財智語陸：A股後市跑贏港股 - 陳永陸

港股昨日先升後回軟，雖然創超過一年新高，但恒指只能於22600點水平收市。今日期指結算，相信恒指會繼續窄幅徘徊。當然，大家會覺得A股昨日雖然出現回吐，但聖誕假期累積如此大的升幅，為何不能為港股帶來刺激作用。

首先，美國仍需要就財政懸崖問題討論，在此憂慮下，港股自然難以大幅上升。另外，A股上升某程度是追落後，因為相對H股或歐美股市之表現，A股今年的表現的確令人失望，所以當資金於11月大舉流入的時候，A股被大幅推高亦屬正常，但不代表資金會同時大舉推高H股或港股。

資金持續流入香港金融市場，但越來越多數據顯示，這些資金不是全面流入港股市場，反而有一定部份流入A股相關產品，如ETF等產品，所以港股並沒有因為資金流入而出現預期的升勢，亦屬正常。

資金湧港　部份捧A股ETF
如果A股繼續向上，一定會為港股帶來刺激作用，但未來A股升幅，很可能會大於H指或恒指。

昨日A股回吐，除因為技術整固外，很大程度與中國工信部部長苗圩預期，明年中國規模以上工業增加值增長目標只有10%左右有關，因這一目標與今年的增速相近。

今年中國規模以上的工業增加值雖然按年增加10%，甚至工業對經濟增長貢獻率超過40%，可是實現利潤只是與去年持平，所以，如果明年工業增加值增速繼續只有10%，但同時仍然是中國經濟的最大貢獻部份，那麼中國經濟明年增長的增速，未必如市場預計般大。

事實上，雖然中央多次表示，透過內需去刺激經濟，但少了出口部份的一台馬車，中國始終面對潛在增長動力不夠穩陣的風險。不過，這問題太長遠，暫時不用過慮。

陳永陸
獨立股評人

The Most Innocent company in America - Poor poor Herbalife!

by Daniel Loh

In Singapore, we have Olam. In America, we have Herbalife (HLF). The thing is herbalife suffered the same fate twice! Another $20 drop in one week! It happened to them in April and last week. Blame the shorting hedge fund managers!

This year 2 well known hedge fund managers both questioned herbalife business model. Greenhorn and Ackman. It is amazing that Ackman calls the company "pyramid". Sigh, i thought MLM has been around for ages, and it is not like herbalife is a new MLM company. They also did not change much of their business plan. Ackman actually bought huge amount of put options a few days before! This is all planned in advance.

http://www.marketwatch.com/story/herbalife-slides-as-ackman-presents-short-thesis-2012-12-20

Updated:

Some of our friends asked about whether can invest in this company. My suggestion is to wait for the short to subside and wait for its next earnings to prove itself. Short term it is never good to go against the hedge funds who are shorting the stocks.

My opinion is next time you see a hedge fund manager like Ackman or Greenhorn talking badly about a company, just short with them! In America, they have hedge fund conferences whereby these sharks will make their presentations. And these 2 guys are famous to make a lot of pages of info why they short the companies! Just short with them wont be wrong.

Market outlook for 2013, choppy H1 likely for equity

The Star Online > Business
Tuesday December 18, 2012
Market outlook for 2013, choppy H1 likely for equity

MARKET OUTLOOK 2013

By RHB Research

WE continue to anticipate a choppy few months for the equity market in the first half of 2013, given the uncertain election outcome on the home front as well as uncertainties from the imminent challenge of the US fiscal cliff and the eurozone's long-running debt problems.

The market outlook will, however, likely improve in the second half, given improving global economic conditions as investors shift focus to fundamentals after the general election.

As it stands, risks of Greece exiting the 17-nation eurozone and a full-blown disintegration of the region are dissipating while positive indicators are emerging from the United States and China.

Meanwhile, the Malaysian economy turned up to be stronger than envisaged this year and prospects are for a slightly stronger gross domestic product growth of 5.4% in 2013, underpinned by the implementation of the various economic programmes and sustained robust domestic demand.

We project net earnings per share growth for the benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) to improve from 5.4% in 2012 to 7.2% in 2013, which will continue to create new shareholder value for investors.

This, coupled with prolonged low interest rates and ample liquidity in the system, is supportive of higher asset prices.

Assuming that Barisan Nasional will remain in control of the Government and global situations stabilise in three to six months and the global economic recovery is intact, our end-2013 FBM KLCI target remains unchanged at 1,815 points, close to 15 times 2014 earnings.

In our view, equity still stands up against low-yielding alternative asset classes, given the prolonged low interest rate environment, set by the United States, and as long as the global economic recovery is not derailed.

While our core strategy remains defensive, particularly for the first half of 2013, we believe investors would still need to accumulate fundamentally-robust stocks on weakness to outperform the market.

Sector-wise, our key overweights are banking and telecommunications, although we also have an overweight stance on the utilities and healthcare sectors.

In our view, banks are the safest bets on account of low earnings risk, cheaper valuations and with decent dividend yields while telcos remain defensive and are preferred relative to consumer stocks on valuations and liquidity grounds.

Source/Extract/Excerpts/来源/转贴/摘录: The Star Online
Publish date: 18/12/12

Consistency - A Short Cut to Reach Destination

No doubt, a lot of people who can earn a lot of money at the beginning. And they started to think that they are "genius" in making money without hard work. But they will soon face some difficulty when the economy turns worse. And most of the people will just stop investing after they faced the losses. If you still can make money from investment for at least 10 - 20 years, then I have to congratulate you on two things:

1. You are still surviving in long run. You may end up achieving a better return in long run, as your experience grows.
2. You are still in the investment for so many years. It is not an easy task to a person who just want to make money but not about "passion" for doing so in long run. 

It's just a like a body training. You will see immediate effect after you have done all the instruction by your personal trainer. But it would become a waste if you just stop training from there and your body will not be kept in good shape if you do not train yourself consistently.

It applies same to the investment. The more homework you do, the "smarter" you are in doing your investment. The more experience you are in the investment, the better result you could get in long run. But you will start experiencing losses if you do not improve yourself in investment skills, or you just become lazy to stop learning a new investment skill that could cost you a million dollar in long run.

As this is a never ending game, consistency plays a very important role here. If you really wish to achieve financial freedom or any of your lifetime goals, just do it. And never give up.

I still remembered that some of my friends told me that it is not easy to earn money from blogging and they urged me to stop blogging and focus on more other thing. But my passion on sharing my thoughts or information on investment has brought me here.

Try not to focus too much on just the destination you want to arrive, but the nice scene along the way you go to your destination. You will find out a lot of beautiful things along the way.

Fear Of Investing

It had been a crazy few months. Having met quite a number of people in their fifties, most were on the topic of planning for retirement. A typical sentiment shared by most of them immediate at the onset of the conversation is "I am old already, going to retire, I cannot take any risk with investments". This is a disturbing trend and it is difficult to change mindsets. This reminds me of the time I met a "Poor Dad" and a "Rich Dad".

First, the "Poor Dad". He was a humble civil servant who being highly educated, worked his whole life for the government. He slowly rise through the ranks. By the time of retirement, he had reach a respectable level and even had a pension pay out. He was frugal and amassed a fair sum for a comfortable retirement. This was 15 years ago.

Fast forward to the present, he is in his late sixties and complaining that he is afraid to live too long as he has nearly a good twenty years based on average life expectancy and may not have much to leave for his children. What happened? Well, he simply shared the same fear of investing and placed all his savings into fixed deposits that had eroded tremendously due to inflation. Even his pension is barely able to sustain a reasonable standard of living that he is used to as it was based on 1990s salary levels.

Next, the "Rich Dad". He was a bus driver. He drove primary school children to and from school as well as factory workers. Although not having finished proper education, he was keen on learning simple investments. So, after paying up his HDB at about age 30 plus, he insisted to place a small percentage of his savings into shares. He did not understand which company to choose, neither were there complicated analyst reports to follow. He used what he knew, simply follow government supported companies that have a monopoly in Singapore market at that point in time.

He bought paper shares into SPH, Singtel, SIA, basically according to him jokingly, Companies that have Singapore in their names. Needless to say, inclusive of the dividends, the funds have increased about five times. And the next thing he did before his retirement was to sell off a portion of it and used it to purchase a private property in the most unheard off place at that point in time, Buangkok. Today, the property has more than doubled in value and he is living happily off the rental income and dividend income from all his investments. At the same age of sixties, he does not fear the next twenty years as much as "Poor Dad".

Is it sheer luck? We can only see from hind sight. But a prevalent point I got from this is that retirement is a good 30 years. That in my opinion is not short term. So even when it comes to retirement, do not place all the bets into a fixed deposit. Asset allocation is still crucial if not more important now more than ever.

Cheers to all! An advance Merry Christmas and a Happy New Year!

Posted by Lau

Do You Want to Trade Stocks For a Living?

http://www.swing-trade-stocks.com/trading-business.html

I do not trade for a living. I get emails from traders wanting to start a trading business. They want me to tell them how to trade for a living. My standard answer is this: "I don't trade for a living." Their reply?
"Why don't you do this full time? Don't you want to quit your job?"
And then it hits me...
This person is sick and tired of his "job" and wants to do something that he loves to do - trading stocks! I currently own a small business (not related to the stock market) and believe me - one is plenty! I don't have the desire that this person has because I don't work for someone else. I work for myself.
I can understand the desire to want to trade stocks for a living. I used to have a "job" and to be quite honest - it sucked!

A Job Versus A Business

Having a "job" is the worst method of generating income and the most inefficient way to make money.
Why you ask?
Because your salary is based on time. You can see the problem right away. There is only so much time in a day! In order to make more money you have to invest more time. This makes you miserable, tired, and cranky!
Some other problems associated with having a job..

• You can never get paid what your really worth.
• You have to work long hours to make someone else wealthy.
• You can't make more money unless you beg for a raise.
• You have no freedom.
• You have no leverage.

And the number one problem? You have to work in order to make money.
Yep. I can see why so many people want to trade stocks for a living!
Now let's look at owning a business. Time is no longer a factor. How much time you spend running your business is up to you. You get paid for the value that you provide to your customers. This is usually in the form of a product or service. If you trade stocks for living, then you are providing liquidity to the markets. This is very valuable. Without traders, the stock market wouldn't work!
Now let's look at the benefits of having a business:

• You get paid what for what you are worth.
• You get paid to make yourself wealthy.
• You decide how much money you want to make.
• You have freedom.
• You have leverage.

And the number one benefit? You do not have to work in order to make money. You can put on a trade, type in your stop loss order, and go fishing. Assuming the trade goes in your direction, you will make money without working.
As I type this on my computer, I am making money with my current business, even though I'm not doing any work there.
Another thing to consider...
When you own a business, you can get paid over and over again for a one time effort. Let me explain: Let's say you decide to trade stocks for a living. You buy a stock on Monday. This will be a typical three or four day swing trade. When the stock moves in your favor, you will continue to make money over the course of several days, for just that one time effort you put into it on Monday!
This is the same way with any business.
So, when you go into work tomorrow to that dreadful day job, tell your boss that you would like to get paid over and over again for the effort you put in last Monday. He will laugh and think you are crazy! But, HE will get paid over and over again for YOUR efforts!
Doesn't seem fair does it?

Trading Stocks For A Living

Well, I hope I haven't upset you by the above comments. But hopefully it will inspire you to make a change.
Like I said at the beginning. I do not trade stocks for a living but I am observant. I own a business so I can see what other professional full time traders do to make a living.
There a several things that I know you MUST do before you begin a trading business:

• You must eliminate all of your personal debt.
• You must be well capitalized.
• You must have a logical trading system.
• You must follow strict money management rules.

This is true for most any business. You have to have your ducks in a row before you even begin.
But there is one major problem that I can see if you decide to trade stocks for a living. This is no small problem either:
Draw Downs.
You WILL have draw downs. Every professional trader goes through periods where they lose money. Anyone that tells you otherwise is a liar! How will you deal with this?
How do professional traders deal with this? The answer is right in front of you but I bet you never noticed it.
They teach others to trade, sell books, and create a myriad of other products and services related to the stock market. They create multiple streams of income to compensate for the harsh realities of draw downs.
Think about it. Look around the internet. Every one of them has a product or service to sell. There is nothing wrong with this if what you are selling is valuable and helpful to other stock traders. That's what a business does. It sells value. If it succeeds, then it becomes a total win-win situation for both the business owner and the customer.
Heck, you don't even need a product or have to sell a service to make money on the internet! I know of a couple people who make a living selling other people's products. Not only do they make a living but they make a very nice living.

Check out some of these success stories from the company that I use to build this website. Yes. They make a living from their website. You'll be shocked but inspired.

Anyway, back to my point. If you want to trade stocks for a living you would be wise to come up with other ways to make money to compensate for draw downs. A LOT of professional traders do it. Very smart.

In Conclusion...

Like I said in the beginning. I do not trade stocks for a living.
The thought of staring at a computer screen watching candles form on a chart does not excite me! But, I wanted to write this page to give you some perspective on it from a business owners point of view - without the hype.
Do not start a trading business just because you want to quit your 9 to 5 job.
Do it because...
YOU LOVE TO TRADE STOCKS!
I certainly do.

10-point plan of tough love for Olam

Published December 06, 2012

COMMENTARY

10-point plan of tough love for Olam

It needs to restore credibility and take definitive actions for a healthy future

By michael dee

In short, Muddy Waters is not the issue here, it is Olam's strategic and financial decisions that have brought this situation to a head - PHOTO: OLAM INTERNATIONAL LTD

Muddy Waters is not the issue here, it is Olam's strategic and financial decisions that have brought this situation to a head.

OLAM'S announcement of a major financing package this week has been characterised as ranging from a "government bailout" to a "vote of confidence". Either way, it is time for Olam to get serious about creating long term sustainability. Having missed the point earlier this year from the Feb 21 CLSA report, the emergence of a significant short position, a 30 per cent decline in Olam's share price since and the resignation of Olam's 20-year CFO in June, Olam's management and board remain in denial. The short-seller research firm Muddy Waters produced an extensive 133 page report which Olam dismissed as out of hand and responded to with a lawsuit which dilutes management bandwidth, wastes shareholders' money and does not address the root causes of Olam's problems. In short, Muddy Waters is not the issue here, it is Olam's strategic and financial decisions that have brought this situation to a head.

The latest Temasek-backed transaction raises significant issues, as it is extremely expensive debt and equity capital, capital that Olam spent a week telling the market it didn't need. The package of US$750 million of five-year debt and so-called "free" warrants are hardly free as they have tremendous value. Black-Scholes models have valued these warrants to be worth an estimated US$127 million. Since Olam's proposed US$750 million of debt is priced at 95 per cent of par, the proceeds, before fees, are actually US$712.5 million including the warrants. By backing out an estimated warrant value of US$127 million, the true bond value is actually only US$585 million, equal to 78 per cent of the original bond value. Thus, the true yield on the bond is not the 8 per cent that Olam would like investors to believe, but rather a whopping 13 per cent. Given the generous nature of these terms and Temasek's commitment to fully take up the rights issue, one has to wonder why Olam is paying US$15 million in underwriting fees to the banks who are taking no risk. If you back out those fees, the cost of this debt is an even more eye-popping 13.7 per cent.

In other words, Olam is offering existing investors a bond yielding an estimated 13 per cent and at-the-money warrants which can only be exercised in years 4 and 5. No wonder Temasek wants to underwrite the entire deal - this is the sale of the century, just in time for Christmas. But before shareholders get too excited about shiny packages under the tree, they should consider that this is just a left-pocket, right-pocket deal. The shareholders are paying for this lavish set of terms. The real losers are the bondholders, not to forget the investors who only a few months ago bought the US$275 million perpetual preferred shares issued at 100 per cent that are now quoted at 82 per cent. Their already over-leveraged securities just got more risky and they get no benefit from this package. And of course any investors unable to take up their rights will see them go to Temasek, who has no shortage of capital.

Muddy Waters' boss Carson Block did not magically create these concerns. He merely capitalised on a well-researched bet. This process is explained with wit and insight in

The Big Short by the author Michael Lewis and is a healthy aspect of capitalism. Now the market is left to sort out what is true and what the end game is.

Since this has not been done yet, I hereby submit to Olam's shareholders a 10-point plan of "tough love" to restore credibility and take definitive actions to reposition a great company for a healthy future:

1) End the war of words. Anyone reading Muddy Waters' 133 page report will see a credible work of research. The market has not been impressed with Olam's attempts to discredit Muddy Waters with ad hominem attacks and lawsuits. What's needed now are strong actions, not words.

2) Raise equity, not more debt. Olam made a strategic error in saying equity was not needed until 2015. It needs equity now. Its net gearing of 248 per cent is well in excess of industry norms and the US$750 million new debt makes matters worse and adds USD/SGD foreign exchange risk to boot. Olam should cancel the egregiously expensive debt issue and execute a meaningful equity rights offering giving the KC Group, Temasek and management the opportunity to take up rights that are unsubscribed, if any. This will underpin Olam's equity capital while demonstrating the commitment of its largest shareholders and management. Selling 13 per cent debt with at-the-money warrants is a sign of desperation.

3) Immediately stop the capital expenditure programme. This is essential as the supply of cheap debt is over. Olam's board must stop the acquisitions, conserve cash and prove the value of the acquisitions to date.

4) Focus on generating positive cash flow as soon as possible. Rule No 1 of battlefield triage is to stop the bleeding. Negative cash flow while executing a capex and acquisition programme with ever increasing leverage is untenable.

5) Sell secured receivables. Olam has said that its secured receivables are as good as cash. It should demonstrate that by selling a meaningful amount, raising cash, paying down short term debt, creating liquidity and convincing the market of these receivables' cash-like properties.

6) Draw down a portion of both committed and uncommitted bank lines. Olam is currently closed out of the fixed income capital markets and the availability of its undrawn, fully committed and uncommitted facilities remains in question. In light of Olam's significant upcoming 2013 debt maturities, showing the availability of committed and uncommitted facilities would boost market confidence.

7) Get the debt rated. Olam has raised billions from the Singapore debt markets with no independent rating of creditworthiness. An independent assessment of Olam's credit is required for investors, many of whom are individuals. The argument that others in the industry do not have a rating is untenable and specious. Olam's net gearing of 248 per cent far exceeds Noble's at 107 per cent and Wilmar's at 88 per cent. The MAS and SGX, whose silence have been deafening, should also publicly back this initiative.

8) Do not buy back stock. A stock repurchase programme burns valuable cash, increases leverage and will not impact Olam's share price. In fact, it would likely only further worsen the precipitous declines in its bond and preferreds prices.

9) Declare if management shares are on margin or pledged. While in the past, it could perhaps be argued that this is a personal matter, with so many questions hanging over the company, management needs to treat its shareholders as partners and declare if any shares are encumbered and could be force-liquidated at a given price point and if so, what that is.

Olam should also disclose the timeline of the events leading up to the announcement of the Temasek underwriting as the storyline has been shifting. Olam claimed this was its idea over the weekend and had the bankers take it to Temasek. Yet Olam also said last Friday that the CEO and two board members bought significant shares in the company. Did the idea emerge after those purchases were made and if so, when and how? There is no need to have questions about possible conflicts of interest when a simple timeline can put the issue to rest.

10) Don't rely too much on Temasek in future. Too often the market believes that when Temasek is invested for over 15 per cent, they will underwrite problems that occur and banks, investors, management, and boards can then get sloppy and lazy. As a professional investor, Temasek will do what is in its commercial interest and those who bet on additional bailouts may one day have a rude awakening, as has happened in the past. The US$750 million debt and warrants package is one sweet deal for Temasek and is not being done for charitable reasons.

Olam, as a trading business, has failed to grasp the realities of the post-financial crisis era. Today balance sheets, accounts and financing must be beyond reproach. Olam has not achieved this, but has continued to travel a dangerous path in recent years fuelled by readily available credit. It has a fiduciary responsibility to its equity and debt investors to respond with a credible and thoughtful plan of action to preserve and enhance value.

Olam has paid an extremely dear price to Temasek to buy some time. How it proceeds from here will be the existential question.

Michael Dee, an investment banker for over 30 years, was Morgan Stanley's regional CEO in Singapore and a Senior Managing Director of Temasek Holdings from August 2008 to April 2010. He has no position in any Olam securities.

Secrets of Singapore Trading Gurus – Exclusive Video Interviews

by ALVIN

A BIG THANK YOU for buying the book! If you have not, you can purchase it here (Enter “bfp15″ during purchase to get 15% discount!)

You can click on the following links to watch the interviews of the traders:

1. Keane Lee
2. Yeo Keong Hee
3. Binni Ong
4. Nicholas Tan
5. Clarence Chee
6. Tom Yuen
7. Patrick Lee

胡立阳：懂得善用信息才能钓到大鱼

[导读]回顾过去二、三十年来，在世界各地演讲会中，我曾回答了投资朋友们所提出之各式各样的问题。现决定在此专栏中择其精华，与网友们分享当时我的小小研究心得，也希望能继续得到大家的支持与鼓励。

问：我的理财顾问建议我每天都要看些专业媒体报导，这样才能知道该买些什么。但我试过一段时间之后就放弃了，因为跟着利多跑，总是接到最后一棒，很容易变成帮别人抬轿子的轿夫吧？

胡： 问的真好！现在，就让我来跟你分享一个投资小秘密吧。过去，在网络还不发达的那个年代，我们公司曾有一位客户，每天都捧着四、五份财经专业报纸仔细研读， 并且还会认真去做笔记，厚厚一本的日记本，里面记下了密密麻麻的重点新闻。当时的我还只是个华尔街的新兵，对他的研究精神虽然感到佩服，但内心不免感到存 疑，他是太闲了吗？任何新闻只要上报，不已经是人尽皆知，还有钱可以赚吗？特别是，当时行情低迷，连我也认为，看再多的信息也没有用啊！

但事后证明，他的长期投资成绩单，总是令人惊艳。因为他经常能早人一步，买在股价的最低档。

他悄悄地跟我说，绝大多数的人，看股市讯息的目的，都是希望第二天就能买进一支飙股然后立刻赚大钱。但他发现，真正能让人赚大钱的消息，往往不会立即发酵，反而是当时大家都没注意，或是早已被忘却且放弃了一段时间之后的那种。

他 举例说，某家公司宣布由第四季开始扩厂效益终于要实现了，会开始转亏为盈。但由于现在才是第二季，没有太多人会认真看待这则新闻，也许股价在下面几天也是 毫无反应，但他就会等到在第四季来临的前一个月左右，天天开始全神贯注的观察股价是否已出现任何动静，就像是个经验丰富的钓鱼老手似的，懂得在对的时间与 对的地点钓鱼，只要鱼汛一出现，他就会是那第一个钓到大鱼的人。因此，他特别强调，在广泛收集财经讯息的同时，是一定要作笔记的，但千万注意，不能只将今 天看到的某个讯息就放在当天的日记栏中而已，还要将它记录在未来利多实现日的往前一个月，到时就可提前密切观察股价的变化，然后守株待兔。

现 在，我们再以2008年下半年油价开始崩跌为例，许多航空公司当时便纷纷预估半年之后，获利会因油价成本降低而大幅增加。股价当时并无太大反映，而是一直 到了2009年第二季，也就是半年之后，全球的许多航空股才真正的出现了一波极为亮丽的走势。你如果事先做了笔记，就会是第一个坐在轿子上的人了，不是 吗？

Controversy is what makes the market! Will Fiscal be solved? Yes, no, maybe...

It seems tiring to guess whether there will be an agreement before the end of the year. All I know is market continue to function and Dow Jones has advanced from 12500 to 13000 these 9 days. We are just  600 points away from breaking 5 year high.

All I know is Yoma and Ezion will still go up after consolidation. All I know is Apple and Facebook are some of the stocks to watch this christmas season. All I know is that US tech sector, retail sector, and travelling industry are the sectors to watch these 2 months. All I know is that putting your money on buying strong earnings stocks are what makes you money.

Perhaps I simply do not need to listen to every news about Fiscal Cliff. Perhaps I do not need to listen to Republicans or Democrats debating about it.

Maybe I should just do what I do everyday, which is to stick to my strategy that has all along work for Me.

If you think you are confused by all these talk about whether there will be a resolution, yes, no, or maybe before christmas, you may want to shut your ears to it and stick to what makes you money.

By the way, just for your info, the market actually went up 1500 points from june to september when we are also debating about whether there will be QE3. Yes, no or maybe.... so so confusing.

Just in case you do not know it, this is the stock market! They are made to create controversies in your decisions. CNBC is the most popular investment show because the hosts are made to debate with each other. You simply got to adapt to this stock market drama or JUST DON'T CARE

Are HDB Flat better investment than stocks and bonds?

Posted by Drizzt

November 18, 2012

It is probably the trend that property is a good inflation hedge, since it will definitely end up higher in value compare to stocks, which can just die off under mismanagement.

It got me thinking while I was studying for my exams.

A 5 room HDB flat that you bought in 1999 for $267k. Now can sell for $550k.

Duration = 13 years

Appreciation = 106 %

Annualized returns = (1+1.06)^1/13 = 5.7 % per annum

If you are not renting it, is 5.7% a good return? I think you have to rent because if you don’t rent it doesn’t show the full potential of HDB.

If you rent at least 2 of your room for $1000 per month, your 13 year return is $156k. or 58.42% returns from rental.

Total returns = 106% + 58.42% = 164.4%

Annualized returns = (1+1.64.4)^1/13 = 7.7% per annum

Man, I thought the figure will be higher! Still its not bad!

Corporate Bonds

Bonds are a bit out of reach for retail investors. You have LTA bonds yielding 4.17% for the 10 years duration. If you hold the bonds for this 10 years, unless LTA defaults, you get back your principal sum.

Dairy Farm

Lets take mom and pop store operator Dairy Farm Group. It operates your Cold Storage, Giant, Guardian I have records of it from 2002.

Duration = 10 years

Appreciation = 1523%

Dividend Returns = 311%

Total Returns = 1834%

Annualized returns = (1+ 18.34)^1/10 = 34% per annum

Dividend returns = (1+3.11)^1/10 = 15% per annum

SIA Engineering

Another stable maintenance house that have a sturdy economic model. I have records since 2001

Duration = 11 years

Appreciation = 200.76%

Dividend Returns = 150.76%

Total Returns = 351.52%

Annualized returns = (1+3.5152)^1/11 =  14.68% per annum

Dividend returns = (1+1.5076)^1/11 = 8.7% per annum

Suntec REIT

A real estate investment trust that didn’t carry out any rights issue. We have records since 2006, which is near the height of the Great Financial Crisis

Duration = 6 years

Appreciation = 14%

Dividend Returns = 72.45%

Total Returns = 86.45%

Annualized returns = (1+0.8645)^1/6 = 10.9% per annum

Dividend returns = (1+0.7245)^1/6= 9.5% per annum

Singtel

One of South East Asia’s biggest telco. Lousy service according to a lot of folks but still you can’t live without it. Share price have been in zombie mode.

Duration = 10 years

Appreciation = 83.83%

Capital Return (from share reduction) = 5.3%

Dividend Returns = 87.03%

Total Returns = 176.16%

Annualized returns = (1+1.7616)^1/10 = 10.69% per annum

Dividend returns = (1+0.8703)^1/10 = 6.4% per annum

Capitaland

South East Asia big property developer. If the housing boom in Asia is great they must be doing even better!

Note: Gave out 1 CapitaCommercial Trust shares for 5 Capitaland shares in 2004, one rights issue at $1.30 in 2009

Duration = 12 years

Appreciation = 35.21%

Dividend Return = 27.47%

Value of CapitaCommercial share returns = 10.6%

Total Returns = 73.28%

Annualized returns = (1+0.7328)^1/12 = 4.68% per annum

Ascendas REIT

The oldest REIT around since 2002. It had a total of 4 rights issues in 2004 (twice), 2005 and 2009 during crisis times

Duration = 10 years

Appreciation = 125%

Dividend Return = 104%

Total Returns = 229%

Annualized returns = (1+2.29)^1/10 = 12.6% per annum

Dividend returns = (1+1.04)^1/10 = 7.3% per annum

OCBC Bank

The world strongest bank according to some metrics. We have 11 years data.

Duration = 11 years

Appreciation = 68.76%

Dividend Return = 60.09%

Total Returns = 128.85%

Annualized returns = (1+1.2885)1/11 = 7.8% per annum

Dividend returns = (1+0.6009)^1/11 = 4.3% per annum

Conclusion

Surprising the stocks did pretty ok going through one bull market and a very bad bear market.

Note that I covered some random REITs and blue chips.

There are some that I include it will show that asset selection plays a part. The returns are worse than that of HDB flats. Then I have many if you hold for 6-8 years you get the kind of Dairy Farm returns.

When we talk about asset selection we are talking about the quality of the company, the valuation you buy it at.

I came to a conclusion that housing like stocks and bonds go through their cycles, and the investor have to be smart enough to know that and buy at the right valuation.

But the one thing that you can do with HDB that you cannot do with stocks and bonds easily: cheap leverage.

You can leverage up to 80% and that will boost your returns.

Other than that, the advantage and disadvantage are not that different. Suntec REIT and Ascendas REIT have shown you can get pretty good returns by having competent management to look after it.

The idea that your flat returns are great is perhaps people didn’t take into account how long the flat have been held. Using the formulas i have shown here you can calculate your own flat’s annualized returns.

So do show me some crazy flat returns going back to 1980s!

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.

Singapore Stocks that are on our watchlist now (publish on 29 Nov 11.02am)

1) Ezion - anticipate to make a run till 1.47-1.5

2) Supergroup - expect resistance at 3.3 now, see if it drop, if it drop somemore might pick up. if it goes up to 3.33, might buy in upon 3.3 breakout

3) Yoma - consolidating, i just need a good up day to tell me if it might run past 0.7... and there is a good chance it will

4) Biosensors - resistance at 1.17- 1.2, not much upside now, but it is in my watchlist. Look for consolidation and watch to pounce

5) Yanlord - anticipate a run till 1.47- 1.5, today at 1.42

Do remember ur money management! All these stocks have strong sales/ earnings or strong forward earnings expectation to sustain their run. All can be our focus this quarter. Not for contra trading. If it does not go according to what we want, do prepared to hold. The good thing is that these stocks can hold a while because of fundamental story.

"Fundamental drive the direction of a stock price. Technical only provides the entry and exit" - Daniel

Speculative play on bad news

by ALVIN on NOVEMBER 27, 2012

I rarely share about speculative activities on BigFatPurse because I do not want to encourage readers to speculate and lose money in the process. However, I do have the urge to share some of my speculations in this post. Again, I emphasise the purpose of this post is to share my experiences and not to encourage you to participate.

Crashes and ‘mini crashes’

We know that stock market crashes once in many years and it is very profitable if we can all buy near the lows. Stock market crashes because of fear and prices become irrational. And because prices are irrational, there is an opportunity to reap good returns when prices return to normalcy. However, it takes a lot of patience to wait for the crash. Your greed will be challenged when your bullish friends are boasting their returns while you sit on cash. Is there a way to play ‘mini crashes’ or irrational pricing in stocks? As I asked myself that question, I saw opportunity in picking stocks that are hit by depressing news. The media does a very good job in instilling and fuel fears in investors to bring down stock prices by proliferating bad news about companies. Of course, these companies deserve to have lower stock prices, but the key is what should the fair price be before it becomes irrational.

I would like to share a few examples now.

Olympus

About a year ago, Olympus was hit with bad news. Michael Woodword, the CEO of Olympus, exposed the $1.7 billion loss which the company was hiding. He was sacked almost immediately after questioning the board. Once the news was in the media, Olympus stock price tumbled. GIC also reportedly sold 2% stake. They continue to uncover all the dirty secrets of how Olympus bought small companies just to write off their debts. With these circumstances, how many would want to invest in Olympus. I am not interested in Olympus’s future, but I do see the selling is overdone with the negativity around this company. This is a ‘mini crash’ if I can describe it this way. I tried to find some fundamentals to see if I can value the business or at least see if their profits are still sound. I found out they dominate the supply of endoscope and I find comfort in that. Note that I say “I find comfort”. Actually nothing matters in such trades because there are too many unknowns. One just need the guts to act.

I asked myself how much I was willing to lose. $5,000 was the answer. So I bought 400 shares of Olympus at 740.40 yen on 16 Nov 11 (a month after the scandal was exposed. I used CMC so there is some market making there of 0.40 yen). I did not have a stop loss order as I was prepared to lose everything. The stocks rose as people got tired about the scandal. As my profit grew, I began to put stop loss to protect my profits in the event it drops again. It finally hit my stop loss on 14 Dec 11 at 1,224.30 yen. I ended up with a 65% gain.

You can see it is a pretty short trade of about a month. The stocks continue to remain sideway until today. And the 65% gain does not seem to be obvious from the chart. The amazing thing is when you buy something at a very low price, it is easier to make large gains.

Sony

Given the jubilant success in my first venture into depressed stocks, I look out for the next one that hit the news. This time was Sony. Unlike Olympus, it was not a scandal. But a report about the change of CEO – Howard Stringer was replaced by a Japanese (Stringer became the Chairman subsequently). The news also presented a negative view about the company, saying Sony stock price had fell 50% since Stringer took over as CEO. Not as negative as Olympus, but I still bought 220 Sony shares at 1500.80 yen.  The price went up and I put a stop loss to protect my profit. I got out even after it hit my stop loss at 1,520.20 yen two months later. On hindsight, I would have lost 50% of my money if I continue to hold on to Sony till today.

Research In Motion

Iphones and Galaxies are hurting the once mighty Blackberries. Research In Motion (RIMM) is the maker of Blackberries and their stocks have been tumbling as people chase up Apple shares. Apple was made the largest company based on market capitalisation. On 22 Jan 12, COO Thorsten Heins succeeded co-CEO Jim Balsillie and Mike Lazaridis (they were the founders). The company was on the brink of burning cash as operating profits were insufficient to pay for expenses. The new CEO’s objectives were to slash costs in the short term, and launch Blackberry 10 to bring the company back to business. I bought 300 RIMM shares on 22 March 12 at 14.14. The CEO slashed costs by cutting staff and other operating expenses but BB10 was delayed quarter after quarter. The stock continued to go down for months until I was 50% in the red. For such trades, I am willing to lose it all so I did not have stop loss at the initial stage. It was flat around $6-8 for a long period and it would have been a better entry. RIMM rocketed in the past month back to $12. Timing is so important (as with the previous two examples) as I would have a double figure paper profit if I entered later. But nobody knows and I have to accept it. We will just have to see how RIMM will go until the release of BB10 in the next quarter.

A risky business

Such speculations are very dangerous. It can either make you rich or poor, provided you put up a meaningful stake. No form of analysis is fool-proof as the uncertainties revolving such companies are just too high. The central thesis about these trades is that the prices are irrational due to the bad news hitting the companies. It is like the ‘mini-crash’ that I described earlier. Some companies may never survive like Lehman Brothers and Bear Sterns. You would have struck gold with AIG though. Some of the companies in the news now are Asian Commercial Bank (arrest of the Founder by the Vietnamese Government) and Hewlett Packard (accounting fraud).

Speaking about meaningful stake, I learned that Goldman Sachs entered the same trade into Olympus. In 8 days, they realised a profit of US$1.8 billion even though it was just 18% gain (compared to my 63% gain). It takes a lot of guts to go for the jugular as Soros said. Do you have the guts? I do not have such guts as far as I know and I believe most of us do not. This is why investing passively is still the best way for ordinary people.

China approves US$7.9b in rail projects to boost economy

China approves US$7.9b in rail projects to boost economy
Business & Markets 2012

Written by Reuters  
Tuesday, 27 November 2012 12:08

SHANGHAI (Nov 27): China has approved CONSTRUCTION [] of two city subway projects worth 49 billion yuan (US$7.87 billion or RM24 billion), adding to the list of recent railway project approvals aimed at boosting growth in the world's second biggest economy.

The National Development and Reform Commission (NDRC), China's state planning agency, also approved a feasibility study on an inter-city rail line between Fuzhou and Pingtan, an island off the coast of Fujian, worth a further 26 billion yuan, the official Shanghai Securities News reported.

The projects appear aimed at shoring up growth in China's economy, which has slowed for seven consecutive quarters, most recently posting 7.4% annual growth for the third quarter.

More recent data, however, has shown signs of a recovery, with fixed-asset investment, factory output, and retail sales all beating expectations in October.

Shanghai Securities News, citing an announcement from the NDRC, reported the agency had approved construction of a second subway line in Fuzhou, the capital city of prosperous Fujian province, on China's east coast.

The commission also approved construction of the first two subway lines in Urumqi, the capital of western China's Xinjiang Autonomous Region, the paper reported.

The Fuzhou project, which will take four years to complete, is worth 18 billion yuan, while the Urumqi project will total 31 billion yuan and is due for completion in 2019.

The latest project approvals come on the back of a slate of rail and other projects approved in recent months. In early September, NDRC approved 25 rail projects totalling US$110 billion (RM335.7 billion).

Reuters estimated that a flurry of new project approvals announced in early September, when concerns about the slowing economy were at their peak, totalled US$157 billion.

Last month, the Ministry of Railways announced it had raised its spending plan for 2013 to 630 billion yuan from 610 billion announced in September. — Reuters

Source/Extract/Excerpts/来源/转贴/摘录: www.theedgemalaysia.com
Publish date:27/11/12

Luck or Skill

by ALVIN on NOVEMBER 24, 2012

I am typing this post while holidaying in Osaka. Few days ago, my girlfriend and I was supposed to travel to Kyoto and spend a night in a temple. As it was autumn, the sun set pretty early at around 4pm. We navigated in the dark and Google map pointed us to a temple which was closed. In fact, many temples were closed. We were pretty lost and wondered if we would ever get to the right temple. My girlfriend tried asking passer-bys for directions. Most did not know about the temple although they were trying to be helpful. Just as I suggest we put up a place in a hotel nearby, my girlfriend tried asking another passer-by. We were lucky to meet an English speaking Japanese and who seemed to be familiar with the area (his friend dressed as a monk). They walked us to the temple and we managed to check-in that night. On hindsight, we discovered that Google map pointed us to a wrong temple. Luck has helped us find our place of stay. It was not our skill in the Japanese language or excellent understanding about the area which got us where we wanted to go. Also, we became lucky because of my girlfriend’s perseverance.

Since I was a child, I was taught that success is a result of hard work.  I was told that studies was important and my job as a school goer was to put in enough effort and get good grades. A good educational qualification is a gateway to a good paying job and a “successful” life. It isn’t wrong to think this way as a graduate does have access to certain jobs that a non-graduate does not. But most of us who went through the educational system and transited into working life know that academic qualifications do not guarantee you a future. The differences in skills among others and myself are minimal – my colleagues are able to do most of the things I do and vice versa. The main difference between those who promote faster and those who do not is about opportunities. It is likely the former was presented the opportunities and they managed to perform well. This opportunities become reasons for their promotions. Those who are successful and rich will tell you how hard they worked and how skillful they are. But they will not equally acknowledge the role of opportunities in contribution to their success. Humans have funny biases - We often attribute success to our own skills and failure is a result of bad luck.

(Malcolm Gladwell touched on opportunities extensively in his book, Outliers. He mentioned about two high IQs individuals, Chris Langan and Robert Oppenheimer. The latter was a more successful individual because of the backing of his wealthy family and his good social skills. The IQ was not a crucial determinant for success. You can read more about it in this book summary)

Jon and I discussed about the role of luck in successes. Interestingly, we observe the role of luck in one of our breakfast outings at a popular curry rice stall in Tiong Bahru. We both concurred that the dishes were mediocre but we witnessed many people willingly queue for the food. In terms of skill, the cook is not of Michelin standard. In terms of profitability, I bet there is a decent amount of income. We believe the stall owner was at the right place, at the right time, and serving the right crowd.

Stock picking involves a lot of luck. Jon would argue with you that if Warren Buffett was in Japan, he would not have done well during the lost decade with his basket of carefully selected Japanese stocks. Being at the right country does make a big difference to your success.

No matter what method you adopt to buy and sell in the market, you cannot ignore the role of luck in investing. We can only evaluate stocks based on historical performance (applies to both Fundamental and Technical Analysis). The future always remains unknown and full of possibilities. We tend to find patterns and reasons why a stock should outperform in the short term (trader) and in the long term (investor) based on observations of past data. We place out ‘bets’ for the future and find comfort after we have done our due dilligence. We believed we deserved to be rewarded for our skill. Like it or not, we cannot control the outcome. Jon and I wrote about control in our previous posts here and here.

To invest successfully, you either

• position yourself with the odds in your favour, or
• limit the role of luck

I do not have a clearly defined solution for the first bullet. If you trade or invest with a set of rules or a system, you can calculate the expectancy of your trading strategy. If you are a discretionary trader or investor, it will be harder to calculate your edge. You may have to evaluate which selection criteria is attributed to your skill (something within your control) and which is attributed to luck (something not within your control). For those criteria relying on luck, you must accept the possibilities that luck will turn her back against you and how you are able to handle it. The good news is that if you are right, you will earn a fortune (provided you put a significant amount of stake). You can read more about randomness in the post on Drunkard’s Walk and Fooled by Randomness (we are doing injustice to this great book by Nassim Taleb with a rather short summary. We will expand the post soon).

For limiting the role of luck, you can choose something safer with less volatility. A permanent portfolio and a life insurance policy are some apt examples. They compensate the lack of huge gains with certainty and less dependency on luck. One important point is that there is no way you can eliminate luck totally. Insurance companies and banks can collapse even though the investments you hold appear safe for now.

To end it off, I would like to talk about the role of perseverence – Perseverence may increase your exposure to luck. Just like the first story I shared in this post, my girlfriend’s perseverence in asking passer-bys for directions made us lucky. Salesmen who can handle rejections and carry on selling is more likely to succeed as compared to those who do not. Employees who are more eager to accept challenging tasks have higher chances of outperforming their peers. Investors/traders who learn about themselves and the markets have higher chances of becoming profitable.

Why past can never be a replica for the present or future? ....... Lies exposed

Why past can never be a replica for the present or future? ....... Lies exposed
Financial Market is place where participant VOTES. Those who believe price will go up vote with BUY and SELL for voters believing price will drop. The results are immediate with prices moving up and down every second till market closes for the day or week.

Voting is a on going process with different intensity. Some players dropped off along the way and new entrants jump in. With the pools of players changing, it is impossible to replicate the past exactly. It is possible the majority to share the same sentiment over a certain price or levels but it is impossible for a unanimous decision when we have millions of people voting over a period.

Yes, the market voting system is very fluid because it involve human emotion. One can use the past as reference but one should not be entrenched with the perception and mindset the past will be replicated in the future. It is possible for the present or the future to copy some parts of the past because some of the present players are remnants of the past.

I am a firm believer that we should look ahead while not loose sight of the past as experience and guide.

It takes time to polish, improvise to perfection.

When you hear ANUSlysts tells you how much the present will repeat the past, trust me, it ain't going to happen.

ANUSLyst and FUNNI manager are salaried to tok kok. They are not fighters in the market place. The resume of this anuslysts and funni manager is tok kok experience.
Posted by TZ aka PEDAS at 6:08 PM

Time to test the market with some small buying?

We have always been positive about this downturn in the US market. We talked about Fiscal cliff as a tremendous chance to get into the market when there are indications of a resolution. These few days do seem good. The progress between the Republican and Democrats are going relatively smooth...

See this article:
http://www.marketwatch.com/default.aspx?siteid=mktw&avatar=seen&dist=ctmw

You may not want to go into the stock market only when the policy is approved.

Get ready to act now by studying which stocks are good with their earnings or which stocks that are in-line with their earnings but grossly oversold these few days. 

If you are hesitant to go in, just study first and act later when more confidence come back into the market.

I am seriously looking now at some Singapore big chip counters like Kep Corp, Semb Corp and Semb Marine, which are bashed upside down. 

In US, the techological stocks like Cisco, Apple and Facebook sure looks tasty too!

For our options grads, remember that Cisco and Facebook has good earnings. Apple may have reached its low of centennial figure of $500 when it touched $505 on Friday.

Remember that we still believe there is a good chance for a late run rally into the holiday season.

Btw, this Thursday is thanksgiving holiday in America. After thanksgiving, US has a Black Friday shopping day where people will go shopping. US will then issue a sales volume to indicate whether the consumer sales are good. Last year, it was one of the best ever in history. Let  us see how it is this friday! My opinion is that it shouldn't be bad as unemployment rate has dropped.

Walmart will start its tech sales on Saturday as indicated in this article:
http://www.marketwatch.com/story/wal-mart-to-start-post-holiday-tech-sales-on-sat-2012-11-19

If the tech sales are great, expect a revival from the tech sector, especially Apple and Amazon, with the iphone and kindle sales.

Do take note that Technological, Retail and Tour-related sectors or industries are the best industries to look at for a Christmas Rally!

Rgds
Daniel

Coffee With FFN and “The 21 Year-Old Investor”

This interview involves a 21 year-old investor (he prefers not to reveal himself) who has discovered his undying passion in investing and believes in the value investment philosophy. He likes to buy excellent businesses that are able to compound their earnings over a long period of time. He runs his own investment blog and frequents the Valuebuddies forum. He also has a knack for unearthing information off the internet about his favourite companies, to the astonishment of other forum users.

FFN: At what age did you get started in investing? 

The 21 Year-Old Investor (TTYOI): I started at the age of 20.

FFN:  How did you get interested in investing and who inspired you to get started? 

TTYOI: I seemed to have the impression that the stock market is where one can earn great wealth by buying low and selling high since young from maybe the TV drama serials. I had a chance at it when I was 16 as my school was organising this virtual stock competition. I didn’t really know what the stock market is about as well as all the various terminologies. The competition occurred during 2007 and during the final day, stocks tumbled down in one single day and the winner of the competition was the one who had their positions in cash. The one lesson that I have learnt then is the stock market is very risky and one can suffer huge losses in a single day.

While I was in the army, I tried to read up about investment through books like the dummies as I have the intention to have a go at it once again. I started reading up only in my second year where there’s more personal leisure time. I eventually created a trading account and bought my first stock in September 2011 which was a tumultuous time.

FFN: What was your life like before investing and how is it now?

TTYOI: My life was drastically different ever since I started investing. In the past, I have always been unable to come up with an answer whenever people ask me what I want to do in the future. Now, I am very clear that investing is what I want to do for the rest of my life until my mind starts to fail me. I have found a passion.

It has also slowly shaped my characters and perspective. Patience, focus and long-term view are stuffs which I have learnt during this journey. Regardless whether one is an investor, management or owner, these 3 traits seemed to be a common point for those who have achieved success. I do incorporate them into my everyday decision making process even in non-investment related things.

FFN: How do you choose which stocks to invest in? What are some of your strategies? 

TTYOI: I am a bottom-up investor that is heavily influenced by the style of Warren Buffett. Hence, I try to look for great companies that have the capabilities to generate high return on capital for a long period of time. Great companies are indeed very rare and in most cases they will be overvalued.

ROE is therefore one of my most important criteria and I love to use the Du Pont Ratio to evaluate the component of the company’s ROE. You rarely have a company with a wide moat having a low normalized ROE. Personally, I will also prefer a clean balance sheet as Black Swan will always happen and you do not want your company to face financing problem. I have since started to come to term with having some amount of debt so long as the company should have no problem repaying them even in unfortunate circumstances. High Free Cash Flow Yield is also very important and is often one of the common traits of great companies. If a company has to constantly pump in half its net profit to maintain its business then it means that you are only getting half the cash return as an owner of the company. Decent dividend yield is a good to have but not a must, as I believe it can provide some form of cash flow and return while an investor is waiting for the long haul.

In term of the qualitative, that will be to find a company with a great moat. In most cases, a high return on capital will attract more competitors who are willing to accept a slightly lower return than one does. In such a case, competition will be such that no one is able to earn supernormal profit for a long period of time. The period of time of which a company is able to earn return above their cost of capital is called the competitive advantage period (CAP).

Companies with great moat are then able to fend off competitors who are seeking to erode their returns. Some of the commonly cited moats are high switching cost, network effect, government regulation, monopoly power (not monopoly) and lowest cost structure. However, we have to keep in mind that they will still be constantly attacked upon despite their moat. Some of these moats can also be illusory and temporary which requires the judgment call of the investor.

Thus, I have to admit that this method is riskier than the traditional Graham’s approach of purchasing below book value and cash. Firstly, an investor can make a wrong call on what seemed to be a moat. Secondly, disruptive technology can make the business obsolete as seen from the case of Nokia and Kodak. Thirdly, as they have high ROE, it will almost be certain that you will be purchasing at huge premium over its book value due to the equation of PER X ROE = P/B. A stock with PER of 10 and ROE of 20% is essentially trading at 2x Book Value. In such a case, you are paying for future growth in book value which might not happen unlike buying a company at a huge discount to book value where only losses can slowly erode their book value. The stock will then potentially have a huge downside.

FFN: What are some of the stocks in your portfolio currently? 

TTYOI: Boustead, SIA Engineering, Silverlake Axis, VICOM, The Hour Glass. I am looking to accumulate more of Boustead and THG.

FFN: Where and how do you look for companies to invest in?

TTYOI: As mentioned earlier, I am a bottom up investor so I have to search for companies one by one. I try to screen for stocks with high ROA (min 10%) and ROE before I research on the potential company’s prospect. I also try to look around for the better businesses out there – there’re quite a number of them right in your supermarket. Valuebuddies is also a great platform for people to uncover some of the gems.

FFN: You are well-known for getting information of companies from the internet easily. You dig deep. How do you do it? 

TTYOI: Because of my riskier investment style, I will feel comfortable investing in a company only if I really understand the company as much as possible. Main sources will include IPO Prospectus, Annual Reports and Company’s websites. These are really amazing source of information though many people do not read them. Competitor’s annual report or prospectus can also be very useful.

Beyond that, you have to search through Google pages by pages. In fact, I can go up to 50 pages just to find a single piece of information. Change your search term and start the manual digging again. Often, you will be able to find some information that will lead you to even more information. It can be some important authoritative report or a specific jargon for that particular business.

Sometimes, I also employ some unorthodox techniques like emailing or calling up the company, their competitors or some other organisation in the identity of customers, students and e.t.c. AGM is also a very important avenue for it is the one day each year that the management will be bothered to discuss about the company with you. Being well-prepared for AGM is essential for one to reap its benefits.

It helps if you read a lot so that you have some idea of what to look for in every sector.

FFN: What are some of your favourite investing books?

TTYOI: Intelligent Investor, One Up on Wall Street, Black Swan, The Little Book That Still Beats the Market, Buffettology, Your First Million, Common Stock Uncommon Profit

FFN: What are the mistakes you have done pertaining to investing and what are the lessons learnt?

TTYOI: All sort of mistakes have been made – Buying on rumours, buying without doing FA, selling on fear, buying on greed, failed to cancel order when changing order, speculation. Lesson learnt is probably that mistakes are inevitable and investor should learn from it. I am sure that my list of mistakes will continue to expand in the future.

FFN: What psychology do people need to succeed in investing?

TTYOI: One needs to learn to control the greed and fear within oneself. Losing control of emotion will lead to buying high and selling low instead of buy low sell high. Independence of thoughts is also very important. If one is not willing to stand by his idea and choose to follow the market, he will at best get a mediocre return. Only by going against the general market, can one possibly achieve above market return.

FFN: What advice would you give for beginners who want to start investing?

TTYOI: Start now, make mistakes and learn from there. Investors grow when they learn from their mistakes and not when they make profit.

Always be humble and understand that there’s too much to be learnt out there from everybody.

FFN: What do you thing is the biggest misconception people have about money?

TTYOI: That money is the end. To me, money is merely a mean to an end and in the race for it many people lose focus on what is it that they really want. It is important to know the purpose of making money.

FFN: What is the one thing, in your opinion, do people need to succeed in investing? 

TTYOI: Temperament

FFN: A parting shot for the readers… 

TTYOI: A quote by famous trader Jesse Livermore: “The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”

Ironically, he did die poor as he did not follow his own rule at the end. Have fun investing =)