In time of very depress and hopeless, a lot of the company's financial statements look the same, full of blood. Their share price also reaching no value. If you want to take really really huge profit, you have to look at those counters, and look beyond the financial statement.
Because in this point of time, government will come out with policies, helping those companies that are too important to the countries and economy, sometimes bail them out. After the government took actions, suddenly the financial statement and outlook change to good, and the share price rocketed sky high!
Thursday, July 5, 2012
Tuesday, July 3, 2012
Dilemma of unit trust agent
One of the bad things about being a unit trust agent is they don't know what the risks are actually taken by fund manager. Combination of stocks In the fund only published semi annually or annually. Even though published, almost all unit trust agents do not understand the stocks bought by the fund manager, (if they know, they wouldn't be unit trust agents but fund managers), they also don't have detail of underwater stocks as transactions may have been made before the publication (detail transactions are not revealed).
As unit trust agents, they are told about the objective of the fund, the market risk of the fund, and they are brain washed to believe stubbornly that dollar cost averaging strategy will win ultimately. They don't realize that the too long time taken for market to recover will build up opportunity cost too high that in many case, invest in bond fund might fare better. Although stipulated in the prospectus the risks involve, the risk taken by fund manager in anticipating for long term return might turn out to be wrong bet in volatility and changing economy, which is out of expectation of investor. (you can see that when the fund performance going down is way exceed the benchmark and never recover when market or benchmark rebound).
A previously perfectly good track record may not guarantee future performance. Although every unit trust agent learn it during their license examination, they quickly forget it when they enter into sale force. They are brainwashed to worship their unit trust product and company, convincing themselves the product they are selling is the best product, and anyone miss it should feel regret. They soon become confuse when the situation turn bad.
As unit trust agents, they are told about the objective of the fund, the market risk of the fund, and they are brain washed to believe stubbornly that dollar cost averaging strategy will win ultimately. They don't realize that the too long time taken for market to recover will build up opportunity cost too high that in many case, invest in bond fund might fare better. Although stipulated in the prospectus the risks involve, the risk taken by fund manager in anticipating for long term return might turn out to be wrong bet in volatility and changing economy, which is out of expectation of investor. (you can see that when the fund performance going down is way exceed the benchmark and never recover when market or benchmark rebound).
A previously perfectly good track record may not guarantee future performance. Although every unit trust agent learn it during their license examination, they quickly forget it when they enter into sale force. They are brainwashed to worship their unit trust product and company, convincing themselves the product they are selling is the best product, and anyone miss it should feel regret. They soon become confuse when the situation turn bad.
Friday, June 29, 2012
Optimism VS pessimism
I came across TED talk suggesting we human like to focus on pessimism things. Our brain has a part specially made for us to alert the possible danger threatening our survival. Thus, we tend to amplify the bad news and ignore good news. Let me give a few of examples of bad news and good news, see if the claim is true to you.
Bad news
Euro zone might break down, US economy is crawling and global economy will continue to be bad, China economy is slowing down. Many companies are either cutting job or freeze hiring, employment picture continue to be bleak. If middle east war started, everything will be gone.
Good news
Like never before, educated people is growing at the fastest pace, from China India to Africa, due to growing internet coverage and abundance of information available at almost no cost. Furthermore, mobile phone and Internet coverage are spreading fast in poor and developing countries.
Some research has found a way to convert any source of water into drinkable water, and coca cola is dumping money to develop the technology further.
Solar energy cost has come down more than 50% since last decade. Abundance of energy can be expected.
We human had overcome problems again and again. Although there are problems lie ahead of us, the TED speaker suggest that ultimately we human will find solution. He emphasizes on the good news and suggest that this decade and coming decade will be the most important period of human success.
Bad news
Euro zone might break down, US economy is crawling and global economy will continue to be bad, China economy is slowing down. Many companies are either cutting job or freeze hiring, employment picture continue to be bleak. If middle east war started, everything will be gone.
Good news
Like never before, educated people is growing at the fastest pace, from China India to Africa, due to growing internet coverage and abundance of information available at almost no cost. Furthermore, mobile phone and Internet coverage are spreading fast in poor and developing countries.
Some research has found a way to convert any source of water into drinkable water, and coca cola is dumping money to develop the technology further.
Solar energy cost has come down more than 50% since last decade. Abundance of energy can be expected.
We human had overcome problems again and again. Although there are problems lie ahead of us, the TED speaker suggest that ultimately we human will find solution. He emphasizes on the good news and suggest that this decade and coming decade will be the most important period of human success.
Friday, June 15, 2012
My investment strategy
I find this period of financial world is in chaos, very much like the early stage of three kingdom in china history. There are lots of opportunity and trap along the way. In order to succeed in this period, a sound and solid strategy is needed.
My strategy is simple. Find undervalue stock with clear growth path, low debt, sufficient cash; or very good company with fair value but not catching much market attention. Find a few of them with different business nature so to diversify the portfolio. Plan ahead sufficient available capital to invest for upcoming financial crisis.
Limiting to the undervalue quality or good stock, when financial crisis come, the stock which drop the most will offer opportunity to buy cheap, the stock which do not drop much means it has the strength and will gain attention to pick up faster when the market recover.
Because of that, it should be wise to invest equally to every stock when financial crisis arrive.
My strategy is simple. Find undervalue stock with clear growth path, low debt, sufficient cash; or very good company with fair value but not catching much market attention. Find a few of them with different business nature so to diversify the portfolio. Plan ahead sufficient available capital to invest for upcoming financial crisis.
Limiting to the undervalue quality or good stock, when financial crisis come, the stock which drop the most will offer opportunity to buy cheap, the stock which do not drop much means it has the strength and will gain attention to pick up faster when the market recover.
Because of that, it should be wise to invest equally to every stock when financial crisis arrive.
Saturday, June 9, 2012
Beware of scam
Market have those kind of businesses that they sell certain ordinary thing with extraordinary price. They will add some features that cannot be trace by technology or scientific proof. Some of the examples are ordinary thing but add in fortune teller wisdom, feng shui, religious feature that will bring good or modify for good things for your life. I am not sure why superstitious will become so popular in the main street, among educated people, but I think this is not a good phenomenal because it will draw in con man to create scam, as those "value added" cannot be explained or proof.
Monday, May 28, 2012
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.
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.
Thursday, May 24, 2012
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.
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.
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