RUBHD – to be privatized?

Yes! The news is out. RUBHD would likely be privatized in the first quarter of 2007. The offer price will probably be between 3.30 and 3.50. I had mixed feelings when I read this. I was hoping for 3.80 which I think is a fairer figure in view of its strong balance sheet and prospective earnings.

The counter has finally transformed itself from a chrysalis to a beautiful butterfly. Come Jan 3, 2007, will it fly? Probably, but not very high. Butterflies normally do not fly very high. A 30c on the upside, perhaps.

Very soon 2006 will be behind us. As the curtain comes down, a new one goes up. Let’s start 2007 with a clean slate. It’s a great feeling to start with a clean slate. The beginning is always important. Be smart from the start.

1997 was a very bullish year in the early months. If there is such thing as a 10-year cycle, 2007 may start off with a bang. What will happen is anybody’s guess. We shall plan and strategize as we go along.

To all my readers, I wish them a happy and prosperous New Year. My message is:

Think intelligently, act wisely, buy smartly and most importantly be healthy.

As usual, good luck and all the best.

VADS

VADS is a small-cap company with a paid-up capital of 61,178,000 shares of RM1 each as at 31 Dec 2005. It is 69.52% owned by Telecom. That means it has the backing of a giant. So safety is assured.

Going by its track record, I see fantastic growth in this counter, not only in its share price but also in its revenue and profits. It was first listed in the 2^nd board in August 2002. I had bought some of the shares at 2.38. Last Friday, which is also the last trading day of 2006, the share closed at 6.40.

So far it has declared a bonus issue of 1 for 2. Taking this into account, a layout of RM2380 has appreciated to RM9600 without including the dividends, in 50 months. This is better than the world’s most successful investor, Warren Buffet’s 25% compounded growth rate.

VADS was transferred to the main board in March 2005. Its core businesses are Managed Network Services (MNS) System Integration Services (SIS) and Contact Centre Services). Because of its excellent services and high expertise, VADS has received several awards in 2005. These are Cisco Best Managed Services Partner Award for Malaysia, the IBM Platinum Club Award and the IBM Strategic Win Award.

With the advent of income tax e-filing, e-banking and other services based on self-service becoming more common, VADS is confident that its services will continue to be in great demand. Also of benefits to VADS will be the WIMAX factor. After its onset, computer demands and internet services demands are bound to increase. All these will benefit VADS in no small measures.

The 3^rd quarter result of 13.94c is testimony to its high performance and strong management... This compares well to last year’s corresponding period of 5.83c. For the 9 months ended 30.9.06 the earnings per share is 34.46c. Last year, it was only 18.72c

VADS has paid an interim dividend of 10c tax free in Sept 06. The final dividend should be about 15c.

Going forward, I think its earnings growth will be remarkable.

Chart-wise, the stock peaked at 6.95 on Nov 14, 06. A correction took it to 5.80 where it was strongly supported. Last Friday it closed at 6.40 with 340 lots traded which is about average. In my opinion, around 6.15 should be a good entry point. If you wish to read more about VADS, go to its website www.vads.com.

This is my stock, picked for the New Year 2007. Put in your silver dollars. They will change to gold over time.

Writer disclaims all liability for his comments or advice. He holds a sizable stake in VADS.

Charts are useful

Charts are only useful to those who have the patience to wait, the knowledge to choose and the wisdom to strategize. Most people, especially beginners, do not have the patience to wait. They must buy and sell, just to be in action. This may be good for their brokers but is not good for their bank accounts.

A smart trader will not buy if he does not see a buy signal. Likewise, he will not sell until he sees a sell signal. It is during the base formation that you must make your plan. Wait and watch for a buy signal before you buy.

If you do not have the patience to wait and the discipline to implement your plans, charts are useless to you.

To succeed in the stock market, you must know who you are temperamentally. Can you take a loss? Can you "cut your fingers" and bear the pain? If you can’t, stock trading is probably not for you. The first loss is the best loss. Never compound your error by averaging down, especially when your first purchase is at extremely high level.

No one has the ability to win all the time. Winning and losing are part of the game. You can’t make cakes without breaking eggs. If you want to win, be prepared to lose. The important thing is to keep your losses small. Not only must you know how to use a stop-loss. You must know how to use a trailing stop-loss to lock in your profits.

The beauty of the stock market is that you can either invest or speculate or do a combination of both. For me I am more of an investor than a trader. Most of my funds are tied up with small-cap sound solid companies. I call them baby blue chips. These companies will appreciate the most over time.

I have spotted one which I shall write about, probably in my next posting. So bookmark this page and come back later.

Good luck and Happy New Year.

Price to Sales Ratio (PSR)

This is an important figure to look at. It will give you an idea as to whether a stock is cheap or expensive.

PSR is calculated by dividing the share price by the annual sales per share. The lower the figure is the better. This, of course, must not be taken in isolation to determine whether the stock is worth buying or not. Its usefulness is to compare the valuation of companies within the same industry.

As a rule of thumb, companies with a PSR of less than one are considered cheap. Sales are also known as revenue or turnover.

When the earnings per share increase, sales must increase as well. If they do not, there must be a reason. It is important you know why, to have a better understanding of what is happening.

RUBHD (5050)

My initial mention about RUBHD in Nov 06 was that the stock was greatly undervalued. (Please refer to my postings in Nov 06). The stock closed at 1.49 on 17.11.06. Since then, it has been in a steady uptrend. Yesterday it closed at 2.87. That’s a whopping gain of 92.6% in just 41 days! Great, isn’t it?

The volume of 17,143 lots traded yesterday, when compared with the previous 4 trading days, was higher. The stock is now in a well- established uptrend. Since my first mention of it, I have been extremely bullish, and still am, about this stock.

Buy on dips, the stock is about to fly!

Good luck and all the best.

As usual, this blog disclaims all liability for your perusal of its commentary.

Cost Averaging – Is it a good strategy?

After you have bought a stock and its share price drops, you buy more at a lower price. This brings the average price per share down. This is called averaging down. The exact opposite is averaging up.

Most people like to average down. Is this a good strategy? It all depends on who you are financially and your personal traits. If you are a value investor, that is, an investor who buys sound solid companies at undervalued prices for the long term, you should certainly average down. Buy low and sell high is your way.

But, if you are a speculator or trader, your strategy would be to buy high and sell higher. Your tactic is to ride with the waves. You don’t want to wait. So you have to time your purchases. That means you wait for the stock to move first before you buy.

A trend can reverse direction at any time. As soon as you buy, the price drops. Your positive expectancy vanished. In this case, you must quickly sell to keep your losses small. Don’t compound your error by averaging down. If you are right, you can average up.

There is no way you can win all the time. The important thing is not to get the best of cards but in knowing when to leave the table. In other words, you must know where to correctly place your stop-loss. That’s the difficult part of the problem.

To win, keep you losses small and profits big.

Good luck and all the best.

Ride with the bulls

Ride with the bulls
Raid with the bears
Be smart, be wise
Money is everywhere

Never go against a major force. Never swim against the current. Never catch a falling dagger. And never pee against the wind if you don’t want to get wet.

In every stock market, the syndicates are there .Not one but many. Some call them the Big Boys. I like to call them Smart Money. Some of these syndicates, not only have the resources to control prices, they are powerful enough to control the news as well.

Technical analysis is to track these Big Boys. The small boys are of course no match for the Big Boys. Why go against them? You are not supposed to, and you would be stupid to do so. Actually, we should be thankful to them. They are the ones who create the waves and the storms. Without them, the market will be lethargic and no body will be there to play the market. If you are smart, you should ride with the waves and profit from their moves.

Factors, many and varied, affect share prices. Not all syndicates make money. Some lost at their own game. Syndicates often go against one another. This is a zero-sum game. One man’s win is another’s loss.

Don’t blame the syndicates if you lose money. If you can’t beat them, join them. And if you can’t join them leave them, but don’t go against them.

Regards.

I-Power - more upside

I-Power closes at 1.14 for a gain of 12c with moderate turnover. It has breached its resistance of 1.10. Its range for the day is good. More on the upside is likely.

Is PE the answer?

To value a share, you must know certain numbers which are important. To name a few, they are:

EPS (earnings per share
DY (dividend yield )
PER or PE (price-earnings ratio)
PSR (price to sales ratio)
NTA or NAV (net tangible asset value)
Gearing (sometimes called debt-equity-ratio)

The PE ratio is the most often talked about. It means the market price per share divided by the net earnings per share. One way of looking at it, is that a PE of 4 means that it will take 4 years to recoup your capital at the current rate of earnings.

Is buying a share at low PE the way to riches? Certainly not. PE alone is not the way to value a share. Wealth is not so easily created; otherwise any form five boy can become rich. You need to know very much more.

Sometimes it is better to buy at high PE than at low PE. When a share is selling at low PE, it means that the prospective earnings are poor and therefore its intrinsic value will be lowered. On the contrary, when it is selling at high PE, it means the prospective earnings are good and therefore its intrinsic value will be enhanced.

It is better to buy a good company in its bad year rather than a bad company in its good year. Think about it, and you will know what I mean.

Prospective earnings are forecast earnings which may turn out to be inaccurate. Hence, if you buy at high PE and your forecast earnings are wrong, the share price will not go up. On the contrary if you buy at low PE and earnings per share subsequently drop, your low PE will become high PE, and the share price will drop also, So you see, it all boils down to earnings.

Fundamental analysts are paid highly, because they are supposed to possess the ability to forecast EPS correctly. In reality, sad to say, many failed miserably.

“If you wish to enjoy the glory of the sunrise, you have to slog through the darkness of the night”. Do your homework, read more, upgrade yourself, and someday you will be rich.

To all my Christian readers, I wish them Merry Christmas and a Happy New Year.

RUBHD

RUBHD(5050) opened at 2.60 and closed at 2.72 with moderate volume traded. It's intra day high was 2.76. As it has convincingly overcome its last resistance of 2.62, it should be on its way to challenge the next resistance at 2.95. The daily chart and weekly chart are in accord. Both are in a steady uptrend. This is a bullish sign.

From a chrysalis, it is transforming itself into a beautiful butterfly

Don't kill the golden goose, if gold is what you want.

As usual, this blog disclaims all liability for its commentaries.

Regards.

The scorpion and the frog

The scorpion and the frog

Once there was a scorpion that asked a frog to take it across a stream. The frog said, “How do I know that you are not going to sting me while I am doing it”? The scorpion said, “Don’t worry, if I do that, I will die also”.

The frog thought for awhile and decided that what the scorpion said was not unreasonable. So the frog asked the scorpion to climb onto its back.

Half way across the stream, the frog felt a sharp pain. The scorpion had stung it. Just when the frog was about to die, it looked up at the scorpion and said, “But why”! The scorpion answered, “I can’t help it, it’s my nature”.

Self-destruction; don’t do it.

Change what you cannot accept.

Whom the Gods wish to destroy, they first praise highly

Ancient Greek has a saying, “Whom the Gods wish to destroy, they first praise highly”.

In the stock market, my saying is, “That which smart money wish to distribute, they will first push them up”.

A share has three values. There are: the market value; the net tangible asset value, and the intrinsic value. The first two values are easy to understand. Intrinsic value needs some explanation. Intrinsic value means the real value. What actually is the real value of a company?

To know the real value of a company, we have to take into consideration all the aspects of that company. First, it’s the management, its capability; reliability, integrity, honesty and its moral values must all be considered. Then it’s the earnings. Are the earnings sustainable? And what is the likely growth rate?

Net tangible assets and intangible assets, like goodwill, patents and monopoly must also be taken into the calculation. The nature of its business, its dividend policy and whether it has a high-entry barrier is also important and must be considered.

As it is, the intrinsic value is indeed very hard to calculate. I think ten accountants will come out with ten different answers. The important thing to remember is that earnings are the lifeblood of a company. It’s the future earnings per share (without the exceptional items) that matters. Keep this in mind and do your own calculation.

Because of overly optimism or overly pessimism, manipulation, rigging, insider trading and speculation, share prices can go up to great heights and down to incredibly low levels every now and then.

A smart investor or speculator is able to exploit these situations. Can you do it? If you can, someday you will be rich. If you can’t, better start learning now, so that someday, you too can do it and be rich.

Good luck and Merry Christmas.

Everything has a first time

Everything has a first time. Yesterday we got two. First, Johore got flooded to such an extent that it was a first in 100 years. Second, Thailand’s stock market halted trading for half an hour when its stock market index plunged 10% after its central bank imposed capital control to curb the speculation of the Thai baht.

Is this control good or bad for the Malaysian stock market? To some analysts, it may turn out to be a blessing in disguise. The exit of funds from Thailand may actually benefit us because these funds can flow in to us.

Yesterday I saw a blanket of red on my computer screen all the time. Now this blanket has turned green with few spots of yellow and red here and there. The KLCI at 1073.60 has recovered more than 13 points at the time of writing. Sentiments of fear have improved to stable

The endless flow of news, facts or rumors causes our emotions to change mood. That’s why the stock market is forever changing.

Going forward, I hope the “present” from Thailand may turn out to be good for a Merry Christmas after all.

Good luck and Merry Christmas.

Common Mistakes made in the Stock Market

Here are some common mistakes made in the stock market. I hope readers will take note and avoid them:-

Holding on to a falling stock hoping to get out even or a small gain. (In most cases, the hope becomes hopeless).

Buying in a downtrend or compounding your error by averaging down indiscreetly.

Buying penny stocks without knowing their intrinsic value

Buying on tips and rumors or tagging long with friends

Buying a share because of its name

Not knowing how to select good solid companies

Not knowing what is good advice

Not using charts and being afraid to buy stocks that are trending up

Taking profits too quickly

Speculating more than one can afford to lose

Overestimating one’s own ability (Don’t be the praying mantis thinking it can block a car)

Approaching the market wrongly.

Trying to make the maximum amount of money in the least possible time.

Not realizing that investing intelligently is the right approach.

Not learning from one’s mistakes and that of others..

Fortunes are made and fortunes are lost in the stock market. If you want to be a winner, be serious about it. Don’t go in for fun, but for the fund.

Happy investing.

KLCI closed at 1089.22 (+13.85)

KLCI open: 1078.17
Close: 1089.22; Vol: 8407 million shares
Gainers: 546; Losers:291; Unch: 290

Contrary to my prediction, the KLCI staged a rebound aided by better performance of the regional burses and the bid by Wilmar to privatise PPB Oil. The short term outlook is neutral. For the intermediate term and long term, it is bullish.

RUBHD closed 23c higher at 2.58 and a big white candle has appeared. Volume traded at 16,350 lots had improved. This is bullish. Buy or hold on to your shares. Better days are ahead.

Although the KLCI is at a high level, the second liners and mesdaq counters have not moved much. I see value in the following counters which I believe have upside potentials:

VADS 6.00; AIGB 1.64; I-Power 0.975; Nexnation 0.685; FSBM 1.38; LKT 3.16 and MNRB 4.20.

As usual you buy and sell at your own risk, absolutely. This blog disclaims all liability for your perusal of its commentary, article and opinion.

Good luck and happy investing.

KLCI closes at 1075.47 (-4.13)

Another black candle. Now we have 3 in a row, all with lower highs and lower lows.This steady downward pattern is bearish.

Volume traded at 786,844,800 shares is slightly lower than that of yesterday. Expect the drifting to continue.

Admid the bearish trend, RUBHD holds up extremely well closing 4c higher at 2.35 with some 786,800 shares traded. It appears to me that the counter has strong support at the 2.31 level.
Base on fundamental, the counter looks good to buy.

The above commentary is my personnal opinion and should not be construed as a recommendation to buy or sell.

The Correct Approach is Important

Never approach a horse from the back, a golfer from the side, or a fool in any direction.

The correct approach is the key to success. This is true in the stock market or any other type of business.

The beauty of the stock market is that you can either invest or speculate or do a combination of both. Speculation is not my cup of tea. I prefer to invest.

To invest in the stock market means to buy undervalued sound equities or other financial instruments which promise safety of principal and a good return in the form of capital gains or dividend income after through investigation.

Actually capital appreciation is the name of the game. Dividend yield is the safety net. I would rather do my trapeze with a safety net than without one.

Blue-chip counters are easy to identify. The important thing is that you must not overpay for them. You may buy the bluest of all blue chips and not make money because you bought them at the wrong time. It is much better to buy small-cap size stocks which have good earnings per share with explosive earnings growth and a high-entry barrier.

The success or failure of a company is dependent on its management which is normally its major shareholder. Good management makes money for its minority shareholders. The bad ones “eat” them.

Good management means management with capabilities, integrity, and a high moral value. These are not easy to find. So be careful.

Speculation in the stock market means the assumption of a long or short position in a financial instrument in the anticipation of a favorable market movement which should result in a gain when the position is covered. Speculation provides much thrill and excitement. But it is a dangerous game. Unless you are a genius, it is very difficult to make money consistently. At best you have a fifty to fifty chance.

Whether you want to invest or to speculate, it’s up to you. For me, investment is my choice and I would rather stay with it.

Regards.

KLCI @ 1079.60

Another black candle appeared making two in a row. This is bearish. Will this soil erosion lead to a landslide? Likely, very likely or unlikely? It's anybody's guess. But the market will likely go along the line of least resistance. And that is down.

Volume traded was 955.5 million shares. This is lower than the previous day's transaction of 1,294 million shares. Until a white candle appears, it is best to avoid any buying.

Going against the trend you must resist. Its much easier to swim with the current than against it.

The above commentary is my own opinion and should not be construed as a recommendation to buy or sell.

As always, you buy or sell at your own risk absolutely.

Sudden storms are short

Small showers last long
Sudden storms are short

Once the downtrend starts, nobody knows when it is going to stop. Be on the watchout for any panic sale.

When there is fear in everyboby's face, it's the time to buy.

If volume increases very sharply with very steep drop, it is likely to end there.

Keeping watching.

KLCI @1088.42 Vol. 1.2294b

Prices closed significantly lower and a big black candle appeared. This a bearish sign. As the candle is at a high level, it could be the first sign of a correction or reversal. Nobody will know for sure. Only time will tell.

Volume traded at 1.229 billion shares is much lower than the highest volume of 2.19 traded on 6.12.06. But compared to average volume during August to October 06, this is much higher.

Because of the quick run-up recently, the market has to pause for breath. Unless there is some bullish news, a downward drifting for awhile is most likely.


This commentary is not a recommendation to buy or sell, but rather a guideline to interpreting the chart. This information should only be used by investors who are aware of the risk inherent in securities trading. This blog accepts no liability whatsoever for any loss arising from any use of this expert or its contents.

Actions speak louder than words

Actions speak louder than words.
Should you counter-herd or follow the instinct of the herd?

The herding instinct in humans can have both positive and negative effects. Just because the crowd is chasing a particular counter does not mean you have to join the bandwagon.
Study your charts and follow your own judgment. Always think intelligently.

Charts are designed to track smart money. If you know how to read correctly, you can see all the actions. But if you misinterpret, you will have to bear the pain. It is not easy to become proficient in chart-reading. You will make many mistakes. Make you bets small initially, the smaller the better.

Charts are like electricity. If you know how to use them, there are very useful; very good servants but very bad masters.

To learn how to swim, you must go into the water. There is no other way. You may have learned everything on paper but you are sure to sink the first time you go in there. Paper-trade is only at best, a practice. In real trading, everything is different. Our emotions, fear, hope and greed all come into play. Experience is the best teacher. As the saying goes, “the proof of the pudding is in the eating”.

So much for now, and as usual, good luck and all the best.

All that glitters is not gold

All that glitters is not gold
Think carefully before you buy
Don’t leave yourself dry and cold
And bade your money, bye-bye!

Our stock market is inefficient. Because of this, the value of a share is not reflected in the price. Overly optimism causes a share to be overpriced; and overly pessimism causes a share to be under priced.

Manipulation, rigging, speculation, rumors, hope, greed and fear are factors causing shares to be greatly overvalued or undervalued.

A smart investor has the shrewdness to exploit your emotion, fear and greed. You must have the knowledge and wisdom to combat them.

Before you are allowed to drive a car, you must undergo a test to prove your competency. This is because your mistakes can be fatal to somebody else. In the stock market you don’t have to undergo any test. If you have the money, you can just walk into a broker firm, open an account and start playing the market. In fact, the more stupid and naïve you are the more welcome you will be because here your mistakes will be somebody’s gain.

Strive for knowledge. Knowledge is better than gold.

Happy investing.

There is a time for everything

There is a time to reap
There is a time to sow
There is a time to buy and keep
There is a time stocks must be sold

Timing is crucial. In a bull market, buy on dips. In a bear market, sell on rallies. The difficulty is to ascertain that a correction is a correction and not a reversal. If you read it wrongly, you are in trouble. Worse still, you may compound your error by averaging down. And that may end you up with a catastrophe loss that could be disastrous. A simple stop-loss could have saved the situation.

People say, “Buy low, sell high; or buy high and sell higher”. But I say it is better to buy high and sell low. Buy high and sell low! You must be mad. Rest assured that I am not. Bear with me for awhile and I shall explain.

Smart monies accumulate at the bottom. Their accumulation may last from a few weeks to a few months or even a few years. Once they have got enough, they will push up the price. So the best time to buy is when there is an upside breakout at low level after the forming of a good base. That is what I mean by ‘to buy high’.

At the top, they (smart monies) will start their distributions. Once their distributions are over, there will be a downside breakout. It is very difficult to know whether a lateral movement is a distribution or further accumulation. That’s why you have to wait. When there is a downside breakout, it means that the distributions are over. And the downtrend has commenced. It is here that you must sell. This is what I mean when I say ‘to sell low”. Actually, it is to sell low at high level. Got it?

The moral: Follow smart money, but be one step ahead of the pack.

Bye now folks, good luck and all the best.

A stitch in time saves nine

I like proverbs. They are short popular sayings embodying some familiar truth or useful thoughts. Much wisdom can be learned form proverbs.

“A stitch in time saves nine”
Your stop-loss, to be useful, must be refined.

It’s easy to say, “Cut your losses quickly and let your profits run”. It is imperative that you know exactly where to place your stop-loss. If you put it at the wrong place, your stop-loss can easily become your stop-gain.
Because every stock has a personality all it own, you cannot generalize. A stock which has a great velocity in its price is different from one that has a low velocity. Therefore, each calls for a different kind of action. If you want to trade, you must master the use of the stop-loss; otherwise you will get into all kinds of trouble. Never drive your car without brakes. Never trade without a stop-loss

KLCI - near 10-year high at 1098.55

Our stock market is getting hotter and hotter. Now is not the time to throw cautious to the wind.
With an intra-day high of 1,103, it closed at 1098.55 yesterday.

Volume traded hit 2.19b. This is a record high. The last time such a high volume was traded was May 9, 06. From a high of 970 it trended down and hit 883 on June 15. The correction was really severe or was it a reserval? I leave that to you.

This time around, I do not foresee such velocity & severity. However, I am of the opinion that a correction is imminent.

The market is most dangerous when it is most attractive. I see many new comers coming into the market. This is also a danger sign. Nobody knows what is going to happen. This is only a probablity game. Whether it's odds on or not, you have to decide. Think intelligently, though.

Best of luck and good day.

World’s Biggest Casino

The stock market is the world’s biggest casino
There you’ll find people of all races, young and old
Excitedly going about their buying and selling
Some have no idea of what they are actually doing

The naïve think about how much they are going to win
The professionals work out how much they can possibly lose
The former, unable to distinguish between investing and speculating
They know nothing about manipulation and rigging

Winning to many is the beginning of losing money
Boasting and laughing about your gains is really funny
Unless you know why you win, and why you should win again
Its better you go slow, lest you find yourself in pain

Speculation has a way of fattening you for the slaughterhouse
If not intelligently executed, you may reduce yourself to a church mouse
Investing in undervalued stocks is the better approach
So first of all, find yourself a good coach

Proverbs

Here are some proverbs which I hope readers will like:-

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Winston Churchill

Benjamin Franklin: Wise QuotesAn investment in knowledge always pays the best interest.

It is when the well is dry that we know the price of water. - Ben Franklin
A successful man is one who can lay a firm foundation with the bricks that others throw at him. - Sidney Greenberg
To achieve the impossible, one must think the absurd; to look where everyone else has looked, but to see what no else has seen. - unknown
It's never too late to be who you might have been. - George Elliot
The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will. -Vince Lambardi

Success consists of going from failure to failure without loss of enthusiasm. -Winston Churchill
A man is not finished when he is defeated. He is finished when he quits. - Richard Nixon
Yesterday is a cancelled check;Tomorrow is a promissory note;Today is the only cash you have,so spend it wisely. - Kim Lyons
How you spend your time is more important than how you spend your money. Money mistakes can be corrected, but time is gone forever. - David Norris

Only those who will risk going too far can possibly find out how far one can go. - T.S. Eliot
The purpose of life is a life of purpose - Robert Byrne

Hard work beats talentwhen talent doesn't work hard. - Tim Notke

The middle of every successful project looks like a disaster. - Rosabeth Moss Cantor

Most look up and admire the stars. A champion climbs a mountain and grabs one. - Unknown

Successful and unsuccessful people do not vary greatly in their abilities. They vary in their desires to reach their potential. - John Maxwell
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - Roosevelt

You may be disappointed if you fail, but you are doomed if you don't try. - Beverly Sills


Unless you try to do something beyond what you have already mastered, you will never grow. - Ronald E. Osborn


If you aren't making any mistakes, it's a sure sign you're playing it too safe. - John Maxwell

Nothing ever comes to one that is worth having except as a result of hard work. - Booker T. Washington

All the beautiful sentiments in the world weigh less than a single lovely action. - James Russell Lowell
The man who keeps busy helping the man below himWon’t have time to envy the man above him. - Henrietta Mears
Not everything that is faced can be changed.But nothing can be changed until it is faced. - James Baldwin
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. Winston Churchill

Benjamin Franklin: Wise QuotesAn investment in knowledge always pays the best interest.

It is when the well is dry that we know the price of water. - Ben Franklin
A successful man is one who can lay a firm foundation with the bricks that others throw at him. - Sidney Greenberg
To achieve the impossible, one must think the absurd; to look where everyone else has looked, but to see what no else has seen. - unknown
It's never too late to be who you might have been. - George Elliot
The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will. -Vince Lambardi

Success consists of going from failure to failure without loss of enthusiasm. -Winston Churchill
A man is not finished when he is defeated. He is finished when he quits. - Richard Nixon
Yesterday is a cancelled check;Tomorrow is a promissory note;Today is the only cash you have,so spend it wisely. - Kim Lyons
How you spend your time is more important than how you spend your money. Money mistakes can be corrected, but time is gone forever. - David Norris

Only those who will risk going too far can possibly find out how far one can go. - T.S. Eliot
The purpose of life is a life of purpose - Robert Byrne

Hard work beats talentwhen talent doesn't work hard. - Tim Notke

The middle of every successful project looks like a disaster. - Rosabeth Moss Cantor

Most look up and admire the stars. A champion climbs a mountain and grabs one. - Unknown

Successful and unsuccessful people do not vary greatly in their abilities. They vary in their desires to reach their potential. - John Maxwell
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - Roosevelt

You may be disappointed if you fail, but you are doomed if you don't try. - Beverly Sills


Unless you try to do something beyond what you have already mastered, you will never grow. - Ronald E. Osborn


If you aren't making any mistakes, it's a sure sign you're playing it too safe. - John Maxwell

Nothing ever comes to one that is worth having except as a result of hard work. - Booker T. Washington

All the beautiful sentiments in the world weigh less than a single lovely action. - James Russell Lowell
The man who keeps busy helping the man below himWon’t have time to envy the man above him. - Henrietta Mears
Not everything that is faced can be changed.But nothing can be changed until it is faced. - James Baldwin

Sterling Performance of VADS

Vads closed at 6.85 per share last Friday, a shade of its all time high of 6.90. What's high normally goes higher.Will yesterday's high be tomorrow's low in the case of VADS? For more information about VADS read here.

Come, Prosper with Me

Fortune favors the prepared mind

Will you go into a virgin jungle without maps or guides, untrained and unarmed looking for gems? The answer is obvious. Yet this is exactly what people do when they go into the stock market . Is there any wonder then, that they failed to come out unscathed, let alone a profit?

No doubt, fortunes can be made in the stock market. But firstly, you must be well armed and well trained. Do you know what causes the stock market to move up and down? The simple answer is supply and demand. When supply exceeds demand, prices fall. When demand exceeds supply, prices rise. The next question, of course, is what causes demand and what creates supply?

Factors, many and varied, affect supply and demand. Inter alias are: corporate earnings, interest rates, inflation, manipulation, speculation, political unrest, government policies, natural calamities, commodity prices, discoveries, new inventions, change of management and major shareholders, etc.

The position of the heavenly bodies can also affect share prices. Surprised? Well, let us look at it this way. Heavenly bodies can affect the weather, which in turn can affect commodity prices and our emotion. Our actions are controlled by our feelings. A man’s action is the best interpreter of his thoughts. Watch what he does, not what he says, to know what he means.

In the stock market you can either invest or trade. Each calls for a different strategy. Let’s look at investing first. To invest in the stock market means to give your money in exchange for equities in the hope of a return in the form of capital gains or dividends. One thing you must keep in mind and always keep in mind is that earnings are the lifeblood of a company. Without earnings, a company will eventually collapse. Earnings are dependent upon the capabilities of the management which must also have integrity and a high moral value. If you do not know the management, look at their track record. The nature of the business of the company should not be overlooked. In our globalize world, the company must be able to compete competitively in the global arena. A small-cap stock with explosive earnings growth, a high-entry barrier, little borrowings and reliable management is the ideal choice. If you spot one, please let me know.

In every endeavor, success needs your labor. The stock market is no exception. After you have bought your shares, you need to monitor them fundamentally and technically. Keep yourself informed of what is happening to the companies’ fortune and share prices.
Never get married to your stocks. Sell when there is a sell signal. When you see smoke coming out of the kitchen, it’s okay. But when you see smoke coming out of the library room, you should check immediately to see what is happening.

Here are some tips which I hope are useful if you wish to invest in the stock market:-

Buy undervalued stocks with good earnings and good dividend yields.
Management must have capabilities, integrity and a high moral value. Avoid the bad and the ugly. If you do not know them, refer to their track record.
Plan your trade and trade your plan. You must have discipline to succeed.
Never go against the trend or swim against the current.
Study your charts. They are designed to track smart money.
Change according to circumstances. Follow smart money, but be one step ahead of the pack.
Don’t listen to rumors, do your homework.
Be patient to wait for a good opportunity. Good things come to those who wait.
Learn fundamental and technical analysis before you start.
Be smart from the beginning.

The above stock market wisdoms are only the tip of the iceberg. Learn as you go along.

Now let us talk about trading. Trading is much more exciting than investing. It is, however, much more dangerous. If you wish to trade, you must learn all about technical analysis first. There are many good books on the subject. Read and learn as much as you can from them. The most important tool for trader is the stop-loss. Will you drive a car without brakes? Of course you will not. Then you must not trade without the stop-loss. There should be no limit as to the amount you can win. But there should be a strict limit as to the amount you can lose.

Manipulation and insider trading are necessary evils in the stock market. Without them, the stock market will be very uninteresting and dull. Charts are designed to track these activities. Forget about the news. Everything is reflected in the charts. Actions speak louder than words. If you wish to ‘play’ the stock market without the necessary knowledge and wisdom, be prepared to lose.

Many have lost in the stock market. This does not mean that you have to lose too. Once you have mastered technical analysis, every trading day will be an exciting day. Henceforth, money should be coming your way.

Bye now folks, happy investing! All feedbacks and comments are welcome. Ben Gan can be contacted at bewise.gan@gmail.com.

Stock Market Wisdom

Stock Market Wisdom

Value for money you must insist
Going against the trend you must resist
The trend is your friend
Follow it to the very end

Holding on to a falling stock is unwise
Cut your loses quickly is advised
To catch a falling dagger
You must never endeavor

Never kill the golden goose when you have one
Never sell prematurely, if gold is what you want
Undervalued unpopular stock is never a fancy
Glamour stock is the choice normally

Join the crowd; enjoy the ride if you wish
Be careful though, lest you drop and vanish
The market is strongest at the top
Lock in your profit before volume has a good drop

Sell your stocks when you love them most
Take your money & let the deal be closed
Buy when volume traded is at its lowest
The market will then be at its dullest

Investors should buy low and sell high
Traders should buy high and sell higher
Some day you will know what I mean
By then, you may be a stock market dean.

By Ben Gan (October 25, 2006)

Comments are welcome. Ben Gan can be contacted @ bewise.gan@gmail.co

Happy investing.

Tips for Thoughts

Hope, Greed, and Fear control the market
Hope causes you to hold on to a falling stock
Fear causes the market to be oversold
Greed causes the market to be overbought

Stupidity abounds in the stock market
Buying a counter because of its name is one of them
A company with no earnings and high gearing is best avoided
Buy someone’s problem, and you are damned

Ride with the bull
Raid with the bear
Benefit from manipulators’ effort
Monies are here and everywhere


The rich accumulate at bottom
The smart distribute at the top
Amateurs buy all the way down
Professionals do it the other way round

Be quick and bold when an opportunity arises
Those who hesitate will lose the gain
Though good things come to those who wait
Opportunities neglected, seldom surface again

People mad with power are those that God wish to destroy
Stocks pushed down are what the smart wish to buy
At the top, equities are the strongest and most tempting
Don’t be lured by them, lest bid your money farewell! Bye-bye!

Consistent winners are hard to find
Learn from them; learn their strategies
Improve and upgrade yourselves
And you will be fine.

Every dog will have its day
Every stock will have its play
A stock that already has its prey
Is not worth looking at in any way.

Easy money is not easily made
One win does not a winner make
If you want to be a day trader
You must learn the trick of the trade

Housewives look around for a bargain price
Be they some foodstuff, groceries, dresses or the like
In the stock market, they are not so bright
Upon a tip, they buy, without knowing whether it is wrong or right.

Go With The Flow

The stock market is full of dummies
Foolishly parting with their monies
Buying what the smart wish to dicard
Remorseful they will be, at the very start
Soon they will feel the pain
For all the money they have paid
There is nothing to gain
They sell when it's time to buy
And buy when it's to sell
Buying blue chips at the top is foolish
Selling them in their bad years is stupid
Follow the trend you must
Never go against it
Go with the flow
It's the surest way to grow and grow.

Why do share prices move up and down?

Factors, many and varied, affect share prices. Below are some of these factors:-

Earnings (present and future)
Mergers and acquisition
Change of ownership and management
Interest rates
Manipulations
Government policies
Political unrest
Lack of co-operation between countries
War
Natural disasters such as severe drought, floods, and epidemic
Commodity prices
Emotion and sentiment. .

The above factors are forever changing. This causes the supply and demand of shares to change as well. When demand is greater than supply, prices rise. When supply is greater than demand, prices fall. The greater the difference, the greater is the velocity.

When people are optimistic, they become overly optimistic. When they are pessimistic, they become overly pessimistic. That’s why shares become overpriced sometimes and under priced at other times. Smart monies know this. They are able to exploit these situations.

Never get married to your stocks. When they are very much overpriced, they must be sold. You can always buy them back when they are down.

Investment in knowledge will pay the most dividends. You must invest wisely to win.

Happy investing.

More About Stock Market Wisdom

Learn more

The Anti-Change Concept

Most people, especially the naïve, like to buy all the way down. This is because of The Anti-Change Concept. When a stock moves from $1 to $1.50, the stock is deemed too high to buy. It then moves to $3.00, and then back to $1.50. Now at $1.50 it is considered too low to ignore. This is called The Anti-Change Concept.

Professionals like to buy all the way up. They look for the most odds. Amateurs like to buy on the way down. They have no stock market knowledge and wisdom. They lack experience and connections. Worst of all, they have no fear. Is there any wonder then, that they should expect to lose?

Success in whatever field needs your labor. A soccer team needs ball-handling skill, speed, stamina, tactics and a good coach. In the stock market you need knowledge, wisdom, discipline, patience, experience and courage.

So if you are about to go into the stock market without the above traits, better make your bets small; the smaller, the better.

If you want to lose money, here are some ways:

Believe everything you hear, especially tips.
Buy in a downtrend.
Take small profits.
Holding on to a falling stock just to get out even.
Average down and keep on averaging down.
Buy ‘rubbish’ shares at very high PE.
Go for the price rather than the value.
Buy when the market is most optimistic.
Buy when volume is at unprecedented height.
Bet on every race.
Be the last to buy and the last to sell.

Good luck guys and happy investing!

When is the best to time to buy, and when is the best time to sell?

“The darkest hour is the beginning of dawn.” (Xxxx) The market always turns around when it is most negative.

After the market is beaten down by The Bear Raid, many stocks become undervalued. You need to identify these stocks and track them. But firstly, you must know which way the market is heading. If it is still in a downtrend or side trend, you are actually going against the current if you buy. It would be much better if you go with the flow. However, if you are a genuine investor with plenty of cash lying idle, you can start your accumulation.

Safety of principle should be your first priority. So buy only solvent companies with good dividend yield, high earnings per share and efficient & reliable management. Look for companies with good track record. The nature of its business is important. Buy slowly and steadily. When the next bull market comes, you should make aplenty.

There are two strategies you can adopt. One is to buy low and sell high (BLSH). The other is to buy high and sell higher (BHSH). Which strategy to use depends on who you are financially and emotionally? If you have the patience and lots of cash you should BLSH. If you are not so rich and find BLSH unexciting, then you should BHSH. Both strategies are profitable if implemented correctly.

At the bottom, the market can trend sideways for a long time. So if you want to BHSH you must wait for the bottom to complete before you buy. The difficult part of this is that there are many false dawns. You need to study technical analysis and have lots of experience to be proficient. Don’t depend on others to do chart interpretation for you. Some chart analysis doesn’t even mention the volume. A chart without volume is close to being useless. If you want to make easy money, you have to work hard for it. “There is no such thing as a free lunch” is the proverbial phrase.

Now that you know when a good time to buy is, it is vital that you know when a good time to sell is. Premature selling yields little profits. When your stock is in an uptrend, don’t sell and take small profits. Short-term gain is long-term pain. You never get rich taking small profits.

A trend in motion is likely to continue. So let it run its course before you sell. You may be surprised at how high it may go. Generally speaking you should sell when the market is at its strongest. That is, when volume transacted is at unprecedented height or at least heavy. The beginning of the Bear Raid is the best time.

Wait for the durians to drop. Don’t pluck them.


Disclaimer: You are absolutely responsible for your own action. You buy and sell at your own risk.

The Bear Raid

Bears are those who sell down the market. The Bear Raid, when it comes will be harsh and severe. Many will get badly mauled.

After the market has hit the top, a fairly severe decline will follow after a slight downward bias. Many will think it is then safe again and start buying. This is actually a bear trap. Normally when the price goes back to where it has a downside breakout, it will start to trend down from there. From some soil erosion it will quickly turn into a landslide. The smart sell at what is given. The naïve hold on hoping to get out even. Sadly their hopes soon turn hopeless. Shares continue to trend down with unabated rapidity.

Suddenly there are no more buyers. Your broker calls you to average down. (If he does that, change to another broker.) Downtrend can continue for a long time. Wait for the bleeding to stop. Consider to buy only when a buy signal has emerged. Averaging down is compounding your error. If not discreetly done, the result can be devastating.

The first phase of a Bear Market is distribution which starts at the later stages of the preceding Bull Market.

The second phase is panic selling. Here buyers thin out and sellers become more urgent. Prices suddenly accelerate into an almost vertical drop with heavy volume. Immediately after this the market normally says “Sorry! Are you still there?” A small rally is likely to ensue with small volume. It soon turns sideways to down, and continue to drift aimlessly.

In the third and last phase, the downward movement is less rapid, trading turns sluggish, volume is down, the market becomes dull, and broker firms become empty. The “dogs and cats” are back to square one. Better grade stocks are almost there. The Bear Market ends when the worst to be expected has been discounted.

It will do well to remember the characteristics of a Bull and that of a Bear so that you are less likely to be deluded by the madness of the crowd.

Quotable quotes:

Great investors are not, and have never been, crowd followers. (Xxxx)

The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty – Winston Churchill

The heights reached by great men are not by sudden flight. While their companions are asleep, they are toiling upwards in the night. (Xxxx)

When is the best time to buy? Welcome to the next article at a later date.

Beginners have beginner’s luck

In the latter stage of a bull market, volume and prices go up day after day. Speculative activities become rampant. Everybody is extremely optimistic. Positive expectancy is the order of the day. The cats and dogs are whipped up as well. It is at this stage of the bull market that beginners are lured into the market. They simply buy and they simply make. Now you see why beginners have beginner’s luck.

As the market rages on, more and more beginners come into the market. Dick, Tom and Harry are all laughing their ways to the bank. They put in more money and simply make more money. Everyone is boasting about his gains. The stock market is the topic of the city. Wherever you go, you hear people talking about the market. In the coffee shops, restaurants, market place and in every corner of the city, it’s the same. Every seat in the broker’s office is occupied. Every corner is crowded. Even the shoe-shine boys, ice-cream sellers and hawkers are involved.

As the speculators become mesmerized, share prices continue to shoot up. News that companies ABC, XYZ, etc is prophesied to sign big contracts here and there, and make great profits, make headlines everyday. Stocks are by now selling at exorbitant PE. “This time is different. The bull is here to stay, forever.” You heard someone remarked. The truth is that all trends must come to an end. No tree grows to heaven.

Sensing that shares are by now very much overvalued the wise start to unload. Slowly, carefully and quietly they go about their unloading so that the market will not be perturbed.

At the top, the market is the strongest. Full of hope and optimism, the naïve continue to buy and sell while the professionals are making their ways to the bank with their profits.

The partying continues. Excellent food, good wine, music and women, they are all there.

What happen after this? The Bear Raid (look out for the next posting)

Timing Is Crucial

"There is a tide in the affairs of man which taken at the flood leads on to fortune. Omitted, all the voyages are bound in shallow and in misery". - xxxx

Timing is everything. In the stock market, what you buy is important. When you buy is crucial. Failure or success depends very much on this. You need technical analysis (TA) to help you. Charts are designed to track smart money. Do not try to lead the market. Follow the leader but be one step ahead of the pack.

A man's action is the best interpreter of his thoughts. Watch what he does, not what he says. The first thing you must learn in the stock market is that stock prices move in trends. Never buy in a downtrend. The trend is your friend; never go against it. If you don't want to get wet, don't pee against the wind. Never catch a falling dagger!

By Ben Gan (March 23, 2006)

Quotable quote: Buy in gloom. Profit in bloom.

Stock Market Wisdom

I am Ben Gan from Bentong, Pahang. Investing in the Malaysian stock market is my hobby and passion. Lots of money can be made from the stock market provided you know the correct approach. The correct approach simply means that you must invest. Do not gamble. If you do, you are finished! Look at Genting. They make millions and millions year after year. In gambling, the sole winner is the house. In speculation, you have a little more than 50% chance of survival. You must however, make a lot of calculation and research. Calculated risk is okay but not blind betting. Value investing is the best choice.

What is Value Investing? Value Investing means buying undervalued stocks. It means buying a Toyota with the price of a Proton and then selling it for the price of a Mercedes. Never get married to your stocks. Once they become overvalued they must be sold.

Do not confuse value with price. A share selling at 5 cents may be costly; whereas one selling at $5 may be cheap. Know the chaff from the grains. Know what the company has and what it owes others. Other than that, the calibre of the management, future earnings, earnings growth and the nature of its business must also be considered. Earnings are the lifeblood of a company. Therefore, companies with little earnings or no earnings at all should be avoided. These companies are the problem of other people. Do not make it yours. Earnings should be considered as earnings per share (EPS) without the exceptional gains, if any.

To be successful in the stock market, you need to have knowledge, wisdom, guts, discipline and patience. Of course you must have cash as well. Knowledge and wisdom are two different things. Knowledge is knowledge. Wisdom is the right use of knowledge. Knowledge without wisdom is not effective to bring about profits.

Before you invest or speculate in the stock market, ask yourself whether you have the temperament and swift reasoning power to cope with some of the best brains in the world. If you do, you will find that hardly a day passes without the market offering you great opportunities in money making.

Recently I read an article dated 10 June 2006 about FSBM by Tee Lin Say in TheStar. The article is informative and extremely well-written. FSBM is definitely undervalued at RM1.30+ a share. I like the nature of its business. I believe it has great potential to grow big. It should be good for your portfolio.

Good luck.

Disclaimer: You are absolutely responsible for your own action. You buy and sell at your own risk, remember.