http://spreadsheets.google.com/pub?key=tkb0enVog-PjOHzgbMUXi_w&output=html
The returns from iCap's winning transactions were truly fantastic.
Are we looking at a budding "Warren Buffett" equivalent?
Wonder the 'cow' will jump over the moon?
Sunday 25 October 2009
Saturday 24 October 2009
iCap completed transactions - The Winners
http://spreadsheets.google.com/pub?key=tvUBvGFsmHcpydgvtogKM9Q&output=html
Analysing the Winners:
Total = 140 transactions
Holding Periods
less than 1 year
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
exceeding 1 year
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
exceeding 2 year
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
exceeding 3 year
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
exceeding 4 year
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
exceeding 5 year
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
exceeding 6 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 7 year
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
exceeding 8 year
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
exceeding 9 year
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
exceeding 10 year
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
exceeding 11 year
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
Findings:
Of the 140 transactions:
Of those transactions giving more than 15% HPR or CAGR, 93% ( 83/89) were stocks held for less than 3 years:
Take Home Message:
1. Of 4 stocks selected, 3 were winners and 1 was a loser.
64 transactions
Holding Period Return less than 15% = 14
Holding Period Return more than 15% = 50
29 transactions
CAGR less than 15% = 5
CAGR more than 15% = 24
17 transactions
CAGR less than 15% = 8
CAGR more than 15% = 9
5 transactions
CAGR less than 15% = 3
CAGR more than 15% = 2
8 transactions
CAGR less than 15% = 8
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 1
CAGR more than 15% = 2
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
4 transactions
CAGR less than 15% = 4
CAGR more than 15% = 0
3 transactions
CAGR less than 15% = 3
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 2
CAGR more than 15% = 0
0 transactions
CAGR less than 15% = 0
CAGR more than 15% = 0
2 transactions
CAGR less than 15% = 0
CAGR more than 15% = 2
- 51 (36%) have a return (HPR or CAGR) of less than 15% and
- an amazing 89 (64%) have a return (HPR or CAGR) of more than 15%
- 50 of the stocks were held for less than 1 year
- 24 of the stocks were held for more than 1 year but less than 2 years
- 9 stock were held for more than 2 years but less than 3 years.
2. Of the 3 winners:
- 1 gives a CAGR of less than 15% and
- an amazing 2 give a CAGR of greater than 15%.
- 1 faltered,
- 1 did fairly alright and
- 2 did exceptionally well.
Completed Transactions of iCap (1989 to 9.7.2009)
http://spreadsheets.google.com/pub?key=tQvTWgP7osgpwBxXVtVyy_g&output=html
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
There were 192 completed transactions over the period 1989 to 9th July, 2009.
There were 140 winners (73%) and 52 losers (27%).
The ratio of winners to losers is 2.7 to 1.
Therefore, we can infer that for every 4 stocks picked by iCap (also known as ttb), 3 will be winners and 1 will be a loser. :- )) or :- ((
Of these 192 transactions:
80 (42%) were sold within the 12 months holding period.
112 (58%) were sold after a holding period of more than 12 months.
Of the 140 winners:
64 (46%) were sold within the 12 months holding period.
76 (54%) were sold after a holding period of more than 12 months.
Of the 52 losers:
16 (31%) were sold within the 12 months holding period.
36 (69%) were sold after a holding period of more than 12 months.
Ref: http://icapital.biz/icapital2/other/completedtranx_en.pdf
Friday 23 October 2009
Past Stock Selections in i Capital
Past Stock Selections in i Capital
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
Completed Transactions from 1989 to 9 Jul 2009
http://icapital.biz/icapital2/other/completedtranx_en.pdf
How to convert this pdf file into Microsoft Office Excel format to facilitate the calculation of the CAGR for each of the completed transactions? TQ
The stock market requires an endless supply of losers
Perhaps the most forceful statement on the need to act in the contrary mode appears Confessions of a Wall Street Insider by the self-named C.C. Hazard:
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
"The stock market is built on a necessary foundation of error. You make money on the market mainly by living off the errors of other players. You become a predator, in fact, a carnivore, a beast of prey. Others must die that you must live... The stock market requires an endless supply of losers."
By refusing to act like and with the crowd in either its manic or panic phases, an investor immensely raises his or her chance of not being part of that pool of losers.
"Never follow the crowd!"
Leaning against that powerful tide
The crowd can be correct during much of a long trend, but always overstays and proves itself wrong at turning points. When the feeling of bullish rightness becomes universal and powerful, a top is immediately at hand.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
Being successful in investing or trading means leaning against that powerful tide, which then creates psychological, financial and social stresses and strains not everyone can handle.
If by nature an investor is passive, a follower, he may lack sufficient courage to do what is required for investing or trading success. But if one can stick to contrarian principles despite probable early suboptimization of profits, he acquires a bucketful of cash near the top (plus some interest) for use later when the panic phase arrives.
The key to success is to do what is not easy.
The key to success is to do what is not easy. What seems very easy will probably prove a mistake. Almost invariably when a buy looks compelling and overwhelmingly obvious, the investor actually is getting in too late.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
The best bargains are purchased when the investor has to struggle and debate, afraid even to tell his broker about an idea under consideration.
When he loves the stock because it has treated him so well and wants to stay on board longer to maintain that highly comfortable association, he has overstayed the market.
"We buy (on) wars, earthquakes, coups, assassinations and devaluations. We sell on peace, free-trade agreements and all that other good stuff."
Buying and selling that way is how to succeed, but it always feels like facing into a 100-mph head wind at the time.
KNM upgraded to 'buy'
KNM upgraded to 'buy'
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Published: 2009/10/23
KNM Group Bhd. was upgraded to “buy” from “sell” at Maybank Investment Bank Bhd on expectations of higher orders for the oil and gas services provider.
The company’s target price was raised to RM1.02 from 69 sen, Maybank said in a report today. -- Bloomberg
Undertand both fundamentals and psychology of the market
Market moves are driven by an ever-shifting combination of fundamentals and psychology; to be successful, investors need to seek to understand both rather than ignore them.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
Mere identification of an extreme trend will not guarantee selling at an exact top or buying at precise bottoms.
But selling above the long-term trend when markets are buoyant will produce returns above those from selling on average at the long-term trendline.
Buying well, namely when fear pervades, gives another advantage.
What is the annual turnover of stocks in iCap?
In their continuing efforts to stay atop the best, many mutual funds engage in 50% to 100% or faster annual turnover (rather than buying and holding.)
Just wondering, what is the annual turnover of stocks in iCap?
Just wondering, what is the annual turnover of stocks in iCap?
The price of investment success is constant vigilance.
Buying and holding for the long term assumes that one is willing to settle for whatever long-term average return is generated.
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Buying and holding for the long term also assumes that one can successfully select a stock, or group of stocks, whose fundamentals will continue intact.
Technology is moving ever more rapidly and for most corporations the relevant competitive context has become worldwide, whether or not they wish it were so. These facts imply that selections of companies likely will not remain valid as long as they could in the past.
In a dynamic world, a static portfolio is by definition a fatally flawed strategy.
Bottom line: One year's favourable and seemingly stable fundamentals are not a given that can be assumed in perpetuity, much as we might wish they could. The price of investment success is constant vigilance.
The advice to buy and hold long term begs a critical question: buy and hold what?
Just 4.5pc of finance professional opted for a V-shape recovery from current slump
Recession: 95pc of finance professionals expect downturn to continue
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
Just one in 20 money professionals believes that the economy will stage a sharp “V-shaped” recovery from the current slump, according to a survey by Barclays Capital.
By Richard Evans
Published: 9:09PM BST 02 Jun 2009
Photo: PA When the investment bank asked experts what they expected the trajectory of the global economy to be this year and next, 37.5pc predicted a W-shape – temporary recovery, before renewed weakness – and 31.5pc a U-shape, representing weak growth for some time before gradual recovery. Another 26.5pc favoured the L-shape: growth remaining weak for a protracted period.
Just 4.5pc opted for a V-shape – weakness and then sharp recovery – according to the survey of 605 professionals, who worked for a broad range of foreign exchange investors including hedge funds, real money managers, proprietary trading desks and corporates.
The pessimism about the economy was reflected in experts' opinions about the recent rally in "risky assets" such as shares.
Thirty-seven per cent said they thought we were in a bear market rally close to ending, while 23.5pc said it was a bear market rally with further to go, a bearish total of over 60pc; 22pc thought it sustainable but that further gains were unlikely, and 17.5pc said risky assets had further to rally.
“The recent strong performance of risky assets is seen by investors as a ‘bear market rally’ that is close to ending,” the bank said. “This is consistent with the general view that any global economic recovery over the next year will be shallow or temporary – U or W-shaped.”
Barclays also asked the finance professionals to select the currencies most likely to rise and fall. As favourite to rise, the pound was narrowly beaten by the Australian dollar, while the American dollar was seen as most likely to weaken.
"The choice of the most attractive long currency trading position was a close-run contest between sterling and the American dollar, with the latter eventually winning," Barclays said. "The US dollar was seen as the most attractive short currency position."
http://www.telegraph.co.uk/finance/personalfinance/investing/5431622/Recession-95pc-of-finance-professionals-expect-downturn-to-continue.html
A rally from extreme cheapness to excellent value
So what happens next? If that was a rally from extreme cheapness, what does the market do when it is merely excellent value?
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
Overpriced = price at more than 120% of Intrinsic Value
Fair price = price at more than 80% but less than 120% of Intrinsic Value
Bargains = price at less than 80% of Intrinsic Value
Overpriced:
Extremely overpriced = more than 50% above intrinsic value
Overpriced = more than 20% above intrinsic value
Fair price:
Fair value = +/- 20% of intrinsic value
Bargains:
Good value = 20% lower than intrinsic value
Excellent value = 30% lower than intrinsic value
Extreme cheapness = 50% lower than intrinsic value
This bull market is not over. The bargain phase is over.
Anthony Bolton: this bull market is not over
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Financials such as banks, property and insurance remain Bolton's top picks.
By Reuters staff
Published: 10:05AM BST 21 Oct 2009
Anthony Bolton: the bull market is not over Fidelity's Anthony Bolton said global stocks were still in a bull market and it was not too late to invest now, with technology and consumer sectors expected to lead the next phase of the bull run.
Bolton, whose contrarian bets made him a top UK fund manager for over two decades, told a news conference on Wednesday that growth stocks would be in the limelight, while commodities and industrial companies were running out of steam after their rally.
"The bargain phase is over. But despite the fact the market is well off lows, we expect the bull market to go on. It's a multiyear bull market," Bolton said in Seoul on a trip to mentor young Fidelity portfolio managers in Asia. Bolton is president for investments at Fidelity International, an affiliate of Boston-based Fidelity Investments, the world's biggest mutual fund firm.
He said the first phase of the bull market was ending this year or by the first quarter of next year, but long-term valuations were still attractive.
Bolton, who does not give much weight to economic forecasts for making stock market assessments, views the global economy as being in a recovery phase and unlikely to fall into a recession, although the pace of the recovery would lose steam next year.
Financials such as banks, property and insurance remain his top picks, based on their pre-provisioning valuations, but regulation would be a key risk to the sector.
"I still think it is right to own financials ... I generally found after financial crisis that you can own financials [for] two to three years," Bolton said, citing "six banking crises" he has seen in his investment career.
The London-based executive said inflation would not be a threat to stocks in the next couple of years because of low growth in Western markets, and the current environment of low economic growth and low interest rates was positive for stock markets.
http://www.telegraph.co.uk/finance/personalfinance/investing/6395393/Anthony-Bolton-this-bull-market-is-not-over.html
Thursday 22 October 2009
Banks top gainers on Bursa
Banks top gainers on Bursa
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Tags: AMMB Holdings Bhd | Banking deals | banking stocks | CIMB Group Holdings Bhd | FBM KLCI | HLBB | Macquarie Research | Malayan Banking Bhd | PBB | RHB Capital Bhd | Wong Chew Hann
Written by Yong Yen Nie
Thursday, 22 October 2009 11:41
KUALA LUMPUR: Banking stocks, led by CIMB Group Holdings Bhd and HONG LEONG BANK BHD [] (HLBB), have emerged as top gainers on the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) since Sept 30.
Analysts said the rise in the prices of banking shares was an indication of the market’s confidence in the performance of banks. It could also point to the absence of near-term downside surprises.
HLBB was ranked first among the top 10 gainers on the FBM KLCI after advancing 14.16% since Sept 30, while CIMB ranked second with a gain of 13.7%, according to Bloom-berg data.
Six of the top 10 gainers on the benchmark index were financial institutions. AMMB HOLDINGS BHD [] came in fourth with a gain of 11.03%, RHB CAPITAL BHD [] sixth (7.1%), PUBLIC BANK BHD [] (PBB) eighth (4.9%) and MALAYAN BANKING BHD [] ninth (3.76%).
The Kuala Lumpur Financial Index has outperformed the FBM KLCI by 2.9 percentage points since Sept 30. As of yesterday, it had risen 7.7% to 10,712 points compared with a 4.8% gain to 1,260.06 points for the FBM KLCI.
Analysts said banking stocks had been “running” since August, following improved results in the second quarter of calendar year 2009, which acted as catalysts for more earnings upgrades in the banking sector.
Maybank Investment Bank Research banking analyst Wong Chew Hann said most banking stocks might have soared mainly due to market confidence that banks would not be hit by any significant charges over the near term.
“Investors are also keen on CIMB, as they believe the banking group will clinch more lucrative investment banking deals in the future, as the global economic and market outlook improves,” she told The Edge Financial Daily yesterday.
Commenting on HLBB’s performance, a banking analyst with a foreign research house said the counter might be playing catch-up, given that the valuation of the bank was one of the lowest among local financial institutions.
Given that the reporting season for banks was near, investing interest in financial institutions might have heightened, especially as the lenders were expected to show positive results in the third quarter of calendar year 2009.
Together with positive news of the economy recovering, financial institutions, being proxies of the economy, were also bound to be beneficiaries, the analyst said.
PBB had already given investors a “feel” of what to expect from the other banks after its net profit in the third quarter of the financial year ending Dec 31, 2009 (3QFY09) rose 3.68% year-on-year to RM639.05 million on the back of strong loans and deposit growth and stable asset quality.
PBB’s net profit had come in slightly above analysts’ expectations of a 2%-3% growth. Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen.
Nevertheless, Macquarie Research believed that the group’s ability to outperform its peers in loan growth, as well as maintain its pristine asset quality would remain its key strengths.
In a research report, Nomura Securities Malaysia Sdn Bhd said it was bullish on banks, with positive catalysts of better loan growth and falling bad debt provisions going forward.
It said CIMB was the preferred banking pick, given that its return on equity, as guided by management, was on positive trajectory to reach 18% over the next two to three years.
Its corporate and investment banking business was also expected to benefit from the government’s move to raise the profile of domestic capital markets with foreign investors, Nomura said.
Meanwhile, in the mid- to small-cap segment, investors were largely positive on AMMB, underpinned by vastly improved asset quality and undemanding valuations at 1.5 times price-to-book.
Several banking counters had closed at their 52-week highs in the past two days.
HLBB and PBB closed at a 52-week high yesterday, with HLBB rising 12 sen to RM7.50 with 2.51 million shares done and PBB adding four sen to RM10.70 on a turnover of 2.21 million shares.
CIMB, AMMB and Maybank had achieved the same feat on Tuesday. CIMB closed unchanged yesterday at RM12.62 while AMMB slipped two sen to RM4.73 from its 52-week high of RM4.76 with 11.58 million shares done.
Maybank closed at RM6.98 on Tuesday and gave up eight sen yesterday with 5.6 million shares changing hands.
This article appeared in The Edge Financial Daily, October 22, 2009.
Maybulk served claim
Maybulk served claim
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Published: 2009/10/22
MALAYSIAN Bulk Carriers Bhd (Maybulk) said its unit Everspeed Enterprises Ltd received an arbitration claim from Raffles Shipping & Investment Pte Ltd.
Everspeed had chartered the Bunga Saga 9 vessel from Raffles and it cancelled the deal in accordance with the terms, Maybulk said.
Raffles did not say how much it is claiming but the total in dispute is US$28.5 million (RM96.61 million) less any sum that Raffles can recover by re-chartering the vessel to another party.
Lawyers have told Everspeed that it has reasonable prospects to win the dispute, Maybulk said in a statement to Bursa Malaysia.
http://www.btimes.com.my/Current_News/BTIMES/articles/20091022004519/Article/
Comment: This is a very tough sector at least for the next 2 years.
Successful Investing-Not Magic
Successful Investing-Not Magic
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past year and a half has been rough for investors, although many investors have grown tired for the financial advisers and have become DIY investors, others who have lost money are too frightened to do it themselves and have turned to financial advisors. Although nothing is wrong with having a good financial adviser, you have to understand that there is no magic to investing, the financial advisor doesn’t do anything you would be able to do yourself so why pay those hefty fees? A little while ago I provided some investing tips for successful investing, if you follow most of those tips you should be fine.
How to Become a Successful Investor?
There is no magic to investing, although the investment industry tries to confuse investors and make things look complicated, there is no reason to be worried. First step to becoming a successful investor is to keep things simple! I am a big fan of simplifying finances and investing, there are too many investment options available and too many contradictory opinions, the best thing you can do is keep your investment portfolio simple, here is how.
How to Simplify Your Investment Portfolio?
1. First find a good online discount broker, you can follow these tips to find the best discount broker for you. Discount brokers can save you a lot of transactions costs when it comes to investing.
2. Establish your asset allocation and investment policy statement. Asset allocation will help you determine how to allocated your assets between different asset classes. When you have your written investment policy statement ensure that you stick to it, only this way can you keep your emotions out of your investment and simplify your investing. You can download a sample investment policy statement from our site.
3. Purchase Index funds or ETFs, often investors purchase expensive mutual funds thinking active manager will perform better. The fact is that active managers lose to index funds, there is no point in paying hefty fees to mutual fund mangers when you can get better performs by investing in index funds and ETFs.
4. Ignore the Noise. Don’t pay attention to the media and so called experts, the media is known to exaggerate the reality and the so-called experts will only confuse you since most of them don’t agree with each other. Keep your focus on your long-term goal and ignore the noise.
5. Rebalance. Although I like passive investing, passive investing does not mean just leave things. Markets will fluctuate and your portfolio asset allocation will change you need to rebalance your portfolio along with market changes, this will ensure you are staying within your determined asset allocation.
Just following those five steps you will be able to dramatically simplify your investment portfolio, as I mentioned at the beginning there is no magic to investing, just keep things simple and follow some investing rules of thumb.
http://frugaldad.com/2009/10/13/successful-investing-not-magic/
Seven Ways to Ruin Your Financial Future
Seven Ways to Ruin Your Financial Future
Often times the best way to learn a lesson is for someone to tell you what not to do. While there are many people willing to tell you all the smart moves to make with your money, only a few are willing to share their own screw-ups. Well, if you’ve been reading this site for any length of time, you know two things about me: I’ve made my share of screw-ups, and I don’t mind sharing them if it will help someone else from making the same mistake. So with that in mind, I offer up the following seven mistakes we made along the way.
1.Lease a new car. I was young and dumb, and actually believed that the car dealership didn’t care whether or not I leased the car from the them or financed it. I mean, that is what the salesman said and he seemed genuine. Wrong! They saw me coming a mile away! I had just landed my first professional job and had been eying a new SUV for a long time. It never occurred to me to buy a used car, save and pay cash, or shop for an auto loan with better terms. I would just lease it and turn it back in for a newer one a couple years later. Well, in a couple years I had made virtually no dent in the residual payoff balance leaving me with an upside car loan, or lease in this case. I had exceeded the maximum allowed mileage and sustained the usual dings you get from driving a car for a few years. There was no way I could simply “turn it back in.” So, I kept it, and paid for it for a few more years until I finally sold the thing for what I owed and got out. What a miserable experience!
2.Take out student loans. I was raised by a single mom, and while we lived comfortably, there wasn’t much left over for a significant college savings fund. However, when I graduated high school I wanted so badly to go off to school that I financed my tuition for the first two and a half years. Big mistake. I wound up transferring schools to return to my hometown, changed majors, and was stuck with a pile of student loan debt as my souvenir. I should have worked a year to save up the money for the first year of school, and then worked my way through the remaining time, which I wound up doing for those final three years or so.
3.Sign up for a credit card in college. While I was in school I fell for the college credit card application trick. It was at a football game, and those Discover people had drawn quite a crowd. What started out as a way to get a free t-shirt wound up being a way to finance my lifestyle at college. By no means did I live an extravagant life, but the occasional CD, grocery trip or late night pizza order went on the credit card and soon I was charging more than I could afford to pay off at the end of the month.
4.Charge furniture on a credit card. For the first few years my wife and I were married we had a mismatched collection of bedroom furniture handed down from family members, or left over from our own single days at college. We were content to live with it in the short term, but eventually fell for a Veteran’s Day sale at a local furniture store. Of course we didn’t have the cash for a new bedroom set, so I charged it and paid on the balance for months. We did eventually pay off the new furniture, but we have agreed that in the future we will pay cash for furniture.
5.Borrow money to invest. It was the late 1990’s and everyone was making a killing in the market. I had no money, but I heard of this little thing called margin, where you could borrow money to invest and hopefully pay it back with your earnings. I even heard a radio host say that the times were so good that he would borrow money to invest if he didn’t have any. Sounded good to me. I borrowed a little money, made a little money, and lost a lot of money when things headed south. In the end I wasn’t hurt as badly as some, but I didn’t gain any ground, financially. Had I been more patient and saved up the money to invest I would have made smarter decisions, and put in place the proper controls to minimize my losses. Playing with your own money has a way of making you more conservative.
6.Start up home businesses with virtually no cash. First it was Avon, then a company that produced personalized children’s books. Toss in a couple technology-related endeavors and we have probably spent twice what we earned from all side businesses combined. The problem with most of these opportunities is that they require some type of up-front investment, or the purchase of sample products or brochures, etc. If you need a “side hustle,” look for an opportunity that doesn’t have a lot of downside risk, and doesn’t require an up-front investment. That way if things totally bomb you will have only lost a bit of time and energy.
7.Stay in a dead end job too long. My first professional job was in a third-party customer service call center answering calls from banking and credit card customers. I took the job to get my foot in the door, and while I did move up eventually, the company made a concerted effort to keep salaries low and promotions slow. I lost a few years of opportunity to earn a higher salary had I simply moved on, but I did make some lasting friendships and learn a little about how not to run a business.
Remember, sometimes the examples of how not to do things make more of a lasting impact. Hopefully, these seven examples from my own past will help you avoid some of the same mistakes in the future.
http://frugaldad.com/2008/09/23/seven-ways-to-ruin-your-financial-future/
Often times the best way to learn a lesson is for someone to tell you what not to do. While there are many people willing to tell you all the smart moves to make with your money, only a few are willing to share their own screw-ups. Well, if you’ve been reading this site for any length of time, you know two things about me: I’ve made my share of screw-ups, and I don’t mind sharing them if it will help someone else from making the same mistake. So with that in mind, I offer up the following seven mistakes we made along the way.
1.Lease a new car. I was young and dumb, and actually believed that the car dealership didn’t care whether or not I leased the car from the them or financed it. I mean, that is what the salesman said and he seemed genuine. Wrong! They saw me coming a mile away! I had just landed my first professional job and had been eying a new SUV for a long time. It never occurred to me to buy a used car, save and pay cash, or shop for an auto loan with better terms. I would just lease it and turn it back in for a newer one a couple years later. Well, in a couple years I had made virtually no dent in the residual payoff balance leaving me with an upside car loan, or lease in this case. I had exceeded the maximum allowed mileage and sustained the usual dings you get from driving a car for a few years. There was no way I could simply “turn it back in.” So, I kept it, and paid for it for a few more years until I finally sold the thing for what I owed and got out. What a miserable experience!
2.Take out student loans. I was raised by a single mom, and while we lived comfortably, there wasn’t much left over for a significant college savings fund. However, when I graduated high school I wanted so badly to go off to school that I financed my tuition for the first two and a half years. Big mistake. I wound up transferring schools to return to my hometown, changed majors, and was stuck with a pile of student loan debt as my souvenir. I should have worked a year to save up the money for the first year of school, and then worked my way through the remaining time, which I wound up doing for those final three years or so.
3.Sign up for a credit card in college. While I was in school I fell for the college credit card application trick. It was at a football game, and those Discover people had drawn quite a crowd. What started out as a way to get a free t-shirt wound up being a way to finance my lifestyle at college. By no means did I live an extravagant life, but the occasional CD, grocery trip or late night pizza order went on the credit card and soon I was charging more than I could afford to pay off at the end of the month.
4.Charge furniture on a credit card. For the first few years my wife and I were married we had a mismatched collection of bedroom furniture handed down from family members, or left over from our own single days at college. We were content to live with it in the short term, but eventually fell for a Veteran’s Day sale at a local furniture store. Of course we didn’t have the cash for a new bedroom set, so I charged it and paid on the balance for months. We did eventually pay off the new furniture, but we have agreed that in the future we will pay cash for furniture.
5.Borrow money to invest. It was the late 1990’s and everyone was making a killing in the market. I had no money, but I heard of this little thing called margin, where you could borrow money to invest and hopefully pay it back with your earnings. I even heard a radio host say that the times were so good that he would borrow money to invest if he didn’t have any. Sounded good to me. I borrowed a little money, made a little money, and lost a lot of money when things headed south. In the end I wasn’t hurt as badly as some, but I didn’t gain any ground, financially. Had I been more patient and saved up the money to invest I would have made smarter decisions, and put in place the proper controls to minimize my losses. Playing with your own money has a way of making you more conservative.
6.Start up home businesses with virtually no cash. First it was Avon, then a company that produced personalized children’s books. Toss in a couple technology-related endeavors and we have probably spent twice what we earned from all side businesses combined. The problem with most of these opportunities is that they require some type of up-front investment, or the purchase of sample products or brochures, etc. If you need a “side hustle,” look for an opportunity that doesn’t have a lot of downside risk, and doesn’t require an up-front investment. That way if things totally bomb you will have only lost a bit of time and energy.
7.Stay in a dead end job too long. My first professional job was in a third-party customer service call center answering calls from banking and credit card customers. I took the job to get my foot in the door, and while I did move up eventually, the company made a concerted effort to keep salaries low and promotions slow. I lost a few years of opportunity to earn a higher salary had I simply moved on, but I did make some lasting friendships and learn a little about how not to run a business.
Remember, sometimes the examples of how not to do things make more of a lasting impact. Hopefully, these seven examples from my own past will help you avoid some of the same mistakes in the future.
http://frugaldad.com/2008/09/23/seven-ways-to-ruin-your-financial-future/
“They did not plan to fail – they just failed to plan.”
Why Don’t Most Financial Planners Plan Finances?
Written by Ed Rempel on Oct 20, 2009
filed under General Finance
“If you don’t know where you are going, you will wind up somewhere else.” – Yogi Berra
We went to a fascinating conference a couple weeks back that showed the inner workings of the financial planning industry in Canada. It was the first annual Financial Planning Week in Canada, so all the “experts” met for a day to discuss how the industry is misunderstood. “Financial planning is still about selling” is the title to Jonathan Chevreau’s article.
While many financial planners claim to do financial planning and provide holistic advice, very few actually provide comprehensive planning with written financial plans, as taught in the CFP courses.
The issue is best highlighted by Alan Goldhar, Professor of Financial Planning at York University and Manager for the Ontario Public Trustee. The Public Trustee takes over the finances for people that are mentally unable to make financial decisions. They have taken over more than $500 million in investments for 10,000 clients, most of which had a financial planner, broker or bank advisor. They interview the client and the family and then send in a team to obtain all financial documents.
The shocking fact is that, of the 10,000 clients they took over, none had a financial plan! Not one!
We have reviewed the finances for about 2,000 families and found the same result – none of them had a proper written financial plan prepared in Canada.
Alan Goldhar also teaches Finance at York University, where he says most financial planning students don’t bother completing the CFP designation, because “the industry has jobs for salespeople, not for professional financial planners. It’s like graduating from medical school and then being allowed only to check temperatures and change band aids.”
Cary List, CEO of the Financial Planners Standards Council (FPSC), says: “The single most common misunderstanding about financial planning is that it is all about investing.”
First, to make the issue clear, a financial plan, as defined by the FPSC, is a written document customized for you that gives you complete advice on all areas of your finances, including:
1.Cash Flow- Helping you understand how you spend your money.
2.Debt/Asset Management – Structuring your debts and your assets in the most effective way.
3.Life Goals, including Retirement Plan – Identify your financial goals in detail and strategies to help you achieve them.
4.Income Tax Planning- Determine most effective strategies to minimize tax over your lifetime.
5.Estate Planning- Determining the most effective way to transfer your assets to your beneficiaries.
6.Risk Management- Determine your needs for insurance and which type is the cheapest/most effective for you.
7.Investment Management- Recommending the strategies and investments appropriate for your plan and keeping you focused on your goals.
In short, it is a complete “road map” to the life you want that allows you to make decisions with your overall plan in mind, instead of making each decision on its own. A plan is not an investment projection, a questionnaire, a goal based on a rule of thumb, or a document with nice graphs printed out in 15 minutes or less.
From experience, we find that the benefits of having and following a plan are far more significant than people realize – and far more significant than Investment A vs. Investment B. For example, the main reason most Canadians will retire at a much lower standard of living than they want is because they never figured out how much they need to invest or what kind of strategies/investments they need to reach their goal.
Just keeping you focused on your goals alone can be the most obvious benefit of a plan. Anyone that lost focus and sold investments since last fall has wiped out years of gains.
“They did not plan to fail – they just failed to plan.”
Why is the industry focused on sales, instead of financial planning? What needs to happen so that Canadians will get real professional plans from their financial planners?
Here are the main suggestions at the conference for why most financial planners don’t plan finances:
1.Blame the public – Financial planning is misunderstood by the public. Most people think short term and do not understand why they need a financial plan. Canadians do not ask that their advisor to do a comprehensive, written plan for them.
2.Blame the schools – Financial education is not taught in schools, even though it is a basic life skill.
3.Blame the industry organizations – They have not effectively educated the public on the need for a plan. They also have a confusing list of degrees, instead of focusing on the CFP designation.
4.Blame “financial planners” – Most advisors focus on the investments or insurance that make them money and consider financial planning to be unpaid service work.
5.Blame the banks, insurance companies and planning firms – They have not been able to figure out a good business model that includes financial planning.
6.Blame the regulators – They focus regulation on products and disclosure related to products, and do not make allowances for advice that is part of a comprehensive plan.
7.Blame the government – There are no national restrictions on who can call themselves a “financial planner” or “financial advisor”. Those that do not write professional financial plans and have the qualifications should have to call themselves what they are: “mutual fund salesperson” or “insurance rep”.
8.Blame the industry –The industry has effectively taught the public that most “financial planners” are just salespeople. Most people have met with or know a “financial planner” and the planner did not do a plan, but mainly just tried to sell them a mutual fund or insurance.
What do you think? Why don’t most financial planners plan finances?
Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.
http://www.milliondollarjourney.com/why-don%E2%80%99t-most-financial-planners-plan-finances.htm
Written by Ed Rempel on Oct 20, 2009
filed under General Finance
“If you don’t know where you are going, you will wind up somewhere else.” – Yogi Berra
We went to a fascinating conference a couple weeks back that showed the inner workings of the financial planning industry in Canada. It was the first annual Financial Planning Week in Canada, so all the “experts” met for a day to discuss how the industry is misunderstood. “Financial planning is still about selling” is the title to Jonathan Chevreau’s article.
While many financial planners claim to do financial planning and provide holistic advice, very few actually provide comprehensive planning with written financial plans, as taught in the CFP courses.
The issue is best highlighted by Alan Goldhar, Professor of Financial Planning at York University and Manager for the Ontario Public Trustee. The Public Trustee takes over the finances for people that are mentally unable to make financial decisions. They have taken over more than $500 million in investments for 10,000 clients, most of which had a financial planner, broker or bank advisor. They interview the client and the family and then send in a team to obtain all financial documents.
The shocking fact is that, of the 10,000 clients they took over, none had a financial plan! Not one!
We have reviewed the finances for about 2,000 families and found the same result – none of them had a proper written financial plan prepared in Canada.
Alan Goldhar also teaches Finance at York University, where he says most financial planning students don’t bother completing the CFP designation, because “the industry has jobs for salespeople, not for professional financial planners. It’s like graduating from medical school and then being allowed only to check temperatures and change band aids.”
Cary List, CEO of the Financial Planners Standards Council (FPSC), says: “The single most common misunderstanding about financial planning is that it is all about investing.”
First, to make the issue clear, a financial plan, as defined by the FPSC, is a written document customized for you that gives you complete advice on all areas of your finances, including:
1.Cash Flow- Helping you understand how you spend your money.
2.Debt/Asset Management – Structuring your debts and your assets in the most effective way.
3.Life Goals, including Retirement Plan – Identify your financial goals in detail and strategies to help you achieve them.
4.Income Tax Planning- Determine most effective strategies to minimize tax over your lifetime.
5.Estate Planning- Determining the most effective way to transfer your assets to your beneficiaries.
6.Risk Management- Determine your needs for insurance and which type is the cheapest/most effective for you.
7.Investment Management- Recommending the strategies and investments appropriate for your plan and keeping you focused on your goals.
In short, it is a complete “road map” to the life you want that allows you to make decisions with your overall plan in mind, instead of making each decision on its own. A plan is not an investment projection, a questionnaire, a goal based on a rule of thumb, or a document with nice graphs printed out in 15 minutes or less.
From experience, we find that the benefits of having and following a plan are far more significant than people realize – and far more significant than Investment A vs. Investment B. For example, the main reason most Canadians will retire at a much lower standard of living than they want is because they never figured out how much they need to invest or what kind of strategies/investments they need to reach their goal.
Just keeping you focused on your goals alone can be the most obvious benefit of a plan. Anyone that lost focus and sold investments since last fall has wiped out years of gains.
“They did not plan to fail – they just failed to plan.”
Why is the industry focused on sales, instead of financial planning? What needs to happen so that Canadians will get real professional plans from their financial planners?
Here are the main suggestions at the conference for why most financial planners don’t plan finances:
1.Blame the public – Financial planning is misunderstood by the public. Most people think short term and do not understand why they need a financial plan. Canadians do not ask that their advisor to do a comprehensive, written plan for them.
2.Blame the schools – Financial education is not taught in schools, even though it is a basic life skill.
3.Blame the industry organizations – They have not effectively educated the public on the need for a plan. They also have a confusing list of degrees, instead of focusing on the CFP designation.
4.Blame “financial planners” – Most advisors focus on the investments or insurance that make them money and consider financial planning to be unpaid service work.
5.Blame the banks, insurance companies and planning firms – They have not been able to figure out a good business model that includes financial planning.
6.Blame the regulators – They focus regulation on products and disclosure related to products, and do not make allowances for advice that is part of a comprehensive plan.
7.Blame the government – There are no national restrictions on who can call themselves a “financial planner” or “financial advisor”. Those that do not write professional financial plans and have the qualifications should have to call themselves what they are: “mutual fund salesperson” or “insurance rep”.
8.Blame the industry –The industry has effectively taught the public that most “financial planners” are just salespeople. Most people have met with or know a “financial planner” and the planner did not do a plan, but mainly just tried to sell them a mutual fund or insurance.
What do you think? Why don’t most financial planners plan finances?
Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.
http://www.milliondollarjourney.com/why-don%E2%80%99t-most-financial-planners-plan-finances.htm
How to Destroy Your Investment Portfolio
How to Destroy Your Investment Portfolio
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past 18 months have been difficult for most investors, the stock market has seen the biggest “correction” since the great depression, “blue chip” companies have cut dividends, had massive layoffs and even begged the fed to bail them up. Not to mention the investment frauds of Bernard Madoff and Ed Earl Jones costing investors their lifetime of savings. More and more investors have decided to become “Do it Yourself” (DIY) investors and often rightly so. There really is no magic to investing; anyone can do it as long as you follow simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you can easily fall into the common investing traps and ruin your portfolio – detailed below.
5 Fastest ways to destroy your investment portfolio
1. Short Term Trading
This is one of the best ways to destroy your investment portfolio. With online discount brokers it is very simple to just buy and sell securities with the click of a mouse, sit in front of your monitor and constantly watch your stock price. Of course when you see your stock take a little hit just click sell and it’s sold. Thank god you acted fast and only took a 2% loss; you do that a few times a month and got your self a 10% loss. We are not even talking about fees. Statistics show that short term trading fails over the long term in overwhelmingly majority of cases. Very few people can be profitable day traders. So if you want to destroy your investment portfolio, start with short term trading.
2. Buy the “HOT” stock – Get Rich Quick
A few weeks ago a friend of mine called and said a co-worker had given him a good tip on a stock and he should buy some, he was considering a $10,000 purchase. So I asked him some basic questions: “What does the company do”, “What do analysts say”, “What’s the management’s history?”… He did not know the answer to any of these, and decided to ask the person who tipped him…he had no clue either but was sure it’s a good investment his brother-in-law’s friend had said so. I advised him against the purchase and his colleague is now down 35% in 2 weeks …OUCH! There is almost no better way to demolish your portfolio than to follow the “hot” stock tips or the get rich quick stocks. Purchasing strong, stable companies is boring!
3. Buy Exotic Investments
The investment industry loves creating new investment products, every few months some new exotic investment is brought to the market. Investors jump at these investment vehicles without understanding the risks associated with them. A great way to destroy your investment portfolio: put a large chunk of your retirement fund into these exotic investments and watch them disappear.
4. Do not have an Asset Allocation
One of the first things any investor should do before investing is have an asset allocation and stick to it, well that is for anyone who wants to see their investment portfolio grow. Asset allocation ensures you are diversified among all asset classes (stocks, bonds, cash etc). Studies show that over 90% of your portfolios variability is due to your asset allocation – not sticking to your asset allocation is crucial to the destruction of your investment portfolio.
5. Ignore Diversification
Every investor knows or has at least heard of diversification, it’s the cornerstone of every good investment portfolio. Simple concept: don’t put all your eggs in one basket. Diversifying your investment portfolio will ensure that your investments are spread out and you are not taking more risk than you need to. Just ignore this important concept and your investment portfolio will surely vanish.
You combine these five tips and you are guaranteed to lose more money in the stock market than you have ever dreamed of.
What tips do you have for those who want to demolish their investment portfolios? Any bad investment decisions you have made in the past?
http://frugaldad.com/2009/09/15/how-to-destroy-your-investment-portfolio/
This is a guest article by Ray, the owner and primary author of Financial Highway, where he discusses investing, saving and practical money management concepts. You can check subscribe to his RSS feed or follow him on Twitter.
The past 18 months have been difficult for most investors, the stock market has seen the biggest “correction” since the great depression, “blue chip” companies have cut dividends, had massive layoffs and even begged the fed to bail them up. Not to mention the investment frauds of Bernard Madoff and Ed Earl Jones costing investors their lifetime of savings. More and more investors have decided to become “Do it Yourself” (DIY) investors and often rightly so. There really is no magic to investing; anyone can do it as long as you follow simple rules. Previously we published 10 investing tips to become a successful investor to help DIY investors. Although there is no magic to investing if you are a new DIY investor you can easily fall into the common investing traps and ruin your portfolio – detailed below.
5 Fastest ways to destroy your investment portfolio
1. Short Term Trading
This is one of the best ways to destroy your investment portfolio. With online discount brokers it is very simple to just buy and sell securities with the click of a mouse, sit in front of your monitor and constantly watch your stock price. Of course when you see your stock take a little hit just click sell and it’s sold. Thank god you acted fast and only took a 2% loss; you do that a few times a month and got your self a 10% loss. We are not even talking about fees. Statistics show that short term trading fails over the long term in overwhelmingly majority of cases. Very few people can be profitable day traders. So if you want to destroy your investment portfolio, start with short term trading.
2. Buy the “HOT” stock – Get Rich Quick
A few weeks ago a friend of mine called and said a co-worker had given him a good tip on a stock and he should buy some, he was considering a $10,000 purchase. So I asked him some basic questions: “What does the company do”, “What do analysts say”, “What’s the management’s history?”… He did not know the answer to any of these, and decided to ask the person who tipped him…he had no clue either but was sure it’s a good investment his brother-in-law’s friend had said so. I advised him against the purchase and his colleague is now down 35% in 2 weeks …OUCH! There is almost no better way to demolish your portfolio than to follow the “hot” stock tips or the get rich quick stocks. Purchasing strong, stable companies is boring!
3. Buy Exotic Investments
The investment industry loves creating new investment products, every few months some new exotic investment is brought to the market. Investors jump at these investment vehicles without understanding the risks associated with them. A great way to destroy your investment portfolio: put a large chunk of your retirement fund into these exotic investments and watch them disappear.
4. Do not have an Asset Allocation
One of the first things any investor should do before investing is have an asset allocation and stick to it, well that is for anyone who wants to see their investment portfolio grow. Asset allocation ensures you are diversified among all asset classes (stocks, bonds, cash etc). Studies show that over 90% of your portfolios variability is due to your asset allocation – not sticking to your asset allocation is crucial to the destruction of your investment portfolio.
5. Ignore Diversification
Every investor knows or has at least heard of diversification, it’s the cornerstone of every good investment portfolio. Simple concept: don’t put all your eggs in one basket. Diversifying your investment portfolio will ensure that your investments are spread out and you are not taking more risk than you need to. Just ignore this important concept and your investment portfolio will surely vanish.
You combine these five tips and you are guaranteed to lose more money in the stock market than you have ever dreamed of.
What tips do you have for those who want to demolish their investment portfolios? Any bad investment decisions you have made in the past?
http://frugaldad.com/2009/09/15/how-to-destroy-your-investment-portfolio/
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