A Trader is not a Gambler

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• Five Reasons Why A Real Trader Is Not A Gambler How often have you heard someone say that they just bought a stock because they have a feeling that it is going to move higher? Personally, I hear someone tell me that every single trading day. When I ask them how they know the stock is going to move higher they answer by saying it's a hunch or they heard someone talk about it. Well, in the trading world it is not prudent to take tips or trade on a hunch. There needs to be a sound methodology for taking a trade, otherwise it is just gambling. It is important to note, a good trader has the odds in his favor while a gambler does not. Just think about it, how can a Las Vegas casino stay in business if they do not have the odds in their favor? The answer is they can't. A casino knows that the odds are always in their favor and the longer a gambler plays in the casino the more likely the casino will take their money. As a trader you want to be Steve Wynn, not the guy at the roulette wheel placing bets.
  Here are five reasons why a good trader is not a gambler, but more like a Las Vegas casino owner:
  1. A good trader takes a position when the odds are in his favor, not when the odds are against him. An educated trader will accomplish this task by using charts and understanding the human emotion that is being displayed on a chart. That is why certain breakout and breakdown patterns continue to reoccur throughout history. The chart pattern is simply recording the human emotion that is taking place in that particular equity.
  2. A good trader will know when to cut his loss when he is wrong. The legendary trader Jesse Livermore used to say that a trader should never take more than a 10 percent loss on any position. Even a Las Vegas casino will cut off a hot gambler if they win too much money. When a trader can admit they are wrong on a trade and limit the loss it is much easier to come back from that error. Traders must always use a stop loss.
  3. A good trader does not need constant action in the market. A trader only enters a trade when the chart setup favors that he will make money. If the chart setup does not overwhelmingly support a pattern then the trader does not want to be in the position. A gambler constantly needs action; they continuously need to have some type of bet in place at all times. This gambler mentality is one of the reasons why so many people over-trade and lose money. A good trader patiently stalks out a stock or equity waiting for the right chart setup to appear. One thing I have learned over the years is that the worst thing you can do as a trader or investor is to force your will on the market. Chart patterns make money and you must patiently seek the good charts out.
  4. A good trader does not trade will with capital they cannot afford to lose. It is so important to be calm and keep all of your senses when trading. I have seen traders enter a position hoping that it is going to work out and their heart rate jumps up like they are running a marathon, this is usually a sign that they are trading too much money. A trader should not use capital that makes them feel uncomfortable. A gambler will usually bet the farm on a single bet, a good trader will not. Gamblers are always doubling down after they lose; this is a recipe for disaster, especially if you are a trader. I have seen traders blow up their entire accounts by doubling down and averaging in.
  5. A good trader does not take tips from others, but looks at the chart and decides whether the pattern is bullish or bearish. Have you ever been to a horse track? Half of the bets in a horse race are because someone has given someone else a tip. Good traders do their own due diligence and never listen to the public. Remember, when everyone is looking at the same thing it will rarely happen. Never take tips. Even the legendary Jesse Livermore admitted this to be one of his biggest mistakes as it was usually one of the main reasons for his trading losses.
• 
  Nicholas Santiago
  InTheMoneyStocks.com

Latitude Back On Track

Latitude went up to an intraday high of RM2.82 on Feb 20, 14. A mild correction because of profit-taking brought the stock down to RM2.35 where it found strong support. 

The stock is now back to its uptrend track. Strong resistance is seen at around the RM2.80 area. If RM2.82 is decisively breached, the stock is likely to trend up higher. At the time of writing this post, the stock was lasted traded at RM2.69.

Buy at your own risk. 

CBIP wins RM46 million contract

This daily chart of CBIP is a beauty to behold. The stock has been having a gradual uptrend. Of late, this uptrend is becoming steeper. The company has just announced that it has been awarded a contract to build a palm oil mill for RM46 million in Papua New Guinea. Click here for the article.
The stock is likely to trend higher.

Latitude Trees (LT) Too Good To Ignore

LT is in the business of wooden furnitures. Its main raw material is rubber wood which is plentiful in Malaysia and Vietnam. It has 6 factories covering 7.8 million sq feet. That is  about 179 acres. Three of its factories are in Malaysia, two in Vietnam and one in Thailand. Below is a brief history of the company, sourced from its website:

"Latitude Tree Holdings Berhad was incorporated in Malaysia as an investment holding company. Through its subsidiary companies, the Group specialises in the manufacturing and sale of wooden furniture and components particularly rubber-wood furniture for both the domestic and export markets.

The Group has carved out a strong niche in the household furniture segment, specifically dining and bedroom sets. From its humble beginnings as a manufacturer of chairs for dining sets in 1988, the Group has grown into a complete high- and-medium-end dining and bedroom sets manufacturer. About 60% of its raw materials are rubber-wood-based with the remaining being oak, pine wood and other wood-based materials.

The Group has made great advances to position itself as one of the largest rubber-wood furniture manufacturers and exporters in Malaysia and Vietnam. Approximately 99% of the Group's products are exported overseas to the United States of America, Canada, Europe, South Africa, Australia and the Middle East countries. 

Manufacturing / Operating Activities

The Group's manufacturing activities are operated from its three factories in Malaysia, two factories in Vietnam and one factory in Thailand. The total floor area of the six manufacturing plants is approximately 7.8 million square feet. The total current workforce is about 7,500 workers."

The EPS of the company in the last 6 months ending 30.12.13 are just too good to ignore. The latest quarter is 19.52 sen per share, and the preceding quarter is 15.02 sen per share. Assuming that these kind of earnings are sustainable in the next 6 months, the full-year result will be 69 sen per share. 

 In view of its strong showings, especially in the latest 2 quarters, a PE ratio of 7 accorded to the stock is not illogical. This means the stock is worth RM 4.83 per share.

The company has a strong balance sheet with a current ratio of 1.598 and cash in the banks at RM154 million. Its paid-up capital is only RM97.208 million. Borrowings stand at below RM100 million.

At the present price of below RM2.60 per share, there is lots of value for money in the stock. 

As usual, you buy at your own risk.

One Hundred and Eighteen Percent In Less Than 2 Weeks

" Western Lithium is pursuing the opportunity to be a supplier of specialty drilling additive, HECTATONE™ and potentially other organoclays for the oil and gas industry, and in particular, to support the growth of high pressure high temperature, deep directional drilling applications. The Company is also developing its Kings Valley, Nevada lithium deposit into a strategic, scalable and reliable source of high quality lithium carbonate. The Company is positioning itself as a major U.S.-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of hybrid/plug-in and electric vehicles."

Western Lithium (WLC.TO) was highlighted in my blog on 14.2.14. The stock had shot up 118% in less than 2 weeks!!! I had bought 30,000 shares at C$0.33 per share. When trading closed early this morning at the TSE, the share closed at C$0.72. Let the good time continue. 

MNRB Highest In The Last 15 Years

The above chart shows that MNRB has been trending up.In the last few trading days, the trend has become more apparent. At RM4.15, the stock is at its highest in the last 15 years. It is now in uncharted territory.

Going by the chart, the stock is poised to go higher. Attractive but dangerous as well. If you can't stand the heat, don't go near the fire.

The Five Biggest Stock Market Myths

When fiascos like the Libor scandal, London Whale scandal, and analysts' conflict of interest occur, investor confidence can be at an all-time low. Many investors wonder whether or not investing in stocks is worth all the hassle. At the same time, however, it's important to keep a realistic view of the stock market. Regardless of the real problems, common myths about the stock market often arise. Here are five of those myths.

1. Investing in Stocks Is Just Like Gambling.
This reasoning causes many people to shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company.

Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the Random Walk Theory); however, over the long term, a company is supposed to worth the present value of the profits it will make. In the short term, a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever - eventually a company's stock price can be expected to show the true value of the firm.

Gambling, on the contrary, is a zero-sum game. It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

2. The Stock Market Is an Exclusive Club For Brokers and Rich People.
Many market advisors claim to be able to call the markets' every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for individuals to use.

3. Fallen Angels Will Go Back up, Eventually.
Whatever the reason for this myth's appeal, nothing is more destructive to amateur investors than thinking that a stock trading near a 52-week low is a good buy. Think of this in terms of the old Wall Street adage, "Those who try to catch a falling knife only get hurt."
Suppose you are looking at two stocks:

• X made an all-time high last year around $50 but has since fallen to $10 per share.
• Y is a smaller company but has recently gone from $5 to $10 per share.

Which stock would you buy? Believe it or not, all things being equal, a majority of investors choose the stock that has fallen from $50 because they believe that it will eventually make it back up to those levels again. Thinking this way is a cardinal sin in investing! Price is only one part of the investing equation (which is different from trading, which usestechnical analysis). The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Make sure you don't confuse this practice with value investing, which is buying high-quality companies that are undervalued by the market.

4. Stocks That Go up Must Come Down.
The laws of physics do not apply in the stock market. There's no gravitational force to pull stocks back to even. Over 20 years ago, Berkshire Hathaway's stock price went from $7,455 to $17,250 per share in a little more than five year. Had you thought that this stock was going to return to its lower initial position, you would have missed out on the subsequent rise to $170,000 per share over the years.

We're not trying to tell you that stocks never undergo a correction. The point is that the stock price is a reflection of the company. If you find a great firm run by excellent managers, there is no reason the stock won't keep on going up.

5. A Little Knowledge Is Better Than None
Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a clear understanding of what they are doing with their money. Investors who really do their homework are the ones that succeed.

Don't fret, if you don't have the time to fully understand what to do with your money, thenhaving an advisor is not a bad thing. The cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.

The Bottom Line
Forgive us for ending with more investing clichés, but there's another old adage worth repeating: "What's obvious is obviously wrong." This means that knowing a little bit will only have you following the crowd like a lemming. Like anything worth anything, successfulinvesting takes hard work and effort. Think of a partially informed investor as a partially informed surgeon; the mistakes could be severely injurious to your financial health.

Source: investopedia.com

Silver Wheaton Corp Best Of The Pick

Over the last 12 months, silver has dropped from a high of $30.45 to a low of $18.50. This is a drop of 39% which is considered severe. Lately, the price of silver has picked up in tandem with the rising price of gold. Presently gold is at $1318.70 and silver is at $21.40. This means that gold price is 61.62 times higher than that of silver. 

In August 2011, gold reached a high of $1,889.60 and silver was at $50. Thus at that time gold was 37.79 times higher than silver. Many people thought at that time the ratio of 37.79 between gold and silver was too wide and would surely narrow. Obviously, they were wrong. What about now? Will the price of gold and the price of silver drifted more apart.  

Gold experts say that the logical ratio is 16. But the market, more often than not, does not follow logic. Therefore, there is no certainty of what's going to happen next. At best we can only guess. With a chart, this is made easier and more intelligent  than just mere guessing.

The above chart SLW shows that the stock has formed a round bottom. It is now poised for a good run-up. With silver price improving, silver mining companies are the ones that will benefit most.

In Bursa Malaysia, there is not even a single silver stock.  So, if you want to invest in silver, what are the options available to you. You can buy physical silver, open a silver account, or buy silver stocks overseas.

Among the many silver stocks that are listed in the NYSE, I like Silver Wheaton Corporation (SLW) which is the largest silver streaming company in the world. 

A silver streaming company is one that makes payment upfront to mining companies for the right to purchase all or some of the silver produced in the mines at a very low price. Lately SLW has also ventured into gold streaming. I feel this counter has the potential to move up fast. I like the business model of the stock.

There are many articles about SLW at Seeking Alpha. Please do your own research before buying the stock. The last traded price was U$25.38 per share. This is a good entry point, in my opinion.

You buy at your own risk.

Western Lithium A Potential 10-bagger

Western Lithium (WLC.TO) is a potential 10-bagger. This means it has the potential to move up 1000% in the next 5 to 10 years. 

The above chart shows that the stock has completed a round bottom. It is now poised to go higher. In the last trading session, the stock jumped 9.52% It closed at C$0.345 in the Toronto Stock Exchange. 

The company is in the business of producing Organoclay and Lithium. Organoclay is an important drilling additive in the oil and gas industry. Lithium is for the purpose of producing lithium-ion batteries. 

The importance of the oil and gas sector needs no introduction. As for electric vehicles, they are becoming increasingly popular as more and more countries are concerned about environmental protection and the need to lessen carbon dioxide.

If you are a high-risk-high-reward investor, and wish to be adventurous, WLC is definitely a stock you should look into. I bought 30,000 shares a day ago at C$0.33 per share.

For a comprehensive understanding of the stock, click here. 

The stock is also listed in America in the OTC counter. 

As usual, you buy at your own risk.

Go Xi Fa Da Cai

Which Way The Market Now

Last Friday, the KLCI closed at 1,802.5 with a small doji. The low of the day was 1,798.57. If the opening price is lower than 1,798.57 which is likely, come Monday morning, the signal is one of extreme bearishness. 

The MACD is looming to go lower as displayed in the chart.  Sentiment in America, notably the Dow index, is extremely  bearish with the latest drop of 318 points placing it at below the psychology level of 16,000. 

For the KLCI index, some support is likely to come in at the 1,792 and at 1780. I believe that they will be breached within the next 30 days. This is just a forecast based on the bearish display of the chart. 

You listen to me at your own risk. 

TDM to set up 60-tonne palm oil mill

TDM Expects Indon Ops To Contribute 40-50 Per Cent To Group's Earnings

KUALA LUMPUR, Jan 21 (Bernama) -- TDM Plantation Sdn Bhd expects its Indonesian operations to contribute between 40 and 45 per cent to the group's earnings over the next five years.

Chief Executive Officer, Badrul Hisham Mahari, said the company has invested between RM250 million and RM300 million over seven years on its 40,000 ha plantation in Indonesia.

He said 12,000 ha had been planted with oil palm trees while 500 ha had matured.

Badrul said TDM, capitalising on the maturation of these oil palm trees, the group would set up a 60-tonne palm oil mill costing RM80 million to correspond with the first harvest which was expected by 2015.

"The group is the first plantation company in the East Coast to achieve 100 percent RSPO-certified for its mills and estates," he said after the Roundtable on Sustainable Palm Oil (RSPO) certificate presentation.

The group's plantation arm received the RSPO certification in November 2013.

TDM also has two oil palm mills in Sungai Tong and Kemaman, Terengganu.

Badrul said the plantation division has been the major contributor to the group's revenue of about 90 per cent compared with its healthcare unit.

-- BERNAMA

Is it a good thing if the proposal to take PRK private is blocked?

PKNP, the investment arm of the Perak Government and 3 others have proposed to  privatize PRK under section 64 of the security act by selective capital reduction and repayment to the minority shareholders. 

The price they offered is RM3.90 per share. This price is way below the NTA value of RM5.05 per share of PRK as at 30.9.2014. 

The intrinsic value of PRK is much higher, considering that PRK has cash and bank balances in excess of RM187 million and a piece of land next to the Proton City which has improved very much in value. 

PRK's township, known as Bandar Meru Raya (BMR)  is doing well. A JV theme park with the Sanderson group in ongoing in BMR. Its investment in Integrax has also improved in value. 

Since PKNP already had the intention to privatize the company, it will not easily give up. I believe that if the present proposal is successfully blocked, it will try again by offering a higher price. For those who have the holding power to hold on, the reward should turn out to be much better when it comes.

Look at MBF, the first offer was only at 60 sen per share, but eventually it was done at RM1.80 per share.

Whatever action you take as a result of this post, you do so at your own risk. I am long on PRK and intend to join the minority shareholders who object to the proposed repayment of RM3.90 per share. 

CBIP To Trend Higher

This daily chart of CBIP looks positive. The candlesticks and stochastic are in accord. Once the overhead resistance level at RM3.28 is crossed, the stock should be on track to trend higher. Keep a close watch. Believe what I say at your own risk.

CRESCENDO THE ONE TO WATCH

As at 31 Jan 2013, Crescendo Corp Berhad has 2,975 acres of land in Johore out of which 2,181acres are in the Iskandar region. The company is in property development, construction, trading and manufacturing of building materials, education and the cultivation of oil palm.

For the quarter ended 31.10.13 and as at that date, the key statistics are as follows:

Revenue = RM78,010,000;  EPS = 21.43 sen. 

Total assets = RM622,868,000;  total liabilities = RM242,052,000.

Current assets = RM334,321,000;  Current liabilities = RM112,876,000.

Cash and bank balances = RM144,793,000;  Loans and borrowings = RM 144,406,000.

From the above figures, it can be easily seen that the company has a solid balance sheet and little borrowings when compared to its total assets. Cash position is strong as well.

What is most commendable is the earnings for the quarter just ended. When you compared them to the corresponding quarter of the previous year's earnings of 5.20 sen, you find that earnings have grown by 312%!  As for revenues, the improvement is only 47.47% because for the corresponding period of the previous year, revenue was at RM52,898,000. 

The Iskandar region is presently a hive of activity and growing fast. Foreigners, especially Singaporeans are converging into the area. As a result, land value is expected to appreciate by leaps and bounds. Crescendo stands to benefit much from this scenario because of its fairly big land bank in Iskandar. The stock is bound to do well going forward. I am long on the stock; I intend to keep them for the long term. 

One For 2014 Buy Hold and Monitor

Palm oil is the cheapest edible oil among other edible oils like Sunflower, Rapeseed and Soya oil. This is because on the same acreage of land, the production of palm oil is several times more than that of the other oils and not because it is inferior to them in anyway. 

People all over the world consume palm oil daily. Much of the usage is in the food industry. Being a versatile oil, it is also used as biodiesel and the manufacturing of products like soap, detergent, shower cream, shampoo, candles, nylon strings, vitamins, and other cosmetic and pharmaceutical products. 

Oil palm biomass is also useful. It can be turned into biofuel, fiberboard, pulp and paper, and fertilizer. 

Demand for palm oil is envisaged to grow in tandem with the world's population growth. This coupled with innovation for palm oil has resulted in the crop having an excellent future. 

All oil palm plantations (except the very small ones) have one thing in common. They all need palm oil mills. These mills are necessary to extract palm oil from fresh fruit bunches (FFB). 

One company that has the expertise and experience to supply, install, build and maintain these mills is listed in Bursa. In fact it is the only listed company in Bursa that has this technology. 

Not all palm oil mills are the same. Modipalm Engineering Sdn Bhd (MESB) working in close cooperation with Malaysian Palm Oil Board (MPOB) has devised a system known as the Continuous Sterilization System to extract oil from FFB efficiently. This is the latest new technology that is much favored by oil palm plantations. 

The main advantages of this system is higher oil extraction and lower labor cost when compared to the conventional type of palm oil mills. To date, MESB has built some 80 such mills. 

MESB is not a listed company, but its parent company, CBIP is. In September 2013, CBIP announced that MESB has been awarded by PT Rafi K.A., a subsidy of TDM Berhad to construct  a 60 tones per hour Continuous Sterilization Palm Oil Mill (CSPOM) and to deliver 3 units of Double Deck Continuous Sterlization System at a total cost of RM53,304,400.

In October 2013, MESB made another announcement which said that PT Windu N.A. of Indonesia had awarded letters of award to it to construct a 60 tones per hour CSPOM at the cost of RM33,001,088. 

The management of CBIP says that these contracts will contribute positively to earnings for the financial years 2013, 2014 and 2015.

While these contracts are not really that big, it does show one thing. It shows that Modipalm Continuous Sterilization System is efficient and competent and in demand. This augurs an excellent future stream of profits for CBIP.

In plantation, CBIP has 70,088 hectares of land. Most of these lands are in Indonesia. Presently only 10,426 hectares are planted. 

Other businesses of CBIP are: Special Purpose Vehicles and Steam Energy.

Fundamentally speaking, CBIP has a strong balance sheet and pays regular dividends. At the present price of RM3.20 plus, this stock is good to buy, hold and monitor. I am long on stock and intend to accumulate more.

As usual, you listen to me at your own risk. 

To all my readers, I wish them, Good Luck, Good Profits, Merry Christmas and Happy New Year. 

Goldis Post Higher Profits

KUALA LUMPUR, Dec 10 (Bernama) -- Goldis Bhd's pre-tax profit for the third quarter ended Oct 31, 2013 surged to RM37.51 million from RM9.87 million in the same period last year.

Revenue rose to RM32.89 million from RM23.12 million in the same period last year, the company said in a filing to Bursa Malaysia Tuesday.

"The higher result was due to higher contributions from the property investment and development segment," the company added.

Goldis is an investment company with private equity investments in Malaysia and China. It focuses on life sciences, water and waste water treatment, information and communications technology and organic aquaculture.

-- BERNAMA

Thong Guan Good For Long Term

Thong Guan was founded by the late Ang Thong Guan with a mere Capital of $50.

Established in 1942 as a tea merchant under the 888 brand name and also in the business of  packaging, the company has grown well over the years. Its base is in Kedah where it has 30 acres of factory land.

Today the company is one Asia Pacific's largest plastic packaging companies. Its main products are : cast pallet stretch film and garbage bags. To a small extent, it is also a trader in tea, coffee and biscuits. 

In the latest quarter ended 30.9.13, the company reported EPS of 10.51 sen. This is a big jump from the previous quarter of 5.05 sen. 

In the corresponding period of 2012, its EPS was only 5.65 sen. The management attributed this improvement in profits to better margins and higher demand for its products. Appended below is an extract from its filing with Bursa regarding its prospects going forward:

Current year prospect

The Group's stretch film division which was boosted by the full production of two new European cast stretch film lines last year has seen the increase in production volume, margin has also improved especially in the third quarter due to the group's efforts to focus on more value added products.

The PVC food wrap division had seen continuous improvements in profitability since the full operations of the second line last year. The group is expanding its operations further with the installation of 2 new lines which is expected to be commission in the first quarter of 2014.

The Group's new subsidiary company, TGSH Plastic Industries Sdn Bhd has continued to improve on its bottom line with its more aggressive pricing strategy and contributions from newly installed machineries. Its operations will be further expanded as well. Its garbage bag divisions in both Malaysia and China has continued to be profitable while the industrial bags division in Malaysia has witnessed marked improvements in the third quarter. There are plans to further expand the operation of this division.

The Group's compounding division which was expanded last year has continued to be consistent, contributor to profitability. New machineries will be installed before the year end and early next year to further increase its production output. The Group's operations in Sabah has also been profitable as well.

The food, beverage and other consumable business unit has continued to grow and is expected to continue its steady progress despite suffering a drop in profitability this year. The Group is confident of the continuous progressive contributions from its business units and has chartered further growth prospects.

The stock was lasted at RM1.80 per share. It has a solid balance sheet with little borrowings. The dividend for last year was 7 sen. I expect this dividend to be improved to 9 sen for fiscal year 2013. This will give a dividend yield of 5 sen if you buy it at RM1.80 per share.

For those who wish to buy and hold, this stock merits consideration.

As usual, you buy at your own risk.

What You Need to Know To Invest Successfully in the Stock Market.

Business is all about profits.

Investing in the stock market is most intelligent when it is most businesslike. This is advocated by Benjamin Graham, the father of value investing.   

Business is all about profits. Therefore, earnings are the first thing you look at when you analyze a company. When you look at earnings, look at earnings per share (EPS) instead of the total amount. 

When I look at earnings, two things come to my mind. One is whether these earnings are sustainable, and two, whether they will have further growth. 

Whether these earnings are sustainable or not, depend to a great extend on the core business of the company, the integrity of the management and the competency of the CEO. If you are not convinced that earnings are sustainable and growing, avoid the stock. 

Dividend Policy

A company should always take care of its minority shareholders. It should have a good dividend policy. Paying 30 to 50% of its earnings as dividends is to me a good dividend policy. The value of a stock depends on the amount of dividend it pays. 

Major Shareholders

A strong major shareholder is very useful. It gives added advantages and protection to a company. 

Barrier of Entry

Two companies that have the strongest barrier of entry are: Genting and Bursa. Why? Because even if you have money, you cannot go into this type of business, simply because you can't get a license for it. 

Banks also have a strong barrier of entry because bank licenses are limited. Plantations, construction and Properties do not have such a strong barrier. This means that if you have money you can easily go into such businesses. A strong barrier of entry prevents competition from becoming too intense and is therefore valuable.

Borrowings

Heavy borrowings can cause bankruptcy. In fact all companies that go bust have heavy debts which they cannot repay. So avoid companies with high debts.

The Balance Sheet

The balance sheet shows you what the company has and what it owes others. You have to study this carefully. I like to look at the current assets, and compare them to its current liabilities. The bigger the current ratio is the better. A current ratio of less than one is a red flag. 

The rest of this article is posted in my Facebook. If you wish to read it, just send me a "Friend Request."  If you don't have a Facebook a/c, open one. It's easy. 

Verdezyne to propel our palm oil industry to a greater height

Verdezyne is an US-based company. It has the technology to produce a variety of bio-based chemicals used in nylons and plastics. The company has been awarded BioNexus Status by the Malaysian Government. It is going to set up its base in Malaysia soon. Already the company is in talk with many plantation companies to bring about downstream activities in the palm oil industry. 

Click here to understand more.