myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Tuesday 14 May 2013

Warren Buffett and Durable Competitive Advantage

Warren Buffett repeatedly emphasizes that an investor must invest into a company that offers a durable competitive advantage. Any company that has a durable competitive advantage is likely to be able to maintain its profitability over a long period of time. Competitive advantage is meant to signify that the company must have a product or service line that is distinctively unique. However, a unique product or service does not make a company financially sound. Rather it is a durable competitive advantage that ensures that the company would be able to maintain its competitive advantage over a long period of time. The product and service must enjoy a competitive advantage such as through the existence of a brand name or through a patented, natural or regional monopoly. Firms also enjoy a competitive advantage if they offer high quality products and are able to develop customer loyalty.

Warren Buffett states that any business that enjoys a durable competitive advantage is likely to have a long history of profitability that is based on a narrow range of products or services. A company that has a competitive advantage is likely to remain in the industry for the foreseeable future. The fact that the organizations products are profitable would mean that their spending on research and development would be minimal whereas the company would also not be in need of continuous up gradation. Furthermore, a company that enjoys a high competitive advantage is likely to offer a product that has a rising or stable pattern of demand.

Any company that enjoys a high competitive advantage is likely to be in a monopolistic position within the market. This is because its unique products and services are likely to generate sales due to their high quality and distinct image. This allows the firm to increase prices while still maintain profitability and sales. This is of immense importance to shareholders as increasing sales and returns signal higher returns for the stock owners. Furthermore, competitive advantage allows a business to refrain from entering into price battles with other competitors and the company is able to dominate the market. The competitive advantage allows the firm to lead the market and generate high profits from the stable product line. Finally, the fact that the business has a durable competitive advantage would mean that it would be able to maintain the current earnings per share in the foreseeable future.

So how exactly is the durable competitive advantage beneficial to investors like Warren Buffet? Warren Buffet states that any company that enjoys a sustainable competitive advantage is likely to invest a minimal amount into research and development and new plant and equipment. This would free up cash for other investing purposes such as expansion that would allow the business to increase its sales and profitability. The availability of cash is also likely to prevent the company from taking on debt and incurring the cost associated with servicing of debt. A company that enjoys a durable competitive advantage is likely to have high amounts of free cash flow which could be passed on to shareholders in form of high return on equity.

http://www.allvoices.com/contributed-news/13233607-warren-buffett-and-a-durable-competitive-advantage

Thursday 9 May 2013

Portfolio Management

When you start investing in stocks, you will soon have a portfolio of them. And managing your portfolio is just as important as picking the right stocks in the first place. Because if you mismanage your portfolio you could be minimizing your potential returns or end up losing money!

So always take note of your stock portfolio and here are some guidelines to help you along:

This one is straightforward but some beginners neglect to do this - Keep records of all your investment decisions. If you don't keep track, you won't know how much you're making or losing!
A portfolio of 5-8 stocks is optimum for the typical investor . Keep within a certain number so your portfolio remains manageable. Too many stocks could result in a lack of proper management and cause losses in your portfolio
Monitor a company's' quarterly reports and keep track of their fundamental performance
On top of monitoring your stock through financial reports, you should attend the Annual General Meetings (AGMs) to meet a company's management team face-to-face
Stay current with world and economic affairs and monitor any news on your stocks and the industry they're in

In a nutshell, managing your portfolio can be summed up in one simple sentence: sell your losers, keep your winners. Sell bad, under-performing investments and cut your losses. Stay invested in good companies and hold on to them, especially if they have good growth potential.

Because let me ask you...

Would you be happy with a 22% dividend yield year after year? That means for every $100 you invested, you're getting $22 back in passive income every year. You don't even have to do anything to make that money; you just sit and wait!

Well, that's what value investing can do for you when you hold on to a winner long enough. Read this article below and it'll show you how:

http://www.millionaireinvestor.com/3-reasons-why-value-investing-is-so-powerful

MillionaireInvestor.com

Tuesday 7 May 2013

Buffett: The time to buy stocks is when nobody else wants them

In the recession of 20087 - 2009 we had the opportunity, and for those of us who did venture into that abyss, the rewards were tremendous.

Here is a quote from Warren Buffett during the 1990-1991 recession in the U.S.:

"Nevertheless, fears of a California real estate disaster similar to that experienced in New England caused the price of Wells Fargo stock to fall almost 50% within a few months during 1990. Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Investors who expect to be ongoing buyers of investments throughout their lifetimes should adopt a similar attitude toward market fluctuations; instead many illogically become euphoric when stock prices rise and unhappy when they fall."

Sunday 5 May 2013

Lim Kit Siang - A Great Malaysian

Vote for a Better Malaysia 5.5.2013.

The campaigning is over and the stands of the various parties are disseminated by various means.

On this faithful day, let's vote for the government of our choice.

Cast your vote for a better Malaysia.

The issues that are dominant in this election, for me are:

CORRUPTION and good governance,

CRIME

Cost of living issues are very important for many Malaysians too.

VOTE FOR A BETTER MALAYSIA

Wednesday 1 May 2013

Be Proactive. You must be the agent for Change

The Danger of Low Dividends

By Morgan House
April 25, 2013

Earnings among S&P 500 companies are at an all-time high. By quite a bit, too: Operating earnings per share last year were more than 10% above the previous peak set in 2006, when the economy topped out before the recession.

Dividend payouts are also at an all-time high, but there is much less to be excited about here. Companies have been paying out a lower share of their earnings as dividends for decades, and the trend shows little sign of slowing. The dividend payout ratio is pitiful:

Source: Yale, author's calculations.

A lot of this decline over time is explained by companies using more of their free cash flow to repurchase shares. Benjamin Graham's classic 1949 book contains deep analysis and commentary on dividends, but scarcely a mention of share buybacks. That changed dramatically after the 1980s. Legg Masson has shown that from 1985 to 2011, S&P 500 dividends increased fourfold, but share buybacks increased 21-fold.

The impact this shift has on how investors are compensated is deep. As Shawn Tully of CNNMoney pointed out earlier this year, the dividend yield on ExxonMobil (NYSE: XOM ) is a little more than 2%, but the total yield including buybacks is north of 7%. Pfizer's (NYSE:PFE ) dividend yields more than 3%, but with buybacks the company returns 7.6% to shareholders. Wal-Mart's (NYSE: WMT ) total yield is about double its dividend yield.

There are mountains of evidence showing that, on average, investors are better off with dividends than share buybacks, as CEOs have a terrible history of buying back their shares at nosebleed prices.

But I think the damage of the shift toward buybacks may even be underrated. With interest rates at zero, investors have been clamoring for yield wherever they can find it. For years, that's been stocks with high dividends, whose prices have been pushed to record levels and yields down to near record lows. Shares of Verizon (NYSE: VZ ) now yield less than 4% and Altria Group (NYSE: MO ) , less than 5%.

These are still healthy yields, particularly compared with fixed-income alternatives -- and both companies have high dividend payout ratios. But I can't help but wonder whether companies favoring buybacks over dividends will ultimately be a disservice to companies with high dividends. The lack of yield among most stocks drives up valuations at companies that still do provide reasonable payouts, and high current valuations will eat into future returns.

Managers typically cite the desire to "enhance shareholder value" when announcing share buybacks. But never underestimate the power of unintended consequences.

http://www.fool.com/investing/general/2013/04/25/the-danger-of-low-dividends.aspx

The 3 Cs issues of this election. Which party is addressing these issues?

The 3 top issues to be addressed in this election:

1. Cost of Living issues
2. Crime issues.
3. Corruption issues.

Sadly, in every election, some choose to focus on race and other divisive issues.

http://blog.limkitsiang.com/2013/04/30/dalang-sebenar-mei-13-dibongkar-oleh-dato-mohd-tamrin-ghafar/

So, who is telling the truth? Are you enlightened or confused?

Tuesday 30 April 2013

A hilarious speaker. "A vote for DAP is a vote for PAS. A vote for MCA is a vote for Ibrahim. A vote for MIC is a vote for Zul." VOTE FREELY and WISELY.

Gary Nair at Ceramah Perdana Tmn Free School 21 Apr 2013

@ 7 min
@ 12.20 min

Monday 29 April 2013

MalaysiaStock.Biz is an excellent website for those who are investing in the Malaysian Stock Market.

About MalaysiaStock.Biz

http://www.malaysiastock.biz/Latest-Announcement.aspx

MalaysiaStock.Biz provides Kuala Lumpur Stock Exchange's (KLSE) share price information, latest announcement for quarter report, dividend news, bonus/rights issue news for all the listed companies in KLSE. This website is also providing information like quarter report history, dividend history and bonus issue & right issue history.

This website is a free channel to access the KLSE market watch information covered from Top Volume, Top Gainers, Top Losers, and up to each categories and individual listed company.

For registered member, you are entitled to the exclusive benefits like portfolio manager, watchlist manager & report analysis tools. Portfolio manager is a management tool for you to keep track all your current portfolio holdings, while watchlist manager is the place for you to monitor your stock list. Both portfolio manager and watchlist manager will summarize all the related dividend news, bonus issue news & rights issue news for all the counters under your portfolio or watchlist. Report analysis tool is a powerful tool for you to shortlisted KLSE counter based on selected criteria. Some of the features are Top 30 Best EPS KLSE Stocks of the Year, Top 30 Best Dividend KLSE Stocks of the Year, 3 Years Continuously Improvement in Dividend and 3 Years Continuously Improvement in Revenue & Profit.

All the services are FREE of charges. Feel free to feedback to us if any so that we can keep improving the website. Thank you.

Site Map

Saturday 27 April 2013

Mat Sabu - Ceramah 23.04.2013

Mat Sabu - Kenapa isu perkauman dan agama di-permainkan olih pihak yang tertentu

Friday 26 April 2013

Tun Mahathir menentang kuat RASUAH - Jangan terima rasuah

Mat Sabu juga menentang rasuah. Yang berbeza ia lah persepsi isu agama dan perkauman.

Tuesday 23 April 2013

An apology is rewarded with a kiss. Change is in the air. Change for the better.

Yesterday, UMNO president Najib Razak urged Indians to forget the insulting remarks by Zulkifli, claimed that Indians had been warming up to him, and alluded to a photograph of an Indian man clad in BN shirt kissing him on the cheek. Thinking

In the latest development, 104 members of the Shah Alam division of MIC showed their displeasure by quitting the Indians-only party. Shocked

http://en.harakahdaily.net/index.php/headline/7104-indian-kiss-of-death-takes-its-toll-on-bn-with-exodus-from-mic.html

Here is a view of Zul’s apology

APRIL 22, 2013

How does he imagine all this will help him go against Khalid Samad in Shah Alam and win “101 per cent” in the May 5 general election?

Khalid was the one MP who stood side by side with the Indian community after the cow-head protest in Shah Alam even when it was not the politically smart thing to do.

What did Umno do? They got the cow-head protesters to pose for pictures with their vice-president after explaining the protest against a Hindu temple in Shah Alam.

Put him where he belongs, in the garbage bin of history. Thinking

In this video, Rafizi Ramli clarifies the difficulty of PR in accommodating Hindraf's requests in an electoral pact.

Are You Making These Investing Mistakes?

by MMARQUIT

One of the ways that you can build wealth, and live a little more abundantly is to invest. Investing can provide a way for you to put your money to work on your behalf. While there are risks involved in investing, and the possibility of loss, you can reduce some of that chance of loss by avoiding some of the more common investing mistakes.

As you consider investing, and how to build a portfolio that works for your situation, here are some common mistakes to avoid:

1. Panicking with the Crowd

It’s easy to get scared and panic — especially when everyone else is doing it. However, you need to be careful about when you sell investments. While there are some very good reasons to sell a stock, it’s rarely a good idea to sell a stock just because everyone is in panic mode.

Instead, take a step back and look at the big picture. Are assets losing ground because the whole market is tanking? If so, you might not want to pull the trigger too quickly. Instead, consider the fundamentals. If the fundamentals are still solid, there is a good chance that your assets will recover in time.

2. Trading Too Often

This can be tied with panicking, but it can also be its own problem. Too many of us get caught up in to day to day movements, and think that we need to trade a lot. While there are day traders who manage to make good money on regular market movements, it’s important to realize that these traders are dedicated to what they do.

Most of us regular folks are better off trading at wider intervals, or employing a dollar cost averaging strategy. Trading too often can cost you in terms of transaction fees, and there is a bigger chance that you will lose out.

3. Lack of Diversity

If you want to reduce the overall risk of your portfolio, you need to remember to diversify to some degree. You need to make sure that your investments are diversified in terms of asset class, as well as across different sectors and industries. It also doesn’t hurt to diversify geographically and include investments from other countries. Avoid investing heavily in your company’s stock.

It’s fairly easy to start investing, and to diversify. There are index funds and ETFs that allow you to diversify easily, while at the same time helping you avoid some of the bigger risks that can come with investing.

4. Failure to Understand What You're Investing In.

One of the reasons it’s good to start with stocks and bonds, and investments that are based on them (like index funds and ETFs), is because they are fairly easy to understand. You shouldn’t invest in things that you don’t understand. Take a few minutes to learn how different asset classes are traded, and how different investments work. It is also worth to learn what factors influence different investments. Get a handle on how different investments work, and you will be far more likely to find success and avoid some of the pitfalls that bring down investors.

http://couponshoebox.com/tips/are-you-making-these-investing-mistakes/

3 Reasons to Invest in Stocks

by MMARQUIT

With the recent volatility in the stock market, and with the financial crisis of 2008 still looming large in many memories, it isn’t too surprising that many people are wary of investing in stocks.

It’s true that stock investing comes with some risk. However, it doesn’t have to mean that you avoid stocks altogether. Here are 3 reasons to find the money to invest in stocks:

1. Build Wealth Over Time

One of the realities of life is that putting money in a high-yield savings account or high-yield CD just isn’t going to cut it if you want to more effectively build wealth over time. This is especially true in a low-yield environment like what we’ve got right now. Your low-yield products are unlikely even to earn a return that beats inflation. You can’t build adequate wealth over time with your earning power subject to real losses.

Investing in stocks gives you the chance to earn higher returns that beat inflation, and that put the magic of compound interest to work on your behalf. When you know how money works, and you can put that knowledge to work, you can build wealth more effectively over time. Stocks are among the best ways to do that.

2. The Stock Market Has Yet to Lose in the Long Run

Even though volatility is a problem in the short-term, and there are big crashes on occasion, the stock market hasn’t lost in the long run. If you plan out your long-term goals, you’ll find that investing gives you the best chance of reaching them.

Over long periods of time — 25 to 30 years — the stock market has always seen net gains. Over time, the trend line smooths out, and doesn’t look so scary. One of the biggest investing mistakes is to panic at short-term volatility, selling with the herd, even though it’s a great time to buy at bargain prices. Take a step back and really consider the big picture and the long-term. You might be surprised at what you find.

3. Stock Investing Doesn't Have to be Complex

The real hang up for many people is stock picking. They worry about whether or not they are choosing the right stocks, and get concerned about seemingly-complex concepts like P/E ratios and reading balance sheets. While these are things that can be learned, stock investing doesn’t have to be complex, especially to start.

Simple investments, like index funds, can help you avoid the pitfalls of stock picking. With index funds, you can start investing fairly easily, with little expertise, and with a small amount of money. An index fund, which follows a group of investments (you can even pick an all-market fund and track the entire market’s performance), allows you to avoid the need for stock picking. These types of investments have made the whole process less complex for large groups of people.

You can start with a small amount of money, and be consistent. Indeed, when it comes to investing success, consistency is key. Create a plan, and look for funds that you understand. You might get around to stock picking later, but to start, it doesn’t need to be complex — and over time it can result in true wealth.

http://couponshoebox.com/tips/3-reasons-to-invest-in-stocks/

Professor Swensen's Asset Allocation Strategy

@ 15 minutes

3 ways to make money:
Asset Allocation
Market Timing
Stock Selection

David Swensen is the chief investment officer of Yale University, where he has produced stunning results in managing portfolios over 25 years. In this lecture, he talks about managing a portfolio for individual investors and stresses on the importance of diversification and equity-orientation.

Special Lecture in Seoul April 2010

Yale's Financial Wizard, David Swensen.

Uploaded on 27 May 2009
Yale's Financial Wizard, David Swensen. The renowned Chief Investment Officer of Yale's $20 billion dollar endowment discusses the strategy behind the fund's extraordinary long term track record, recent criticisms of the "Yale model" and his investment recommendations for individual investors.

Guest Speaker David Swensen (YaleCourses)

Published on 5 Apr 2012

Financial Markets (2011) (ECON 252)

00:00 - Chapter 1. Introduction, Overview, and "Barron's" Criticism of the Swensen Approach to Endowment Management
15:49 - Chapter 2. Asset Allocation
30:38 - Chapter 3. Market Timing
37:16 - Chapter 4. Security Selection
46:02 - Chapter 5. "Barron's" Criticism Revisited
52:57 - Chapter 6. Questions & Answers

Complete course materials are available at the Open Yale Courses website: http://oyc.yale.edu

Open Yale Course：Financial Markets　09. Guest Lecture by David Swensen

My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?