Prospect of Malaysia is good

Some say Malaysia is a small market. With urbanisation going on and with the focus shifting to relatively undeveloped East Malaysia, there is still many opportunities for local company to focus on. For the West Malaysia, focus now is on East Coast where there will be highway linking Johor Pengerang oil hub to Pahang being planned to build. Just like few decades ago when North South highway opened, this will create a lot of opportunities, with the creation of and expansion of many currently small town. Many jobs will be created and income will be rise. Then many houses and retail shop will be built up. Small town will then reinforce capital city like KL to greater height, as many business headquarter in KL will reap the bigger profit and also, many more people from the small town will have access to KL better job opportunities.

Malaysia is bless with its center location of South East Asia and its well developed resources.
Malaysian is good at making great plan and have a plenty of great business people with great business acumen. Prospect is looking good. Now it depend on the government execution and reform to make Malaysia the center of South East Asia.

How to identify good long term investment

In investment portfolio, I think we need to have a combination of long term bet, arbitrage bet, company or industry revaluation bet, undervalue with huge upside potential bet, etc. Basically long term bet is hard to come by as well known company's valuation is usually already very expensive and hard to call it fair, and potentially good long term bet is hard to identify in our naked eyes.

To identify potential long term bet, i think 1 of the way is to start with arbitrage bet, undervalue company bet, good company in downturn industry bet, solid foundation company that kept on downgraded by analyst or investor bet, small medium growth company bet that investor have doubt with its growth sustainability. Of course the company has to be financially sustainable and have good management in place. As time goes by, those bets might eventually become our long term bet if things turn out favourably. If it turn out bad, just sell it as we know it is just a bet. As we keep on our betting practise, our skill of betting improve overtime.

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.