Investment Note - Oct 2013

Dear Investor,

Good day! Coming month is a budget month for Malaysia, for some investor they think this is important month, as the Government might create a new blue print and set new rules for coming year or next few years. By knowing what is good for a country's economy, one can actually plan ahead. The hot topic now in GST (Good Service Tax) and investors are looking for the company that will benefit from this. However, this is just part of it, how to choose a right company for long term investment is more important.

Let think what's the purpose of investment? Last week, I meet a friend, he told me, he sold all the stocks before the General Election because he fear the price may go down... Investment is not about predict the market! Investment is about how to create wealth or increase net worth over time. If you are not sure what I mean, just see the below example:

Someone who invest 1000 shares of Public Bank 40 years ago and never sell the shares, today, his net worth will easily above 2 million, not yet include the dividend.

If you invest 1000 shares of Maybank 13 years ago and never sell it, today, your holding will value about RM60,000+.

If you invest 1000 shares of Telekom 10 years ago and never sell it, today, your holding will become 2000 shares of TMplus 2000 share of Axiata. Total holding is worth about RM25,000+.

Even 4 years ago, if you bought 100 share of Dlady at RM18 (RM1,800), today, the price for Dlady is RM45++ (RM4,500).

This is one of the method how long term investor beat the market, find the monopoly business and let the magic and power of compound interest doing their job. Don't say “I don't have the money to invest!” In fact, you don't need a lot of money to invest 1000 shares but you have a lot of time if start early! Time is good friend for monopoly business.

In recent market correction, I have added Axiata as one of my investment portfolio. My average cost was about RM6.50. I have received one time of dividend payment and going to receive another one soon. May be you will ask, what's my plan if the stock price go down below my investment cost of RM6.50? Since my plan is to invest for the next 5 to 10 years, why should I bother about the price movement every day? In fact, I do happy if the price keep falling so that I can buy more shares in next few months and just wait for it to bear fruit.

If you fear of market turn down, then don't invest. If you remember my previous email few months ago, I told one of my friend who bought Dlady 3 years ago at RM18 and he only make small profit even though Dlady's market price is RM45 today... the reason? Because he sold it when the share price start to move up because fear of choppy market price!

That's the beauty of stock market, price fluctuate! If tomorrow Axiata stock price fall below RM6.50, I will buy more. You may ask, what's so good about this company? The reason, I let you think of it. It's nothing wrong if you buy and sell stock in short term, but make sure you buy and keep 1000 share of Monopoly type business at least, and keep it in your portfolio when you plan to save money!

All right, this all for now. Happy Investing!

Investment Note - Jul 2013

Dear Investor,

Good Day! Not long ago, we just past the first half of 2013. Overall, most of the stock markets still in the happy mood, especially US, where we see Dow Index near all time high of 15,450. Thanks for the QE (or I call it printing money policy), hot money is floating every where from stocks to property.

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Now, the question to ask, when the party going to end? Or when US will stop QE? From the latest indication, seem coming December, US will going to review it. Maybe they will stop QE at 1st quarter or 2nd quarter of 2014, but again, depend on the employment and economy data. We may not know when, but at least we know the party will not going to end this year. We can follow closely the indication, perhaps when the Gold price start to go up or when their interest rate (10 year treasury rate) start to go up, then it may be the time.

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Back to Malaysia, Bursa is also doing very good, the KLCI index rises to all time high level. Making money in stock market is easy or not? It's very easy, if you know how to make use of good news and ride on it. For example, Puncak and other water related stock, when the news came out, we already know these stocks will become black horse. (but now, I am not suggest to buy this stocks, as it's already over run right now).

So, what is the next Blue Chip one can buy? I suggest, IOI and Tenaga, they going to announce good news (in fact, most of public already know) in next few months, hence, I will suggest investors try to accumulate these 2 stocks when their share price turn red. When to sell? Sell when IOI announce the date they distribute IOI Property. For Tenaga, sell when they announce getting approval to raise electric tariff.

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For those who follow my advise last month to buy CIMBC25, now it the time to see the result. You may slowly sell batch by batch in next few days when you see the high volume day. (those who want to know how to trade this stock, please refer my blog)

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Last, if you want to chase the running stock, don't chase it at high price. Try to enter when there's a pullback (the pullback must on low volume) If it’s on high volume, it means that institutional investors are selling!

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That's all for now! Happy Investing!

Investment Note - Apr 2013

Dear Investor,

Greeting! It's first week of April 2013! Almost all the world stock markets are near their high level. US Dow Index already above 14,000 points for few weeks. The recent update came from Hong Kong, where we saw Hang Seng Index fall by about 600 points last Friday, thanks for the new Bird Flu! Anyway, this is good opportunity to play around. (for local stock, glove stocks sure will become hot now, for HK, I will explain below)

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Cheap money to support the Market rally this year

Finally, for Malaysian, the long awaiting event, General Election going to happen! Many think that Bursa's Index will go down after the announcement. As usual, I always advise investors, don't predict the market, instead respect the trend and use it to our advantage. Currently, Malaysia market is extremely strong, investors can ride on "current moving stocks", especially Glove makers (usually Bird Flu happen people will buy these type of shares) and Iskandar play related to properties stocks.

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One should know that in the Market, there are stocks which you can keep for long term. There are some suitable for short term trading and some penny stocks (or I call it problematic stocks) which people like to speculate. There's nothing wrong to play with penny stock, but just be extra careful, jump out of the boat if it start leaking water, a sign of going to sink!

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Biggest listed company in Malaysia

Maybank is one of stock I like for long term. It never fail me (Last year, I recommend this in my blog when it was RM8.5x and now it's near my target RM10.10 this year). (you may read it here, from my blog). Now, I don't suggest to buy it at current price, but can keep it in your buying list for next round when market crash.

For Maybank, as long as a valuation for a stock is not overly stretched and the company's dividend raised year after year, it will likely to attract investor. Don't forget, beside EPF, now we also have PRS (private retirement scheme), which they have ample of funds need to invest. Next time, when market go down, if you want to invest in Malaysia's biggest listed company and enjoy good dividend, remember to include Maybank as your long term investment portfolio.

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CIMBC25 strategy - don't cut loss but cut profit when market up

If Maybank is for long term buy, is there any others stock to trade for short term? Yes, take advantage of current HK down trend, I suggest to accumulate CIMBC25 (it's an ETF that buy 25 Blue Chips in HK/CN) Last week, it close at 86 cents, investors can start slowly collect it. (remember, slowly, don't collect it one time) Don't fear if the price go down further. For this stock, you can average down even the price keep falling in next few weeks. When Hong Kong market rebound, 10% of return is not a problem. (Click here to see my buy & sell record)

That's all for this time, wish you doing well in investment trading. I do welcome if you have any question related to CIMBC25 or Maybank.

Investment Note - Feb 2013

Dear Investor,

 

 

For those who celebrate Chinese New Year, Gong Xi Fah Chai! The celebration is not over yet!

Almost all the stock markets in the world are near the all time high! US Dow Index just close near 14,000 points. We can see all the money stay sideline in last few months, start to move into equity (stock market).

However, there's one exception, Malaysia stock market! As all know, the General Election is approaching, many investors stay sideline for the time being... Some one even predicted if the opposition party win the election, Bursa will drop by at least 500 points! I don't know what was his intention (to scare people?), but as a mature investors, we should welcome this! How can we buy low if the market is always high? Another question, if the ruling party win the election, will the stock market going up? Ok, I don't want to touch politic issue here, this is just to let investors be prepared for the worst case, if market crash, the only worry is without bullet (money)

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Stay away from problematic stocks

Just a gentle reminder to investors, stay away from speculate stock, even they may look as if very cheap (few cents only). Why chasing low price speculation stocks is very risky? The reason is one may potentially buy and hold a problematic stock if you were to continue buy this kind of stocks. The stock sell cheap for a reason.

Market tips for now?

As of last month's, YTLPowr still under our buying list should it drop near to around RM1.51. Investors can accumulate at this level and wait for Malakoff IPO launching. SP Setia was another good buy at around RM3.00, which we managed to collect 2 months ago. I hope if general election will create the fearing factor and we can have the opportunity to collect these stocks at low price. For this month, I also put Digi into our watch list... if the price drop near RM4.60 or below, then it's a good buy, for dividend and capital gain as well.

That's all for this time, I wish you all doing well in 2013!

Personal Investment Note - Jan 2013

Dear Investor,

Happy New Year!

We have come to the year 2013, it's time to review our portfolio and plan for the coming year. US stock is performing well in the end of Dec 2012 and at beginning of 2013. Ample of hot money stay sideline last few months started to reposition their holdings, that's why most of the stock markets Index broke the highest record and it could be the start of another bull run cycle.

Back to Malaysia, Bursa reach the all time high record with Index 1690 points. Actually, many retail investors sell their holding because fear of General Election, anyway, seem foreign fund now is not afraid of this event anymore, as they need to park their fund some where.

Create a written Investment Plan if you buy for long term

In the past, I witness some investors sold their “blue chips” stocks and buy a small company's stocks (penny stocks). Many times, they just bought any stock base on rumours. I think the biggest problem faced by them was without a written investment plan. The reason to sell the Investment Grade should be, you have found a better investment option or the company's business started to go down (profit down). Never sell because of the stocks go up in price, or you expect some event going to happen (for example General Election).

Why we need an Investment Plan

If you have written down the Investment Plan, every buy / sell decision will make you think twice if the decision is base on “follow the others” or “follow your plan”. (I believe investment is not how well you do it, but how less you create a mistake) Write down the reason buy / sell a stock so that you keep track the record and create an investment lesson, as there's no better teacher than experience. Believe me, human is forgetful, if you don't write down your plan and review, few months later you tend to forgot and will repeat the same mistake! During the market swings (up or down when people become greedy or fear), it's these written down principles that will help as a guide post. Further, write down the points make one think more clearly and be more intelligent and less emotional. Unwritten investment belief tend to change without direction.

If you ask me what's my investment plan? Mine is simple, I want to create portfolio with consistent / stable income by investing into excellence business that has an expanding value, provide income and adjust for inflation. Then I will come out with action items to list down those potential companies. Anytime when the market correction occur, it's the opportunity for me!

Tips for next few weeks?

Again, as always, I don't really like to tell this, however, most investors still want to ask me if I have any tips... Well, if you want to trade for short term, then can try YTLPower. This stock will become active for next few weeks until Malakoff come with IPO. Don't chase high, buy at the pivot point. (similar to last month, when I write about SPSetia, noticed some investors not making money because of chasing high) SPSetia still good buy if fall near to RM3.00.

That's all for now, Happy Investing!

Investment Idea - Nov 2012

Greeting! We are in the second last month of 2012. Today is another Malaysia Holiday, hence in the midst of enjoying the holiday, I am thinking it would be good to give a brief update on what's happening in current market. Last month, US Dow index went as high as 13,610 point but today, the index is around 12,571. It's clearly this is a minor correction. However, my view is this create a opportunity for us to invest into “Great” company, if you plan to invest for long term.

Inflation or deflation better?

Some people blame the government that causing the inflation. For example, few years ago, with RM3, I can have a good breakfast. Today, I need to spend about RM6, to have a breakfast at McDonald. Many start to think, how nice if the price start to decrease... things just get cheaper, sound great? If this happen, the problem is your house value will go down, and your salary will go down as well. Assume you borrow $400k to buy new house, then 3 years later, the value become $300k but you still need to repay loan of $400k with the lower salary now, would you happy with it? This is what happened in Japan few years ago – deflation, which causing the changing of government. Since then, all the government in the world learn the lesson, try to print more money (to cheat people in a way), make everything goes up in price, so the houses value rise, people's salary increase, they feel more happy with inflation!

Why 90% of people lose money in stock market?

About 90% of people make a lot of money by investing in property, thanks to the inflation. However, it's less than 10% of people making money in stock market, if you are not in the 10%, then something could be wrong with your investment strategy.

For long term, only “Great” company will benefit from the inflation, remember, not simply choose any company for long term. You need to choose the company to invest, seriously and carefully.Few years ago, I recommended people to invest in Nestle and 2 years back in Dlady, these companies are great example for long term investment, the share price just go higher every year. You may email me if want to find out next company in this category.

The great company can be invest anytime, their price is hardly fall (because of inflation and growing population), hence any price correction is the best time to invest. Not long ago, I meat with a fried who bought Dlady's share 2 years ago and I thought he make a lot of money. However, he told me, no, he only make small money even Dlady's share price up by 300%. Why? Because he already sold the shares when the price up by 50%... The reason is he fear of choppy market especially follow by the news about Europe problem! This is another mistake, sell the great company too fast, great company need time to grow! Since the purpose of this investment is for long term, don't border about short term noise or news, you should use the bad news as your advantage to buy (if the price go down) but not as a reason to sell.

Long term means never sell, similar to holding the property asset!

Then another question come, should you sell Dlady if the price hit RM50 or Nestle hit RM70? My answer is NO. You should try to hold the great company as long as you can if the business continue to grow and the dividend continue to increase every year! I will consider to buy more if the price really fall! (never think of you try to sell Dlady at RM50 and buy it back at RM45, the tactic for short term is correct but for long term strategy is wrong!)

Short term investor can trade CIMBC25

The above is mean for long term, if you would like to trade for short term, then I recommend CIMBC25. You can refer to my previous email for details of CIMBC25. The price movement is slow and steady, currently is making the down trend movement, I am just waiting for the suitable time to buy. (CIMBC25 is for short term, hence, don't mix up with strategy for Dlady or Nestle)

Happy Investing!

Investment Idea - Oct 2012

US is printing the money, but no impact to the stock market?

 US government plan to print money again, another QE3, market observer expect Dow Index continue to climb higher. However, Dow Index did not make high record after the announcement as what we had seen when QE2 announcement. Seem the market is waiting for next indicator to spark the movement. My thought is, the Bull now a bit tired (after 3 years and 7 months), it could due for correction anytime soon. What would be the investment strategy for last quarter of 2012?

Sales strategy for Astro IPO

For Bursa Malaysia, Astro IPO will list on 19 Oct 2012. Everyone is talking about it now, I suggest those who strike the shares, use the strategy similar to Felda IPO. The idea is sell on 1^st or 2^nd day after listing. (just check on the price of Felda on 1^st day of listing and compare with the price today, you will understand why) This is the strategy we use when anticipate market at the high level.

Try to avoid Malaysia Stock for next few months

The next 6 months, something BIG may happen in Malaysia, in view of currently high level, my advise is try not to buy any Malaysia stock for the time being. If something happen, there are a lot of opportunity for you to buy at low level. However, high dividend stock is not a problem for you to hold on.

China Stock market + an opportunity
 

While Malaysia and US stock market are near the high level, China stock market was actually on the down trend for the past 2 years. Recently, we noticed that China stock market seem to stable and did not break lower low anymore. It may be a good idea if you can invest into China stock market and I do believe if US market crash, China will benefit from it.

If you want to invest into China market, I recommend CIMBC25 (ETF, stock code 0823EA, list on Bursa). Technically, invest in CIMBC25, you actually own 25 China blue chip stocks list on HK Exchange. (I have been trading on CIMBC25 for the past one years) If you know how to make use of 5 to 10% monthly movement (depend on your skill) combine with creative trading, then making money with this single stock is not a problem. I just sold some unit last week, you may refer to my trading record as below:

https://docs.google.com/spreadsheet/ccc?key=0AoGWjHCeLl9rdFU2TzZvbVV1OXBsUi1ZSnRRNVVKRGc

Again, I want to remind, one man's meat is another man's poison. If you have NO idea how trade CIMBC25, please observe first, if you just want to buy and hold, then should not buy this stock, for details, you may refer to my blog as below:

http://bursastory.blogspot.com/p/cimbc25.html

Do write me an email if there's any query. Good luck and Happy Investing!

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