Technology stock like Apple.

In company like technology stock, things are very unpredictable. Things change very fast.

"New technology, product launch, is it acceptable by consumer, how is the consumer taste now, why our taste change so rapidly without any sign, what is our future, can the company keep leading us into future, who are they, it is not them that decide our future, we are the ultimate user and decider of our future.....etc."

Look, how confuse are we about our future and hence the unpredictable of technology company. It is not like consumer product company where earning is more or less very predictable. We know we eat everyday and we are reluctant to change our habit.

For technology stock, as a prudent investor, I should not be too concern about the speculation of the stock price and earning. This is when the earning reporting season is near when the speculation noise is the loudness. The volatility of the stock is prompting a lot of people to enter into market because of higher probability to earn money when the stock price fell below your target price or rise above your target price. But we are always the outsider, we do not know exactly how the performance of the company during the period between the reporting time. Looking from outside, all the prediction is merely speculation unless the insider top executive personally reveal something. If not, it is better to wait for the earning report and decide after that. Everything will settle down after the reporting time. I will be more able to make better judgement.

Now the Apple is falling to USD400. How will it be 5 years from now? This is really who knows question....

Japan monetary policy the game changing point

China recent H7N9 is again bring down China and Hong Kong stock indexes. But in Japan and other ASEAN countries, stock indexes are climbing. This arbitrage make China related stocks the more attractive.

US Quantitative and Europe bond buying activities are bringing down the interest rate to ever low level. With low interest rate, bond become less attractive compared to equities. Low interest rate also make the currency less value. Therefore, more money is switch from bond to equities, to other asset like property. The one who kept buying the bond is government to support the low interest rate environment. Apart from money switch from bond to equity and other asset, money also search their way oversea to Asia where interest rate is higher, where currency is stable, where equity return are better. All of these actions make the equity indexes all over the world to climb higher and higher.

Now, Japan joins the crowd of US and Europe. We can see immediately Japan stock index is climbing very fast where its currency is depreciating fast. Due to scare of continue depreciating of its Yen, money switched from bond to equities, money is converted to other currency, or transfer out to other countries. So, while we are seeing the depreciating of yen and surging of Japan stock index, we see appreciating of other countries' currency in countries other than US and Europe, we also see the surge of equity indexes of other countries.

Japan policy of "printing money to create inflation" might be a game changing point in world economy. A sudden slump of yen value will greatly disrupt the trading pattern of the world economy. Devaluation of yen, US and Euro will automatically made China and ASEAN countries currency appreciate. From that, looks like US, Euro and Yen will export more and China and ASEAN will import more. Looks like the trade imbalance will improve. Looks like the world is paving a better foundation and footing for future economy growth.

It is not that US QE and Europe Bond buying activities thus far is not improving the situation, just that the adding of another economy giant into their "money printing" camp has a very huge impact. Also Japan has been not contributing to world economy growth for more than 20 years. If Japan can return to growth, the impact can be huge.

Nature of competition "new entry"

After much hoohaah about new innovation by smart phone "stiff competition", consumer will soon find out true innovation is rare, evolution is the hope they can hope for, and they will find most so call competitor only know how to copy and follow the leader (see how test water rat do first?).

Investing rule

First, Buy great business with discount price.

If no, then Buy great business with fair price.

Sometimes can Buy ordinary business with great discount price.

But Remember, don't buy mediocre business with whatever price.

Betting the unknown

I am talking about investment as a tiny minority shareholder:

If we done our homework, by reading news, forum or company annual reports, most of us knows the fundamental of a company or industry. No matter how well you dig into detail related information, there is always somebody else knows better and act faster. And that somebody is really a lot of experts, and the experts comes from all over the world. It is almost impossible to outrun their wit.

If you want to outperform the market, what you can do is betting the unknown. The unknown is really the unknown, either is a breakthrough, secret innovation, future business, where even the top executive is unsure of the success. Or you can form your own believe or idea where majority of people will not believe. That means you are silly in the eye of public. Most of the time, you are. Even you are proved right, it is hard to turn around people view of your silliness. If you got it correct once or twice, you may be lucky. If you got it wrong, it is expected. So between the 2 ways: betting the unknown, and be a contrarian, which way is better to outperform the market?

Anyway, i believe its better to continuously learn, dream, set your own trend and believe, refine it. It is better worth to bet your own idea and prove it right. Investment is just one of an exciting process for me to learn about the world.

Timing dilemma again

While waiting for Malaysia election approaching, I notice that the interest of stock seems to be diverse. The investor don't favour any of stock. Sitting sideline become obvious. And the market become highly sensitive now. Any election movement, news, rumours can move the market. Looking at the level of index which is over 1600, it is still at high point. I believe most of other investor thought the same. This high index certainly make a lot of people uneasy. There are certainly a lot of uncertainty in market right now.

But looking fundamentally, it is getting cheap in someway. More and more company is having free cash flow to equity above 10%, some even is in the grow industry. Although now the term is "cheap", it may get "ridiculously cheap", and even "insanely cheap". The timing issue always come back to hunt me when decision to buy is so tempting and I sometimes may act irrationally too quickly.

Housing price reality

To maximise the selling price of malaysia property, property developer strategy is to push the affordability of Malaysian to its limit, but in the same time, emphasis on quality and lifestyle to attract foreign buyer from Hong Kong, China, Singapore, South Korea, Japan etc. In their homeland, the house is so expensive which easily 2 to 5 times more expensive than Malaysia most expensive house. If Malaysia property developer can offer similar quality but lower price, they will likely to take up this bargain.

Now consider every property developer in Malaysia, Thailand, Indonesia is doing the same strategy to attract rich foreign buyer. It is hard for a single government to control price of housing (by building houses that are truely affordable to different class of income range,) if all other regional countries in neighborhood isn't doing the same. Because it is just not worth building: not profitable, letting go foreign investment to other countries, lower GDP.

So, fellow Malaysian, we are competing against the rich from countries all over the world now. Even if our salary fail to keep up, the trend and force of globalisation will keep the housing price high in foreseeable future. Unless, our salary keep up, or there is another serious crisis happen here in Asian countries, or less people is viewing house as an investment and more view house as purely a place to live, I don't think house will become affordable for most Malaysian.