Wise Investment - Journey to Financial Freedom

The blue and green - 2888

2009-08-14T01:14:00.000-07:00

Blue and Green - the colors of the Standard Chartered Bank logo. Also, my favorite color.

2888 - the stock code of Standard Chartered Bank listed at Hong Kong Stock Exchange. Good number.

2888 announced earning report last week, impressive growth of almost 10%, however the share price did not go up after the report was announced because 2888 also announced share placements - most, if not all of the people perceive this as a bad sign and shrugged off the good earning report.

2888 is very well known as a more prudent and steady banks, not as aggressive as other banks in a lot of ways. The focus of 2888 is on emerging markets in Asia, Africa and the Middle East. You don't see a lot of 2888 logos in Europe and America continents. 2888 was not badly affected by the toxic assets during the financial crisis last year. 288 survived, even though 2888 issued rights to shore up capital last year, 2888 did not need any financial assistance from government.

I read an article written by some experienced analyst/columnist in Hong Kong: http://www.quamnet.com/newscolumnistcontent.action?authorCode=COL_AWO&articleId=1296486

He described banks are like basketball players in a game. 2888 and other big and famous banks might have similar skill set, however 2888 might have better physique and stamina to eventually outplay other players.

I love the article.

2888's share price may not surge above HKD 300 in a few months time, however I see 2888 as one of the precious blue chip you must include in your portfolio - medium to long term portfolio. Just for your information, 2888 does not have any warrants/options traded in Hong Kong, you can tell that speculators are not a fan of 2888, I think :)

Actually, in terms of the ability of rebound, 2888 is not bad at all! From the low of HKD 73.85 on 23 February 2009, 2888 closed at HKD 181.80 today, an impressive JUMP of 146% !!!

I was lucky to have bought 2888 at $76.50 during the drop, however I had to sell it amost immediately at HKD 80+ because I did not have much cash left in my pocket... However I still keep buying 2888 at the range of HKD 100 - HKD 150, will continue to buy - for long term investment.

Last but not least, 2888 has not bad dividend yield as well - a bonus for us, the long term value investors :)

Worth investing?

2009-08-05T18:54:00.000-07:00

on my way to work this morning, I was stuck in a crazy traffic jam - the temperature meter at the speedometer was going up - I kept praying that I could make it to the office - trust me, you don't want to have this kind of feeling. It happened few weeks ago - I had to stop my car by the road side to let her cool down before I ccould drive again. Workshop people checked and could not identify any problem. Guess it is old car. She's 8 yrs old and 850cc.

I have been working for almost 7 years now but I never change my car. Suppose to change to a 1.5 car (Toyota Vios or Honda City) 3-4 yrs back but I did not. Most if not all of the working adult at my age are already driving 2.0 car or better.

I was not stingy, like most people thought I was. I was just crazy over stock market investment.

Everytime I want to buy something, I will ask myself: if I put the money I am about to spend on this item in blue chips that pays good dividend, I will achieve my financial goals earlier.

That thought held me back from spending, in fact, I have been short-changing myself (in terms of lifestyle) in the past few years. Until a year or two back, I started to think if I have been doing the right thing.

I thought I was paranoid.

I missed out a lot of things.

Bear market in 2008 did not kill my portfolios, however it makes me think if stock market is all I ever needed? For some reasons, I just happened to watch a couple of disaster movies in the past 1-2 yrs and my thinking process started ever since. what if one huge disaster really happens one day, what if the end of the world is really coming one day?

I want to start treating myself better. I bought an apartment 3 months ago and about to move in. I am buying a new car, probably a 2.0 or 1.8 be end of this year. I am going to buy a watch for myself (I am using my cell phone as watch all this while) - kind of absurd I think... a guy approaching his 30 does not have a watch. well, I almost bought IWC's Mark 16 at Hong Kong International airport 2 weeks ago - HKD 22k +++. I will own that soon - maybe a gift for my 30th birthday.

Now, besides stocks and unit trusts - I do see some other thing worth investing. (one thing I realized that I have not been investing much is love, a relationship, that explains why I am still single...)

Now, when I want to spend on something cost $100, I will probably try to check if I can get it for $80 elsewhere or with discounts, promotion, etc, then save the $20 and put it in my favourite blue chips.

I just love to invest.

Fear and Greed

2009-08-03T23:04:00.000-07:00

I read my previous posts yesterday, I shared my feeling during the market crash in Q408. I did not become greedy but fearful. most of the people and I thought the market has more to go down, therefore we waited and told ourselves we will buy when it is lower. In fact, that's FEAR. I admit. I admit I was unable to be greedy when everyone else is fearful.

Today, talk to people around you - I bet some if not most of them are already back to stock market, or planning to get back to the market. I can already smell some greed. Take Hong Kong's Hang Seng index for example. Just 2-3 weeks ago, I was telling myself that 20,000 is hell of a strong resistance and I was not confident that it will break above 20,000. The market proved me wrong, Hang Seng is approaching 21,000 today.

Are we already in Bull market? Is the bear gone or just taking a nap (which means bear will be back soon)? I do not know but seriously, I do think the markets have gone up too fast in such a short time frame.

However, nothing is impossible. Who would have thought Lehman bros would collapse? Who had any an idea that Citigroup's share price will drop till below $0.97? Who could predict that Shanghai index could fall from 6000+ to 1900+ in less than 24 months?

I am not an expert to talk about if the global economy will recover in L, U, W or V shape. I am just sharing my emotions and feelings here.

I failed to be greedy when everyone's fearful. However I think I can easily feel fearful when everyone's greedy. Just like right now, do you feel greedy now? Some people on some stock market forum told me he can't wait to put all his cash in stock market right now. Some people said he will buy anything related to the "Five Star Red Flag"...

I have sold some of my stocks in Malaysia and Hong Kong 2-3 weeks ago - apparently the prices went up after I sold - it is not easy to experience that... it is like, every 1 cent up will translate into 1 virtual slap on my face.

I am still learning - maybe I should just buy now, and buy next month, and buy next next month - setup a savings plan kind of thing. With this, I will not feel regret that I sell the shares too early, or buy the shares at too high the price.

Hmmmm... let me see if this is easy to execute.

Recent movies related to Stock Markets

2009-08-02T22:46:00.000-07:00

I have been lazy in the past few months, many events took place and I indirectly participated in some of them. I will update them slowly, however what triggered me to come back here is to share 2 movies I watched recently.

The Taking of Pelham 123 - fantastic acting from both main actors. when Ryder tried to get signal and log on to the Internet, I had a feeling he's trying to monitor the market - it proved me right when I saw him logging in to CNBC website, I actually thought he bought lots of put options (just like how the NYC mayer think) however, he placed his 2 mil bet on Gold... the gold price has gone up to like USD 8900+ if I am not mistaken, isn't it crazy? It makes me think - if there is really a terrorist attack (touch wood), will Gold price react like that too?

It is definitely not right to manipulate the market like that. When I looked at the 3 major US indices dropped like 7%, it reminded me of the financial crisis all of us just experienced months ago.

What is happening right now? Has US markets hit bottom in March already? I don't know. Too many reports, analysis, etc - Just like the rest, i am confused. There are times, we just can't rely on the reports, we have to do some homework.

I asked myself - when good stocks' price fell like crazy few months ago, what was I thinking? Being an amateur, I did not calm myself during the bear market. I did buy some of the undervalued blue chips which I am comfortable with the business model, however I was unable to achieve - be greedy when everyone's fearful.

Now, seems like more and more people are getting greedy - should i feel fearful now?

Ok, second movie - Cantonese movie from Hong Kong <> 窃听风云. Good acting too, story line not bad. Some of the police in the movie heard the bad guy told the girlfriend that the company's share price will go up. The police did not report this but make use of the information to buy the shares then make a fortune. This is considered illegal and they have got the punishment - some dead, some lost their family - it is quite unfortunate because they were dealing with gangsters.

Then, my friend and I start to ask - will you do the same as the policemen in the movie? I told my friend right away - NO. I love money but I won't do illegal things because I believe in making money with my own ability. Also, I believe in karma.

Some people speculate in stock market - they treat stock market as casino - bet big or small - just like buying put and call options, or long / short futures contracts. However, there are differences - in my opinion. For instance, you need more luck in casino than in stock market. You need to do less research for casino games comparing to stock market. etc.

ok, have to stop here. good to start writing again :)

Great Stuff

2009-02-07T18:22:00.000-08:00

One my best friends forwarded the below email to me, not sure if it is really from Mr. Warren Buffet but these are certainly great stuff :)

*****
Advice from Warren Buffet.....

Every new year, I adopt a couple of old maxims as my beacons to guide my
future. This self-prescribed therapy has ensured that with each passing year, I
grow wiser and not older. This year, I invite you to tap into the financial
wisdom of our elders along with me, and become financially wiser.

Spending: If you buy things you don't need,
you'll soon sell things you need.

Savings: Don't save what is left after spending;
spend what is left after saving.

Hard work: All hard work brings profit; but mere talk leads only to poverty.

Laziness: A sleeping lobster is carried away by the water current.

Earnings: Never depend on a single source of income.

Borrowings: The borrower becomes the lender's slave.

Accounting: It's no use carrying an umbrella, if your shoes are leaking.

Auditing: Beware of little expenses; a small leak can sink a large ship.

Risk-taking: Never test the depth of the river with both feet.

Investment: Don't put all your eggs in one basket.

I'm certain that those who have already been practicing these principles
remain financially healthy.

I'm equally confident that those who resolve to start practicing these
principles will quickly regain their financial health.

Let us become wiser and lead a happy, healthy,
prosperous and peaceful life.

- Warren Buffet

Are you greedy or fearful now?

2009-01-29T16:54:00.000-08:00

it has been quite some time since I last updated my blog, was busy looking for a job... I resigned before Lehman Bros collapsed in Sep 2008, honestly speaking, I would not have resigned if the financial crisis hits earlier, anyway, I have got a new job and started few weeks ago, brand new start :)

while I was not working, I witnessed the dramas in stock markets, few hundred points a day for Dow, few thousand points a day for Hang Seng. It was a great experience and at times, I think it was a blessing in disguise that I was free during the craziest times so that I can witness the VERY FIRST big bear market in my life.

Lots of people got the honey from the bear, I got some too but not a lot. What I did in the past few months was:

#1 Sold some of the weaker stocks and move to the stable quality blue chips (in Chinese, we call it “Change Horse”) – trust me, this works. I sold a weak Malaysian telco stocks at $ 4.58 and changed to a very stable Malaysian bank in Oct 2008 and now the telco’s price is $3.20 while the bank’s price has gone up (slightly up, but at least it is paper gain).

#2 Keep or buy more of the strong stocks in my portfolio – for those quality stocks, I will not sell in a bear market, in fact, I have bought more shares at lower price. I am sure I will be rewarded in long run.

#3 Keep putting money in Unit Trust gradually – I still put few hundred Ringgit each month into the Unit Trust I invest in. It is not the best thing in the world to see your portfolio value shrinks in the bear market but it is definitely very upset to see your portfolio remain the same in the upcoming bull market… therefore I will not stop buying in bear market.

#3 Hunt for “High Cash, Low Debt” – I read lots of articles and forums, most if not all are in the hunt for companies with lots of cash, low or zero debt. In times like this, only those who hold cash can survive, just like the big 3 Autos in US, only Ford is still doing okay and does not need help from government coz she is holding some cash to weather the storm. Some analysts in US mentioned a few stocks with lots of cash and low/zero debt: Apple, Exxonmobil, Cisco, etc.

#4 Hunt for NTA higher than stock price – NTA is Net Tangible Asset, there are believers (I am one of them) who buy the stocks if the stock price is lower than the NTA per share – it is somehow believed that the stock price will eventually go up to match the NTA per share.

#5 Gold – I sold some of my holding when Gold touched USD 900+ in Sep08 but I still keep some. The problem I have for Gold is, there is no interest no dividend or whatsoever return when you hold it, the only thing you can hope for is the price to go up and make capital gain. Lots of people claim that Gold is the safe haven but to me, yeah I agree it will sort of protect the capital but I will rather go for some super blue chips – at least while holding the stocks, I can enjoy some dividend and the share price will not fluctuate too much (having said that, some super blue chips are having roller coaster’s ride these few months). Well, Gold is still in my portfolio but not more than 10% of my total investment.

#6 Real Estate – I thought the financial crisis will allow me to buy some apartment at low price but to my surprise, no desperate sellers and therefore no cheap apartment. My agent told me lots of owners in prime locations are not in a rush to sell the apartment because they either bought the apartment with cash or they have rental every month. Well, maybe Malaysia’s property market is really resilient. What about the properties in the U.K.? It has dropped quite a bit and GBP also dropped more than 25% (against MYR, it was GBP 1= MYR 7 in 2004 and now GBP 1 = MYR 5.10)…

Most of the people are still in fear… I am sure you have heard of the quote “Be fearful when others are greedy and be greedy when others are fearful”.

How many people can really do that?

I have to confess I was not strong enough / experience enough to do it – on 27 Oct 2008, I was in a café with my friend, Hang Seng index dropped like crazy to below 11,000 – the lowest it hit was 10,676… I witnessed that, all the stocks in my watch-list are in negative territory. I did not become greedy, I became a bit fearful – I was thinking:” let’s wait for Hang Seng to break 10,000 and I shall buy when it hits 9,000 or 8,000.

You know what, ever since 27 Oct 2008, Hang Seng went up more than 40% to hit around 15,000+, of course recently it has gone down to the range of 12,000 – 13,000.

If I continue to think like that – I will not buy when Hang Seng hits 8,000 coz I will be telling myself to wait for 6,000 then only I will buy.

This is a very good lesson – at least I found out that I was fearful when others were fearful. Since then I learned my lesson well and start to fine-tune my investment strategy. I am not saying that I am the expert now but at least I am slowly improving.

Are you ready to be greedy when others are fearful? Try, it’s fun, especially when you’re rewarded with your "anti-crowd" strategy.

Saving is sin, and spending is virtue??? (article sharing)

2008-05-30T19:11:00.000-07:00

I received this article in my inbox (author/source: Indian Economist), it is considered spam to certain people but I read it and I feel it is very interesting and useful to share with everyone. Enjoy!!!!!!!!!!

Japanese save a lot. They do not spend much. Also Japan
exports far more than it imports. Has an annual trade
surplus of over 100 billions. Yet Japanese economy is
considered weak, even collapsing.

Americans spend, save little. Also US imports more than
it exports. Has an annual trade deficit of over $400
billion. Yet, the American economy is considered strong
and trusted to get stronger.

But where from do Americans get money to spend?
They borrow from Japan, China and even India.
Virtually others save for the US to spend. Global
savings are mostly invested in US, in dollars.

India itself keeps its foreign currency assets of over
$50 billions in US securities. China has sunk over $160
billion in US securities. Japan's stakes in US
securities is in trillions.

Result:

The US has taken over $5 trillion from the world. So, as
the world saves for the US, Americans spend freely.
Today, to keep the US consumption going, that is for the
US economy to work, other countries have to remit $180
billion every quarter, which is $2 billion a day, to the
US!

A Chinese economist asked a neat question. Who has
invested more, US in China, or China in US? The US has
invested in China less than half of what China has
invested in US.

The same is the case with India. We have invested in US
over $50 billion.. But the US has invested less than $20
billion in India..

Why the world is after US?

The secret lies in the American spending, that they
hardly save. In fact they use their credit cards to
spend their future income. That the US spends is what
makes it attractive to export to the US. So US imports
more than what it exports year after year.

The result:

The world is dependent on US consumption for its growth.
By its deepening culture of consumption, the US has
habituated the world to feed on US consumption. But as
the US needs money to finance its consumption, the world
provides the money.

It's like a shopkeeper providing the money to a customer
so that the customer keeps buying from the shop. If the
customer will not buy, the shop won't have business,
unless the shopkeeper funds him. The US is like the
lucky customer. And the world is like the helpless
shopkeeper financier.

Who is America's biggest shopkeeper financier? Japan of
course. Yet it's Japan which is regarded as weak. Modern
economists complain that Japanese do not spend, so they
do not grow. To force the Japanese to spend, the
Japanese government exerted itself, reduced the savings
rates, even charged the savers.
Even then the Japanese did not spend (habits don't
change, even with taxes, do they?). Their traditional
postal savings alone is over $1.2 trillions, about three
times the Indian GDP. Thus, savings, far from being the
strength of Japan, has become its pain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend,
not save. Not just spend, but borrow and spend.
Dr. Jagdish Bhagwati, the famous Indian-born economist
in the US, told Manmohan Singh that Indians wastefully
save. Ask them to spend, on imported cars and,
seriously, even on cosmetics! This will put India on a
growth curve. This is one of the reason for MNC's coming
down to India, seeing the consumer spending.
"Saving is sin, and spending is virtue."

But before you follow this neo economics, get some fools
to save so that you can borrow from them and spend!!!

New Caluclation of EPF Withdrawal - For Malaysian

2008-05-26T08:41:00.000-07:00

Over lunch, we talked about investment in Unit Trust, some of my colleagues are not comfortable investing with cash, I then gave them another option - provident fund (EPF in Malaysia).

One of the colleagues told me her EPF account has no more money as she has withdrawn all for the new house. I was surprised that some of us, despite working for many years, still are unclear about the money we have in our provident fund.

What she withdrew, was from EPF Account #2, which consists of 30% of your entire provident fund, another 70% is with EPF Account #1 which you cannot withdraw unless for certain purposes:
#1 Attaining retirement age
#2 Leaving the country
#3 Investment - certain approved investment instruments only
etc, please refer to http://www.kwsp.gov.my for more information.

There is a new method to calculate EPF Account#1 withdrawal for Unit Trust investment - the younger you are, the more amount you can withdraw (i.e. you are required to keep less "Basic Savings" in Account #1). However, the minimum amount you should have in Account #1 is MYR 5000.

Example #1: Wong is 27 years old and he has MYR 50,000 in his EPF Account #1, referring to the table below, he is required to have the "Basic Savings required" of MYR 12,000. Wong is allowed to withdraw 20% of the balance.
(50,000 - 12,000) * 20%
=38,000 * 20%
=7,600

Example #2: Joe is 22 years old and he has MYR 15,000 in this EPF Account #1. His "Basic Savings required" is MYR 5,000. He can therefore withdraw:
(15,000 - 5,000) * 20%
=10,000 * 20%
=2,000

Example #3: Gerald is 35 years old and he has MYR 80,000 in his EPF Account #1. His "Basic Savings required" is MYR 29,000 (much more than Wong as Gerald is older). Therefore Gerald is allowed to withdraw:
(80,000 - 29,000) * 20%
=51,000 * 20%
=10,200

Let me know if you need more information on this, I am more than happy to share what I know with you!

Buffett sees U.S. in recession (CNN news)

2008-05-26T08:12:00.000-07:00

Read this in CNN this afternoon, the news is short but the message is very important, hope to share with everyone.

Berkshire Hathaway CEO tells German magazine he believes country is now in recession.

BERLIN (AP) -- Warren Buffett, whose business and investment acumen has made him one of the world's wealthiest men, was quoted in an interview published Sunday as saying the U.S. economy is already in a recession.

Asked by Germany's Der Spiegel weekly whether he thinks the U.S. could still avoid a recession, he said that as far as the average person is concerned, it is already here.

"I believe that we are already in a recession," Buffet was quoted as saying. "Perhaps not in the sense as defined by economists. ... But people are already feeling the effects of a recession."

"It will be deeper and longer than what many think," he added.

The 77-year-old chairman and chief executive of Berkshire Hathaway Inc. (BRKB) gave the interview while he was in Europe for what he called a "deferred shopping tour," looking for possible acquisitions.

Omaha-based Berkshire has about $35 billion in cash and is looking to invest. Berkshire's subsidiaries include insurance, clothing, furniture, natural gas, corporate jet and candy companies. Berkshire also has major investments in such companies as Coca-Cola Co. and Anheuser-Busch Cos.

(http://money.cnn.com/2008/05/25/news/economy/buffett_recession.ap
/index.htm?cnn=yes)

Trade Merck - in 20 days

2008-05-22T08:15:00.000-07:00

Why I bought?

It dropped 10% on 30Apr as FDA rejected one of its cholesterol control drugs, this is not a big issue as Merck so many other best selling drugs in the market. I am taking a ride of the recent roller coaster in stock market. Another reason: I am also practicing “Buy the good stocks when most people are selling.”

Why I sold?

Markets worldwide can still feel the aftermath of sub-prime crisis, crude oil price is not giving up the strong uptrend, inflation worries are getting worse. Even though holding Merck for long will return me with higher return, however I do see further downside of this stock, even though pharma stocks are usually viewed as “defensive stocks”, which will not have dramatic ups and downs. I love pharma stocks, am also keeping an eye on Schering Plough (NYSE SGP) and Pfizer (NYSE PFE).

Coca-Cola (part 2)

2008-05-13T08:04:00.000-07:00

I came across this article today and found out The Coca-Cola Company has bought MORE companies and it is seeking MORE... http://biz.yahoo.com/rb/080513/cocacola.html?.v=1

Coca-Cola seeks more acquisitions to grow business
Tuesday May 13, 3:27 am ET

TOKYO (Reuters) - Coca-Cola Co (NYSE:KO - News), the world's biggest drinks maker, is seeking more acquisition opportunities in the fast-growing soft drinks market to expand its revenue sources, the company's CEO-in-waiting said on Tuesday.

Sales of established soft drinks are declining in the United States as people opt for the likes of bottled water and tea, which they see as healthier.

"You will see us grow organically as well as through targeted acquisitions," said Coca-Cola Chief Operating Officer Muhtar Kent, who is due to become chief executive officer on July 1.

Kent told reporters at the Foreign Correspondents' Club of Japan that such acquisitions would not be large, and the company was looking from country to country for opportunities, though he didn't specify where.

Coca-Cola, whose rivals include PepsiCo Inc (NYSE:PEP - News) and Dr Pepper Snapple Group Inc (NYSE:DPS - News), has benefited from its recent acquisition of FUZE teas and Glaceau vitamin water, which have helped boost the company's sales.

***Picture above: I came across Glaceau vitamin water in Manila last week, selling at PHP 125 (approx. USD 3.10), this is not available in Malaysia, so I removed the label to keep as memory, which I did not know The Coca-Cola Company has already bought it...***

The Atlanta-based company, which gets 78 percent of its sales abroad, also bought Russian juice maker Multon in 2005 for $500 million.

"There is no better industry, truly we believe, to be in than the non-alcohol beverage business," said Kent.

He added that the soft drinks market was growing faster than most other categories of consumer products such as cosmetics, toiletries and beers.

"We see huge opportunities in every category (of soft drinks)," he said.

Kent also reiterated Coke's long-term targets of increasing annual sales volume by 3 to 4 percent, operating income by 6 to 8 percent and earnings-per-share by a high single-digit percentage rate.

On April 16, Coca-Cola reported a higher-than-expected quarterly profit as strong international growth offset the effects of a weak U.S. economy and flat sales volume at home.

Coke's international business, especially in places like China, India, Brazil and Turkey, has grown more important to investors in recent years as growth slows in mature markets like North America.

On Monday, Coke shares closed up 25 cents, or 0.5 percent, at $56.40 on the New York Stock Exchange.

(Reporting by Mariko Katsumura, Editing by Brent Kininmont)

Coca-Cola (part 1)

2008-05-12T08:42:00.000-07:00

Does anyone do not know Coca-Cola, or its nick name/short name of COKE? I think this is a very famous household name that will come to your mind naturally when you want a soft drink (especially when you are thirsty!)

Some facts about this great company The Coca-Cola Company, from the website: www.thecoca-colacompany.com

Established: 1886
Ranking: We own 4 of the world's top 5 nonalcoholic sparkling beverage brands
Associates: 90,500 worldwide
Operational Reach: 200+ countries
Consumer Servings (per day): 1.5 billion
Beverage Variety: more than 2,800 products

I am sure most of us are or used to be Coca Cola's customers, but how many of us are shareholders?

Can you AFFORD not to add Coca-Cola: one of the top quality blue chips (NYSE ticker: KO) in your investment portfolio?

If The Coca Cola Company only produces Coke, Diet Coke and Zero Coke, maybe you can ignore - this is how ignorant I was few years back. Not until after a few business trips abroad, I realized The Coca Cola Company is offering more than soft drinks in the market - The Coca-Cola Company has more than 450 brands in more then 200 countries!

Energy Drinks
Juice / Juice Drinks
Sports Drinks
Soft Drinks
Tea and Coffee
Water
others...

My recent trip to Manila, I came across 2 products in one week:

#1 Viva - Mineral Water
#2 Wilkins - Distilled Drinking WaterDo you still want to be a customer only?

Or you are interested in becoming the shareholder now? THINK!!!

US - Federal Reserve's Interest Rate Cut

2008-05-02T21:08:00.001-07:00

Lower Interest Rate means:
#1 Consumers pay less for monthly loan repayment (for those non-fixed rate mortgage, personal loan, etc)
#2 Consumers will not put the money in bank's savings accounts to earn such low interest, instead, they will put the money in other investments, or spend it!

Fed has cut interest rate for 7 times in 8 months, from 5.25% to 2%!!!

Let's hope US will not go into recession and the economy and stock market will pick up soon! Good luck to everyone!

What makes a person rich? [article sharing]

2008-05-02T10:25:00.000-07:00

One day a father of a very wealthy family took his son on a trip to the country with the firm purpose of showing his son how poor people live.

They spent a couple of days and nights on the farm of what would be considered a very poor family.

On their return from their trip, the father asked his son, "How was the trip?"

"It was great, Dad."

"Did you see how poor people live?" the father asked.

"Oh yeah," said the son.

"So, tell me, what did you learn from the trip?" asked the father.

The son answered: "I saw that we have one dog and they had four.

We have a pool that reaches to the middle of our garden and they have a creek that has no end.

We have imported lanterns in our garden and they have the stars at night.

Our patio reaches to the front yard and they have the whole horizon.

We have a small piece of land to live on and they have fields that go beyond our sight.

We have servants who serve us, but they serve others.

We buy our food, but they grow theirs.

We have walls around our property to protect us, they have friends to protect them."

The boy's father was speechless.

Then his son added, "Thanks, Dad, for showing me how poor we are."

Isn't perspective a wonderful thing? Makes you wonder what would happen if we all gave thanks for everything we have, instead of worrying about what we don't have.

Appreciate every single thing you have, especially your friends!

p/s: thanks Lydia for sharing this wonderful article!

Hypnosis to Financial Freedom - anyone interested to try?

2008-04-26T05:33:00.000-07:00

Came across this in one of the online advertisements, very interesting and I think it might work... the question is: how much? any side-effect?

hmmmmm.........

Why does Stock Market exist?

2008-04-26T02:47:00.000-07:00

Lots of people called themselves "stock market investors", but does everyone of them know the exact definition of stock market? Why does stock market exist? Some of my friends regard stock market as casino. Some of my friends even commented that I am gambling in stock market!

No no no no no, stock market is not like a casino, at all!

However, some of the "investors" (I prefer to call them "speculators") do treat stock market like gambling. That is because of their mindset and perception, stock market by nature is never a place for gambling.

Gamble requires a lot of luck and very little on skill and strategy. Investment is the opposite - needs patience, knowledge, strategy and just some luck.

Stock market exists for 2 main reasons:

#1 For corporation/institute to get more money to expand their business, create new product lines, improve Research & Development, etc.
#2 For people like you and me to invest or own part of the business you are interested in.

Many of us want to own a business but due to many reasons, not everyone can own a business. By investing in stock market - purchase some shares of a listed company, you own part of company and business.

A book about stock investment said if we own a company's shares, we have to make sure we provide the business to our "own company" but not its competitors. For instance, if you own some shares of McDonald's, you should always go to McDonald's for fast food but not KFC, Burger King, etc.

Are you a shareholder of your favorite brands - bank/restaurant/boutique/real estate/etc?

Malaysian stocks with highest dividend in 2007

2008-04-25T07:21:00.000-07:00

BJtoto	9.40%
Bintulu Port	8.40%
Amway	8.30%
BAT	7.90%
Calrsberg	7.90%
IJ Intl	7.40%
Guinness	7.20%
Gamuda	7.10%
KFC	6.60%
Digi.com	6.30%
PBB	6.20%
Star	6.00%
TH Plantations	5.80%
Axis REIT	5.80%
Atrium REIT	5.50%
MBM Res	5.30%
Telekom	5.20%
MAHB	5.00%

I received the above list from my remisier (stock broker). As long term investor, you would want to have some of these stocks in your portfolio, if not all.

I am happy to hold some of the stocks above, even though the number of shares is not a lot but the returns have definitely beaten the Fixed Deposit rate!

On top of that, some of the stocks above also gained quite a lot in terms of price. For instance, I bought BJtoto (Berjaya Toto, gaming stock) in Jun07 at MYR 4.76 and today's (25Apr08) closing price is MYR 5.05. The price's capital gain is 6%, which is not so bad!

During the bull run in end of 2007/beginning of 2008, the highest price it went up was MYR 5.55 (capital gain of 16.6%!!!).

Anyway, let's have some patience, as long as I am still holding this lovely stock, I will still be able to enjoy the handsome return in the form of dividend.

Therefore, next time if you want to try your luck in number/lotto game in Malaysia, kindly choose Berjaya Toto. As a very very very minor shareholder, I thank you :)

Best Time To Buy?

2008-04-19T18:23:00.000-07:00

After few months of busy schedules, I have decided to take some time off to at least share some of my thoughts.

Friends who know I have investment in stock market asked if I am affected by the recent market volatility. Personally, I invest quite a lot of my savings in stocks and unit trust, about half of my investment is suffering from paper loss at the moment (Paper loss means unrealized loss, as long as I do not "sell" the stocks and unit trust, it is like a loss recorded on "paper"). However, I do have a few good blue chip stocks which the share prices are very stable and able to withstand the recent storms and rains in stock markets worldwide.

No one can tell the exact top or bottom point of stock markets, therefore let's not try to be the fortune teller but adopt a smart strategy - Dollar Cost Averaging.

Dollar Cost Averaging is a strategy to invest at an interval (usually fixed) with a fixed amount of money (some people will fix the units of unit trust or number of shares of a stock to buy in). This strategy allow you to buy in no matter the market is at its high or low. Eventually you will be able to achieve the "averaging" effect.

Let's see a simple example (without complex fee calculation or things like that):

In January, You invested $1000 in Unit Trust A at the price of $0.50 per unit, therefore you have 2000 units. You have setup a Standing Instruction to invest $100 every month in the same Unit Trust A, despite the price.

	Amount invested	Price	Units
January	$1,000	$0.50	2000
February	$100	$0.47	212.77
March	$100	$0.45	222.22
April	$100	$0.46	217.39
May	$100	$0.51	196.08
June	$100	$0.55	181.82

As you can see, when the price is low, we purchase more units; when the price is high, we purchase less units. This will answer the questions below:

#1 I afraid I will buy at the wrong time - highest price?
#2 I am not sure if this is the right time to buy -lowest price?

Last but not least, Dollar Cost Averaging strategy can also help you to set aside some money for savings/investment at a regular or fixed frequency.

This strategy has helped me a lot, not only successfully "forced" myself to save some money every month but also help me to achieve a better return from my investment (Unit Trust in particular) in long run. A friend of mine bought similar Unit Trust as me, but he did not practice Dollar Cost Averaging strategy, that is why his "paper loss" is greater than me (at the moment).

Best Time To Sell?

2007-11-29T03:19:00.001-08:00

I am very busy at work but I have decided to allocate time for my blog, sorry for no update in the past few weeksssss.

I had lunch with my friend this afternoon and we talked about investment. I told her I am looking for a condo to invest but she asked me to hold on first as she heard from her friends that there will be a recession in year 2008. The perception is that, during recession, property will be slightly cheaper. Then we talked about investment in stock market, my friend said that her husband told her about his weakness in investment – do not know when to sell.

I shared my point of view with her. I told her nobody is able to predict the BEST TIME to sell, or predict the HIGEST price for certain investment product. We should set a target like x% of return/profit. For example your target is 30% return, for Unit Trust investment of MYR 1000, the BEST TIME for you to sell is when you are able to get back MYR 1300 from the Unit Trust Management Company. (1300–1000) / 1000 = 300 / 1000 = 30%

Another way is, mentioned by lots of famous and successful investors – when everybody is greedy, be fearful; when everybody is fearful, be greedy. In other words, buy when everyone else is selling, sell when everyone else is buying.

When is the best time to buy/sell? YOU DECIDE!

Invest in ASEAN!

2007-10-03T20:31:00.001-07:00

I have a friend in Vietnam, he is 24 years old this year, currently working in a bank as Customer Service Manager. He told me that he traded actively in local stock exchange and the investment amount was about USD 30,000. I did not believe him as I had no knowledge in Vietnamese economy and stock exchange.

Recently, I received some information about a new fund launched by a local UTMC (Unit Trust Management Company), a fund that invests in ASEAN market. ASEAN stands for Association of Southeast Asian Nations, it comprises of 10 countries including Thailand, Malaysia, Vietnam, Singapore, the Philippines, Indonesia, etc.

After some study at wikipedia, I found out that 4 ASEAN countries top the chart of world’s population: Indonesia 4^th, the Philippines 12^th, Vietnam 13^th and Thailand 20^th. ASEAN has an estimated population of 573 million! (source: www.wikipedia.org)

Another discovery: GDP (Gross Domestic Products) growth rate of ASEAN countries are very consistent comparing to the rest of the regions in the world. Over the past 6 years, the GDP per capita for ASEAN was 6.8% whereas it was only 5.4% for the whole world.

GDP Growth Forecast for major economies in ASEAN (%):

Country	2007F	2008F
Vietnam	8.4	8.1
Indonesia	5.6	6
Singapore	6.2	6
Malaysia	6	5.8
Philippines	5.5	5
Thailand	4.8	4.5

(source: Bloomberg)

As for stock market performance, I also found out that ASEAN stock markets are performing very well since 2004. Some examples of the high performers from 2004 until 31^st August 2007:

Country	Return
Vietnam	447.00%
Indonesia	217.20%
Philippines	133.30%

I am definitely investing in this new fund as I like to diversify my investment geographically! Moreover, there is a discount in service charge during offer period! Send me an email if you would like to know how to invest in this new ASEAN fund: anson.chng@gmail.com

p/s: Now I know that my friend in Vietnam is not lying, he is investing a lot in the booming Vietnam market!

No cash to invest?

2007-09-27T08:29:00.000-07:00

No Cash? Wait a minute, have you forgotten about your Provident Fund? For Malaysian, we call it EPF (Employee Provident Fund). EPF is like Hong Kong’s MPFA (Mandatory Provident Fund Fund Schemes Authority) and Singapore’s CPF (Central Provident Fund), it is meant to be a form of savings for our old age.

*links: http://www.mpfa.org.hk/eindex.asp, http://mycpf.cpf.gov.sg/Members/home.htm, http://www.kwsp.gov.my

Malaysian’s EPF consists of 2 accounts, i.e. Account 1 and Account2. Account 1 has 70% of your funds and the remaining 30% is in Account 2. Malaysian EPF members are now allowed to withdraw a small part of the funds from Account 1 to invest in selective Unit Trust managed by Unit Trust Management Company.

It is solely up to you to decide what do you want to do with your money. I am not very sure about other country’s Provident Funds but for Malaysian, you have a choice. Of course, there are only a few selected Unit Trusts that we can invest with our EPF funds, usually less aggressive local Unit Trust. For example, Public Mutual Berhad’s Unit Trusts: Public Islamic Balanced Fund, Public Regular Savings Fund, Public Money Market Fund, etc.

EPF does provide dividend return, you may refer to the screen shot below for the previous EPF dividend return against inflation rates.

Question: How much can you withdraw from EPF’s Account 1?
Answer: 20% of the amount in excess of $50,000. In other words, you have to at least keep $50,000 in your Account 1.

Example 1:
Nicole has $60,000 in her Account 1, she can withdraw
$60,000 - $50,000 = $10,000
20% of $10,000 is $2,000

Example 2:
Priya has $40,000 in her Account 1, she is not qualified for the withdrawal as she has to keep minimum $50,000 in the account.

Example 3:
Jasmine has $120,000 in her Account 1, she can withdraw
$120,000 - $50,000 = $70,000
20% of $70,000 is $14,000

Question: How often can you withdraw from Account 1 for Unit Trust investment?
Answer: Once every 3 months.

Question: More question?
Answer: You may send an email to me: anson.chng@gmail.com and I will personally explain to you in detail!

***Next: Interested to invest in the region below?***

NAV

2007-09-25T23:49:00.000-07:00

NAV is Net Asset Value. NAV is the total value of the fund's portfolio minus liabilities.

Usually, the NAV of a fund is calculated on a daily basis. You can get the NAV price on the UTMC’s website (examples: http://www.publicmutual.com.my, http://www.pacificmutual.com.my)

Unit Trust Management Company (UTMC) can choose to use are using Dual Pricing or Single Pricing method to display the “Price” to buy or sell. The main difference is either or not the Service Charge is included in the calculation. All UTMC in Malaysia is practicing Single Pricing now, no matter you buy or sell, you will refer to only 1 NAV price. However Service Charge calculation varies from UTMC to UTMC. In my previous blog, I have used the Buy and Sell of Unit Trust of Public Mutual Berhad as example.

***No Cash to invest?***

To buy and sell

2007-09-25T22:26:00.001-07:00

To invest - Purchase
When you invest in Unit Trust, you do not hold any shares or bonds directly, you hold “units” of the funds. Your investment amount will be converted to number of units in that particular Unit Trust you invest in. So, how do you know the “Price” of the Unit Trust? You can get it from the Unit Trust Management Company’s website, newspapers or visit the company directly. Please note that the “Price” may not be the latest if you get it from newspaper or even website. We will discuss more about “Price” later. Lastly, there is definitely an upfront service charge – for Fund Manager’s management fee, Unit Trust Consultant’s commission and any other miscellaneous fees and charges.

Example: You invest $1000.00 in the Unit Trust ABC which the price per unit is $0.25. Assuming the Service Charge is 6.5%, how many units will you get?

Price per Unit $ 0.25, Service Charge 6.5%, Amount Paid $1000.00

Actual Amount Invested:
$1000 / 1.065
= $ 938.97

Unit hold:
$ 938.97 / $ 0.25
= 3755.88 units

Service Charge paid:
$1000 - $ 938.97
=$ 61.03

If you add both Actual Amount Invested and Service Charge Paid ($ 938.97 + $61.03), you will get the initial amount you paid: $1000.00.

Cooling-Off period
As individual investors, after you have purchased the Unit Trust, you will usually have a few business days of Cooling-Off period to cancel the purchase and get a full refund. You have to check with your Unit Trust Consultant on the Cooling-Off period and exercise your rights wisely.

To sell – Repurchase
When you want to “sell” your units of the funds to the Unit Trust Management Company (UTMC), you may do the redemption through Unit Trust Consultant or go to the UTMC directly. We call the redemption “Repurchase”. Please note that there is a cut-off time when you refer to the “Price”, before cut-off time you will refer to yesterday’s closing price, after cut-off time, you will refer to today’s closing price (which is still unknown at the time you “sell”). Usually, you will get the Sale Proceed in about 10 days, varies from UTMC to UTMC.

When you “sell” your units to the UTMC, there might or might not have Service Charges, please consult your Unit Trust Consultant for more information.

***NAV***

Strategy - Diversification

2007-09-23T18:30:00.000-07:00

Different investor embraces different types of investment strategy. One of the famous ones is Diversification. This strategy is to reduce or minimize the risk exposed to one investment. Some investors Diversify to achieve a “Balance” in their different types of investment, if 1 investment fails, other investments are still making profit.

You can diversify your investment in order to achieve “don’t put all your eggs in one basket”. You can diversify your investments by different market and/or different investment types.

For instance, Lee and John want to diversify their investments, therefore they choose to invest in the Unit Trusts below:

Customer#1: Lee

Public China Select Fund (Aggressive Equity Fund)
Public Global Balanced Fund (Balanced Fund with Conservative to Moderate Risk Profile)
Public Money Market Fund (Money Market Fund with Conservative Risk Profile)

Customer #2: Mohammad

Public Islamic Bond Fund (Bond Fund with Conservative Risk Profile)
Public Global Select Fund (Aggressive Equity Fund)

There are, however, some investors believe that they should put all the eggs in one basket in order to FOCUS. It really depends on individual if you want to diversify or focus.

***Next: To buy and sell***

How to start investing in Unit Trust?

2007-09-20T17:25:00.000-07:00

1. Who and Where?

You can choose to visit a Bank or Unit Trust Management Company. Or more directly, talk to a UTC (Unit Trust Consultant, generally known as Unit Trust Agent). Make sure you choose the right person to manage the Unit Trust for you, do not choose the unqualified and irresponsible agent.

2. How to make decision?

Understand your Risk Profile – Aggressive, Moderate or Conservative*
According to your Risk Profile, choose the type of Unit Trust you want to invest – Equity, Balanced, Bond, Money Market, etc*
Decide which market you want to go for, Asian, Far-East, Global, Local, etc*
*please refer to my previous blog for details

3. What to prepare?

Usually photocopy of your Identity Card or Passport. And obviously, money! Either cash or cheque, my suggestion is to write a cheque.

4. How much?

Depends on the Unit Trust, some minimum entry is RM500, some RM1000.

5. Where to get money?

Make sure you have extra money and you do not have outstanding balance in credit card! Someone who has outstanding balance in credit card asked if he should invest in Unit Trust. My answer to that person was obviously a “NO”!
For Malaysian, if you have worked for quite some time, you can withdraw part of the money from EPF Account 1, I will share more about this later.

***Next: Strategies***