Do you know why companies have different destiny? While some are able to grow and prosper, others have failed miserably. Logic tells us that it's the management that makes the difference.
The CEO is the most important person in a company. If this person is competent and has integrity, the company is bound to grow. Competency without integrity is disastrous. You may see the money, but it does not go to you. Of what use is cash if you can't get your hands on them.
In the stock market, everything is not what it appears to be. You have to be very careful. Misleading statements, fraud accounting, manipulation, such as "pump and dump" or "short and distort" are common traits. Although the SEC is here to see law and order, it can never do enough to protect the laymen from being cheated. Take care to note the names of those CEOs in failed companies. This will go a long way to save you from getting involved with people who have no integrity. I am not saying that every CEO in failed companies is bad. But it's better to mix with people who succeed rather than those who fail.
Get close to black ink, and you will be black; get close to gems, and you will shine.
You must upgrade yourself all the time just to stay in play. Time and again, you may feel that you have become proficient only to realize later that once again you are at the wrong end of the bargain.
The world is forever changing. You need to stay focus on your job and stay well informed on what is happening locally and abroad as well.
The present flooding in Thailand, the worst in the last 50 years, is causing great havoc to the country. Malaysia needs to be careful. Obviously, climatic change is one of the factors. Malaysia should find out the causes and take preemptive steps to prevent such flooding if possible.
Fire and water have no emotion. They can really punish you when they are the masters at their fury.
马 到 功 成. Success is when the horses come. Success goes only to those who dare and act, it seldom goes to the timid. The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.
Sunday, October 30, 2011
Sunday, October 09, 2011
How To Effectively Investigate A Stock
Thanks to the internet, there is an information overload when it comes to investigating stocks. Simply type in a ticker symbol in any search box, and within seconds you have dozens of articles and related links on that particular stock. Properly navigating through the haystack of information and determining how to use it can be daunting and intimidating, and while there are no shortcuts to properly evaluating a stock, investors can eliminate a lot of unnecessary or repetitive effort by knowing how to effectively investigate a company.
TUTORIAL: Investing 101 For Beginner Investors
Basics First: What is a Stock?
As elementary as it sounds, many investors know what a share of stock is, but often ignore what it means. Stock is an equity claim on the business. Specifically, owning stock is defined as having a residual claim on the business. A stock investor's claim on a company is residual by debt holders and preferred stock holders.
Balance Sheet
Because of this residual claim, the very first place investors should go when investigating a stock is the balance sheet. The balance sheet is one of three principal financial statements of any company, with the other two being the income statement and the statement of cash flows. The balance sheet gives a snapshot of the company's financial position at a specific moment in time. As such, it is more important than the income statement. (For more information, see 5 Tips For Reading A Balance Sheet.)
Often, investors first examine the income statement in order to determine profitability. Profits are extremely valuable, but the balance sheet shows you how healthy a company is. A profitable unhealthy company is a disaster that many investors fail to consider. A quality balance sheet protects a company when times get bad. Consider the various recessions in the U.S. in the past 50 years; most of the companies that failed to make it through had a balance sheet problem.
When looking at the balance sheet, you want to examine the indebtedness of a company. Evaluate the debt in relation to total assets and equity value. Consider the quality of the company's assets. How do current assets stack up against current liabilities? How much cash is on the balance sheet in relation to debt? How much goodwill or other intangible assets are on the balance sheet? Under tough operating environments, goodwill and intangibles are usually worth very little for most companies.
Once a balance sheet has been examined, it can be connected with the other financial statements. Look at the interest expense line item on the income statement and compare it to the company's earnings before interest and taxes. Is the company comfortably making its interest payments?
Management
Once you get a handle on the financials, investigate management. An effective way to do this is by reading a company's annual proxy statement (DEF 14A), which can be found on the company's website or at the Securities and Exchange Commission website. A proxy statement will show you insider ownership levels and management pay, two good metrics for evaluating management. (For related reading, see SEC Filings: Forms You Need to Know.)
Investigate Industry
If you are still comfortable with the company, it's time to investigate the industry. One quick way to do this is to compare numbers between competitors. Some great numbers to investigate:
1. Operating Margins
Does one company have significantly higher or lower margins than the others? Is this a long-term occurrence or a one-time benefit?
2. Debt to Equity Levels
Is the industry characterized by high or low levels of debt? How does the company stack up?
3. Capital Expenditures
Found on the cash flow statements. Is the industry capital intensive? If so, this could be a problem during weak environments.
4. Competition
Is there a lot of competition? Coca-Cola only competes with a couple of companies. Teen retailer Abercrombie and Fitch has lots of competition. A great deal of competition can make it difficult for a company to consistently earn profits, as these businesses have to compete on price.
Detective Work
Once you have done all the above, the detailed detective work begins. Now you should go back and read the company's financial releases and get a feel for the how the company is looking at growing and creating value for the business. Examine the company's additional SEC Filing, including 13D filings which show if other major investors are taking stakes in the company.
If the particular company you are looking at has operations in your area, go visit them. Some of the best analysis on a company is not found in documents, but visible through the day to day operations.
Conclusion
In the end, this investigative work will give you your unbiased insight into the company. As a result, you are far more likely to make better investment decisions based on quality data and analysis. (For related reading, also take a look at Blending Technical And Fundamental Analysis.)
by Sham Gad (Contact Author | Biography)
** This article and more are available at Investopedia.com - Your Source for Investing Education **
TUTORIAL: Investing 101 For Beginner Investors
Basics First: What is a Stock?
As elementary as it sounds, many investors know what a share of stock is, but often ignore what it means. Stock is an equity claim on the business. Specifically, owning stock is defined as having a residual claim on the business. A stock investor's claim on a company is residual by debt holders and preferred stock holders.
Balance Sheet
Because of this residual claim, the very first place investors should go when investigating a stock is the balance sheet. The balance sheet is one of three principal financial statements of any company, with the other two being the income statement and the statement of cash flows. The balance sheet gives a snapshot of the company's financial position at a specific moment in time. As such, it is more important than the income statement. (For more information, see 5 Tips For Reading A Balance Sheet.)
Often, investors first examine the income statement in order to determine profitability. Profits are extremely valuable, but the balance sheet shows you how healthy a company is. A profitable unhealthy company is a disaster that many investors fail to consider. A quality balance sheet protects a company when times get bad. Consider the various recessions in the U.S. in the past 50 years; most of the companies that failed to make it through had a balance sheet problem.
When looking at the balance sheet, you want to examine the indebtedness of a company. Evaluate the debt in relation to total assets and equity value. Consider the quality of the company's assets. How do current assets stack up against current liabilities? How much cash is on the balance sheet in relation to debt? How much goodwill or other intangible assets are on the balance sheet? Under tough operating environments, goodwill and intangibles are usually worth very little for most companies.
Once a balance sheet has been examined, it can be connected with the other financial statements. Look at the interest expense line item on the income statement and compare it to the company's earnings before interest and taxes. Is the company comfortably making its interest payments?
Management
Once you get a handle on the financials, investigate management. An effective way to do this is by reading a company's annual proxy statement (DEF 14A), which can be found on the company's website or at the Securities and Exchange Commission website. A proxy statement will show you insider ownership levels and management pay, two good metrics for evaluating management. (For related reading, see SEC Filings: Forms You Need to Know.)
Investigate Industry
If you are still comfortable with the company, it's time to investigate the industry. One quick way to do this is to compare numbers between competitors. Some great numbers to investigate:
1. Operating Margins
Does one company have significantly higher or lower margins than the others? Is this a long-term occurrence or a one-time benefit?
2. Debt to Equity Levels
Is the industry characterized by high or low levels of debt? How does the company stack up?
3. Capital Expenditures
Found on the cash flow statements. Is the industry capital intensive? If so, this could be a problem during weak environments.
4. Competition
Is there a lot of competition? Coca-Cola only competes with a couple of companies. Teen retailer Abercrombie and Fitch has lots of competition. A great deal of competition can make it difficult for a company to consistently earn profits, as these businesses have to compete on price.
Detective Work
Once you have done all the above, the detailed detective work begins. Now you should go back and read the company's financial releases and get a feel for the how the company is looking at growing and creating value for the business. Examine the company's additional SEC Filing, including 13D filings which show if other major investors are taking stakes in the company.
If the particular company you are looking at has operations in your area, go visit them. Some of the best analysis on a company is not found in documents, but visible through the day to day operations.
Conclusion
In the end, this investigative work will give you your unbiased insight into the company. As a result, you are far more likely to make better investment decisions based on quality data and analysis. (For related reading, also take a look at Blending Technical And Fundamental Analysis.)
by Sham Gad (Contact Author | Biography)
** This article and more are available at Investopedia.com - Your Source for Investing Education **
Monday, October 03, 2011
Thumbs up for home-grown RFID system
2011/10/03
THE impending deployment of a radio frequency identification (RFID) tag system by the Royal Malaysian Customs at all its checkpoints nationwide to facilitate trade and security is a potential plus for Malaysia in giving peace of mind to investors.
Prior to the soft launch in Penang last week by its developer Smartag Solutions Sdn Bhd, the RFID-based security and trade facilitation system has been given the thumbs up by local and foreign logistics players that participated in a three-month trial-run, which ended in August.
The project, which is set to be financed by newly-listed Smartag Solutions, is one of 12 initiatives under the government's Economic Transformation Programme.
From Saturday and over the span of two years, the home-grown RFID system will be implemented in stages at more than 200 customs checkpoints and 600 high-value bonded warehouses nationwide.
Some of participants of the project, which essentially allows users to secure their containers (whether by air, land or sea) with RFID seals and track their movements electronically while entering, leaving or moving within the country, were DHL, TNT, Federal Express, Western Digital and Priority Cargo.
For these companies, whose reputation is built on speed, reliability and just-in-time delivery, the introduction of the RFID system is most welcome since it has the potential to increase customs clearance efficiency, along with paperless clearance and processes.
RFID is a generic term for technologies using radio waves to identify people or objects and has been available since the World War Two when the British army used it to recognise, among other things, friendly aircraft.
It is not every day that a logistics giant like TNT Express Worldwide NV comes forward and lends it endorsement to the Malaysian Customs for introducing this project.
The pilot run of the project was a collaboration between the Royal Malaysian Customs, industry users and Smartag, with facilitation by the Performance Management and Delivery Unit.
The company's regional network manager (Asia Road Network), Dinesh Kanapathy, said at the soft launch that his company had accrued a time-reduction savings of at least 50 per cent for customs clearance when participating in the trial run.
Other global names have also endorsed the RFID tag, as it has been proven to work in favour of safe logistics.
Penang investors remember only too well the international embarrassment caused to the country in 2006 by a RM50 million computer chip heist at the Batu Maung Free Commercial Zone, near the Penang International Airport.
The world's biggest chipmaker Intel Corp - whose investment presence in Penang spans close to four decades - said it was a victim of the microchip robbery, which left everyone in the state spooked over the lack of security measures in the movement of high-value goods.
By making available to investors, both local and foreign, the option of a cost-effective resource to save time, reduce labour requirements and afford better visibility of moving goods and services, Malaysia can only improve its position as a preferred site for doing business.
Depending on how successful efforts by Smartag Solutions are in convincing importers, exporters and their suppliers on the value of adopting RFID-based security systems, the field is wide open in Malaysia and elsewhere for other sectors - such as the judiciary and healthcare industry - to adopt this system of profiling, tracking and communicating.
THE impending deployment of a radio frequency identification (RFID) tag system by the Royal Malaysian Customs at all its checkpoints nationwide to facilitate trade and security is a potential plus for Malaysia in giving peace of mind to investors.
Prior to the soft launch in Penang last week by its developer Smartag Solutions Sdn Bhd, the RFID-based security and trade facilitation system has been given the thumbs up by local and foreign logistics players that participated in a three-month trial-run, which ended in August.
The project, which is set to be financed by newly-listed Smartag Solutions, is one of 12 initiatives under the government's Economic Transformation Programme.
From Saturday and over the span of two years, the home-grown RFID system will be implemented in stages at more than 200 customs checkpoints and 600 high-value bonded warehouses nationwide.
Some of participants of the project, which essentially allows users to secure their containers (whether by air, land or sea) with RFID seals and track their movements electronically while entering, leaving or moving within the country, were DHL, TNT, Federal Express, Western Digital and Priority Cargo.
For these companies, whose reputation is built on speed, reliability and just-in-time delivery, the introduction of the RFID system is most welcome since it has the potential to increase customs clearance efficiency, along with paperless clearance and processes.
RFID is a generic term for technologies using radio waves to identify people or objects and has been available since the World War Two when the British army used it to recognise, among other things, friendly aircraft.
It is not every day that a logistics giant like TNT Express Worldwide NV comes forward and lends it endorsement to the Malaysian Customs for introducing this project.
The pilot run of the project was a collaboration between the Royal Malaysian Customs, industry users and Smartag, with facilitation by the Performance Management and Delivery Unit.
The company's regional network manager (Asia Road Network), Dinesh Kanapathy, said at the soft launch that his company had accrued a time-reduction savings of at least 50 per cent for customs clearance when participating in the trial run.
Other global names have also endorsed the RFID tag, as it has been proven to work in favour of safe logistics.
Penang investors remember only too well the international embarrassment caused to the country in 2006 by a RM50 million computer chip heist at the Batu Maung Free Commercial Zone, near the Penang International Airport.
The world's biggest chipmaker Intel Corp - whose investment presence in Penang spans close to four decades - said it was a victim of the microchip robbery, which left everyone in the state spooked over the lack of security measures in the movement of high-value goods.
By making available to investors, both local and foreign, the option of a cost-effective resource to save time, reduce labour requirements and afford better visibility of moving goods and services, Malaysia can only improve its position as a preferred site for doing business.
Depending on how successful efforts by Smartag Solutions are in convincing importers, exporters and their suppliers on the value of adopting RFID-based security systems, the field is wide open in Malaysia and elsewhere for other sectors - such as the judiciary and healthcare industry - to adopt this system of profiling, tracking and communicating.
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