Investment Idea - Oct 2011

 We are entering last quarter of 2011. Currently, US market is trending down. The past 2 months, a very volatile and roller coaster months.  Crude oil is also trending down, except for Gold future.

For Bursa, there are some exciting news, such as merger, budget and election talk.  The current market toward the down trend is not suitable for trading, unless you are experience trader who know how to trade Put warrant (for instant, HSI-H3). The current market condition is suitable for buy and hold investor. If you look for short term gain, my advise is better to stay side line until new up trend appear. ( Market Crash... buy more or cut loss ?)

As an investor, we save our hard earn money, park at some where safe and protected, the most common one is bank's FD. Then we may want something which give us good returns. In this case, buying Government's Bond with 5% return is good enough. If you look for something within 7 to 8% of return, then REIT is something can be considered in current market environment. 

If you want something exciting with better return, Maybank is a great company to look for. If you plan to keep for long term, buying at current down trend is better than simply buy at anytime. I bought Maybank's share whenever market down since I was schooling. Usually, I bought and kept it for next bull run to sell with very good return. Maybank, with the dividend policy of 40 to 60% payout, make it having great support from  investment fund. Last week, when Bursa drop by 50 points, I bought some Maybank share at RM7.56.  Maybank gave dividend of 55 cents last year, with this price, it work out as 7.2% just for dividend alone. Further more, I like the Dividend Reinvestment Plan as well. 

If Maybank drop below RM6.87, I will use reposition approach by selling some REIT and buy it if I do not have extra cash. Why? Because Maybank now give me 8% of dividend return. Last, the above idea is not a recommendation to buy any shares, it's one of my investment approach which work well for my investment style.  If you were to buy any stock with current market environment, just remember to buy only the great company. Why? Because great company create wealth as the value of company grows. Below are the check list for great 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 15%)

5. Buy at reasonable low price to have margin of safety 

.