Perception is hard to change

It is human nature that perception is hard to change. Things we have been hold on to so long we cannot just let go instantly. For example, a man who done something dishonest act and lost his friends' trust, he will be struggle to gain back the trust although he changed and doing everthing honestly since then. Similarly, a transitional CEO especially from a legendary founder will have difficulty to prove his ability and gain trust of investment community although he is leading the company well or even better in his own style.

However, time will tell. If the change is towards better and it carry consistency, sooner or later people will realize the value and accept it with open arms. And once people accept it, their perception changed and they accept it long term.

Know well the company you invest in, not the numbers

To be able to have a peace of mind in the business of investing, the most important thing is to invest in a company you know very well.

1. You know that the company's product or service will be in demand anyway,
2. you know that the company will still be around tomorrow,
3. you know that the company staff or employee will still be happy to work in the company,
4. you know that the company customer will still be happy to be with the company
5. you know that the supplier of the company will still eager to work with the company
6. you know that the company finance is very healthy with no debt problem in whatsoever economy condition it become.

Only look at company with outstanding growth and track excessively close the financial numbers is not the way for investing. This will only create stress and disrupt your peace of mind.

New exciting blog introduced to all of you!

Would like to introduce a blog I discovered today. It is "Observatory" by Ken Segall, the author of "Insanely Simple, The obsession that drives Apple's success." The link is placed in "My Blog List" in my blog.


Yeah, I am big Apple fan, not merely by its products like iPhone, iPad, iPod or iMac, but more of its culture, its style, the thinking and value in Apple corporate world and its employee. I admire the company. Whether is it coming to introduce new innovation is not the primary concern, but the culture that stimulate innovation that is really matter, and Apple still the old Apple when Steve Job alive. It only create quality, simplicity, artistic, detail defined product and only intend to sell to people who value those qualities, not to anyone. I am really proud of Apple.

Missing the boat

Just finish study 1 company, and found the prospect is very interesting going forward, and still undervalue despite rapid surge recently. Planned to buy the next day, and was transferring the money into brokerage account yesterday. Today the price surge another 10% but still my money isn't in the brokerage account yet.

This type of situation is frustrated.
Rerating stock is very hard to chase. Although I know there is still plenty room to the target price, but watching the margin shrink so fast is frustrated. If the margin is not wide enough for me by the time I am able to buy it, I may drop it and consider missing the boat.

Forward looking 2014 valuation

Half year into 2013, RHB investment analysts are already using forward price earning of 2014. It is still one and a half year away. But I think that's how the valuation in Malaysia work, and probably that's how international equity valuation work too. 1.5 years forward earning, it suddenly give room to a lot of stocks to run further, it suddenly open more opportunities for investment.

To study and value a company, we should try to forecast the next 2 to 5 years earning (try our best to guess base on previous track record, management planning, contract in hand, economy growth etc) and have roughly in mind how the stock price will be down the road. Better company will have better earning visibility and the better management planning and execution ability. Better company will let the investor know their direction clearly.

Malaysia bull market party started

When the news said retail investor started to come in Malaysia stock market, I reckon that Malaysia stock market is going in a full blown bull market. All category of stock from small to big cap will rise, pull the index rise. Fund manager whose fund performance track the index will probably have to invest. They will fuel the market further. When you see stock like Landmark where it's hotel business is not making profit and its hotel property is so small compare to the whole balance sheet, (all other asset is land development in Pulau Bintan in Indonesia where we still have no idea when the contribution will come in), when you see even Landmark stock started to follow the other Malaysia property developer stock rising, you know probably no stock will be left out unseen. Let the party begin.



NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. I may already have positions in the above mentioned counter. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Unprecedented low interest rate

In this global unprecedented low interest rate environment, what happen is that highly leveraged corporates and individuals benefit as they can accelerate their deleveraging process. In the same time, huge liquidity created by central banks, profits and excess income generated by other healthy corporate companies and individuals need to be invested. Because of low interest rate, opportunity cost of not investing into higher risk asset is high. So, it drive up all asset price, namely property, stock market, high yield bond and others bonds as well. High liquidity is also solving the price anormally of lack of liquidity stock, small capital stock where marketability is low. A lot of those stocks are being discovered and revalued. Less and less arbitrage in the market as all is being exploited (money is not a problem, they can always borrow because of cheap borrowing cost). Eventually, the discount rate, thus business risk will be down (to close the premium between interest rate and discount rate) and hence, asset valuation will be up significantly.

We are in that journey, but i really dont know how long before the journey end. As long as the journey goes on, all asset price will hit new high. Some time down the road, the 2 factors: deleveraging process call upon completion and wealth effect created by high asset price, may prompt central bank to raise interest rate. At that time, we should turn cautious of the reversal of asset price.

How long? Now? 1 year, 3 years, 5 years? This is a million dollar question!