In Malaysia, you just need RM2.2m in wealth to join top ‘one-percenter’ club unlike Singapore’s RM16.1m

Publish date: Tue, 30 May 2023, 07:31 PM

KUALA LUMPUR, May 30 — How much do you need to be in the top 1 per cent of your country’s population in terms of wealth?

Just US$485,000 (or over RM2.2 million using today’s currency rates) in net wealth in Malaysia is all it takes for you to be categorised as the richest one per cent here, or to be richer than 99 per cent of the Malaysian population, according to property consultancy Knight Frank’s latest report.

This US$485,000 level in Malaysia is far lower than the US$3.5 million (over RM16.1 million) minimum wealth you need to have in Singapore, before you can be categorised as richer than the remaining 99 per cent of Singapore’s population.

According to Knight Frank’s latest edition of its The Wealth Report (Wealth Sizing Model), its own definition of an ultra-high net worth individual (UHNWI) — someone who owns more than US$30 million wealth — actually requires greater wealth size compared to what is perceived as “the 1 per cent”.

“While ‘the 1 per cent’ might be thought of as the epitome of excess, the price of access to the club falls well short of our definition of a UHNWI — somebody whose net wealth exceeds US$30 million,” Knight Frank said in its report.

The Knight Frank report did not state the number of individuals in Malaysia who would meet the minimum US$485,000 (over RM2.2 million) needed to be among the country’s top one per cent of wealthy individuals.

However, the same report said the number of wealthy individuals has continued to grow in Malaysia, with those being high net worth individuals (HNWI) or owning over US$1 million (more than RM4.6 million with today’s currency rates) numbering 58,395 persons in 2017, before growing to 66,682 in 2021 and to 85,126 in 2022.

In 2017, there were 491 persons in Malaysia in the UHNWI category or owning more than US$30 million wealth (over RM138 million) each; this number grew to 659 persons in 2021 and 721 persons in 2022.

If the numbers for HNWI and UHNWI are combined, there would be at least 85,847 individuals in Malaysia in the top “1 per cent” club in terms of wealth in 2022.

The latest official statistics from the Department of Statistics Malaysia as of May 11 show that the Malaysian population is estimated to number 33.2 million, comprising 30.4 million citizens and 2.8 million non-citizens.

Where is it ‘cheaper’ to be a ‘one percenter’?

During the global financial crisis, attention turned to terms such as “the 1 per cent” which were deemed as the richest of the rich with wealth concentrated in their hands, to emphasise the wealth inequality with the remaining 99 per cent of the population.

Despite that, the amount of wealth you need to own to be in the top wealthiest category of one per cent will depend on which country you are in, but it will actually be much lower than US$30 million.

Even in glitzy Monaco which has the world’s highest concentration of super-rich individuals, all you need is US$12.4 million in wealth to join its top one per cent of the population in terms of wealth.

Switzerland has the second-highest level of wealth required to be in “the 1 per cent” segment at US$6.6 million, followed by Australia (US$5.5 million), New Zealand (US$5.2 million), the US (US$5.1 million) and Ireland (US$4.3 million).

The next highest ones are Singapore (the highest in Asia) and France with a minimum of US$3.5 million required, Hong Kong (US$3.4 million), the UK (US$3.3 million), Italy (US$2.6 million), Spain (US$2.5 million), Japan (US$1.7 million), UAE (US$1.6 million), Chinese mainland (US$960,000), Czech Republic (US$880,000), Saudi Arabia (US$740,000), Romania (US$587,000).

While Malaysia has a relatively low entry point for the “1 per cent club” at US$485,000, the levels are lower in other countries like Brazil (US$433,000), Mexico (US$383,000), India (US$175,000), South Africa (US$109,000), the Philippines (US$57,000) and Kenya (US$20,000), the list in Knight Frank’s report shows.

“All of these levels have risen since we last published the analysis in The Wealth Report 2021 reflecting the growth in wealth over the past two years, despite the dip in 2022.

“However, as explored in that edition, growing inequality globally could see a greater focus on this group — particularly in the sights for greater taxation on assets and even emissions,” Knight Frank said in its report.

 

https://www.malaymail.com/news/malaysia/2023/05/30/in-malaysia-you-just-need-rm22m-in-wealth-to-join-top-one-percenter-club-unlike-singapores-rm161m/71679

PRESS RELEASE BY PUBLIC BANK BERHAD FIRST QUARTER 2023 FINANCIAL PERFORMANCE

PUBLIC BANK GROUP ACHIEVED PRE-TAX PROFIT OF RM2.21

BILLION FOR THE FIRST QUARTER OF 2023

For the first quarter ended 31 March 2023, the Public Bank Group

recorded pre-tax profit growth of 10.4% to RM2.21 billion, as compared

with the corresponding quarter in 2022. Net profit grew at a higher rate of

22.6% to RM1.71 billion during the same period, due to the prosperity tax

imposed in the previous corresponding period.

Tan Sri Dato’ Sri Dr. Tay Ah Lek, Managing Director and Chief Executive

Officer of Public Bank commented, “The Public Bank Group continued

to navigate through the challenges in the evolving operating

environment and demonstrated resilience in its first quarter 2023

performance, which was mainly supported by commendable net

interest income growth and lower loan impairment allowances.”

Net interest income increased by 7.4%, mainly led by healthy loans and

deposits growth which expanded at an annualised growth rate of 5.0%

and 9.1% respectively. Coupled with lower impairment allowances during

the quarter, the Group sustained a resilient net return on equity of 13.6%.

Despite high inflationary pressure, increase in operating expenses was

well under control at 4.7%, underpinned by the Group’s prudent cost

management. As a result, the Group continued to achieve an efficient

cost-to-income ratio of 33.1% in the first quarter of 2023.

Asset quality remained stable with a low gross impaired loans ratio of

0.5%. Loan impairment allowances were lower by 98.5% to RM1.5 million

from RM99.7 million in the corresponding quarter of 2022.

Loans and Deposits Businesses

During the first quarter ended March 2023, the Public Bank Group

maintained a healthy loan growth momentum at an annualised growth

rate of 5.0% to RM381.6 billion, largely supported by the domestic loan

portfolios which grew by an annualised rate of 5.4% to RM356.8 billion.

Domestic loan growth was mainly contributed by residential properties

financing, hire purchase financing as well as SME financing, which grew

at an annualised rate of 6.1%, 11.5% and 2.7% respectively. This has

sustained the Group’s leading market share in the residential properties

financing, hire purchase financing and domestic SME lending, which

stood at 20.6%, 30.4% and 19.0% respectively.

The Group’s funding and liquidity position remained healthy, supported

by a commendable growth in customer deposits at an annualised rate of

9.1% to RM403.7 billion. Domestic deposits rose by 10.2% on an

annualised basis to RM376.5 billion, attributable to the consistent growth

in retail deposits.

Reflecting its healthy balance sheet, the Public Bank Group continued to

maintain a stable gross loan to fund and equity ratio of 80.4% as at the

end of March 2023.

Asset Quality

As at the end of March 2023, the Public Bank Group continued to achieve

and maintain sound and resilient asset quality as reflected in its low gross

impaired loans ratio of 0.5%, a level significantly lower than the domestic

banking industry’s average gross impaired loan ratio of 1.7%.

The Group’s loan loss coverage ratio stood comfortably at 217.8%, well

above the banking industry’s loan loss coverage ratio of 95.8%. Including

regulatory reserves, the Group’s loan loss coverage ratio was higher at

239.6%.

With the ongoing economic recovery, the Group has observed a stable

repayment trend from customers. However, amidst the expected

economic challenges in 2023, the Group will stay vigilant in managing its

loan portfolios and will continue to provide assistance to customers who

face repayment constraints.

Non-interest Income

In the first quarter of 2023, non-interest income increased marginally by

0.7% as compared with the corresponding quarter in 2022. The subdued

market conditions was cushioned by the Group’s higher foreign

exchange profit, stockbroking income as well as investment income.

The Public Bank Group’s unit trust business undertaken by its wholly

owned subsidiary, Public Mutual remained the main contributor to the

Group’s non-interest income. Public Mutual recorded a pre-tax profit of

RM192.6 million in the current quarter, contributing 8.7% to the Group’s

profit. With total assets under management of RM94.4 billion and 179

unit trust funds being managed, Public Mutual continued to capture a

large retail market share of 35.7% as at the end of March 2023.

Overseas Operations

In the first quarter of 2023, the Public Bank Group’s overseas operations

contributed 8.1% to the Group’s profit, mainly attributed to its Hong Kong

and Indochina operations.

Public Bank Vietnam and Cambodian Public Bank continued to deliver

strong profit performance, as reflected in the respective double-digit profit

growth of 24.5% and 59.8% year-on-year. Indochina will continue to be

the Group’s key focus growth area, with continued expansion of branch

network as well as broadening of products and services. The Group is

targeting to open another 8 new branches in Vietnam to reach a total of

40 branches by year end.

However, the operating environment for the Group’s Hong Kong

operations remain uncertain and challenging despite the lifting of COVID19 

containment measures.

Capital and Liquidity Position

As at the end of March 2023, the Group remained well capitalised with

common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital

ratio standing at 14.6%, 14.7% and 17.7% respectively. Liquidity

coverage ratio also remained stable and healthy at 137.1%.

The Group’s capital and liquidity position has remained sound and is

resilient to any potential stress condition. The Group will continue to

manage its balance sheet prudently in pursuit of its banking business

growth.

Group’s Prospects

The heightened volatility in the financial markets and rising concerns

about the health of banking sectors across the United States and Europe

raise question on the potential risk of contagion effects. This is likely to

further exert downward pressure on the world economy which is already

bracing for a challenging 2023 due to elevated inflation, tightening

financial conditions and geopolitical tensions. Malaysia as an open

economy, will continue to face these headwinds.

Nevertheless, firm domestic demand underpinned by improved

employment market, multi-year investment projects, Government’s policy

measures and recovery in China’s economy will continue to support the

Malaysian economy on the positive growth trajectory, providing a stable

and conducive business environment for banking business growth.

Tan Sri Tay concluded, “The Public Bank Group is cognisant of the

prevailing challenges and evolving landscape. The Group will

remain focused on cost discipline, preservation of sound asset

quality and upholding strong corporate governance to safeguard its

resilience against adversity. Notwithstanding, the Group will

continue to take a proactive approach in embracing growth

opportunities arising from the growing economy, digital

transformation as well as the growing ESG demand.”

25 May 2023

For more information, please contact:

Ms Chang Siew Yen Ms Yik Sook Ling

Senior Chief Operating Officer Chief Financial Officer

Tel: (603) 2176 7461 Tel: (603) 2177 3310

Fax: (603) 2163 9925 Fax: (603) 2164 9002

Email: changsiewyen@publicbank.com.my Email: yiksookling@publicbank.com.my

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=136962&name=EA_GA_ATTACHMENTS

Malaysian Equity Market

 Equites

The fortunes of a country’s equity or stock market are closely aligned with its economic well-being, and Malaysia is no exception. Similar to its global peers, Bursa Malaysia been enduring much turbulence in the last few years. Buffeted by strong external and internal headwinds, the market capitalisation of the local bourse had moderated further to RM1.74 trillion as at end-2022 (end-2021: RM1.79 trillion).

Profile of Malaysian Equity Market

Bursa Malaysia has the distinction of being among the biggest bourses in ASEAN with well over 900 listed companies. Investors can choose from a variety of listed products, including equities, derivatives, exchange-traded funds (ETFs), real estate investment trusts (REITs), and exchange traded bonds and sukuk (ETBS). Notably, 789 (81.2%) of the 972 listed entities on the local bourse were Shariah-compliant securities as at end-December 2022. These accounted for RM1.139 trillion or 65.6% of Bursa Malaysia’s overall market capitalisation as at the same date. Despite the tumultuous global markets, a total of RM26.0 billion was raised from the Malaysian equity market in 2022. Of this amount, RM3.5 billion originated from the primary market, i.e., via 35 initial public offering (IPOs). The other RM22.6 billion stemmed from secondary fundraising. The sturdier performance in 2022 was driven by a 52% y-o-y surge in IPOs and a 58% spike in secondary issuances.

Three Types of Markets on Bursa Malaysia

Bursa Malaysia operates through three markets – the Main Market, the ACE Market and the LEAP Market. Each has a different set of listing criteria for aspiring candidates. The following represents some of the most salient points of the respective markets.  

The Main Market is the primary market for larger companies with strong operating and profit track records, with a minimum required market capitalisation of RM500 million upon listing, among other things.

The ACE Market is a sponsor-driven alternative market designed for smaller companies that exhibit strong growth potential. No minimum profit or operating track record is required for listing.

The LEAP Market is a fundraising platform for what are perceived as underserved SMEs, which do not need to demonstrate any operating or financial track record. This adviser-driven market is only available to sophisticated investors.

In 2022, the Main Market hosted the listing of five companies while the ACE Market welcomed 25 and the LEAP Market contributed another five – bringing the total to 35 IPOS for the year. Together, these newly listed entities raised RM3.49 billion.

Listing Process and Platforms

The listing process (from the time the candidate engages an adviser to the day of listing) usually takes four to nine months, depending on the structure and complexity of the listing scheme. Upon approval, the entity will be given six months to complete its IPO exercise.

Bursa Malaysia also offers an end-to-end Shariah-compliant investing platform, along with the world’s first end-to-end Shariah-compliant commodities-trading platform. In recognition of the importance of sustainable and responsible investment, Bursa Malaysia launched the FTSE4Good Index in 2014. This index permits investors to measure domestic companies’ performance based on ESG standards. In July 2021, the local bourse introduced the FTSE4Good Bursa Malaysia Shariah Index – the Shariah-compliant version of the former. This new index will assist fund managers to develop new investment products constituting a portfolio of Shariah-compliant equities, guided by sustainable investing principles.

Investor Profile

The Malaysian stock market benefits from a diverse pool of investors, underscored by sturdy support from local institutional and retail investors. Domestic institutions remained net sellers in 2022, to the tune of RM6.53 billion (2021: RM9.1 billion). Meanwhile, local retail investors infused RM2.31 billion of net funds into the equity market, which paled in comparison to the previous year’s RM12.2 billion. Interestingly, foreign investors pumped in RM4.40 billion net (2021: RM3.15 billion) after four consecutive years as net sellers. Against this backdrop, the participation rate of retail investors declined to an average of 25.7% in terms of transaction value, relative to 34.6% in 2021. Nonetheless, this is still higher than the five-year pre-pandemic average of 18.8%

Trading Procedures

To invest in shares in Malaysia, one must be over the age of 18, open a Central Depository System (CDS) account and a trading account at a stockbroking firm. There are specific steps to follow pursuant to this, as detailed on Bursa Malaysia’s website.

Regulatory System

The Securities Commission Malaysia (SC) is the ultimate regulator of the Malaysian capital markets, including the equity market. As the front-line regulator, Bursa Malaysia, is tasked with safeguarding a fair and orderly market for the trading of securities and derivatives. The SC supervises and monitors Bursa Malaysia on listing, trading, clearing, settlement, and depository operations – to ensure the latter effectively performs its regulatory duties and obligations. Brokers and regulated entities must comply with the various rules set by Bursa Malaysia.

https://www.capitalmarketsmalaysia.com/public-equities/

Most stocks end up losing you money. So what’s a stock-market investor to do?

Most stocks end up losing you money. So what’s a stock-market investor to do?

May 21, 2023 

By Brett Arends

If you’re going to try to retire early and rich by picking the right stocks, there’s something you should know first: Most stocks end up losing you money. 

Over the long term, a majority of stocks on the U.S. stock market have actually ended up as worse investments than keeping your money in low-risk 1-month Treasury bills. (Or savings accounts, or certificates of deposit.)

It’s easy to look at the fabulous wealth created by those who picked the big winners. We ignore at our peril all the losers.

Going all the way back to 1926, it turns out that a stunning 59% — roughly three out of five — of all the stocks ever quoted on the U.S. stock market have made their investors poorer. Yes, the stock market overall has gone up phenomenally since then. But all of the gains have come from those other 40%, or two out of five. And even among those “winners” most of the gains have come from a very few.

So reports Hendrik Bessembinder, a professor at Arizona State University’s W.P. Carey School of Business, in another of his landmark studies into stockholders’ returns. 

He’s crunched the numbers on 28,114 stocks ever traded on U.S. markets and tracked by the authoritative Center for Research in Security Prices, an affiliate of the University of Chicago.

Total wealth for stockholders over the entire period sums to $55 trillion, he calculates. But the winners, fewer than 12,000, accounted for … er … $64 trillion of that.

The other 16,000 stocks lost you $9 trillion, that means.

When you look closer at the numbers, it gets even crazier. Out of those 12,000 or so stocks that made you any money at all, nearly half — about 45% — of all the money created came from just 50 stocks.

Put another way, this means that the majority of stocks lost you money, and most of the rest made you bupkis. Just 0.17% of all stocks, or one in 562, accounted for about half of all the wealth ever created on the U.S. stock market.

How do you like those odds?

Naturally this has been distorted by inflation, which ignores the devaluation of the dollar over that period. 

Nonetheless, from Bessembinder’s data, 5% of all the wealth created on the U.S. stock market was created by one company: Apple AAPL. And 20% of all the wealth was created by 10 companies: Apple, Microsoft MSFT, Exxon Mobil XOM, Google parent Alphabet GOOG GOOGL, Amazon AMZN, Berkshire Hathaway BRK BRK, Johnson & Johnson JNJ, Walmart, WMT Chevron CVX and Procter & Gamble PG.  

It’s something to bear in mind — especially now that investors are getting thrilled about artificial intelligence and are trying to pick the likely winners from this next technological advance.

It reminds me of Warren Buffett’s comment that the only way for most investors to win from the invention of the automobile was to bet against the companies — like buggy-whip manufacturers — whose industries would be put out of business. Picking the winning car companies in advance was almost impossible: In the early days there were hundreds. Almost all of them went bust.

I remember a wise investor telling me something similar during the dot-com mania of 1999-2000. Even if the dot-com revolution really did end up transforming the world, he said, there was no way to know in advance who would be the big winners. And, he added, many of the likely winners probably weren’t even on the market.

How right he was. Of the top tech stocks back then, only Amazon and Microsoft have ended up big winners. In 1999 nobody was talking about Apple as the likely winner. Alphabet, né Google, wasn’t a public company and Meta, né Facebook, didn’t even exist.

Meanwhile, Bessembinder’s list of the companies that have destroyed the most stockholder value is littered with the big tech hopes of yesterday (or, actually, today). WorldCom is the all-time champ, alone leaving stockholders $100 billion poorer. Lucent, Palm and Sycamore Networks are also near the top of the list. 

So, too, are a lot of newer hot names, although it is surely far too early to draw firm conclusions about the ultimate fortunes of Uber UBER, DoorDash DASH and Airbnb ABNB, among others. (We should note that Bessembinder tracked the data through the end of last year, and many of these stocks have rallied in 2023.)

The latest research is yet another strong argument in favor of investing in broadly diversified, low-cost mutual funds. Actually, as we don’t know who will create the most wealth out of the stocks on the market today, it’s really a strong argument in favor of a fund that invests them equally, such as the iShares MSCI U.S.A. Equal Weighted ETF EUSA.

Meanwhile, if you are going to try to pick stocks, remember the odds are stacked against you. 

https://www.marketwatch.com/story/most-stocks-end-up-losing-you-money-whats-an-investor-to-do-996e8326?link=sfmw_fb

Industry outlook – Malaysian property sector

Industry outlook – Malaysian property sector

The property market recorded an increase in 2022 supported by a better performance in all sectors compared to the previous year. In 2022, total transactions volume and value increased by 29.5% and 23.6%, respectively to 389,107 transactions and RM179.07 billion (2021: 300,497 transactions and RM144.87 billion). Total transactions volume in 2022 is the highest volume recorded within the period of 10 years (2012: 427,520 transactions) whilst total transactions value is higher than the previous record high in 2014 (RM162.97 billion).

Of the total transactions recorded in the review year, 20.7% (80,373) and 76.5% (297,700) were transfers dated 2021 and 2022 respectively while the remaining percentage share was for prior years’ transfer. Primary market formed 13.8% (53,698 transactions) of the total transactions (purchase from developers) while secondary market took up the remaining 86.2% (335,409 transactions).

The property market continued to record growth in 2022, supported by the implementation of various government initiatives and assistance, improving labour market conditions and higher tourist arrivals. Several initiatives which outlined under Budget 2022 by the government to a certain extent helped improve property market activities. These are:

i. RM1.5 billion allocation for low-income groups housing projects i.e. rumah mesra rakyat and maintenance assistance programmes.

ii. Lifting the imposition of Real Property Gains Tax on the disposal of properties in the 6th year onwards by Malaysian citizens, permanent residents and other than companies.

iii. Guarantees of up to RM2 billion to banks via Skim Jaminan Kredit Perumahan in assisting gig works, small entrepreneurs and farmers in obtaining home financing.

The Overnight Policy Rate (OPR) has increased gradually from the lowest level of 1.75% since May 2022 by 25 basis points each in May, July, September and November 2022 to 2.75%. The Monetary Policy Committee decided to further adjust the degree of monetary accommodation amid positive growth prospects for the Malaysian economy and to reduce inflationary pressures due to strong demand conditions, tight labour markets, and the elevated commodity process, despite some improvements in global supply chain conditions.

On the demand side, loan applications and approvals for residential purchase increased by 28.7% and 48.7% respectively in 2022. Higher levels recorded in 2022 as the data updated in accordance with the latest data definition and requirement. The new application and approval data will be based on real-time application and approval during the month, irrespective of time lag or application withdrawal by customer in the same month.

Though higher growth recorded by the growth trends remain broadly similar. Similarly, loan applications and approval for non-residential purchase also increased at 33.8% and 92.8% respectively.

Volume of transactions across the sub-sectors showed upward movements. Residential, commercial and industrial, agriculture and development land sub-sectors recorded year-on-year growths of 22.3%, 46.3%, 44.5%, 44.6% and 35.7% respectively. Value of transactions moved in tandem with residential, commercial, industrial, agriculture and development land sub-sectors recorded an increase of 22.6%, 16.7%, 24.8%,50.5% and 16.6% respectively.

Residential property

There were 243,190 transactions worth RM94.28 billion recorded in 2022, increased by 22.3% in volume and 22.6% in value as compared with 2021. Secondary market formed about 80.0% (194,749 transactions) of the total transactions while primary market (purchase from developers) formed nearly 20.0% (48,441 transactions).

All states recorded higher market volume except for Labuan which recorded decline in market activity. The uptrend recorded in Pulau Pinang (31.1%), Johor (24.3%), Perak (18.9%), Kuala Lumpur (18.4%) and Selangor (15.9%) supported the overall increase in the sub-sector. Combined, these states formed about 60% of the total national residential volume. Selangor contributed the highest volume and value to the national market share, with 23.2% in volume (56,514 transactions) and 32.4% in value (RM30.58 billion). Kuala Lumpur recorded 13,182 transactions but ranked the second highest in value at RM11.79 billion, contributing 12.5% market share. Demand continued to focus on terraced houses, formed around 42.0% of the total residential transactions, followed by vacant plots (15.1%), high-rise units (15.0%) and low-cost houses/ flats (10.6%). By price category, RM300,000 and below accounted for 55.8% of the total, followed by RM300,001 to RM500,000 (24.2%) and more than RM500,000 (20.0%).

The primary market recorded more than 54,000 newly launched units in 2022. In spite of the increase in new launches, market remained cautious as the numbers were lower than those recorded in the pre-pandemic years.

Sales performance was moderate at 36.0%. Selangor (11,176 units), Kuala Lumpur (10,324 units) and Johor (7,718 units) were the three leading states with higher new launches. Both Kuala Lumpur and Johor recorded better sales performance at more than 40.0% as compared to Selangor, which recorded a lower rate of 26.9%.

Condominium/apartment units dominated the new launches, capturing 45.0% (24,366 units) of the total, followed by terraced houses with 42.2% share, comprised single storey (9,422 units) and two to three storey (13,403 units).

The residential overhang situation improved as the numbers reduced compare to previous year. A total of 27,746 overhang units worth RM18.41 billion recorded in 2022, reduced by 24.7% and 19.2% in volume and value respectively against 2021 (36,863 units worth RM22.79 billion). Johor retained the highest number and value of overhang in the country with 5,258 units worth RM4.33 billion, accounting to 19.0% and 23.5% respectively of the national total. Selangor (3,698 units), Pulau Pinang (3,593 units) and Kuala Lumpur (3,429 units) followed suit. In terms of value, the second highest was Selangor (RM3.36 billion), followed by Kuala Lumpur (RM3.15 billion) and Pulau Pinang (RM2.74 billion). Condominium/apartment formed 61.9% (17,162 units) of the national total overhang, followed by terraced houses (20.3%; 5,636 units). By price range, those priced at RM500,001 to RM1.0 million formed 33.6% (9,323 units) of the total, higher than 30.2% in 2021.

Price range between RM300,001 and RM500,000 came second, accounting for 29.3% (8,128 units).

Meanwhile, houses in the affordable price range of below RM300,000 formed another 23.5% (6,509 units) of the total and followed by more than RM1.0 million price range formed 13.6% (3,786 units). The unsold under  construction improved as the numbers dropped to 57,649 units (2021: 70,231 units), declined by 17.9% meanwhile unsold not constructed recorded sharply decrease by 49.7% in number with 11,053 units (2021: 21,960 units).

Commercial property

The sub-sector recorded a further increase in market activity in 2022. There were 32,809 transactions worth RM32.61 billion recorded in 2022, increased by 46.3% in volume and 16.7% in value as compared with 2021 (22,428 transactions worth RM27.94 billion). The increase in all states and major transactions involving shopping complex and purpose-built office recorded in the review period contributed to the overall improved market. Selangor contributed the highest volume and value to the national market share, with 26.4% in volume (8,654 transactions) and 31.7% in value (RM10.35 billion). Kuala Lumpur came second with 14.6% in volume (4,777 transactions) and 26.0% in value (RM8.49 billion) and Johor with 14.6% in volume (4,787 transactions) and 14.0 % in value (RM4.57 billion).

Shop segment recorded 16,862 transactions worth RM14.2 billion, dominating 51.4% of the commercial property transactions volume and 43.5% of the total value. Market activity recorded an increase of 45.7% in volume and 48.2% in value (2021: 11,574 transactions worth RM9.6 billion). Selangor contributed the highest volume and value to the market share, with 19.0% (3,207 transactions) and 29.9% of the total value (RM4.2 billion) followed by Johor with 17.1% (2,880 transactions) and 16.3% of the total value (RM2.3 billion). By type, two to two and a-half storey shops captured more than 53.0% (8,970 transactions) of the shops’ market share, followed by three to three and a-half storey shops, registering 27.4% share (4,628 transactions). Shop overhang segment increased to 6,720 units with a value of RM5.84 billion, up by 1.6% in volume and up 1.1% in value against 2021. The unsold under construction and not constructed saw the reverse, down by 28.8% (2,777 units) and 9.0% (365 units). Johor accounted for nearly 26.0% of shop overhang volume and 28.7% in value (1,731 units worth RM1.67 billion) and the unsold under construction with 36.2% share (1,005 units).

Industrial property

The industrial sub-sector recorded 8,082 transactions worth RM21.16 billion in 2022. Compared to 2021, the market activity increased by 44.5% in volume and 24.8% in value. Selangor continued to dominate the market, with 33.8% of the nation’s volume, followed by Johor and Perak, each with 14.0% and 8.1% market share.

The industrial overhang remained manageable. The overhang volume decreased to 880 units worth nearly RM1.15 billion, down by 22.1% volume and 27.6% in value against 2021. On similar note, the unsold under construction decreased to 450 units, down by 31.2%. The unsold not constructed recorded 51 units, more than 22 units recorded in 2021. Sarawak held most of the overhang, with 33.8% share, followed by Johor (23.3%) and Pulau Pinang (9.7%). By type, terraced and semi-detach units formed the bulk of the overhang, each with 59.2% and 29.8% share. Most of the overhang were above RM1 million, forming 45.2% of the national total.

The property market is expected to continue its momentum with various initiatives outlined by the government under the revised Budget 2023. Among others:

1. Full stamp duty exemption on instrument of transfer and loan agreement for the purchase of the first  residential home priced up to RM500,000 by Malaysia citizens remained until 31 December 2025.

2. Increase of stamp duty remission from 50% to 75% for the purchase of the first residential properties priced between RM500,000 to RM1 million by Malaysian citizens and applicable for sale and purchase agreements executed until 31 December 2023.

3. Full stamp duty exemption up to RM1 million and 50% stamp duty remission for the remaining balance on transfers of property by way of love and affection between family members (father to child and grandfather to grandson).

4. Allocation of RM460.2 million for the building of new homes and home renovations in rural areas.

5. Allocation of RM389.5 million will be channeled to the People’s Housing Programme.

6. Allocation of RM358 million for the construction of affordable homes under Rumah Mesra Rakyat programme by Syarikat Perumahan Negara Berhad.

7. Allocation of RM462 million for the construction of 23,000 houses under Projek Perumahan Awam Malaysia.

8. Increase the guarantees of up to RM5 billion via Syarikat Jaminan Kredit Perumahan in assisting gig workers such as e-hailing workers in obtaining home financing up to RM500,000.

As the country’s GDP growth is projected to be moderately lower than the previous year and in line with other countries in the region, the property market performance is expected to be cautiously optimistic given the unpredictable external environment. The accommodative policies, continuous government support, well execution of measures outlined in the revised Budget 2023 and the proper implementation of strategies and initiatives under RMK-12 are expected to remain supportive of the property sector.

(Source: Property Market Report 2022, Valuation & Property Services Department Malaysia, Ministry of Finance.)

Retirement mistakes to avoid

MANY of us dream of the day when we can finally retire.

However, not many of us actually prepare for it and by the time that fateful day arrives, we wish that we could turn back the clock, plan ahead or do things differently.

Here are five retirement mistakes to avoid:

Not planning for retirement

Excellentte Consultancy Sdn Bhd’s Jeremy Tan said many end up retiring without having a proper retirement plan.

“Many just end up ‘drifting’ into retirement. But even those that choose to plan, end up miscalculating and don’t save up enough to cover their retirement years,” he told StarBiz.

Tan said having a retirement plan is an important financial goal that everyone needs to have.

“It is never too early to start planning for retirement,” he said, adding that it was crucial to ensure that one’s savings could last longer than their lifespan.

“Taking the country’s life expectancy as the bench-mark, it would be wise to add at least another 10 years to the average life expectancy.

“Taking into consideration the availability of better healthcare and medical treatments available today, it is noteworthy that the average life expectancy has been increasing.”

Success Concepts chief executive officer Joyce Chuah said many individuals miscalculate the amount of money they need to save by the time they retire.

“One common error involves underestimating the amount required for post-retirement.

“The challenge for most people would usually be to have a decent understanding of financial concepts like discount, interest and inflation rates, so that they can predict the present value of lifelong earnings and consumptions.

“Moreover, unexpected circumstances such as changes in health status or the unclear financial burden related to health problems can affect insufficiency in retirement savings.”

Chuah said one should make time to comprehend basic financial literacy concepts.

“If personal finance is not your cup of tea, get guidance from a financial adviser to run your numbers when your financial, physical and economic situations change.”

Not having a diversified portfolio

If you are planning for retirement, it’s always best to have a diversified portfolio, said Tan.

“Having a portfolio with diversified risks can still be applied during the retirement years, rather than on just a conservatively-centric basis.”

Chuah said many are also too risk-averse when it comes to financial planning, especially for retirement.

“Humans are also made to avert risky situations that threaten our security, be it physical or financial. Putting money into fixed income that guarantees the capital at a low return is only good for short-term and emergency purposes.

“In the long run, any fixed income that does not hedge against inflation will mean that you are essentially experiencing a deterioration in your money’s ability to purchase future goods and services.”

Sadly, Chuah said the effect of inflation is not immediately felt, as many individuals often take refuge in the fact that their capital stays intact, compared to volatile investments.

“Comprehend the positive side of taking risks, which is to hedge against inflation and eventually grow your wealth.”

She added that one should make an effort to understand the levels of risks one can take as a new investor.

“Progress with risk management strategies so that you can deploy them, especially during declining markets.

“Differentiate the risks between being a short-term trader and a longer-term investor, with the latter being a preferred option for long-term wealth accumulation for retirement,” she said.

No healthcare planning

Healthcare tends to be one of the largest expenses an individual can incur during retirement.

By not planning for it, many end up burning their life’s savings on high medical bills well into their retirement years, said Tan.

“Many do not plan earlier to transfer any health cost to an insurer during their prime years, when health cost is still relatively cheap, compared to when they are in their old age.

“Many also end up taking their employer’s employee benefits coverage as a replacement for paying their own personal health costs.”

Tan said health cost planning is essential the moment one starts working.

“Transfer your health costs to an insurer as early as possible, to take advantage of the cost of insurance and ones’ prime years where the individual’s health is in the best state to receive coverage.

“As your income increases over time, upgrade the insurance plans and do it over the different stages of your life, from being single to married, to married with children and henceforth.”

Owning too many illiquid assets

Chuah noted that many individuals prefer to own physical assets.

“Being Malaysians, we love brick-and-mortar.

“However, some may have over-allocated their retirement funds into real estate which can be a strain on their retirement income should tenants leave or worse, stop paying their rent.

“An additional worry is when interest rates keep going up and monthly repayments increase.”

To avoid falling into this trap, Chuah said an individual should list all of their assets that are meant for retirement funding.

“This can start from your Employees Provident Fund, private retirement scheme, unit trusts and investment properties.

“Create a more balanced portfolio consisting of properties, bonds and equities with no more than 40% of it in real property, as you get closer to retirement age.”

Losing money to financial scams

Chuah noted that scams have befallen many individuals over the decades.

“Sadly, people are still being lured into the scam trap, normally via abnormally high guaranteed returns. As the saying goes, ‘if it’s too good to be true, then it’s too good to be true’.

“The unfortunate truth is that many people have been lured into these schemes because they have no patience to obtain returns from proven investment portfolios that work.”

Chuah pointed out that many cannot take the vagaries of the ups and downs of the stock market and merely want to accumulate wealth in the shortest time possible due to lack of planning.

“Plan and accumulate earlier so that you won’t be in a hurry to play catch-up and end up being more susceptible to schemes that promise you high returns.”

She added that there are many scams disguised as real investments that prey on investors’ emotions (such as greed and desperation).

“Even if you want to give it a shot, use only a small allocation of your ‘play money’ that you can afford to lose.

“Check with a friend or adviser who can give you an objective evaluation of the scheme before you do,” Chuah said.

By EUGENE MAHALINGAM

https://www.thestar.com.my/business/business-news/2023/05/22/retirementmistakes-to-avoid

Malaysia’s economy grew 5.6% y-o-y in 1Q2023, says BNM

By Syafiqah Salim & Priyatharisiny Vasu  theedgemarkets.com  

12 May 2023, 01:45 pm

KUALA LUMPUR (May 12): Malaysia’s economy, as measured by gross domestic product (GDP), grew 5.6% year-on-year (y-o-y) in the first quarter of 2023 (1Q2023), driven by further expansion of household spending, strong growth in employment as well as continued expansion, which have supported private consumption spending.

Investment activity was underpinned by capacity expansion and continued implementation of multi-year projects, while inbound tourism continued to recover, lifting services exports and partially offsetting the slower goods export growth, according to Bank Negara Malaysia (BNM) in a statement on Friday (May 12).

Malaysian economy grew by 0.9% (compared with a 1.7% contraction in 4Q2022).

Despite global headwinds, the Malaysian economy is projected to expand by 4% to 5% in 2023, driven by firm domestic demand, improving employment and income as well as continued implementation of multi-year projects that would support consumption and investment activity.

“Recent indicators suggest that the economy is on a firm track to expand between 4% and 5% in 2023, Malaysia is not at risk of recession,” said BNM governor Tan Sri Nor Shamsiah Mohd Yunus at a press conference.

“The labour market continued to strengthen in 1Q2023 and is expected to remain supportive of domestic demand. The economy will approach full employment by the end of this year,” said Nor Shamsiah.

According to the BNM governor, risks to the country’s growth outlook are relatively balanced.

“These include stronger-than-expected tourism activity and implementation of projects including those from the re-tabled Budget 2023. Meanwhile, downside risks could emanate from lower exports due to weaker-than-expected global growth and more volatile global financial market conditions,” she added.

Financing conditions

Credit to the private non-financial sector expanded by 4.2% in 1Q2023, compared with 4.7% in 4Q2022, accounted mainly by slower growth in outstanding loans and outstanding corporate bonds.

Outstanding business loans grew by 2.4%, following slower growth in working capital loans, said BNM.

“Nonetheless, investment-related loans remained forthcoming, especially in the small and medium enterprise (SME) segment.

“For households, outstanding loan growth expanded by 5.2%. This was supported by sustained growth in outstanding loans for the purchase of big-ticket items, with higher growth recorded particularly for car purchases,” it added.

Ringgit performance remains stable

Against the backdrop of the US dollar and risks arising from banking sector stress in the US and Europe, the ringgit continued to show two-way movements with an overall marginal appreciation of 0.1% against the US dollar in 1Q2023, according to Nor Shamsiah.

"The ringgit's performance remained broadly stable as the currency started the year on an appreciation trend," she said.

"Going forward, BNM will continue to closely monitor global and domestic financial conditions while ensuring orderly adjustment in financial markets," she added, without giving a forecast for the ringgit's performance through the end of the year.

BNM defends recent OPR hike to 3%, saying it was to avoid greater unease of higher inflation

By Priyatharisiny Vasu & Syafiqah Salim 

/ theedgemarkets.com 

12 May 2023

Bank Negara Malaysia governor Tan Sri Nor Shamsiah Mohd Yunus says the central bank wanted to guard against a situation of raising rates too little and allowing inflation to resurge, or raising them too much and causing unnecessary economic weakness.

KUALA LUMPUR (May 12): 

Bank Negara Malaysia (BNM) defended its recent position of increasing the overnight policy rate (OPR) to 3% amid widespread misconception, saying the central bank wanted to avoid keeping the rate too low for too long when economic growth was firm. 

BNM governor Tan Sri Nor Shamsiah Mohd Yunus said at the briefing on the first quarter of 2023 on Friday (May 12) that the central bank wanted to guard against a situation of raising rates too little and allowing inflation to resurge, or raising them too much and causing unnecessary economic weakness. 

“I must also correct the perception that we want growth to be slower. That is certainly not true. Which one is more kejam (brutal)? [A rise in the] OPR, or if our inflation goes out of control? 

If our inflation level heats up, all our purchasing power will be impacted regardless of whether you have a loan or not,” the governor said. 

She added that prolonged low interest rates that are not aligned with the health of the economy could have damaging effects, such as overspending and overborrowing. 

 “This could push up prices even more. When that happens, all of us will be affected, especially the poor and vulnerable,” Nor Shamsiah said. 

 It can also encourage excessive risk-taking, and speculative investments to get higher returns, and increase chances of financial scams. 

 She added that the central bank wants economic growth to be on a sustainable trajectory, and as such, it is focused on ensuring the long-term impact of its policy rate decisions. “We want it to be sustainable, not just for today, but for months and years to come. We do not want to have a situation, where we just look at today’s growth numbers, but further down the road, it's not sustainable, where it leaves us in high inflation and even a recession. That is not what we are here for,” Nor Shamsiah said. 

 On May 3, BNM raised the OPR by 25 basis points (bps) to 3%, as the central bank believed the global economy continued to be driven by resilient domestic demand. The rate hike, after two consecutive pauses in early 2023 at 2.75%, came as a surprise after most economists predicted that the central bank would maintain the OPR to further assess the impact of four straight increases in the key rate last year that raised it by a cumulative 100 bps. 

 Inflation remains sticky 

 Nor Shamsiah said although headline and core inflation is expected to moderate over the course of 2023, core inflation would remain elevated. 

 Elevated underlying inflation has been more prolonged than in past episodes, the governor said, adding that it was partly owing to a strong recovery in domestic demand. 

 “While core inflation moderated to 3.9% during the [first] quarter, compared with 4.2% in the immediate preceding quarter, it remained elevated relative to the historical norm of around 2%,” she said. Core inflation is more indicative of demand pressures, she said, adding that both headline and core inflation will remain within 2.8% to 3.8% for the year as a whole. 

 “Even as cost has begun to moderate, strong economic activities have continued to generate demand-driven pressures, which have kept core inflation elevated,” the governor said. 

 She said higher core inflation could be observed beyond conventional demand indicators, such as retail trade and credit card spending data. 

 Existing price controls and fuel subsidies will be continued to partly contain the extent of upward inflationary pressures, according to her. 

 “The balance of risk to the inflation outlook is tilted to the upside, and remains highly subject to any changes in domestic policy, financial market developments and global commodity prices,” she said.

https://theedgemalaysia.com/node/666714

Public Bank (RM 3.97 per share on 18/5/2023)

Income Statement

Public Bank Bhd
Dec 2022

 Interest Income 16.79 B

 Interest Expense 5.76 B

 Loan Loss Provision 365.56 M

 Non-Interest Income 3.33 B

Balance Sheet

Public Bank Bhd

Dec 2022

 Investments 81.84 B

 Net Loans 387.86 B

 Total Deposits 394.72 B

 Tier 1 Capital 46.78 B

 Book Value Per Share 2.59 

Comments:  

Net Loans:  Commercial & Industrial Loans 98.4B; Consumer & Installment Loans 258.1B; Broker & Financial Institution Loans 15.6B, and others.

Total Deposits:  Demand Deposits 68.7B; Savings/Time Deposits  326B.

Loans are well diversified to various borrowers.  The majority of deposits are in Saving/Time Deposits.

Cash Flow 

Public Bank Bhd

Dec 2022

 Net Financing Cash Flow +25.93 B

 Free Cash Flow +2.00 B

 Cash Flow Per Share +0.18  

 Free Cash Flow Per Share +0.14 

Free Cash Flow Yield 4.39%

Comments:  

Its net interest income = 10.66 B.  

Its non-interest income or fee income is about 31% of its net interest income.

It loans out 4.73x more than the amount it invested.

Its total deposits are more than its net loans.  

Given its Tier 1 Capital, it only has to borrow a small amount.

Earnings & Estimates 

Public Bank Bhd 

Qtr. EPS Est. +0.10  Q1 2023

Qtr. Year Ago +0.07 Q1 2022 

Ann. EPS Est. +0.35 FY 2023

Ann. Year Ago +0.32 FY 2022 

Comments:  

At RM 3.97 per share, it is trading at a future 2023 P/E of 11.3x.

Per Share Data 

Public Bank Bhd 

All values updated annually at fiscal year end 

Earnings Per Share +0.32

Sales 1.04 

Tangible Book Value 2.45

Operating Profit - 

Working Capital -8.45

Long Term Liabilities - 

Capital Expenditure 0.01

Capital Expenditure TTM 0.01 

Ratios & Margins 

Public Bank Bhd 

All values updated annually at fiscal year end 

Valuation 

P/E Ratio (TTM) 12.59 

P/E Ratio (including extraordinary items) 12.53 

Price to Sales Ratio 4.17 

Price to Book Ratio 1.67 

Price to Cash Flow Ratio 10.96 

Enterprise Value to EBITDA 11.08 

Enterprise Value to Sales 5.06 

Total Debt to Enterprise Value 0.41 

Total Debt to EBITDA - 

EPS (recurring) 0.32 

EPS (basic) 0.32 

EPS (diluted) 0.32 

Comments:  

At Price to Book Ratio of 1.67, and taking into consideration its efficiency, ROE and ROA, it is trading at a fair price.

Efficiency 

Revenue/Employee - 

Income Per Employee - 

Receivables Turnover - 

Total Asset Turnover 0.04 

Liquidity 

Current Ratio 0.14 

Quick Ratio - 

Cash Ratio - 

Profitability 

Gross Margin - 

Operating Margin +43.82 

Pretax Margin +43.88 

Net Margin +30.41 

Return on Assets 1.28 

Return on Equity 12.45 

Return on Total Capital 10.62 

Return on Invested Capital 8.88 

Comments:  

The high operating margin and the high pretax margin show that this bank is run efficiently.

The ROA and ROE are indicative of a well run and profitably run bank.

Capital Structure 

Total Debt to Total Equity 76.90 

Total Debt to Total Capital 43.47 

Total Debt to Total Assets 7.82 

Interest Coverage - 

Long-Term Debt to Equity 59.39 

Long-Term Debt to Total Capital 33.57 

Long-Term Debt to Assets 0.03

Comments:  

Its total asset/total equity is about 9.0 x.  It is not over-leveraged.  

Warren Buffett: Earnings and not book value are what determine the value of a business.

 

 

@5.45  

Earnings are what determine value and not book value.  Book value is not a factor we consider.  Future earnings are a factor we consider.  

Earnings have been poor for many great Japanese companies.  If you think the return on equity of the Japanese companies is going to increase dramatically, then you are going to make a lot of money in Japanese stocks.  But the returns on equity of Japanese businesses have been quite low, and that makes a  low price to book ratio very appropriate because earnings are measured against books.  

A company earning 5% on book value, I do not want to buy it at book value, if I think it is going to keep earning 5% on book value.     A low price to book ratio means nothing to us.  It does not intrigue us.  In fact, if anything, we are less likely to look at something that sells at a lower value in relation to book than something that sells at a higher relation to book.  The chances are we are looking at a poor business in the first case and a good business in the second case.

Coastal is one of the leading shipbuilders in Malaysia.

Coastal is one of the leading shipbuilders in Malaysia.  

1.  It specialises in offshore support vessel (OSV) and marine transportation vessels. 

2.  It is also an established vessel chartering services provider in South East Asia with vessels deployed to transport various types of dry and liquid bulk commodities.

3.  In 2013, Coastal diversified into the oil and gas upstream sector with its entry into the jack-up drilling rig business. 

• In 2013, it fabricated a jack-up Gas Compression Service Unit (GCSU) for use by Mexico's national oil company, Petroleos Mexicanos.  It sold its maiden jack-up rig, Coastal Driller 4001, for RM877.2m in 3Q16. 
• It fabricated its second Jack-up Gas Compression Service Unit (JUGCSU) in 4Q13 and is contracted under a USD372 million, 12-year charter for Mexico's state-owned company, Petroleos Mexicanos, from January 2016 onwards. 

4.  In December 2021, Coastal secured a 10-year mega contract worth USD1.06 bn from Petroleos Mexicanos to undertake an onshore gas conditioning plant project with a gas conditioning capacity of 300 million standard cubic meter feet per day (MMCFD) in Tierra Blanca, Veracruz. Mexico.

Y2022

COASTAL's adjusted core earnings more than tripled to RM173.4 m y-o-y. 

• riding on the back of a jump in revenue of 44.0%, 
• a more than doubling of Other Income to RM98.9 m and 
• a sizable share of profit from the group's JV of RM51.5 m in FY22, 

The surge of revenue in FY22 was driven primarily by 

• a more than tripling of revenue from the Vessel Chartering Segment to RM64.09 m, as a result of the acquisition of liftboat chartering business in February 2021; 
• coupled with increased revenue contribution from the Gas Processing Segment (+17.7%), arising from the contribution by the Perdiz onshore gas plant and construction revenue by the Papan onshore gas plant project. 

The sharp increase in Other Income was largely due to 

• interest income earned from loans granted to the group's JV 
• as well as a disposal gain on offshore support vessel of RM33.2 m. 

The group recorded adjusted FY22 EPS of 32.92 sen. 

Warren Buffett: How to Easily Value almost Any Business

Valuing a business and applying a margin of safety

How to get better and better at doing this.

1.20  

Ben Graham taught him about a certain types of businesses.

Charlie taught him about durable competitive advantage and first class businesses.

Over time, he learned more about other types of businesses.

Not important to know every businesses.

Important to know where your circle of competence is.

You don't have to be an expert on 90% of the businesses but you do have to know the ones that you put your money into, and that is a very small part of the universe.

2.30

Think about the businesses you would pay in your own hometown.

Which would you like to buy into, which do you understand their economics, which do you think will be around in the next 10 or 20 years from now, which do you think will be very tough to compete with.

Just keep asking yourself questions about businesses, talk about this with other people about them, and you will extend your knowledge over time.

Always remember that margin of safety and I think you basically have the right attitude because you recognise your own limitations and that is enormously important in this business you will find things to do.

3.17

6 to 7 years ago, Buffett invested into Korean stocks.  He invested into 20 stocks which he felt had margin of safety.  Why 20 stocks?  Because he cannot anticipate which counter might be problematic (due to crooked managers or due to competition).  They were so cheap and this form of investing was based on Ben Graham approach.

4.00

If you wish to be good at something, you have to think about it a lot and learn a lot and practice doing it a lot, and in this field you have to keep learning because the world keep changing and your competitors keep learning.   Try to wake up each morning a bit wiser than when you went to bed the night before.  When you keep doing that for a long time, and accumulate experience (good and bad), as you try and master what you are trying to do; people who do that never fail utterly.  They may have a bad period when luck goes against them or something, but very few people have ever failed with that. If you have the right temperament, you may rise slowly but you are sure to rise.

5.15

Charlie, did you take any business course in school?   No, I took some accounting.  A gentleman in Omaha Club seemed so prosperous and Charlie wondered how he achieved this.  Well this man enjoys practically no competition in his business.  He gathers up and renders dead horses.  That was avoiding competition by one strategem..  By asking such questions from a young age, you eventually learn the same thing.   A lot of businesses gone broke, a lot of businesses sold out under distress, and some of the people who rose from small beginnings which nobody thought of as the great glories of that early time and that is the kind of the way life is.  It is hard to get anywhere near the top and it is hard to hold any position once you have attained it.  But I think it was likely to predict that this man is likely to win because he cared more about doing it right, they cared more about avoiding trouble, they are more discipline on themselves.  I was automatically doing it, what was working, what was failing, why was it failing, and if you have that temperament, you are gradually going to learn and if you don't have the temperament, I cannot help you.

8.20

It is avoiding the dumb things.  You don't really have to be brilliant.

9.10

Charlie was incapable of looking at a business without thinking the economic fundamentals of it.

10.00  

What businesses have the best return on capital on earth?

Capital necessary to run the business versus the capital we might have to pay for the business.

If you run the Coca Cola company excluding the bottling business, you can run it without any capital.  On the other hand, when you buy it for $100 million. you can look at this as the base capital.

When we define what is a good business, we look at the capital actually needed in the business and 

 whether it is a good investment or not depends on how much we pay for it in the end.

There are a number of businesses that operate on negative capital.  Any of the great magazines operate with negative capital (eg. Fortune).  Subscribers pay in advance, and there is no fixed assets and the receivables are not that much and the inventories are nothing.   There are many great businesses that operate needing very little capital, eg. Apple.  The best ones are those who can get very large while needing no capital.  See's Candy requires very little capital.  Generally, the great consumer businesses need relatively very little capital.  The businesses where the people pay you in advance, eg. magazines, insurance,  you are using your customers capital.  Of course, many other people like them too, so this can become very competitive and buying them.    Many of the service types businesses and consumer businesses require very little capital; and when they get to be successful, they really can be something.

13.18

Charlie:  The formula never changes.    If you were to own only one business in the world, what would it be?  If you name some businesses with incredible pricing power, you are talking about businesses that is a monopoly or a near monopoly.  

Bond investing can sometimes fail

Bond investing can sometimes fail, despite being traditionally considered a safe and steady investment. 

Interest rates, inflation, and credit ratings can all affect the value of bonds, and investors need to carefully consider these factors before investing in them. 

For example, the Puerto Rican government's default on its bond payments, which resulted in losses for many investors who had bought the bonds. 

Be wary of the risks associated with high-yield or "junk" bonds, which offer higher returns but also come with a higher risk of default. 

Conclusion:

While bond investing can be a useful tool for investors looking for steady income, it is important to understand the risks involved and to diversify one's portfolio across different types of investments.

https://www.youtube.com/watch?v=s_sNy-SZ4MM&t=2s