Tuesday, January 29, 2013

The 10 Commandments

1. Thou shall not go against the trend.
If it be down, let it be down. The market is bigger and stronger than you.
Follow the market but be one step ahead of the crowd.

2. Thou shall not follow the herd instinct
Just because many people are buying a certain stock does not mean you should follow suit. If people want to buy rubbish stocks, that is their bad luck. Don't make it yours.

3. Thou shall treat the market as a business, not a casino
The stock market is not meant to be a casino and you should not be there to gamble.

4.Thou shall not buy high-debted and no-earnings stocks
All companies that folded are highly geared with negative earnings. Don't buy rubbish shares; don't buy somebody's liabilities.

5. Thou shall only buy solvent companies with good-growth prospects
Present earnings are important, but future earnings are more important. That's why we have companies selling at high PER (Price earnings ratios).

6. Thou shall not be overconfident
Overconfidence leads to overtrading. Once you overtrade, you may not be able to control your own emotion. Fear may set in when the market is not going the way you expect it. It may disrupt your plan, turning your profitable trade into a loss.

7. Thou shall invest within the comfort zone
Don't be too greedy; don't play with borrowed money. Debt is a disease. It can cause you a lot of problem if you are not careful.

8. Thou shall be patient
The market is designed to transfer money from the impatient to the patient. You must have very good reasons before you switch counters. Very often, the shares you sell move up faster than the shares you buy.

9. Thou shall be disciplined
Don't change your strategy at the eleventh hour. If you have placed a stop-loss in your chart, don't remove it unless it is replaced with a trailing stop-loss.

10. Thou shall be knowledgable
Investment in knowledge pays the best dividend. No one is so skillful that he cannot better his best. Keep learning for knowledge is boundless.

Happy investing.

Friday, January 25, 2013

The Importance Of The Trend

One of the most importance features in TA (Technical Analysis) is the trend. Before you buy or sell, you should have a look at the trend of the stock. How do you do that? The only way I know is to look at the chart. ( I wonder how people who do not believe in charts do it.)

With a chart it is easy for you to know the trend. When you see higher highs and higher lows, you have an uptrend. When you see lower highs and lower lows, you have a downtrend. Your can also have a sidetrend which means that prices are moving sideways in a narrow range.

Once you have determined the trend, you can then decide what action to take.
Buying in a downtrend should be avoided, especially when the downtrend is initially moving down after a long uptrend.

Similarly, selling in an uptrend should also be avoided, especially when the uptrend is just beginning to trend up after a long downtrend or a long sidetrend.

Many people make the mistake of selling in the initial stage of an uptrend. This is because they have been holding the stock for too long at a loss, and when they see a chance to get out at a small profit or a small loss, they quickly do it. This is a grave error, because more often than not, the price continues to move up after their sales.

How many times have you heard people say this, "I sold out just before the big rise?" Remember this: A trend in motion is likely to continue.

Never be the first to sell in an uptrend nor the last to buy. Never be the first to buy in a downtrend nor the last to sell.

If you find this article useful, please click "f" or tweet it. Thanks.

Thursday, January 24, 2013

A novice trader is a sheep

Making some mistakes is part and parcel of the game. But to continue making the same mistakes again and again is unacceptable. If you are losing money consistently, better stop immediately. Upgrade yourself first and fight later.

The shrewd learn from the mistakes of others. The foolish don't even learn from their own mistakes.

A novice is bound to have many disadvantages and make many mistakes when he starts to trade. What are these mistakes and disadvantages? Below are some of them:

1. Yielding to the herd instinct

A newbie in the market is a sheep. He has not idea of his own. So he simply follow his friends, thinking there is safety in numbers. Very soon he will find out that there is no safety in numbers and some of his money has gone.

2. Listening to a tip

A tip is seldom a good tip, especially one that comes from a remiser. Why? It's simple logic. When a big boy wants to unload his stocks, he will get someone to tell his remiser that the stock is a good buy. Thus you buy what he sells.

There is only one good tip you can get from your remiser. Ask him for the name of the person who consistently wins. (Assuming there is one). Then you can watch him closely and learn from him.

3. Haste

Many mistakes come from haste. The Chinese says: 万事皆从急中错.
When you are new in the market, you have little patience to wait. Hence you move in and out of the market too frequently. You forget that every time you trade, you pay money to the government, the broker firm and Bursa.

4. Lack of experience, lack of knowledge & lack of wisdom

Experience is the best teacher. It is also the most important. Unfortunately, it is the most costly as well. And the market is the most expensive place to find this out.

5. Trading without a plan

It is said that if you failed to plan, you planned to fail. No one ever goes to business without a plan; no one ever built a house without a plan, and no one ever goes to battle without a plan. Trading in the stock market is akin to going to a battle. Do you think you can win without a plan?

6. Overestimating your own ability

This is a very common error. When you win, you say you are skillful; when you lose, you say luck is not with you.

My advice is:
Be knowledgeable, be patient, trade with a plan and always remember that
Luck Favors The Prepared Mind.

Tuesday, January 22, 2013

Pantech Going From Strength to Strength

Pantech made a net profit of RM15.6m (EPS 3.33 sen) for the 3rd quarter ended 30.11.12. In the previous corresponding quarter, it made only RM10.3M. The improved result is because of strong demand for its products in the oil and gas sector. It has declared a 3rd interim dividend of 1.2 sen.

At the last traded price of 75.5 sen per share, there is value in the stock. Click here to know more about Pantech.

Sunday, January 20, 2013

Smartag displays bullishness

Smartag was in great demand last Friday. The above daily chart of Smartag clearly shows this. Hopefully, it is not a "false dawn".

Wednesday, January 16, 2013

The above chart of TMCL shows a breakout, and a pullback. The stock is likely to move higher. The last traded price is 41 sen.

Psychology & the Stockmarket

Dreman in his book, "Psychology & the Stockmarket" says:

The best chance an investor has is to stand apart from popular thinking. He must be willing to forego the thrill of being in unison with the market, in agreement with the expert opinions and with the exciting, seemingly surefire ideas currently in vogue.

This is no small sacrifice. To own the right stocks in a rising market is a heady experience. There is a wonderful blend of monetary gain and ego satisfaction in being right in a popular manner.

Man is a social animal. To succeed, the investor has to be able to withstand the tremendous pressure leading to conformity. He will face a continuing flow of negative feedback from the market, from experts and from groups of people whom he respects.

The reader may feel a little bit like the patient whose doctor has advised him to give up sex for his health.

Some of us might just prefer to die happy.

The above excerpt simply means that to succeed in the stock market, one must be able to avoid the herd instinct, have full confidence in oneself and act without referring to any one.

Sunday, January 13, 2013

Shark's fin soup kills sharks and could poison you too

Think twice before you order shark's fin soup in the future, not only is it an endangered species but Chinese experts say it is potentially dangerous to your health.
Zhejiang authorities recently discovered that many shark's fins sold in the market were artificial products and some contained excessive levels of cadmium, an extremely toxic metal.
The artificial shark's fins are made of edible gelatin and seaweed gum. "These outlets purchased fake shark fins at a low price, but sold them to customers as genuine product for up to 1,000 yuan (RM488) a bowl," it said.
Similar results were found in an investigation by the province's Consumer Rights Protection Agency, which randomly selected about 10 samples of shark's fin soup collected from local restaurants for DNA testing. No shark's fin was found in any of the soups!

Insiders revealed that artificial shark's fins are widely available in the market. "Many restaurants and hotels have bought such product from me," said Lin Wenyu–a wholesaler that sells "vegetarian" shark's fin at Shanghai Tongchuanlu Seafood Market.
But it's not just the fake shark's fin soup that's dangerous. The agency also found about one-third of dried shark's fin in the province's markets contained excessive cadmium and methyl mercury.
Local news website Zjol reported that ocean pollution could lead to high levels of metals in the sharks and experts said excessive ingestion of mercury could harm pregnant woman and the development of the fetal brain and nervous system.
In recent decades, demand for shark's fin has increased, raising concerns about the sustainability and welfare of sharks. Each year, about 73 million sharks are killed around the world to meet the increasing demand for shark's fin soup.
The population of some species of shark have declined up to 99% according to WildAid, a wild animal conservation organisation that advocates shark protection.

Sharks are often alive when their fins are sliced off. Since their meat is not considered as valuable as their fins, they are thrown back into the water to drown or bleed to death.
Many Chinese celebrities, including legendary gymnast Li Ning, former NBA icon Yao Ming, retired diving queen Guo Jingjing and singer Liu Huan, have joined in shark protection campaigns.
Some luxury hotels and popular restaurants have also taken the traditional delicacy off the menu to stop the fish from becoming extinct. But many eatery operators continued to serve shark's fin soup, citing commercial concerns.
"The soup is one of the major dishes at banquets. People believe banquets would be degraded without it and they'll not hold events at our outlet if we don't provide this dish," said a restaurateur in Tianjin, who declined to give his name.
Experts said shark's fins are not as nutritious as many people believed. "What it contains is incomplete protein, of which the nutritional value is not as high as people expect," said Chen Shunsheng, professor of College of Food Science at Shanghai Ocean University.
Source: China Daily; ANN
Published: 10th January 2013

It's time to switch to bird nests.

How to do the *Gangnamstyle"

Thursday, January 10, 2013


If a thing appears too good to be true, it probably is.

Rumor abounds that DRB-HICOM may be privatized at between RM3.50 to 4.00.

The stock reacted fast to the rumor. It moved up 7 sen to close at 2.70 in heavy volume.

This type of news can be extremely dangerous especially to the naive players. In my opinion, Bursa should immediately suspend the stock and make an investigation as to who started the rumor. It should also take appropriate action if the rumor is created by someone who wishes to unload his stocks.

It will be failing in its duty if it fails to protect the small players.

Tuesday, January 08, 2013

Adventa PN 17

Adventa is now classified as a PN 17 company. What does this mean?

PN 17 stands for Practice Note 17/2005 (formerly known as PN 4).
The reasons for companies to be classified under PN17 are as follows:
1. Shareholders' funds less than 25% of their total paid-up capital.
2. Receivers have been appointed to take control of the companies’ assets.
3. The winding-up of some of their subsidiaries and associated companies.
4. The auditors have expressed adverse opinions on the companies.
5. Default in loan interest and principal repayments.
6.The companies have suspended or ceased their operations.

Adventa lost 5 sen at the close of trading this morning. It was lasted traded at 43.5 sen.

The company is not in any financial distress. I don't think there is much cause for concern. It was suspended because it sold its core business in the glove industry. It has 12 months to submit a regularization plan to Bursa and get it approved. I have no cause to opine it will fail to do this.

Monday, January 07, 2013

Sleeping Beauties, Love Them, Hold Them

Sleeping Beauties can make you rich.
The key attributes of a sleeping beauty are as follows:
1. Strong balance sheet with much cash and little or zero borrowings
2. Ill-liquid
3. Low PER (Price Earnings Ratio)
4. High NTA (Net Tangible Asset)
5. Popularity: low
6. Future Potential: great
7. Safety: High
8. Management: Passive and cautious

If you have deep pockets, and want to play safe, the best way to riches is to invest in sleeping beauties. These beauties are hard to come by, easy to love, and safe to keep. They pay you decent dividends while you wait for them to wake up.

The big money will come in when a meager or acquisition happens. Because sleeping beauties are prime candidates for takeovers, a meager or acquisition is sure to happen some time in the future.The problem is that we do not know when. If you are not patient enough, sleeping beauties are not for you.

In my investing career, I have invested in many sleeping beauties and profited much from them.

Whether they are suitable for you or not, the best person to judge is you, yourself.

Sunday, January 06, 2013

Adventa HitsThe Limelight

Adventa is no longer in the glove business. It is now focusing in healthcare industry which it says is more profitable and predictable. The stock was up 19.5 sen after it went ex-dividend (XD) of RM1.70 per share. Prior to XD, the stock was last traded at 1.93. After XD, it closed at 42.5 sen on very heavy turnover. Bursa has queried the company on its sudden price-surge. If it gives a good and positive answer, the stock is likely to move up further. Interest in the stock is likely to be ongoing for a while. I like this stock because the company is in good hands with excellent principles.
Below is an extract from its website.

Company Principles

ADVENTA operates in many regions around the world, in varying political and social environments, with people of different races and cultures. The Group adheres to the following 6 organizational principles in its dealings with its customers, suppliers, shareholders, and partners:
1. Integrity
2. Corporate Responsibility
3. Quality and Value
4. Focus
5. Non-political Involvement
6. Environmental Care

ADVENTA maintains integrity in all dealings and trade, working to achieve excellence through honesty and responsibility, and without compromising on its duty of care. Undue and illegitimate practices are not tolerated.

Corporate Responsibility
ADVENTA operates with a clear open policy when dealing with its shareholders and the authorities, making proper and timely disclosures of any and all material factors it faces. ADVENTA is to uphold and maintain the trust of its customers and shareholders.

Quality and Values
ADVENTA strives for quality in all it does, giving customers the value they expect and deserve. ADVENTA endeavors to meet customer requirements and exceed expectations with the products it manufactures and sells.

The Group maintains a clear and defined focus on its objectives and targets. ADVENTA is set to be a multi layered and multi-product group producing and distributing products used in the healthcare industry.

Non-political Involvements
ADVENTA operates for commercial enterprise and to create value and returns for its shareholders. The Group is determined to operate within the legitimate laws and regulations set down by the democratically elected governments and do not involve themselves in any political, philosophical activity or movement of any particular group, country, or region.

Environmental & Social Cares
ADVENTA operates within accepted social and environmental requirements. Its responsibility to society and social wellbeing is a priority in all its commercial decisions. ADVENTA works to achieve a cleaner and healthier environment for all employees and the societies it operates in, and uses its knowledge and ability to contribute back to its environment. The lives, careers and the rights of its employees are respected and enhanced in recognition of their loyalty and dedication in the organization.

Stock Market Report

Helium was up, feathers were down.
Paper was stationary.
Fluorescent tubing was dimmed in light trading.
Knives were up sharply.

Cows steered into a bull market.
Pencils lost a few points.

Hiking equipment was trailing. 

Elevators rose, while escalators continued their slow decline.

Weights were up in heavy trading.

Light switches were off.

Mining equipment hit rock bottom.
Diapers remain unchanged.
Shipping lines stayed at an even keel.

The market for raisins dried up.

Coca Cola fizzled.

Caterpillar stock inched up a bit.

Sun peaked at midday.

Balloon prices were inflated.
Scott Tissue touched a new bottom.

And batteries exploded in an attempt to recharge the market...

From Clyde's collection

Wednesday, January 02, 2013

One Up For Multico

Multico has announced that Dato Abdul Hasan (2nd Defendant) has agreed to pay back to the company Rm22,000,000, after the market closed today.

This means that for the financial year ending July 31, 2013, Multico's EPS will be boosted by 48.5 sen per share. For details of the payment, please refer to Company Announcements at Bursa.

The chart above clearly shows that accumulation of the stock has been ongoing for the past several trading days. So are charts useless or useful?

If you know how to read it, it is useful. If you don't, then of course, it is useless.

Multico is likely to move up further.

Happy New Year.