Monday, 24 November 2014

How many long-terms can we afford

It never failed to intrigue or impress me each time I have group conversation with young people. Some could articulate well on how they see good personal wealth management should be. Stock market investment not necessarily is one of the tools for good wealth management. Some see it as a devil indulgence while others see it as part and parcel of wealth management. To some extreme, some don't even know what and how stock market works just like they don't know how insurance-investment-linked scheme works. But surprisingly, they willing to part their money in insurance scheme even on monthly basis without knowing or asking hard questions on how it works. Here I am not insinuating that investment-linked insurance scheme is unwise investment. Far from it. I am just asking why people treat investment-linked insurance they way the did but not on stock market. I mean, "will you willing to part some money into stock market in monthly or quarterly basis the way you did for investment-linked insurance?". Most, if not all, responded with no or unsure answers and others said investment-linked has money saving feature in it besides one gets life insurance coverage. Rightly so. One thing for sure is investment-linked insurance is a long term commitment. Not one year or two years commitment but probably 10 years or more. I would say most people have no problem to commit this for long term. But when it comes to stock investment, most would not commit the same. What I want them to give some thought is why not they consider stock market as long term money saving tool the way they see investment-linked insurance.

 

The other day, someone in this blog asked me about what is the longest stock I had ever invested. That is a very interesting question. This question really triggered me to give some further thought about how I see long term investment once again. How many long-terms can we afford in our lifetime? The ultimate reason why we invest in stock market in the first place is to make money, regardless it is short or long term. If one can make 100% return in 5 years is good. If one can make 100% return in 3 years is even better. It is the best if one can make 100% return in 1 year! Of course some will dream of making 100% in 1 month. Nothing wrong. But the question is how many will see it as a life long learning and enriching experience besides making money?

 

Let me tell you this. A person with net worth of say 10 millions will see long term definition very differently from someone with net worth of say 100k. That person of net worth of 10 million will probably enjoy and satisfied even his long term investment gives him 50% return. But for a person of net worth say 100k would probably would not be satisfied even manage to make 2 or 3 long term investments of 100% return in his or her lifetime. What I want to drive at is don't look at making money from stock market purely on money sense alone. You will never satisfy even if you make 100% return. One would probably end up chasing an endless unsatisfied dream over and over again. But rather to treat stock market investment as life long learning and enriching experience. If one take this approach, one will take out the stress when investing in stock market.

 

By the way, OCK goes ex-bonus today. The price adjusted and open below a dollar. We shall see how's the Q3 results look like soon.

 

Its price open at RM0.95 upon ex-bonus today.



Friday, 7 November 2014

DJIA hits new high again

DJIA hit new all-time intraday high at 17,560.31 on Thursday 06.11.2014.




What has that got to do with KLSE market? Sadly, nothing.

 

It seems that KLSE has its own independent mind recently. Whenever DJIA hit new high, KLSE reacted coolly about it. In contrast, whenever DJIA came down, KLSE reacted badly. Many people try to get clues from US stock market to make their position about KLSE. This could be mainly because KLSE itself is not able to provide useful clues to local investors for them to make investment decision. The flow of market information in KLSE is not acute and sufficient enough for the ordinary retail investor to fully comprehend what is happening behind every step of the corporate activities. Many a time news that we got is from third party, fourth party or worse it is unsubstantiated hearsay. This is the disadvantage many local retail players have over here. On the flip side, it is this disadvantage that has been fully make use by certain parties to work to their advantage. Unfortunately, the less informed investors are the one got slaughtered by their game. So how to beat them? You must know that they cannot play their game all the time. So to beat them is to play long term investment. Forget about tips for this and that from who and who. Tips are just to suck you into their games. Be wise and stay wise.


**************

(Reuters) - U.S. stocks edged up in a volatile session on Thursday, with the Dow and S&P 500 hitting fresh record closing highs. This was a record levels for the second straight day Thursday, after European Central Bank president Mario Draghi hinted at monetary stimulus of as much as €1 trillion.

The Dow Jones Industrial Average (DJIA) rose 69.94 points, or 0.4 percent, to 17,554.47, the S&P 500 gained 7.64 points, or 0.38 percent, to 2,031.2 and the Nasdaq Composite added 17.75 points, or 0.38 percent, to 4,638.47.

About 6 billion shares changed hands on U.S. exchanges, below the 7.3 billion average for the last five sessions.

NYSE advancing issues outnumbered declining ones on the NYSE by 1,730 to 1,327, for a 1.30-to-1 ratio on the upside; on the Nasdaq, 1,557 issues rose and 1,121 fell for a 1.39-to-1 ratio favouring advancers.

The benchmark S&P 500 index posted 72 new 52-week highs and three new lows; the Nasdaq Composite recorded 118 new highs and 61 new lows.

Thursday, 6 November 2014

OCK - the stage is finally set

The stage is finally set for better things to come.

 

People outside the company will never know how excited it was for the people who had worked so hard for this to finally come to fruition. The sense of accomplishment is all round. It is all about hardwork. Then comes result and then comes recognition. When there is recognition, things will be easier for the business to grow further. All this started as a small sole proprietorship company with limited capital. What it has then, and still has now, is grand idea and passion. That was 15 years ago.

 

One thing for sure. It is not easy for a small company to grow organically and eventually able to be listed in Main Board. This is not to compare to those high flying company with multiple layers of connections and backing.

 

I see this as a success story of the 1st generation of entrepreneur where the seed has been planted and this will carry on to the 2nd generation. We all know about Genting, YTL story and the like. These companies are now coming to their 3rd generation, SPSetia is supposedly in their 2nd generation (unfortunately the plan was scuttled prematurely). These companies may seem like family business oriented company. But who cares as long as it creates values for the shareholders in the long run. Business runs well, making profit continuously, have big vision and ambition to grow the company further.

 

And this is what I see in OCK since last year.




Its price closed at RM1.43 on 05.11.2014.


Friday, 26 September 2014

Testing time

Just a short note.

 

We are currently going through some testing time in the stock market. This thing happens few times within year, every year. And it is exactly this kind of time will put off many nervous investors. Or should I say amateur investors. If you speculate in stock market for short term, certainly this time around is not an easy time. During rally market, I often heard people saying want to be a full time trader and quit their 9-to-5 job. This is because they make money easily almost everyday from the market. But they forget what they are doing is not sustainable as their performance in their trading is difficult to be consistent for long run. So, this testing time will bring them back to reality. Make money from the market is never by chance but by perseverance, patience, trust and knowledge.

 

If you are stuck in the stock market at the moment but in good fundamental stock, then you may be down but safe. But if you are stuck in speculative or so-called hot stock with plenty of rumours but no substance, then you are against your own luck. Many traders or speculators turned long term investors unintentionally because of this. How I know? Because I was one, long long time ago. I learnt from my mistakes.

 

With this kind of less enthusiastic sentiment in the stock market, good stocks will not have its field day just yet. Starting from now, I may touch on other things which may not necessary about stock market. Life is not always about stock market. Come what may, enjoy it.

Tuesday, 23 September 2014

iPhone, iPad, iWatch, iMac and iCxxx

iPhone, iPad, iWatch, iMac and the best of all, iCxxx

 

It is 'Alternative' communication gadget to iPhone and most important it is cheap. Only USD7.00

 

No screen, no buttons, no apps. Just simple, pure communication !

 

"i" product enthusiast must have it.

 

What is it?

 

 

 

iCups






Monday, 22 September 2014

Property - They really want to kill it

This is what I said back in June:

 

"There are so many trades activities that rely on construction industry. Because of our overzealous to introduce more and more cooling measures, everyone will be affected. It is a matter of when it will hit us one way or other. If you killed property development activities, you kill construction activities. With construction down, all other trades related to construction will collapse as well. People will be out of job and out of business. At that time, who cares about property price anymore. The main priority then is to put food on the table. And stock market will be affected too."




Average wage earner already find it hard to buy property priced above a million. What more for property priced above 2 million. Many developers are banking on foreigners to buy their properties. I do not see how this can help to cool down property prices or help the locals to buy property or worry the locals need to compete with foreign buyers to buy local properties.


Those people in the government department is hurting the industry again and again. Of course, they will never feel the pain as they draw their salary from metal bowl. Even if the economy collapsed, they still get their salary. But the people on the street, the wage earners working in the construction and property industry will suffer.


It pains me to see important policy is made without proper consultation and feedback with the stakeholders. Important decision are made by a few hold up in high office.




Friday, 19 September 2014

Consumer Price Index CPI and GST

Someone shows this advert to me and asked me to explain because he does not seem to understand. I mean, not the wordings in the advert but the message brings about by the advert. To him is very simple. As long as the price of his regular teh tarik increased, it put a dent to his wallet. It does not matter whether it is 0.1% increase or whichever way you want him to look at it. Any increase is an increase. It is a fact, atleast to his wallet.

 

At the end of the conversation, he asked for a pay rise for next year. And now I understand where he is coming from. Clever chap ! 





 

And then, came news report about GST from one major newspaper. Is anyone clapping their hands? Let's hope we have better news from the coming Budget 2015 especially for the housing sector.




Thursday, 18 September 2014

UK is at cross road with independence referendum today

I have been following closely the recent developments in UK on the Scottish Independence Referendum vote whether Scotland will part ways from the Union of the United Kingdom (UK) that has stood for 307 years. There are 4 kingdoms that form the union of what we know as United Kingdom or simply UK.  The United Kingdom comprises four countries namely England, Northern Ireland, Scotland and Wales. Those who likes UK history will understand the sense of pride among the Scottish people about Scotland and not England. For a start, watch the movie BraveHeart starred by Mel Gibson. This movie will provide you some historical facts, minus the love story of course, on why some Scottish have this dream and pride to have their own independent country.





Today we will know whether Scotland will become an independent nation just like Malaysia. If that happened, UK will be reduced to 3 kingdoms and lose 1/3 of its land mass.


******************

GLASGOW, Scotland (AP) — The people of Scotland will decide on Thursday whether to end a partnership with the rest of the United Kingdom that has lasted more than 300 years. Here is a guide to Scotland as the historic vote nears.
 
WHAT IS SCOTLAND?

Scotland, with little more than 5 million people, is one of the oldest countries in the world, having been united as a single nation by King Kenneth MacAlpin in the year 843.

It remained an independent state for more than 800 years until the formation of Great Britain in 1707.
When England found itself at war with France in the early 18th century, fears that Scotland would side with the enemy prompted London to block trade and deprive Scots of property they owned south of the border unless they agreed to create a single country.

After much debate — and widespread Scottish hostility — both the Scottish and English parliaments were dissolved on May 1, 1707, and replaced with a new British one.


HOW IS SCOTLAND DIFFERENT FROM THE REST OF THE UNITED KINGDOM?

Scotland has its own legal system, and the national Church of Scotland was guaranteed under the Act of Union.

However, all monetary and finance matters are controlled by the government in London and the Bank of England, which was founded by Scotsman William Paterson in 1694.


DOESN'T SCOTLAND ALREADY HAVE ITS OWN PARLIAMENT?

A desire for more autonomy in Scotland led to Westminster holding a referendum in 1997 for the establishment of a devolved Scottish Parliament in Edinburgh.

The idea was backed by 74.3 percent of the voters and in 1999 the parliament was opened for business by veteran politician Winnie Ewing, who chaired the first meeting, with the words: "The Scottish Parliament adjourned on the 25th day of March in the year 1707 is hereby reconvened."
Members of the Scottish Parliament can legislate on education, health spending, housing, tourism, transport and a few other areas; they have no control over immigration, defense, foreign policy, employment, trade, energy or the main levers of finance.

Most of the money used by the Scottish Parliament to finance public services comes from a grant allocated by the United Kingdom government.


WHAT ARE SCOTLAND'S ECONOMIC STRENGTHS?

The U.K. produces more than 75 percent of the European Union's offshore oil production, of which 90 percent is extracted from Scottish waters, according to the European Commission's Joint Research Centre. Based on 2012 figures, the Scottish government says this Scottish oil contributes around 24.4 billion pounds ($39.5 billion) to the U.K. economy.

In addition to oil, the Scottish government calculates the country could produce 25 percent of the EU's offshore wind and tidal energy and 10 percent of the EU's wave energy.

Scottish exports are worth around 100 billion pounds a year to the British Treasury, including more than 11 billion pounds from financial services, along with almost 9 billion pounds from food and drink, including whisky.



Friday, 12 September 2014

911 - the incident that we know

Where were you when 9/11 happened? How things had changed since then. 13 years had passed. America has wake up. Why I said America has wake up? Do you know many American people don't know much about outside world apart from their own country America. Can't blame them. They already have all what they need to have. America is an economy power house of the world. If you have a chance to be there, you will surely get fresh air of things which you probably would not able to get here. I compare China and America, I still hold America much better than the former, culturally, economically and politically. We all know what is free world means but we could only appreciate the real meaning until you see the free world through the eye of America. You have to be there to see it and feel it and not just by reading about it.

 

Below are tweets from someone who used to stand beside the US President and now tell account by account on how they deal with the 911 incident. How often could you get that.





George W. Bush's former press secretary Ari Fleischer's tweets offer captivating, real-time look at his 9/11 experience.

'I'm thankful Twitter didn't exist then,' says George W. Bush's former press secretary.

Ari Fleischer, the former White House press secretary who was with President George W. Bush on Sept. 11, 2001, took to Twitter on Thursday to offer his recollections of the 9/11 attacks in real time.
 
Through a series of diary-like tweets taken from his notes from that day, Fleischer offers a vivid account of the events of 9/11 as seen through the eyes of one of the president's trusted advisers.
"What happened that day should be shared so it is never forgotten," he told Yahoo News. "Letting people see what happened on the inside just feels like the right thing to do on a day like this."
 



But Fleischer, who served as press secretary from 2001 to 2003, says Karl Rove informed Bush of what was believed to be an accident. Then the second plane hit.



Fleischer, who now runs a sports communications firm, recalled that Bush wanted to address the press, but that Fleischer advised him against it.




At 9:45 a.m., they boarded Air Force One. Years later, Fleischer writes, Capt. Mark Tillman told him they took off at an "unusually steep ascent because he had a report of a sniper at end of runway."


They flew to Barksdale Air Force Base in Louisiana, instead.




Hearing Bush's declaration of war is Fleischer's most vivid memory of 9/11.
"To hear the commander in chief say that sends a shiver down your spine," Fleischer told Yahoo News.


At Barksdale, Bush addressed the nation.


They left Barksdale for Offut Air Force Base in Nebraska, "a secure location where Bush could convene a meeting of the National Security Council."



Fleischer says that had Twitter existed on 9/11, he would not have used it.

"I'm thankful Twitter didn't exist then," he said. "I wouldn't have tweeted, but it likely would have spread bad rumours — and there was a lot of false information flying that day."

Would it have changed the way the administration responded to the attacks?

"[We] would have had to respond to every false rumour that circulated, and many horrific accounts would have come out from inside burning buildings," Fleischer said. "You can't stop technology, but as much as I am a fan of Twitter, I'm glad it didn't exist on September 11, 2001."


Wednesday, 10 September 2014

About Malaysia and Being Malaysian

Have a good laugh and relax while the stock market is taking a cooler.





Most unexpected but interesting things you could find in Malaysia.


Wednesday, 3 September 2014

OCK - EGM approved resolutions

Good deal for Chin Yew. Most important, it is a win-win deal for both him and OCK.



TheSun 03.09.2014




Chin Yew, a young chap previously worked for SP Setia, made a handsome fortune from OCK share that he got at RM1.10 arising from the sale of his Indonesia company to OCK. He made a clever deal to have part of OCK shares and part cash from the sale deal instead of all in cash consideration. Well, he will get more if he keeps the shares for longer. And he will.

 

Its price closed at RM1.47 on 03.09.2014.

Saturday, 30 August 2014

Friday, 29 August 2014

Tales of two salemen

Salesman A : I am going this rural town to explore new business opportunity.

 

Salesman B : I will be going there to assess the market too.

 

After their trip to the rural town, both salesmen reported back to their respective company on the viability of setting up the shoe business over there.

 

Salesman A : Boss, cannot do ! I spent the entire day and noticed that almost all the people do not wear shoe ! If we set up our shoe business there, surely there will be no business. We should only go to places where people wears shoe.

 

Salesman B : Boss, wonderful ! I spent the whole day and noticed that nobody wears shoe and thus it is a huge market opportunity. Give them the awareness to wear shoe to protect their feet. If we set up our shoe business there, it will surely flourish. It is a new business frontier.



This is a story I think many might have heard before. It is about 2 salesmen have different opinion on how they view business opportunity on a particular same situation.



*****

 

I see the above story is quite relevant to our stock investment. Essentially, stock investment is like putting our money into a business which we think it will flourish over time. The business model must not only sustainable but must have plenty of opportunities to expand. It is not good enough just maintaining the current rate of doing business. Revenue must increase over time. Profit will catch up as the company will improvise to reduce cost as the company understands more deeper and have more knowledge about the business over time. With revenue increasing and cost reducing over time, the only thing that sure will go up is profit.

 

Back to the relevancy of the above story. A good businessman or salesperson will see great opportunity ahead in an uncharted territory while other will take the easy path of following the established market. Of course it will be safer to join the established market but competition is higher as you will be the newcomer up against the big guys. Investing in stock market is the same. A good investor or value investor will see great opportunity ahead at time when the company is moving into uncharted business territory. Average investor will normally shun this type of company until they show good results. Granted. But by the time the company shows good results, the average investor like you and me will not be fast enough to see it. By the time we see it, the big guys are already in it and the average investor will have to fight it out with them or with everyone i.e. chasing after stock and end up buying at higher price which by then there is lesser room to go up further. Sadly, this is what most average investors do, that is, only take investment action when price started to move up, but not based on company's business fundamental. Company's business fundamental has been relegated to second priority. Even though it is nothing wrong with this, but it is not wise strategy. You will end up just another story of Johnny comes late. Surprisingly, many an average investor is contented with such situation.



Currently, stock market is full of pessimistic sentiment. Have you heard of this quote - "Maximum pessimistic is the best time to buy and maximum optimistic is the best time to sell". The problem is when maximum pessimistic has set in, we already short of money to buy because we already fully invested at the time of maximum optimistic. Whilst I don't fully subscribe to this quote but certainly there is one or two things to learn from this quote. I would advise investor to set out their investment goal first. Once you have set your investment goal, any situation of the stock market is time to buy or sell. I have set my investment goal for OCK since June last year. Here. You see, there were so many strong ups as well as many terrible downs since then until now but I have been patiently stood my ground because I have set my investment goal for this company right from the start. If I have sell or sell-then-buy-back which is the most favourite strategy among retail players, I think I would not have make that kind of profits as it is now. From what I gathered, the next four months will be interesting months for OCK. Yes. I can't wait for the New Year to come. The company has announced their quarterly results. Good or bad, you judge yourself or wait for analyst's report (this will be another Johnny-comes-late case again). But I am certain this will set a new tone for a better results for the coming quarters.



As for Hovid, the company has announced their full year results. Revenue improved and profit dropped slightly. I am satisfied with the results. As expected, not much of excitement. The company announces a dividend of 0.5 cents and this is good for any long term investment.

 

Its price (Hovid) closed at RM0.41 on 28.08.2014.

Its price (OCK) closed at RM1.40 on 28.08.2014.

Thursday, 28 August 2014

Presbhd - bruised but certainly not out

Admittedly, this month is not a good month for Presbhd. As usual, many analysts have come out to caution about the company's missed earning target. If one were to go by purely on the analyst's call, one would be very busy buying and selling stock. Is this not will make us a short term player? In fact analyst will give out recommendation every 3 months or so which is coincide with the quarterly reporting session. It means that if one is to strictly follow this routine, one will end up buying or selling every 3 months or so. And this of course will make your broker very happy. Imagine if you only make investment action to buy or sell once every year, your broker will be out of business very soon. Of course, there is nothing wrong for these analysts to chunk out report after report. After all, it is their job to do so. But think about this. Have you ever wonder why analysts or research houses are so generous to publish their reports for the public to read for free? Ain't these reports are meant for their private investors or clients only? Or are they truly doing it for free public service so that everyone can make money together? If everyone makes money, who loses money then?

 

Yes. Presbhd stock price takes a beating recently particularly the last two days. This mainly because the quarterly earning results is not so good, so the analyst said. Let's take a deep breath and relook at the profit numbers for the last 4 quarters : 14Q2 (7.0mil), 14Q1 (6.4mil), 13Q4 (10.7mil) and 13Q3 (12.3mil). I concluded that the numbers are decent. And don't forget, the dividend keeps flowing in.

 

In conclusion. What I am saying is that the decision to buy or sell or hold is entirely yours which must be based on your investment goal. Certainly investment goal is not and must not depends purely on analyst's report alone. What happen if one analyst says buy and another analyst says hold and analyst says sell. I, for one, will never sell just because one quarter results did not meet the target (who decides the this target anyway). As long as the business structure of the company does not changed, there is no reason for me to follow the analyst's report. Be patient. It is not end of the world.

 

Good luck.

 

Its price closed at RM1.90 on 28.08.2014.



Monday, 25 August 2014

Google Inc & Apple Inc's Share Price War

With KLSE market is kind of unexcited recently, it is good to take a back seat and relax and take a look at outside world, particularly the US market.

I always have a strong interest in Google and Apple stocks. Not only because I have some very small interest in Google stock but also because these 2 companies are so prominent in our life. I think no one can deny that almost everyone in this planet knows what Apple is famous for as well as what Google is famous for. Of course there are other brands too that we are so used to like Coca-Cola, Samsung, Microsoft, Facebook etc. Most Malaysians can easily connect to these brands one way or another. Even the young kids know who they are. Coming to think about it - do Malaysia has any product that have prominent presence at world stage? Perhaps AirAsia, SP Setia, Petronas .... how about Tongkat Ali? I don't know. 







Apple Inc. split its share for 7-for-1, converting a share that closed at $645.57 to seven shares valued at $92.22 on the morning on 09.06.2014. Currently AAPL is at $100.30 a share which is nearing the company's intraday high, and Google Inc. split its share for 2-for-1 on 03.04.2014, although in a different fashion. In the stock price increase war since the events, Apple has won handily. The anticipation for the iPhone 6 has overwhelmed Google’s growth dominance in Internet advertising, both on PCs and mobile devices.

In the past three months, Google’s shares have risen 8%, which is less that the 10% advance in the Nasdaq. Apple’s have spiked 16% over the same period.

 

The two tech giants are among the three most valuable, based on market cap, of any company traded on U.S. exchanges. Exxon Mobil Corp. (NYSE: XOM) rounds out that group. Apple’s market cap is $439 billion, Exxon’s $403 billion and Google’s $257 billion. For comparison, the entire market cap for KLSE is $556 billion which consist of one thousand over listed companies.






Its price was hovering around $640 a share before the share split. With its price closed at recent high above $100 a share or equivalent to $700 a share, this reminiscent of the good old days

Google holds the edge in recent growth. In the most recent quarter its revenue rose 23% to $16 billion. Apple’s revenue rose 6% to $37.4 billion. Although operating income and balance sheet considerations are also part of any evaluation, each company is wildly profitable and carries huge cash positions. Growth companies continued to be measured by their top line improvement ahead of almost all other considerations.

 

Google and Apple share one thing in common. Each tends to be analysed primarily on one measure. In Google’s case it is search advertising, and in Apple’s it is iPhone sales. Both companies have plenty of other businesses. Among Google’s most important are Android and YouTube. Neither brings in enough revenue to be terribly important. Apple has its media distribution and app business, along with iPad and Mac sales. Very few analysts look at these smaller businesses over Apple’s flagship smartphone.

 

Unlike Google, Apple is largely a single-event company. It launches a new iPhone every year or so. Its market value is pegged primarily to the success of each iPhone generation. A poor launch can hinder its stock performance for months. Google, on the other hand, has relied primarily on the performance of its original product, which has improved, but not changed radically, since the company went public a decade ago. All of this goes to say that if the iPhone 6 release meets with a poor reception, Apple’s share performance and Google’s will change places.


Its price (Google) closed at $592.54 on 22.08.2014.

Its price (Apple) closed at $101.32 on 22.08.2014.

Sunday, 24 August 2014

The secret is unveiled

Someone up there is cursing the newspaper editorial for publishing this article for what may considered as unveiling the secret pack that has long being practiced in the stock market. It is an unspoken rule that everyone knows what is happening but no one will talk about it outside their circle lest ruffle the feathers.

This is what the paper said - "For retailers, ultimately value investing is the game". What the paper is trying to say is that speculating in stock market is not for retailer players. And this was what I said before.

*********************


"" .... Apart from Sumatec, the bulk of the shares were traded in two other stocks, namely, Globaltec Formation Bhd and PDZ Holdings Bhd. The three stocks have a combined market capitalisation of RM2.6bil, which is a fraction of the entire market capitalisation of Bursa Malaysia that stood at RM1.76 trillion yesterday.
The large trading volumes of stocks should not be a reason for retail investors to invest in stocks. Fundamentals should be the primary reason. The large volume is a game for a select group of market participants called proprietary day traders, or better known as stockists.
There are about 80 of them attached to various brokerages in Bursa Malaysia. Their job is to trade for the brokerage as principals. They don’t have any clients. The stockists can buy and sell as much as they want in a day. There is no limit imposed.
They are not imposed any brokerage fees but have to pay stamp duty and clearing fee to Bursa Malaysia based on the value of trades done. The duty is capped at RM250 or less, while the clearing fee is minimal.
A brokerage will normally place their stockists in a room where they conduct their buying and selling operations with minimum disruptions. Even phone calls are restricted.
The stockists can short-sell stocks without having the shares in hand. But they have to cover their positions by buying back from the market before the end of the day’s trading.
The profit from buying and selling are shared between the brokerage and the stockist. Normally 60% goes to the brokerage and the trader gets 40%. However, an “ace stockist” can command up to 90% of the profits. But the stockist has to absorb all the losses.
Normally, the brokerage will hold the profits of the stockist and pay out only after a year. An ace stockist can earn RM10mil or more a year by just being a principal stockist for the company.
But there are limitations to what a stockist can do to generate the volume of stocks. They generally shy away from stocks that are more than RM1 and that have a small paid-up capital.
Apart from having to incur a higher clearing fee, normally stocks that are held tightly tend not to have enough shares in the market to generate the volume without causing a substantial rise in the price.
The typical targets for a stockist are stocks that are priced at less than RM1 and that have a large share capital. For instance, Globletec Formation, which is an amalgamation of three stocks that were involved in manufacturing automotive components, has a capital of more than 5 billion shares.
Some companies like to see the activities of the stockist because it supposedly adds excitement to the market, not to mention to the stock as well.
But there is also a view that the stockists hold an unfair advantage over the normal investors because they can short a stock or take long positions several bids higher.
This allows a few stockists to “gang up” and deliberately cause a panic sell-down of a particular stock.
For retailers, ultimately value investing is the game. Value stocks may not have the kind of volume one would like to see nor would it be cheap. But it attracts the kind of investors who generally take a long-long term view.
Berkshire Hathaway Inc, the flagship listed entity of Warren Buffett crossed the US$205,000 per share mark last week, making it the highest-priced stock on the New York Stock Exchange. Despite calls from shareholders to split the stock, Buffett has stayed firm in refusing to undertake such an exercise on the grounds that it would attract a “different breed” of investors that he does not fancy.
A hard-to-trade stock encourages investors to take a long-term view and cuts out those trading on emotions. This is something retail investors should take heed of. The volume game in trading stocks is not their cup of tea. It is only for a select few. "" - The Star 23.8.2014

Wednesday, 20 August 2014

What gives, Mr Bursa

Yesterday major newspaper screams market is very hot will high transaction volumes. Retail players certainly have their field day with high excitement and expectation. FBM SCAP index has crossed 19,000 points multiple times and racing to reach 20,000 points. As I write this, the transaction volume has exceeded yesterday's transaction volume. But surprisingly the trade values is more or less the same as yesterday's. Loser counters outnumber winning counter by 4 to 1. It shows today focus is very much on penny of the penny stocks. Some commentators even claimed that a lot of hot money has flown in. But it would be naive to believe hot money flows in to pick up penny stocks.





With the current market sentiment, I get excited too but not for the same reason like many people. It seems the party has 'started'. For good or for bad, it depends which side you are at. When penny stocks play has become the main theme, it is the sign of the beginning of something and at the same time it is also the sign of the-end of something. There will also be opportunity but that opportunity has to be cautiously measured. Most brave retail players will see current penny stock play is an opportunity to make quick kill for money. It is a game of the fastest competition of in and out. No more technical analysis or fundamental research. Some will said sarcastically - "technical analysis, fundamental research? What's that? Waste time la." Some even go further "Before I could finish reading the research report, I could probably have make several in/out from the market in fastest time even faster than my eyelid blinks and make money. Hell with the research report." I, for one, am happy with such sentiment but not for the reason to make quick kill, even though I did make a few quick punts just for the fun of it. Just for the fun of it. Because I know I will never get burnt with this. I just want to get by the day filled with fun actions. So that there is topic to chat about whenever get around together with friends. Similarly like betting on golf game. Whoever loses, he has to pay for the lunch meal for everyone. Never about money. Treat your punt this way, you are safe - mentally and emotionally, most important your wallet. But never forget your main goal is to make good money for long term. Penny theme play like this will come and go even before you know it. The one that makes the most good money is long term investment in good stocks.





What interested me now is not the current penny stock play euphoria, but rather what's next that is in store for us. What has Mr Bursa planned for us after this. If you can understand this and plan along with it, you will be more prepared for what come may. Stay invested. Stay safe and good luck.


Friday, 15 August 2014

Google - thank you

Google Inc. - thank you








Previous story here.

Its price closed at USD 574.64 on 14.08.2014

Thursday, 24 July 2014

Moment of Silence

This blog will silence for 2 weeks as a sign of respect for those who lost their lives on board MH17.



Hearses carrying victims of Malaysia Airlines flight MH17 plane disaster escorted on a highway in Nieuwegein, shortly after arrival in the Netherlands. The bodies will be identified by forensic experts in Hilvers. 24.7.14


The convoy of hearses with the remains of the victims of Malaysia Airlines MH17 downed over rebel-held territory in eastern Ukraine, drives past international flags as it leaves Eindhoven airport to a military base in Hilversum July 23, 2014.
The Netherlands declared Wednesday the country's first day of mourning in more than half a century.

Mourners gather near flower bouquets as they pay their respects at Schiphol Airport during a national day of mourning for the victims of the downed Malaysia Airlines flight MH17, in Schiphol July 23, 2014. The bodies of the first victims from the Malaysian airliner shot down over Ukraine last week arrived back in the Netherlands on Wednesday amid dignified grief tinged with anger. Bells pealed and flags flew at half mast in memory of the 298 people killed.
A woman cries during a religious service held by villagers in memory of the victims at the crash site of Malaysia Airlines Flight 17, near the village of Hrabove, eastern Ukraine

President Barack Obama visits the Dutch Embassy in Washington to sign a book of condolence, joined by Deputy Chief of Mission Peter Mollema.












People search a wheat field for remains in the area of the crash site of Malaysia Airlines Flight 17 near the village of Hrabove, eastern Ukraine
Flowers placed in front of restaurant Asian Glories in Rotterdam. Both owners, Jenny Loh and Popo Fan, were among those killed



Members of the U.N. Security Council stand for a moment of silence for the lives lost on Malaysia Airlines Flight 17 during a meeting at United Nations headquarters


A woman lights candles at a memorial for victims of the downed Malaysia Airlines Flight MH17 in Kuala Lumpur July 18, 2014

Ukrainian coal miners prepare to search the site of a crashed Malaysia Airlines passenger plane near the village of Rozsypne, Ukraine, eastern Ukraine. Rescue workers, policemen and even off-duty coal miners were combing a sprawling area in eastern Ukraine near the Russian border





Malaysia Airlines flight MH17 takes off at 12.31 PM from Schiphol airport near Amsterdam, the Netherlands, 17 July 2014. The Boeing 777 aircraft with more than 280 passengers on board crashed in eastern Ukraine.