Saturday, April 28, 2007

One is Enough

There was a time when I received six same annual reports when I needed only one. These reports were elegantly and beautifully presented with lots of pictures inside. But the worst thing was that the bottom line in the P & L account statement was in red ink. They might have cost a few ringgits each. Adding in packing and delivery charges, the actual cost per copy could be up to at least seven ringgits. I couldn’t help sighing, “What a waste.”

We know that when we open an account with a broker firm, a CDS a/c will be allocated to us. Thus, if we open accounts with three broker firms, we have three CDS accounts. Often we have the same stock in each of the accounts, and thus, three same annual reports will be sent to us. You can imagine how many millions of annual reports are wasted in this manner. This is money down the drain for nothing. Why waste shareholders’ funds when they can be saved?

I understand that in America one person has only one CDS account irrespective of how many broker firms you deal with. You can buy and sell at any broker firm but only one CDS account is all that is needed.

Why can’t we follow such a system of one person one CDS account? Apart from the possibility of using the wrong account to sell, there are plenty to be saved.

Underutilization of assets is a waste. To use, consume, spend or expend thoughtlessly is also a waste. Like most people, I hate to see waste. Over the years, I have been wondering why Bursa cannot do anything to improve things in this respect. We have to change for the better if we want to move forward. Complacency has no place in an ever- changing world.

Not so long ago, some companies have gotten smart. The YTL Group for example; they packed the annual reports of YTL Corp, YTL Power, YTL Land, YTL Cement, and YTLE all into a disk. From this alone we can visualize the shrewdness and excellence of the management.

How about those companies who got fined year after year for late filings or other obligations not carried out? What can you say of their management when the red ink at the bottom line has become redder and redder? You already got the answer.

Be smart, associate with successful people to be successful.

Thursday, April 26, 2007

A brilliant solution to a poser

Life is full of problems; some are expected; some are unforeseen. Problems tend to become bigger and may lead to other problems if they are not solved early. Luckily most problems can be solved or settled amicably or at least minimized.

Once there was a man who left 17 horses for his three sons. The eldest was to get 1/2 of them; the second son, 1/3 and the third son, 1/9. None of horses was to be slaughtered. And they were not supposed to do that.

How are you going to solve this problem? Before you read on can you find a solution?

They were concurring as to what they should do and how best to share the horses when a mathematician happened to be there. Upon hearing their plight, the mathematician said, “Let me do the sharing for you. I have one horse which I shall add to the 17 horses so as to enable the sharing to be carried out efficiently.”

Thus with 18 horses, half of them means 9; one-third means 6 and 1/9 means 2. 9+6+2=17. After the sharing, the mathematician walked away with his own horse. The three sons were amazed, happy, and satisfied as well, with the solution.

Where is the catch or trick? Can you figure it out?

Well folks, if you have a problem do not despair. Surely, there is a solution somewhere.

Saturday, April 21, 2007

The stock market is a different game

In badminton, the player who gets the first 21 points wins the game. In soccer, the team which scores the most goals is the winner. In the stock market, things are different. It is not how many times you win that count; it is how much you win when you win that matters You can actually lose ten times and win once and on balance you win.

Small losses and small winnings cancel themselves out. They are of no use except for the fun and the experience. Your aim is to win big when you are on the right stock, Just like in a game of poker, you must make the best use of a good hand otherwise the best of cards will go to waste.

If you are an intelligent investor, you will only be buying undervalued stocks. There is no need for you to cut losses. Warren Buffett says there is no need for you to panic even when the value of your stocks has dropped 50%. You can actually buy to average down. In trading, an entirely different strategy is called for. You never average down but cut your losses quickly. If you are one of those who cannot bear the pain of a small loss, never be a trader.

Prospective earnings are more important than current earnings. They are what people look at when they buy. That’s why some companies are selling at high price earnings ratio.

Do not buy anything you do not understand. If you are really serious about the stock market, keep a daily trading diary. Every time you buy or sell, write down the reasons for the actions. You will be amazed at how smart or stupid you have been when reading them a year or so later. In any case, these recordings will go a long way to grooming you as a smart trader or investor.

Saturday, April 14, 2007

Ten Tips For The Successful Long-Term Investor

By Investopedia Staff, (

1) Sell the losers and let the winners ride! - Time and time again, investors take profits by selling their appreciated investments, but they hold onto stocks that have declined in hopes of a rebound. If an investor doesn't know when it's time to let go of hopeless stocks, he or she can, in the worst-case scenario, see the stock sink to the point where it is almost worthless. Of course, the idea of holding onto high-quality investments while selling the poor ones is great in theory, but hard to put into practice. The following information might help:

  • Riding a Winner - Peter Lynch was famous for talking about his "tenbaggers", his investments that had increased tenfold in value. The theory is that much of his overall success was due to a small number of stocks in his portfolio that returned big. If you have a personal policy to sell after a stock has increased by a certain multiple - say three, for instance - you may never fully ride out a winner. No one in the history of investing with a "sell-after-I-have-tripled-my-money" mentality has ever had a tenbagger. Don't underestimate a stock that is performing well by sticking to some rigid personal rule - if you don't have a good understanding of the potential of your investments, your personal rules may end up being arbitrary and too limiting.
  • Selling a Loser - There is no guarantee that a stock will bounce back after a protracted decline. While it's important not to underestimate good stocks, it's equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because it's also an acknowledgment of your mistake. But it's important to be honest when you realize that a stock is not performing as well as you expected it to. Don't be afraid to swallow your pride and move on before your losses become even greater!
In both cases, the point is to judge companies on their merits according to your research. In each situation, you still have to decide whether a price justifies future potential. Just remember not to let your fears limit your returns or inflate your losses.

2) Don't chase the "hot tip" - Whether the tip comes from your brother, cousin, neighbor, or even broker, no one can ever guarantee what a stock will do. When you make an investment, it's important you know the reasons for doing so: do your own research and analysis of any company before you even consider investing your hard earned money. Relying on a tidbit of information from someone else is not only an attempt at taking the easy way out, it's also a type of gambling. Sure, with some luck, tips may sometimes pan out. But they will never make you an informed investor, which is what you need to be to be successful in the long run.

3) Don't sweat the small stuff - In tip No.1, we explained the importance of realizing when your investments are not performing as you expected them to - but remember to expect short-term fluctuations. As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term. Also, don't overemphasize the few cents difference you might save from using a limit versus market order.

Granted, active traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.

4) Do not overemphasize the P/E ratio - Investors often place too much importance on the P/E ratio. Because it is one key tool among many, using only this ratio to make buy or sell decisions is dangerous and ill-advised. The P/E ratio must be interpreted within a context, and it should be used in conjunction with other analytical processes. So, a low P/E ratio doesn't necessarily mean a security is undervalued, nor does a high P/E ratio necessarily mean a company is overvalued. (For further reading, see our tutorial Understanding the P/E Ratio.)

5) Resist the lure of penny stocks - A common misconception is that there is less to lose in buying a low-priced stock. But whether you buy a $5 stock that plunges to $0 or a $75 stock that does the same, either way you'd still have a 100% loss of your initial investment. A lousy $5 company has just as much downside risk as a lousy $75 company. In fact, a penny stock is probably riskier than a company with a higher share price, which would have more regulations placed on it. (For further reading, see The Lowdown on Penny Stocks.)

6) Pick a strategy and stick with it - Different people use different methods to pick stocks and fulfill investing goals. There are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it. An investor who flounders between different stock-picking strategies will probably experience the worst, rather than the best, of each. Constantly switching strategies effectively makes you a market timer, and this is definitely territory most investors should avoid. Take Warren Buffett's actions during the dotcom boom of the late '90s as an example. Buffett's value-oriented strategy had worked for him for decades, and - despite criticism from the media - it prevented him from getting sucked into tech startups that had no earnings and eventually crashed.

7) Focus on the future - The tough part about investing is that we are trying to make informed decisions based on things that are yet to happen. It's important to keep in mind that even though we use past data as an indication of things to come, it's what happens in the future that matters most.

A quote from Peter Lynch's book "One Up on Wall Street" about his experience with Subaru demonstrates this: "If I'd bothered to ask myself, 'How can this stock go any higher?' I would have never bought Subaru after it already went up twentyfold. But I checked the fundamentals, realized that Subaru was still cheap, bought the stock, and made sevenfold after that." The point is to base a decision on future potential rather than on what has already happened in the past.

8) Investors adopt a long-term perspective - Large short-term profits can often entice those who are new to the market. But adopting a long-term horizon and dismissing the "get in, get out and make a killing" mentality is a must for any investor. This doesn't mean that it's impossible to make money by actively trading in the short term. But, as we already mentioned, investing and trading are very different ways of making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certain specialized skills.

Neither investing style is necessarily better than the other - both have their pros and cons. But active trading can be wrong for someone without the appropriate time, financial resources, education and desire. (For further reading, see Defining Active Trading.) Most people don't fit into this category.

9) Be open-minded when selecting companies - Many great companies are household names, but many good investments are not household names (and vice versa). Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps: over the decades from 1926-2001, small-cap stocks in the U.S. returned an average of 12.27% while the S&P 500 returned 10.53%.

This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Dow Jones Industrial Average, and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains.

10) Taxes are important, but not that important - Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but they are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize the amount of tax you pay and maximize your after-tax return, but the situations are rare where you'll want to put tax considerations above all else when making an investment decision (see Basic Investment Objectives).

In this article, we've covered 10 solid tips for long-term investors. We started off saying that there is an exception to every rule, and we can't overemphasize this point. Depending on your circumstances, you might even disagree with some of these pointers. However, we hope that the common sense principles we've discussed benefit you overall and provide some insight into how you should think about investing.

I believe readers will find the above tips useful. At Blisswind, you have nothing to lose and everything to gain. You are welcome to join us.

Tuesday, April 10, 2007

Indication of Distribution

Let’s face it. None of us is smart enough to know to what extent news will impact the stock price. We know that good news will have a positive influence and bad news will have a negative one. The question is “to what extent.” Even the very smart will not be able to figure this out correctly.

People tend to become overly optimistic or overly pessimistic as the case maybe. That’s why shares are sometimes very much overvalued and at other times undervalued. It is imperative that we understand this fact and act accordingly to our benefits. Everything has a fair price. If you buy the bluest of blue chips and greatly overpaid it, you may lose the most when the crash comes.

As the market goes higher and higher, it is becoming more and more dangerous. At extremely high levels, you must pay more and more attention to your charts and less on fundamentals.

One of the first things you must learn and commit to memory is that price moves in trends. Buy in an uptrend and sell in a downtrend, early. If you miss the boat, you may have to wait for another opportunity, to be safe.

When good news no longer causes the price to advance more even in heavy volume, this is an indication of distribution. Likewise, when bad news hit the market but the share price refuses to drop farther, it is a good time to start your accumulation.

Saturday, April 07, 2007

Intelligent Investing is the Best Strategy

If someone asked you to join him in a business venture, what is your reaction? The first thing you think of would probably be the traits of this person. Is he honest, reliable and capable? This question is likely to be uppermost in your mind.

Next, what is the business about? How much do I need to invest? What is my return? What is my risk and what is my reward? These questions are sure to cross your mind. Unless you are fully convinced that the business is viable and in good hands, you will not join the venture even if it means RM5000 to start with.

In the stock market, before you buy a share, did you consider these things?
Probably not. Why? It’s because you do not know what intelligent investing is all about and the best way to go about it. Actually, the questions mentioned above are the very ones you must look into before you buy the stock. When you buy a share, you become a shareholder; a partner of the company. Do not overlook this fact.

Housewives especially, will take the trouble to go bargain hunting in the supermarkets for their necessities. They will look for the best bargains. But when it comes to the stock market, there are not so choosy. Upon a tip they will buy. They will not bother to evaluate the tip. Here is definitely a case of penny-wise-pound-foolish syndrome.

Intelligent investing is value investing, you must know what you buy and why you buy.

Beginners like to buy all the way down because of the Anti-Change Concept (posted in June, 2006). Professionals do it the other way round. They buy all the way up and distribute at the top.

If you wish to turn your 10k to 10m, you must invest intelligently. Discipline, patience, knowledge, wisdom, and the will to succeed are the very essentials for your success. Know them well. They are your indispensable generals.

Do not forget to join us at Blisswind. All are welcome.

Friday, April 06, 2007

Rubhd (5050)

Rubhd is a 70% owned subsidiary of Ranhill Berhad. It processes and treats raw water, and supplies treated water in the state of Johor.

From the historic high of 3.08 on Jan 5, 07, the stock trended down after Ranhill Berhad denied that it would privatize the company. It was then rumored that the offered price was 3.30 to 3.50.

The stock hit a low of 1.98 on March 06, 07 before trending upwards amidst minor ups and downs. Today, the stock suddenly gapped up. From the opening bell, demand for the stock was evident. In between little dips here and there, the stock steadily moved up. At the end of the day it closed at 2.69 (highest of the day) with 1.1759 million units traded. This volume is moderately high for Rubhd.

The chart shows a long white candle which convincingly breached the latest minor high of 2.44. Thus 2.44 is now a support level for the stock. From my point of view, the stock has turned bullish and better things are likely to follow. Privatization? This time, it may be for real.

Should you be interested to learn more about the company, the link is here

The above commentary should not be construed as a recommendation to buy or sell. You buy and sell at your own risk.

Wednesday, April 04, 2007

Share to Prosper; Shares to Prosperity

At Blisswind, our philosophy is to share our wisdom, knowledge, info, experiences,ideas and opinion with the aim of upgrading ourselves to be more knowledgeable, intelligent, and well informed.

All stock market enthusiasts are cordially invited to join this group to
benefit and benefit others.

Immediately on becoming a member, you can start asking questions about the stock market. Have what you want to say, that are beneficial to fellow members, posted at your own convenience. You can post comments, answer questions and have your questions answered as well.

Everything is free. What you need is a google account or google email.

Interested? Please click here.

The way to happiness is to help others.

Monday, April 02, 2007

How To Control Your Trading Risk

This is an excerpt from an article written by
Janice Dorn, MD, PhD
Neuropsychological Trading Coach.

I find it interesting and appended it below for your
reading pleasure.

How To Control Your Trading Risk

What is your biggest problem with your trades?
I’ll bet it is not your stock picks or the entry. Let me guess…
it’s your losses. The way to reduce the long term
Money management is the most neglected, and the most
important aspect of trading any market. New and intermediate
traders tend to fixate on entries and exits and every new
stock indicator out there. They'll tell themselves that money
management is “something I’ll pick up later when I need it
." But here's the deal......If you lose 50% of your money;
you need a return of 100% to break even. year after year.
If you lose 100% of your money, you have none left and
you need to get another job.

A large part of money management is position sizing, and it
has two components-- psychological and practical.
From a psychological point of view, popular piece of advice to
beginning traders is to do "paper trading." That is you gain
experience by “trading” for a while without using real money.
You go through the motions of buying and selling without
using real money. and utilize your trading strategy you
have as if you were trading " for real."

DO NOT PAPER TRADE. It is one of the worst things
you can do because it makes you overconfident or underconfident
and does not take into account the true reality of trading.
Emotions areover 85% of trading, and paper trading does not take
this into account. Thus, you are missing the most important
aspect of trading when you are on paper. You do not
experience fear, greed, happiness or panic when you
paper trade.

The emotions from paper trading are not real and have
nothing to do with the roller coaster of emotions you feel
trading when your money is on the line. Only by actual
trading do we make all the mistakes we need to make in
order to make ourselves strong and resilient and brave and
confident as traders.