Emotion in investment will take you nowhere.

Previous years I was too emotional about investment. I tend to buy on feel good factor, on my own perception. I tend to buy after reading some research report or some investment blog. Sometimes I will flip through the annual report and see what the chairman and management say about the business.
Most of the time, I didn't firstly do a thorough research of the industry and compare all the similar stock available in the markets, financially and management quality wise. I am always too afraid to miss the boat. So I held a principle that I will buy a bit now, then for I will be motivated to conduct research later if I have some stake in it. Almost all the time, I will not do the research afterwards. And the bad thing is I lost confident easily when the whole market drop. I am not sure whether the business will be affected by how much severe. So I am worried.

This year I want to clear my worry as I will sell down the unsure worried and non performing, maintain good management and prospect company, and search for good quality undervalue stock. This really require a lot of hard work and very time consuming. But, fortunately, that's my interest.

A Look at Asia emerging market's value

When you look at PE chart of MSCI ex Japan, it's approaching valuation of 2008, and 1998. and it's around the lowest level in 25 years time. It's valuation is similar with troubled Europe countries. When you look at Malaysia PE, it is still around 10 years average, which is still far away from the lowest valuation of 2008. Malaysia is an exceptional case as most of the shares are controlled by business owner and government arm. Foreign investor contribution portion is substantially less than regional peers. Moreover, when the media concentrate on positive side of the news, its market's reaction to external shock will be slow. However it will change swiftly if there is any political shock in the country.

Asia emerging market is growing at a fast pace with their ever stronger fiscal position. Why is the market trade at such low valuation? The Asia emerging market emerge stronger after each crisis. They will be taking over more share of global economy this round, and more importantly, there are still lots of excitement and opportunity to grow here.

I think it's a good idea to agressive research and accumulate some good companies with bright prospect in Asia emerging market here now and hold for 10 to 20 years. The world will be different then.

By listing a company......

By listing a company, despite raising fund for further expansion for the company, most importantly is to enrich the major shareholder by sell out some of their share.

2nd, by listing a company, major shareholder can establish as much private owned companies as possible which can trade within the amount set by regulation with the listed company. Those companies sure profit with guarantee sales to the listed company. Those are categorized as recurrent related party transaction.

3rd, listed company can act as final resort to buy out whatever investment or asset major shareholder would like to sell. Which mean major shareholder can feel safer to invest. If anything happen like cannot find buyer or investment turn sour, listed company will come and help.

As a minor shareholder, we are always at a disadvantage position. What we can hope for is a good corporate government and strict law and implementation by overseeing authority.

Stock performance sequence by sector

Few months ago the sequence was
1. Oil and gas, 2. Real estate 3. Oil palm 3. Consumer product.

Now the sequence change to
1. Consumer product, 2. Oil palm, 3. Oil and gas. 4. Real estate.

What will be next?

The stock performance is always interchangeable. Those sector which got behind will eventually get under value and those sector which is hot now will get over value. So, somebody will notice it sometimes and the game sequence change. Of course at that time, other reason will be given, not under or over value. But please do not get me mistaken, the reason given is true and reflect the reality, it is just how the world works to balance up when things getting unbalance.

Seller has some secret

We should never 100 percent trust the seller. Because most seller has incentive to sell you something tangible, intangible, service or idea. They are always bias to promote good thing. Not a single seller would tell you about competitor product's product is better even if it is true. If they are honest and don't want to lie, they will choose to avoid talking about the bad thing. In the end, customer will only get information about the good thing about the product.

We should not rush to make decision even if we are so attracted to the talking of the seller or broker. Research, verify, ask around who has experience, competitor, to get wider perspective, before making our owned decision.

P/S: seller can be anyone, like advertiser, direct seller, broker, investment agent, banker, business owner, property owner, politician, friends, unknown crowd etc.

Diversification of business by a listed company

If a listed company announced they want to diversify into a new business, in the name of risk management, recurring income, improve profit, etc, is it good or bad?

I think unless the new business venture can create synergy to current business, else is not a good thing. From an investor point of view, if the management has no experience and not familiar in the new venture, and the diversify action by management is just to improve profitability of the company without synergy created between those business, investor will be better off by diversifying themselves and choose the best company in each businesses to invest into.

Those company who diversify without synergy thought acts like a speculator, crowd mentality, dives into other type of business whenever the business prospect looks good, like the company is owned by them. They don't realize that most of the investor invest into the company because the company has excellent track record in the current business, not because the company management have "farsighted ability predicting the future of economy". Imagine a property developer suddenly venture into oil and gas, or a electronic manufacturing firm venture into oil palm. It is just ridiculous.

If for example the oil palm company venturing into property development because they have lots of land, or oil service company venture into upstream exploration to have full control of supply chain, or a drink company venture into snack company to create a better brand, or a bank venture into insurance business, then synergy can be created, and value can be added to the company.