Wednesday, March 31, 2010

What is an Ostrich?

An ostrich will hide itself by lying flat against the ground, or run away when frightened. In dangerous situation, it will stick its head in the ground.
In the stock market, an ostrich is referred to as someone who ignores bad news even when bad news is clearly affecting his portfolio. He will ignore the market and pretend not to know anything. It is not advisable to be an ostrich.

Sunday, March 28, 2010

Invest, Speculate or Gamble

When you buy shares in the stock market, are you investing, speculating or gambling? Before you answer this question, let's take a look at what is what.
According to Benjamin Graham , an investment operation is one which upon through analysis promises safety of principal and satisfactory return. Operations not meeting these requirements are speculation.
What is speculation?
Engagement in risky business transactions on the chance of quick profit or exchanging money for something involving high risk but also the possibility of high profit is speculation.
What is gambling?
Playing games of chance for money and wagering of money on an event with an uncertain outcome are gambling.
Many people think that if you buy stocks for the long term, you are investing, and if you buy for the short term, you are either speculating or gambling. Actually this is not true. If we go by the definition of Graham, we are investing if we do a through research, are convinced that our principal is safe and that what we buy will give us a satisfactory return before we buy, we are investing. The time factor does not matter. So whether you invest or gamble, it depends on what you have done before you put in your money.
Investing is positive. Speculation is neutral. Gambling is negative.
Gambling can ruin your life. Think of your family before you gamble. There is no way you can outsmart the banker.

Saturday, March 27, 2010

2010 will be bullish for Malaysia

Events in the near future will cheer the Malaysian Stock Market further north. On March 30-31, PM Datuk Seri Najib Razak will speak at the "Invest Malaysia" conference. The audience will mainly be foreign and local fund managers. Most probably investor-friendly policies that are bullish for the stock market will be announced. Looks like the Malaysian government is going all out to woo foreign investors to bring in foreign exchange. On June 10, under the 10th Malaysia Plan, more friendly measures will be announced and introduced.
On November 5, last year Forbes said that Sime Darby was in talk with Chinese investors for a possible stake sale. Should this come true, the palm oil sector will benefit. The government was also reported to be lowering its stakes in some big-cap companies later this year. This will generate a great deal of excitement and bring about the much needed stock liquidity in the market.
When "the stars are aligned" many good things will happen.
I look forward to a bullish 2010 for Malaysia.

Friday, March 26, 2010

A beauty is a joy forever

Health Care Reformed Bill (HCRB)

America's HCRB is now law. It is designed to transfer money from the rich to the poor. Some thirty-two million people will benefit from this legislation. Everyone in the land has to buy medical-health-care insurance from now on.
The danger of this law is that people may become less concerned with their health when they know that they are medically taken care of when sick.
The obvious beneficiaries of this reform are hospitals, drug makers, medical devise manufacturers, doctors and nurses. As for insurance companies, the impact is uncertain to negative. They will have more business. But the terms and regulations may be less favorable to them.
At Bursa, KPJ, AHealth, CCMBio and Pharma may benefit.

Thursday, March 25, 2010

Are you in sinful investing?

What are sinful stocks? Stocks that are associated with gambling, alcohol, tobacco, firearms and pornography are classified as sinful socks. On the other side of the coin, we have what we called Socially Responsible Investing (SRI). Each side has their own fans and support.
There are others who couldn't care less. Whether it is sinful investing or SRI investing, it does not mean anything to them. So long as the investment is yielding a good return they will go for it. Just as, they are guys who like teasing young ladies, there are others who like pleasing them. Really, it all a matter of choice depending on the individual.
Gambling is actually bad for society. Gambling is generally associated with gangsterism, illegal money lending with exorbitant interest rate, robbery, confidence men, illegal sex and prostitution.
Alcohol and tobacco are habit-forming. A person taking them can become addicted and suffer health impairment as well.
Is it right to classified firearms under sinful stocks? No doubt, firearms such as warplanes, mines, bombs, guns and cannons have killed millions of people, but they are also needed to keep peace.
Supporters of SRI investing are normally people who are concerned in ethical values. Industries associated with medicines, water, electricity, climate change, food, building materials and housing are classified under SRI.
For me, SRI investing is the preferred choice.

Wednesday, March 24, 2010


FimaCorp after breacing its overhead resistance has been moving from stregth to strength in light volume. The writer is of the view that this stock has a long way to move higher. The stock is fundamentally sound. (Please refer to my previous post.)
I believe the stock will hit RM6 per share by the end of the year.
There are two adages. One is that what goes up must come down. The other is that what goes up is likely to go up higher. Both are true. In this case, my opinion is that the latter will apply.

(The idea expressed above is that of the writer. You don't have to agree with him. As usual, you buy, sell or hold at your own risk absolutely.)

Tuesday, March 23, 2010

Invest in Women and make profit from men

Invest in women and make money from man.
Those who study technical analysis will know that a double bottom looks like a "W" and a double top looks like an "M". When you see a double bottom with a breakout with volume, it is actually a good time to buy. When you see a double top with a downside breakout, it is a good time take profit.

Monday, March 22, 2010

Are your stocks safe?

At the Malaysian Investor website, we can email to the SIDC (Securities Industry Development Corporation) to ask a question. Some time ago I did that. I asked them whether my portfolio in my CDS a/c were safe or not should the broker firm that was not a public listed Company (PLC) went into bankruptcy. They have not given me a reply. This is really disappointing. They encourage us to write to them. But they don't bother to reply.
Once I had an account with a broker firm that went bust. That was many many years ago. My stocks in my CDS account with that broker firm that was a PLC were not affected.
My question is: Is there a difference between a broker firm that is a PLC and one that is not a PLC as far as securities rules and regulations are concerned? In dealing with the latter, are we adequately protected? I believe many people would like to be 100% sure regarding this.
All comments are welcome.

Saturday, March 20, 2010

Peter Lynch

Probably you have heard of Peter Lynch. But did you know that in 13 years, from 1977 to
1990, the Fidelity Magellan Fund he managed grew from $20m to a whopping $14b?!
One of his famous buy, Subaru, was already up twentyfold when he bought the stock and he made sevenfold after that.

Quotes from Peter are as follows:
"Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it."

"If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them."

"Investing without research is like playing stud poker and never looking at the cards."

"Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide."

"If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes.

His philosophy is:
• Know what you own.
• It's futile to predict the economy and interest rates.
• You have plenty of time to identify and recognize exceptional companies.
• Avoid long shots.
• Good management is very important - buy good businesses.
• Be flexible and humble, and learn from mistakes.
• Before you make a purchase, you should be able to explain why you're buying.
• There's always something to worry about.

His publications are:
• "One Up On Wall Street" by Peter Lynch with John Rothchild (1989)
• "Beating The Street"Peter Lynch with John Rothchild (1993)
• "Learn To Earn"Peter Lynch with John Rothchild (1996)

Friday, March 19, 2010

A five-star resort at Sanya

Sanya has many 5-star resorts. This is one of them.

The Goddess of Mercy at Sanya, China

The Guan Yin Bodhisativa also known as Goddess of Mercy is 325 feet high. It is 45 feet higher than the Statue of Liberty.

The Stock Market - How It Begins

In 1653 immigrants from Netherlands built a wall on a site to protect possible attacks from Indians. In this location, they started the stock market. Thirty-two years later, a street was built to replace the wall. This is how Wall Street came about.

Before the infamous crash of 1929, people made tons of money trading and investing in the stock markets. There were absolutely no risk until then. Everyone was happy holding stocks as investments. The 1929 crash completely changed this scenario. After one particular crash in 1987, the government intervened to give more protections to investors. Unfortunately, to a great extent, this has not been successful.

The market continues to experience wild swings every now and then. A severe downturn can wipe out your lifetime savings and investments in a short period of time.

However, the market is still a very lucrative place to put your money in. What is important is that you must educate yourself in the investment world. If you are unable to spot a good opportunity and know how to identify a good stock, making money in the stock market will continue to be a fantasy for you.

There is no short cut to riches. You have to work for it.

Thursday, March 18, 2010

Turtles make easy meat of sheep & lemmings

What are turtles? Turtles are trained traders. They are savvy and skillful in their trading. The sheep and lemmings are easy meat for them.
In 1983, two famous commodity traders, Richard Dennis and Bill Eckhardt did not see eye to eye in respect of trading. Richard was of the opinion that a trader could be trained to trade profitably while Bill said that a trader's skill was inborn. So, they decided to have a experiment.
Two groups of people were each given $2m to trade. One group was given professional training before they commenced. The other group was not given any training at all. Over time, the trained group was far more superior making over 80% annually. Thus, if you want to be successful in your trading, make sure your are a turtle and not a sheep or lemming.

Wednesday, March 17, 2010


In the animal kingdom, lemmings are herbivorous rodents. In the stock market, lemmings are followers of investments that eventually go bust.
Many people believe that lemmings commit mass suicide periodically. Actually, this is not so. It's true that lemmings breed rapidly and once every 3 to 4 years, they mass migrate in search of food and shelter. As they attempted to cross rivers or lakes or even an ocean, many of them drowned.

Tuesday, March 16, 2010

Casinos are not sure money

If you think that casinos are sure money, think again. In 2009 the major casinos in Nevada lost $6.8b. To know more about this, read the article appended below:

CARSON CITY, Nev. — Nevada's major casinos posted a net loss of $6.8 billion in fiscal year 2009, a 1,040 percent plunge from the $721 million earned in the prior year, according to a report released Friday.

The annual "Gaming Abstract" issued by the state Gaming Control Board tracks casinos statewide that gross $1 million or more in gambling revenue.

It's only the second time the state's biggest casinos had a loss. It's also the largest in history, providing more sobering evidence of how Nevada's tourist-driven economy has been walloped by the global recession. The last loss was in 2002, right after the Sept. 11 terrorist attacks, when casinos lost $33.5 million, said Control Board analyst Frank Streshley.

"This is a reflection of the recession," he said. "Even those visitors who did come to the state spent substantially less than they did two years ago." In 2007, casino's had a record net income of $2.3 billion.

The 260 casinos included in the latest report for the fiscal year ended June 30 had total revenue of $22 billion. Of that, $10.5 billion came from gambling revenue, which declined 12.7 percent.

Room revenue fell 16.6 percent to $4.3 billion; food, down 9.3 percent to $3.2 billion; and beverage, down 0.3 percent to $1.3 billion, according to the report.

Higher costs also ate into profits. General and administrative expenses increased $5.4 billion, or nearly 54 percent, over 2008. Included in that was bad debt expenses, which jumped 126 percent to $4.1 million; and $621 million in interest expenses, a 29 percent increase.

The report also said the major casinos in 2009 employed 177,397, roughly 25,000 fewer people than the year before.

A breakdown showed Clark County, with 149 casinos large casinos, had a combined net loss of $6.5 billion.

Thirty-two casinos in northern Nevada's Washoe County had a combined net loss of $47.4 million.

Statewide, the casinos paid $778.7 million in state gambling taxes and fees, representing 7.4 percent of their gambling revenue.

The unaudited report tracks gains - or in this case losses - after various expenses and state taxes - but not federal taxes or extraordinary expenses - are deducted from gross revenues.

Elko County's 18 casinos in northeast Nevada, a rich mining region that has withstood the recession, were the only ones to report a net income, a combined total of $36.2 million, the report said.

Five casinos along the South Shore of Lake Tahoe had a net loss of $260 million.

How's Genting Singapore after the initial fanfare? If you are in the stock, I wish you good luck; you may need it.

Monday, March 15, 2010

Bulls, Bears and Sheep

Bulls are those who buy in anticipation of a rise in price. Bears are those who sell in anticipation of a drop in price. But those who sell, may in actual fact, not bears. They may sell because of other reasons, like for example, they may be in urgent need of money or they may have spotted another stock which they think is better and wish to switch counters.
What are sheep? Sheep are neither bulls nor bears. They are followers; they act emotionally on the suggestions of friends or family members or remisers; they are naive, lack knowledge and do not have any strategies to trade or invest.
Sheep normally come in late in a bull market when the market is the talk of the town. They are normally fattened for the slaughter house.

Saturday, March 13, 2010

KPJ is going for the number 1 spot in the world

The man or woman at the top obviously makes the difference. Success or failure depends on him or her to a great extent.
Integrity without competency is useless. It doesn't add value. Competency without integrity is worst. The company makes money, but the money does not come to you, the minority shareholders. If a company makes good money but gives out very little dividends or no dividends, beware of two things. 1)The company's account may not reflect the true state of the financial standing of the company; it actually could not afford to pay out a good dividend. 2) there is lack of integrity; the interest of the minority shareholders is not considered. I normally avoid this type of company.
Competency with integrity is the best. KPJ is the typical example. From 2009 to date hereof, it has paid 230 units of Al Aqar Reit worth RM230, RM170 gross dividend, bonus issue of 500 units of 50 sen each, and 625 units of free warrants for every 1000 shares of RM1 each that you hold. And now it has proposed a dividend of 10 sen. Good earnings, great pay-out, and great potentials, that's KPJ! No wonder Datin Paduka Siti Sa'diah, the CEO of KPJ, gets the title: the best CEO of 2009.

KPJ has Great Potential

Siti Sa'diah is Malaysia's CEO of the year 2009. KPJ targets RM2b revenue in 2012 from RM1.4b currently. KPJ wants to be the world number 1. Those who bought KPJ at the beginning of 2009 or earlier and adopted the buy-and-hold strategy are laughing all the way to the bank. Click here to read more.

Friday, March 12, 2010

Ask a question

Do you know that if you have a question to ask you can do so here:
Go to the website, scroll down the screen. At the bottom on the right, click on Select at I want to....There are also some good articles at the site for your investing education.

Thursday, March 11, 2010

What you should know about earnings

Earnings are the life blood of a company. Without earnings, a company cannot survive. Earnings are referred to as the net earnings after tax. When you look at earnings, you must look at earnings per share (EPS) which is the net earnings divided by the number of shares issued. Many people look at total earnings without considering the paid-up capital and the par value of the share. This is not the correct way.
Another thing you should pay attention is whether there is any one-time gain , like the selling of an asset for example, that is included in the net earnings. Because such earning is unlikely to happen in the following year, the EPS should be adjusted if such earning is there.
Earnings and dividends are the most studied figures in an analysis as they are the ultimate determinants of the share price. If the earnings beat the estimates of analysts by a significant margin, the share price will normally surge.

Wednesday, March 10, 2010

Keck Seng (Stock Code 3476)

The FBMKLCI closed at 876.75 on 31 Dec 2008. Accordingly to the annual report of Keck Seng, it had investment in quoted shares that had a market value ofRM360,967 millions.
Yesterday, the FMKLCI closed at 1317.94. Using these figures to assess the market value of its share investment, the portfolio should have a market value of about RM542,278 millions. This is only a rough estimate because about 75% of the shares are outside Malaysia. What I understand is that they are mostly invested Wilmar International, Singapore which is under Robert Kuok. Assets-wise, Keck Seng is very rich. The problem is when is Keck Seng going to unlock the value of its assets. Keep in mind that they have 10,000 acres of land in South Johor. These lands will become more and more valuable as the development of Iskandar Malaysia becomes a reality.
Key Statistics of Keck Seng as at 31.12.2009 are:
Share Cap: 241,393
Reserve: 951,913
Long term borrowings: Zero
Short term borrowings: 23,887
Cash and short term investment: 351,852
Current assets: 635,587
Current Liabilities: 122.946
Earnings per share: 42 sen
Last Done: 4.78

So what do you think of Keng Seng as an investment? What's on your mind? All comments are welcome.

Tuesday, March 09, 2010

Reading the Annual Report

When you look at a woman, which part of her anatomy do you look at first? Is it her face, her bosom or her bottom? It is all a matter of choice. It doesn't matter so long as you get to look at the whole picture. Now, when you look into an annual report, it is the same. Which statement do you prefer to see first. Is it the income statement, the cash flow statement or the balance sheet? Personally, I go straight for the balance sheet to find out what the company has and what it owes others. If I don't find things attractive there, I will just close the report, avoid the stock and move on.
The things that I pay attention in the balance sheet are: Paid-up capital, par value per share, retained earnings, current assets, and current liabilities. I pay special attention to its cash position and how much debt it has. If its debt is too high, when compared to its equity, I will normally lower the grading of the stock. Don't forget that all companies that folded are those with very high debt.
From the balance sheet, I go to the income statement , the cash flow statement, and then the CEO's statement, or Chairman's statement. If both are available, I'll read them both and also the notes in the annual report to ascertain that the company is not involved in any litigation. Lastly, I will go to the page that shows the names of the majority shareholders. A strong major shareholder is a advantage. Take the case of YTL Cement whose major shareholder is YTL Corp.
Things to consider when assessing a company are as follows: a) Calibre of management; b) Modal of business; c) Earnings per share; d) Dividend yield; e) Cash and debt position; f) Barrier of entry; and g) sustainability of profit.

Monday, March 08, 2010

Iskandar Malaysia

Iskandar Malaysia covers 2, 217 sq kilometers. This is nearly 3 times the size of Singapore. (1 sq km = 247.105 qcres).
Nusajaya Medical Park, a subsidiary of UEM Land has a joint venture with Columbia Asia to build a 70-bed hospital in Afiat Healthpark in Nusajaya. Toward this end, a sale and purhase agreement has been entered between UEM Land & Columbia Asia involving the sale of a piece of land of more than 1 hectare for RM4.818 million in 2008. This will roughly give you an idea how much lands cost in the region.

Keck Seng

Resort World Singapore (RWS) is already up and running. It commenced business on 14 Feb 2010. According to reports in the media, it is now raking in millions of dollars daily (whether this is true or not is uncertain). Come April 27, 2010, Marina Bay Sands, also in Singapore, will commenced business. These two casinos will definitely boost the tourism industry of Singapore. Because of the close proximity of Iskandar Malaysia (IM) to Singapore, the IM is sure to benefit tremendously from these developments in Singapore.

We do have a master plan to develop the IM. But so far, it's all thunder and no rain; all talk and no action. Is there anything that is up and running; anything that we can be proud of to tell the world, so far? Time is of the essence and speed is everything. I think we have too many red tapes to deal with. If we want to achieve Vision 2020, please buck up. Time and tide wait for no man.

Keck Seng has no less than 10,000 acres of land in South Johor. The lands have not been revalued since 1980. Once they are revalued and the land value is unlocked, the price of Keck Seng will explode. I hold some shares in Keck Seng. I hope it will not be too long before Keck Seng reward its minority shareholders.

Sunday, March 07, 2010


Accept Full Responsibility

One thing you must learn, not only in the stock market, but in life as well, is to take full responsibility for all your actions. This means that whether you fail or succeed you must not blame others.

In my younger days I went into a joint venture with partners that I chose. Unfortunately that venture didn't turn out well. It failed miserably because of poor management and lack of integrity. The venture eventually folded and we went our separate ways. We are still friends even though I didn't like the ways they ran the business. If there is anyone to blame, it is myself. I picked the wrong partners; it was my lack of foresight.

I learned one very useful lesson in this failure. "Never depend on others to make money for you. If you can't be hands on to manage the business, don't go into it."
In the stock market, it is very easy to blame your broker or someone for that 'sure tip'
when the trade turned sour. But there is one thing you must not forget. It is your decision to listen to the tip after all. So,next time you are tempted to buy a stock because of a strong tip, remember to take full responsibility for your actions.

Research well before you buy.

Friday, March 05, 2010

Lake at Taman Wawasan, Puchong

What a sight for sore eye! Can't the Subang Jaya Municipal Council do something about this? What is our town councillor doing?
This lake should be converted into a fishing spot that can become an asset of the town instead of a liability. The park at Jalan Wawasan 4/6 is also littered with bottles, old shoes, old umbrellas and all kinds of rubbish. What the hell is our government doing? What happened to all our tax money?
What will foreigners say when they come here?

Thursday, March 04, 2010

Be Smart Don't Smoke

Beyond dispute, smoking is bad for your health. Smoking is open burning. It contributes much to global warming.
There was a time when smoking was considered and generally accepted as smart. This type of mentality has changed. Smoking is no longer smart. Look at the ministers of our country. Which one of them smoke? None, right? Smart people don't smoke now.
So, why don't you stop smoking? "I tried, but I couldn't stop the habit," is the normal answer. What nonsense! There is no way one can give up drinking water. But to give up smoking is really not that difficult. I was a smoker; many of my friends were smokers. We have all given up. So why not you?
Cigarettes are expensive these days. Assuming that you spend RM10 for smoking each day. That means you have to spend RM3650 in a year. Do you know that to get RM3650 a year as interest from the bank, you need to deposit with the bank RM182,500!! (Banks pay 2% interest per year)
So it goes to reason that the moment you stop smoking, you have gotten yourself a winning tottery ticket of Rm182,500! Doesn't this mean anything to you?

Once you stop smoking, your food will taste better, your drinks will taste sweeter, your health will improve, and you will have a better sex life. So be smart, be healthy, be a non-smoker. I was a smoker; I gave up for the same reason.
If you like this article, please email it to your friends. Thanks.

Wednesday, March 03, 2010

Day Traders

Day Traders are the darlings of remisers and broker firms. Without them, the commissions generated in the market would be greatly reduced. These group of people should be given free lunch everyday.

A Day Trader normally makes several trades a day and closed out his positions all within the same day. Day traders do know care about the fundamental aspects of the stocks they buy. The smart ones who study charts closely and follow price trend or patterns may have a chance to win. Sadly the majority of day traders are not proficient and professional enough to make a profit. They play on margins and before long, many of them, not only say bye bye to their hard-earned cash but also gotten themselves in debt.

If you want to be a Day Trader, learn the trick of the trade first or you will be tricked in the trade.

Money Money Money

I work all night, I work all day, to pay the bills I have to pay
Ain't it sad
And still there never seems to be a single penny left for me
That's too bad
In my dreams I have a plan
If I got me a wealthy man
I wouldn't have to work at all, I'd fool around and have a ball

Money, money, money
Must be funny
In the rich man's world
Money, money, money
Always sunny
In the rich man's world
All the things I could do
If I had a little money
It's a rich man's world

A man like that is hard to find but I can't get him off my mind
Ain't it sad
And if he happens to be free I bet he wouldn't fancy me
That's too bad
So I must leave, I'll have to go
To Las Vegas or Monaco
And win a fortune in a game, my life will never be the same

Money, money, money
Must be funny
In the rich man's world
Money, money, money
Always sunny
In the rich man's world
All the things I could do
If I had a little money
It's a rich man's world

Money, money, money
Must be funny
In the rich man's world
Money, money, money
Always sunny
In the rich man's world
All the things I could do
If I had a little money
It's a rich man's world

It's a rich man's world

Tuesday, March 02, 2010

Cult Stock

What is a Cult Stock?

A Cult Stock is a stock that has insignificant fundamental value but a large investor following. People are lured to cult stocks because of big stories, normally regarding big contracts about to be signed or newest discovery in oil, gold or drugs that can do wonders.
The majority of Mesdaq counters (now renamed AEC counters) are Cult Stocks. Many people got their fingers burned buying there counters. Don't go for Cult Stocks. The odds of winning buying Cult Stocks are heavily against you.

Monday, March 01, 2010

World's Billionaires

Bill Gates lost $18 billions in 2008 but regained the tittle as the world's richest man in 2009. What happened to Warren Buffett? Read here.

Bear Raid

What is a Bear Raid (BR)?

A BR is a strategy to push down the price of a stock. Only a big trader or a cartel of traders is able to do this. Many people will suffer devastating loss of money in a BR. Accordingly to security law, a BR is illegal and the manipulators can be fined or imprisoned.
In countries where short selling is legal, a BR usually commenced with short selling followed by heavy aggressive selling and the spreading of negative rumors. These activities cause the prices of the targeted stocks to plummet. When the prices have dropped to a sufficiently low level, the manipulators will buy back the stock.
If you are a proficient chart reader, you should be able to detect these selling and buying activities. The BR is the opposite of the Pump & Dump strategy. Savvy investors and smart traders are able to profit from these manipulations. Can you?