Greeting! Last August, we saw US market had a mid correction of about 20% from the high of 12,724 to low of 10,720. At the time I write this mail, US market close at 11,614, seem it's stable right now and we will going to enter the last phase of bull run. The down grade of USD had caused market imbalance where people pull money out from US market and put into Gold market, causing gold price hit record high. Whereas China government tighten the money policy to avoid hot money coming into their country.
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I expect Hong Kong market will move higher if US fund come into Asia in next few months and Asia region will have positive impact. Anyway, always respect the trend, make trend as your best friend, never against it.
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Last month, some clients bought glove stock when the market went down. If I were to buy glove stock, will choose the industry's best performance... in this case, my first choice is Hartalega. The reason is, this is one of the company with profit keep on growing, unlike others glove company where their profit in decreasing trend.
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Some clients bought TENAGA, it's a blue chip counter and almost near the bottom (some snippets about TENAGA). One can buy TENAGA every day to average down if he have a lot of money. What if TENAGA keep on falling in next 1 month, 3 month or 6 month? Since this guy keep on buying TENAGA when the price goes down, his cost will become less and less. If I were to buy TENAGA, I will check with this guy what is his cost for the last 1 months after averaging down. I will only buy when TENAGA's market price is equal or above his cost for last 1 month. (this will avoid buying too soon when the share price keep on falling)
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You may ask how to find this guy to ask for his cost for last 1 month? The answer is simple, take the 30 days Moving Average line compare with current market price, got it? Some also bought CIMB and got stuck there because buying too soon, hence the safer way is using my above method. (*try to record down your trade)
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Last, if you going to buy any stock, at least must meet below 2 conditions:
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1. The company must making profit (profit must stable and keep on increasing is the best)
2. The company must have a dividend policy, distribute the dividend of at least same or better than FD. (It's better to have goose that keeps laying eggs (golder egg is even better) than a goose that sit there and doing nothing.)
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Tuesday, September 27, 2011
Investment Idea - Aug 2011
Let see what's happen in US recently, after the long debate, finally the US government agreed to raise the debt ceiling . What's debt ceiling? It's a self imposed limit on Treasury's ability to borrow. Never mind! Who cares, history always repeat itself. Since 1945, the ceiling has been raised 87 times, it's almost no impact to the market after few months.
Parkinson's law states, “Expenses always rises in direction proportion to the income” In general, as income goes up, expenses almost will follow go up too. This is happening every where, almost every countries' government like to print more money... it's better to keep goods price going up, all properties and asset goes up, so everybody feel more happy.
In theory, share price will going up too... in fact, US market already in the up trend for more than 2 years and 5 months now. Normally, the up trend will reverse after 2.5 to 3 years. Investor reposition their holdings, shares change hand from week investor to strong investor (long term investor). After some time, market will go up again. (because history always repeat itself)
What's the meaning of reposition ? Example, Susan bought a house for $300k few years ago. Now the market price is $600k, Susan decide to build a passive income machine. Hence, she sell the house and take the money to buy REIT and some blue chip stock which gave dividend yield of about 8% and capital gain in long term. Another example is sell A stock and buy B stock. (be careful with this approach, as some investors sell good stock and buy the bad stocks)
Many would like to know if now it's good time to buy stock. My opinion is, yes, as “hot money” printed will flow to Asia (since US and Europe both having fear factor), however, do not predict the market direction. Strong investors prepare to hold for long terms, hence buying good stock is the main condition to success in investment, especially blue chip stock if discount by 10% or more.
Last, someone ask me if any market tips... I say no... but MBSB ($1.64) and GENM ($3.66) worth to take a look if the price drop, it's in my buying list. Please note this is my personal view, not a recommendation to buy. Last time when I recommend a stock, someone sent me a mail, state that he's going to invest $100K and want me to sign agreement with him that I will pay him back $100k if his investment fall in value. Please, even Warren Buffet did a mistake to pay high for certain stock, the money is yours, you have full responsibility to decide if want to invest or not.
Strong investors always keep building net worth in mind. Building passive income flow and buying good asset or stocks at a discount price is a priority. The goal is made the money work hard, so one day you can choose no need to work or work because you choose it, not because of necessity.
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Parkinson's law states, “Expenses always rises in direction proportion to the income” In general, as income goes up, expenses almost will follow go up too. This is happening every where, almost every countries' government like to print more money... it's better to keep goods price going up, all properties and asset goes up, so everybody feel more happy.
In theory, share price will going up too... in fact, US market already in the up trend for more than 2 years and 5 months now. Normally, the up trend will reverse after 2.5 to 3 years. Investor reposition their holdings, shares change hand from week investor to strong investor (long term investor). After some time, market will go up again. (because history always repeat itself)
What's the meaning of reposition ? Example, Susan bought a house for $300k few years ago. Now the market price is $600k, Susan decide to build a passive income machine. Hence, she sell the house and take the money to buy REIT and some blue chip stock which gave dividend yield of about 8% and capital gain in long term. Another example is sell A stock and buy B stock. (be careful with this approach, as some investors sell good stock and buy the bad stocks)
Many would like to know if now it's good time to buy stock. My opinion is, yes, as “hot money” printed will flow to Asia (since US and Europe both having fear factor), however, do not predict the market direction. Strong investors prepare to hold for long terms, hence buying good stock is the main condition to success in investment, especially blue chip stock if discount by 10% or more.
Last, someone ask me if any market tips... I say no... but MBSB ($1.64) and GENM ($3.66) worth to take a look if the price drop, it's in my buying list. Please note this is my personal view, not a recommendation to buy. Last time when I recommend a stock, someone sent me a mail, state that he's going to invest $100K and want me to sign agreement with him that I will pay him back $100k if his investment fall in value. Please, even Warren Buffet did a mistake to pay high for certain stock, the money is yours, you have full responsibility to decide if want to invest or not.
Strong investors always keep building net worth in mind. Building passive income flow and buying good asset or stocks at a discount price is a priority. The goal is made the money work hard, so one day you can choose no need to work or work because you choose it, not because of necessity.
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Investment Idea July 2011
It's come to the mid of the year, many fund manager are busy reposition their investment holding. Overall the market condition still in good shape as almost all the index breaking new high record, especially for Malaysia and US Market. While the Index continue to move higher, do you able to make good return in Stock Market?
One of my client ask me to help him find out why his investment portfolio continue making loses of more than 28%! He wish if he had follow my advise six months ago, today his portfolio could have been reverse. After reviewed with him, I did shared with him for reasons and he think it would be good to shares with all, I do feel the same as learning from others experience is a great advantage. Below are top 5 stock in his portfolio:
HWGB: cost 73 cent, loss 45%
Sanbumi: cost 39 cent, loss 36%
Mieco: cost 78 cent, loss 32%
Pworth: cost 70 cent, loss 30%
MAA: cost RM1.33, loss 48%At first glance, these are not so call investment grade stocks, only suitable for trading, not for Investment! So, if want to trade this kind of counters, make sure you have the trading plan – a plan spell out clearly if the stock drop by 5%, need to cut loss or what? (in his case, he can not cut loss because he think one day the price will rebound, but I can tell, the chance is very slim) If earn by 15%, need to take profit... (in fact, many of the stocks managed to make some profit at first, but he just too greedy and without plan, hence miss the boat) If you want to go North, but notice the train you in now is moving South, shouldn't you get down immediately to avoid further regret? Direction or purpose of investing is quite important!
Ok, now forget about his portfolio, do you know what's the reason for one portfolio continue to make money? Just refer to my previous post: http://vincpetrol.blogspot.com/2011/07/investment-idea-june-2011.html
Investment is similar to buying a business, investor need to think like business owner. In the long run, buying Investment Grade stock is better than buying so so company, especially the current environment, only the best company have better chance to survive in next 10 or 20 years. Below simple check list to filter best company:
1. Make sure that stock you buy give dividend (at least 2x FD rate is even better)
2. Try to choose top Malaysia's company in the Industry
3. The Stock must have Institutional support (find like EPF, mutual fund, pension fund or foreign investment fund, find out usually buy)
4. The great business must able to increase in profit (with ROE & ROA of more than 10%)
5. Last, buy at low price to have margin of safety (you may buy it now or wait for Market pullback to take advantage of cheap price)
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One of my client ask me to help him find out why his investment portfolio continue making loses of more than 28%! He wish if he had follow my advise six months ago, today his portfolio could have been reverse. After reviewed with him, I did shared with him for reasons and he think it would be good to shares with all, I do feel the same as learning from others experience is a great advantage. Below are top 5 stock in his portfolio:
HWGB: cost 73 cent, loss 45%
Sanbumi: cost 39 cent, loss 36%
Mieco: cost 78 cent, loss 32%
Pworth: cost 70 cent, loss 30%
MAA: cost RM1.33, loss 48%At first glance, these are not so call investment grade stocks, only suitable for trading, not for Investment! So, if want to trade this kind of counters, make sure you have the trading plan – a plan spell out clearly if the stock drop by 5%, need to cut loss or what? (in his case, he can not cut loss because he think one day the price will rebound, but I can tell, the chance is very slim) If earn by 15%, need to take profit... (in fact, many of the stocks managed to make some profit at first, but he just too greedy and without plan, hence miss the boat) If you want to go North, but notice the train you in now is moving South, shouldn't you get down immediately to avoid further regret? Direction or purpose of investing is quite important!
Ok, now forget about his portfolio, do you know what's the reason for one portfolio continue to make money? Just refer to my previous post: http://vincpetrol.blogspot.com/2011/07/investment-idea-june-2011.html
Investment is similar to buying a business, investor need to think like business owner. In the long run, buying Investment Grade stock is better than buying so so company, especially the current environment, only the best company have better chance to survive in next 10 or 20 years. Below simple check list to filter best company:
1. Make sure that stock you buy give dividend (at least 2x FD rate is even better)
2. Try to choose top Malaysia's company in the Industry
3. The Stock must have Institutional support (find like EPF, mutual fund, pension fund or foreign investment fund, find out usually buy)
4. The great business must able to increase in profit (with ROE & ROA of more than 10%)
5. Last, buy at low price to have margin of safety (you may buy it now or wait for Market pullback to take advantage of cheap price)
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