CCM XB calculation

From forum

they cannot give bonus shares...sgx has some regulations about it..eg min share price i think is 50 cts before bonus sharees are allowed...
so give bonus warrants plenty of them....
so u see
yesterday share price is 16 cts...cum bonus
today x bonus..

16 cts + 10 cts warrant subscriptions= 11 shares...
theorectically =2.36 cts/share..

today share price started at 2.2 cts and traded up to 9 cts..
currently around 6 cts...

Why Following Your Passion is Bad Advice

18 Dec, 2013 Alvin Chow

I was searching for my passion for a period of time. I wanted to know what I should pursue in my life. A course of work that I could devote all my energy toward it and enjoy doing it. My late mentor, Dennis Ng, told me I have to search within. The answer is in me. I would say even after a few years I still do not know what my passion is but I have gained a more valuable insight.

You would have heard of such phrases:

“Do what you love and you do not need to work a day in your life!”

“Do what you love and the money will follow.”

How wonderful and motivating these phrases are? Life would be so good if it happens to me.

Don’t you feel the same way? Are you searching for your ideal job or career? Are you finding that passion of yours?

A book caught my eye one day, So Good They Can’t Ignore You, by Cal Newport. The book told the story of the legendary Steve Jobs. If Steve Jobs had followed his passion, he would have been a zen monk. For a period of his life, Steve was a practitioner of zen Buddhism and he even went to India to seek enlightenment. That was his passion. We won’t have our beautiful iphones and Macs if he had became a monk.

His career in IT was born out of an opportunistic endeavour, and not of passion. It happened that personal computers were in the nascent stage and seeing a potential to make a few thousand dollars, Jobs partnered Steve Wozniak to create the first Apple computer and sold the units to a local shop. That initial plunge into IT went so much further than they could imagine. They provided something of value to the market, not because Steve Jobs was passionate about computers.

My intention of writing Secrets of Singapore Trading Gurus was to show how hard trading is, instead of promoting it. I wanted to discourage those who are not prepared to take the hard knocks of trading, to give up trading. This would save them a lot of time and energy.

I shared this with my publisher and I said I was ironic. In the sense that I discouraged people to pursue their passion in trading while I encourage people with passion in business to be entrepreneurs. Both are risky endeavours but why do I have a split stand? He told me I shouldn’t be. Not everyone can be entrepreneurs and following one’s passion cannot be trusted advice.

Now I understand what he meant. I had a friend who wanted to quit his job and do business. Instead of just giving him the pat on the back and ask him to go for it, which I would in the past, I am asking him something else – what value are you providing and would people pay for it?

This is a capitalist society. You must be providing something of value that others will pay for. The better you are at something than most people, the higher pay you command. For example, you may be passionate about photography but you may not be good enough to charge for your pictures. But if you are so good, people will pay you top dollars for your service.

Don’t get me wrong, passion is still useful. I have devised the following set of questions to help you find a direction in life. The first two questions to ask yourself ensure you are grounded in reality while the subsequent two questions are related to passion. Passion becomes an afterthought. This set of questions will help you make a balanced decision whether to pursue something or not.

• What are you good at than most people?
• Would people pay you for it?
• Would you enjoy doing it?
• Would you enjoy the tedious process of honing your skills continuously?

Getting ‘yes’ for the last 3 questions will set you up in the right direction for your career.

- See more at: http://www.bigfatpurse.com/2013/12/why-following-your-passion-is-bad-advice/?utm_source=rss&utm_medium=rss&utm_campaign=why-following-your-passion-is-bad-advice#sthash.huCaSe3x.dpuf

投资大师：慎防美国盛极而衰 目前非买黄金最佳时机

Created 12/15/2013 - 07:35
（纽约14日讯）商品投资大师———罗杰斯（Jim Rogers），担忧美国恐怕会走上英国盛极而衰的老路，呼吁所有人都要慎防美国崩溃，他认为目前并非买黄金保险的最佳时机。

或步英国老路

BullionVault报道，罗杰斯指出，英国在1918年是地球上最富裕强大的国家，但之后仅花了一代的时间，就面临经济混乱的局面。


相较之下，美国现在放任美联储乱印钞票、国会不断拖延减支问题，可能同样会面临英国100年来财富、强权逐渐丧失的困境。

他警告：“全球央行都在印钞、各国政府也毫无节制地乱花费，这种现象不太可能轧然终止，因为印钞规模缩减、金融市场一乱，央行就会惊慌失措地再次印钞，直到市场决定不再随央行起舞为止，而许多不愉快的事件也将接踵而来。

他指出，许多国家开始出现社会动荡，未来还会进一步恶化。

白银跌幅已深

针对黄金，罗杰斯表示，全球最大黄金进口国印度已减少买金规模，这是金价走软的主因之一；他已为个人持有的一部分黄金避险，以防金价继续下跌。

但他认为，在央行不断印钞的压力下，黄金绝对是躲避混乱的最佳办法，只不过目前并非买进黄金或白银的好时机，若一定要选，他会买跌幅已深的白银。

Source/Extract/Excerpts/来源/转贴/摘录: 南洋财经 
Publish date: 15/12/13

5 indications why Singapore residential prices will dip 10%

Next year's decline imminent, says Maybank.

According to Maybank Kim Eng, there are 5 indications that the Singapore residential market will turn in 2014 due mainly to the effects of thhe QE tapering, "culminating in an expected 10% decline in residential prices."

Here's the complete analysis from Maybank:

1. Sentiment to get worse before it gets better; cut to Neutral. We downgrade the Singapore property sector from Overweight to Neutral as we believe the prospect of QE tapering in 2014 will be a drag on Singapore developers’ share prices. Physical prices look set to correct and we expect continued share price weakness unless the government removes some of the cooling measures. Inexpensive stock valuations notwithstanding, we will adopt a Neutral view on the sector for 2014.

2. Point of inflexion looms. Private residential property prices in Singapore have been rising since 2Q09, but there are indications that prices will turn in 2014. Higher borrowing costs, falling HDB resale flat prices, slower population growth and a record number of physical completions in the near term all suggest that residential demand will wane. We reiterate our belief that private property prices will decline by 10% in 2014, led by the mass market segment.

3. New options for retail developers. Even as most developers reduce exposure to the Singapore residential segment, we see new openings for those with the expertise to develop and manage retail malls. The Urban Redevelopment Authority’s Draft Master Plan 2013 heralds opportunities in mixed developments, namely, integrated transport hubs. Toa Payoh HDB Hub and Compass Point in Sengkang are two examples of transport nodes integrated with commercial elements.

4. Overseas forays gather steam. Most of the developers under our coverage are increasingly looking to diversify overseas, particularly in China. We concur with such a move as long as they do not overpay for land. We believe China’s market will continue to be underpinned by growing affluence and the urbanisation process and favour names with a proven track record in that market.

5. Valuations inexpensive but be selective; TPs trimmed. We cut our TPs for all the stocks that we cover in this universe, based on slightly steeper discounts to RNAV (lowered by 5ppts). This is to factor in the uncertainties associated with QE tapering. The exception is CapitaMalls Asia, which remains our top pick as it benefits from new malls opening in Singapore and China. Maintain BUY on CapitaLand and Keppel Land as well, given their diversified business models, reduced exposure in the Singapore residential sector and strong execution in China.

- See more at: http://sbr.com.sg/residential-proper....7BjxJ9NS.dpuf

Daily Market Summary 16th Dec 2013

Albedo to buy more iskandar landin $1.86b RTO. SGX
Ausgroup refinancing and capital raising update. SGX
Hartawan completed the acquisition of gold mining group, name changed to "Wilton Resources". SGX
IEV secures a major CNG supply award in west java, Indonesia. SGX
Ipco post 2Q14 net loss of $114.7m vs 2Q13 net profit of $5.2m. SGX
Medi-Flex 1Q14 net profit +37% to RM7.1m. SGX
TigerAir unevils alliance strategy to accelerate growth in key asian markets. SGX

DW 2014 Dividend Investing Goal

2013 - Financial Independence Achieved...errmmm...technically

2013 was a rather eventful year. The US fiscal cliff shenanigans at the start of the year, followed by QE taper fears, US debt ceiling fight and ending with a spectacular crash of the local penny stocks market. Through it all, I am proud to say my portfolio and my dividend income stream continue to grow in 2013. In fact, I managed to celebrate my 30th birthday by achieving the goal of collecting S$1k per month in dividends. Better still, I surpassed that goal!^^

Let's take a final look at how my Singapore Dividend Portfolio has performed in 2013.

• My portfolio size in terms of cost/capital has increased from S$163,794 to almost S$200k now. This represents a 22.1% rise.
• I collected a total of S$14,370 dividends in 2013 compared to S$8,968 in 2012. This represents a 59.6% rise. 
• My portfolio's current dividend yield remains healthy at 7.1%, compared to 6.8% in 2012.

2014 - Buying Opportunities!

Even though my passive dividend income is already sufficient to pay for all my daily expenses and bills, I am not resting on my laurels. I believe that 2014 will be the year when the compounding effect on my portfolio will shine through. It will be the year when my dividend compounding strategy kicks into high gear. My regular readers should understand what I meant. However, those of you who are new to my blog may be wondering, "Is DW thinking straight? Is he blinded by yield? The Fed is starting QE taper soon! Interest rates will rise! REITs and dividend stocks will go out of favour! Why is he still buying dividend stocks?"

The answer is simple. I am currently in the accumulation phase of my investing life. In other words, I am a net buyer of stocks. Therefore, I wish to see prices weaken so that I can keep growing my portfolio. Of course, there are risks. But I have faith in my strategy and it has served me well over the past 4 years. I just need to be more selective when adding counters. My new dividend income target for 2014 shall be S$1.2k per month. 

Projected dividends for 2014 (based on current portfolio)

1. Singtel: S$1176
2. Starhub: S$2000
3. M1: S$1022
4. SPH: $1100**
5. SATS: $150
6. Neratel: S$120
7. CapitaMall Trust: S$700
8. Frasers Centrepoint Trust: S$1040
9. Suntec REIT: S$552
10. AIMS AMP: S$2700
11. CACHE: S$848
12. First REIT: $760
13. PLife REIT: S$416
14. Mapletree Industrial Trust: S$197
15. Mapletree Logistics Trust: S$364**
16. ST Engineering: S$168**

Total: S$13,313

**Note: I have divested HPH Trust and Sabana REIT. Added Mapletree Logistics Trust and ST Engineering. The total dividend is an estimated figure based on 2013 numbers. There is NO guarantee the companies will maintain the dividends next year. The special dividend payout due to the SPH REIT spin-off is not included in the calculation.  

My 2013 dividend investing goal. Check it out! :)

My 2012 dividend investing goal. Check it out! :)

Embrace the Power of CD!

Dividend Warrior

Lessons From The Penny Stock Crash

06 DECEMBER 2013

Lessons From The Penny Stock Crash
By Ong Qiuying and Choo Hao Xiang

It has been two months since the penny stock crash. Still, the market is reeling from the repercussions. This issue, Shares Investment looks into the potential red flags that could prompt second looks as well as ways to avoid getting oneself into a sticky situation.

From being termed laggards to being the stock market losers of the year. All in less than a year. That was how quick the tide had turned for penny stocks listed on the Singapore Exchange (SGX).

Top Gainers

Source: FactSet Research Systems Inc

The mood was totally different at the start of the year. Trading activity was centered on smaller cap issues. It goes without saying that the other factor behind private investors’ interest was the significant price appreciation.

But as the saying goes, all good things must come to an end. As penny stock trading continued to scale new heights, concerns began to set in. Subsequently, fences were established by trading firms to limit their exposures to the small cap section as early as March. Things then started to fall apart in October.

Two Months Back
On the morning of 4 October, shares of Asiasons Capital, Blumont Group and LionGold Corporation suffered heavy sell-downs. Within an hour of the start of the trading day, SGX placed these three counters, which already lost about 50 percent of their values, on suspension. Prior to this bloody episode, the equities market regulator queried Asiasons and Blumont on two occasions about irregularities in trading activities while LionGold received one query.

While these shares were back on the market the following trading day, they were tagged as designated securities by SGX. That did not help to break the falls. Market value of $3 billion was further wiped out in the next two days when trading resumed.



The massive plunge had a spillover effect on other penny stocks as well. WE Holdings, Innopac Holdings, ISDN Holdings and Mirach Energy, just to name a few, were among those affected.



Potential Red Flags
So are there signals that could help identify if one is getting into a sticky situation or is already in one? The answer to that is yes; there are some warning signs an investor can make use of to detect if something is amiss. While one cannot deny that when things are set in motion, it might be tough to stop, it is handy for investors to get familiar with the early signals, albeit fuzzy at first, which may present themselves.

1. Excessive Price Action
Investors should be wary of stocks that have climbed or plunged multiple folds within short time frames because while it may be a market phenomenon, it could also be individual out-of-norm behaviours that warrant a second look.

It is absolutely normal to be tempted to gravitate towards what others are investing in. However, it is important that investors justify if this herding instinct that is causing rallies or sell-offs are backed by substantiated fundamental evidence.

2. Trading Restrictions
If brokerage firms begins to put trading restrictions on certain stocks, investors should also be vigilant to pick up that there may be unusual trading for such stocks. If the brokerage firms are protecting themselves by limiting their clients’ exposure to the stocks, you should probably think twice as well.

3. Business And Management Changes
Staying up-to-date with your investments is essential as changes in the market environment could trigger or cause a change in the fate of the company’s health.

On an international level, economic downturns in major countries such as the US, China and Europe would have spillover effects onto the sentiment of the stock markets worldwide. Within the industry, developments such as the appearance of strong competitors and shifts in buyers’ habits could disrupt demand and supply dynamics in the sector. All these exert pressure on the company’s performance, hence, it is important that investors are sensitive to the changing market trends and note how it could impact their interests.

Most importantly, on a company level, investors should look out for dramatic changes in company’s strategies, whether they are planning to switch its business, foray into new industries or sell its business entirely. For example, when the company starts cutting prices, selling off core assets or show a deterioration in quality of products or services, it could be a sign that that the company is in trouble.

One should also be concerned if major shareholders begin offloading a substantial portion of their stakeholdings in the market out of the blue. The sudden departure of key executives or board directors could also signal bad news especially when the individual concerned has a reputation for being successful or as a strong, independent director.

4. SGX Queries
SGX makes queries when shares of companies experienced unusual trading activities such as sudden price swings and questions the transparency of the company disclosures. Interested buyers or shareholders of stocks that have been put under query or multiple queries should exercise caution in such situations as there could be market manipulation or an over- or under-reaction to the corporate developments in the company.

New Mechanism
Another move targeted to offer protection is the circuit-breaker mechanism that SGX proposed to bring into its armoury in June. The addition is reportedly said to come online early next year.



While there are no hard and fast rules about circuit breakers, now might very well be an appropriate time for exploration. After sieving through the different types of circuit breakers deployed by exchanges around the world, below are some further considerations that may improve efficiency.

1. Define price bands based on sector
2. Cancellation of trades executed beyond price bands during cooling-off periods
3. Varying cooling periods depending on a set of defined price bands

Selecting The Right Stock
Nonetheless, no matter what new regulations are meted out by the exchange, the onus is not just on the regulatory authorities. Investors themselves have to play their own part in safeguarding their own interests.

For investors, a good rule of thumb is to adopt a selective approach instead of chasing a trend. One should be familiar with the industry or the company that you wish to invest in simply because it will help in better understanding the workings of the company and what drives its growth.

Some factors to consider when selecting a stock to invest:

1. Financial Health
What you should look out for is a consistent growth in revenues and profits over a number of years. This shows that the company has a growing income while an increasing profit suggests that it has expanding margins or strong cost controls.

Investors should be careful when the company’s assets are difficult to value and tough to estimate and also identify if any drastic jumps or falls are one-off or recurring incidents.

The cash flow position is also important as you can find out if the company has the financial flexibility to take advantage of any business opportunities or if it is laden in debt and may require more bank borrowings, which will incur additional interest costs, or equity funding, which will lead to dilution.

Most importantly, look out for a dividend payout as it is a sign of good financial health, especially if the company has been paying an increasing dividend or a stable dividend yield. This also gives investors a cash return on top of the potential capital appreciation of the stock.

2. Valuation
Common valuation metrics can be employed by investors to help gauge if a stock is indeed worth buying. Some of the common ones are the price-to-earnings ratio, price-to-book ratio and discount to book value.

However, investors have to bear in mind that these metrics are not “one-size-fit-all”. Companies that are different in size, industry or at different stages in their market cycle will have different standards. Hence, understanding what is the average for the industry and the company is important and would help the investors sift out value buys.

3. Growth Prospects
Other than numbers, investors should also take a macro perspective on the industry and company outlook. How will the business evolve in the time horizon you wish to invest? Knowing how the company’s growth strategies and expansion plans fit into the global outlook of the industry would also help the investor identify if the company’s growth plans are intact.

Keep in mind that when you buy a stock, you are becoming a part owner of that company and the value of your investment will depend on the health of the business.

Source/Extract/Excerpts/来源/转贴/摘录: http://www.sharesinv.com/
Publish date: 06/12/13

Rex (REXI SP): Bridging distressed 60cts share price closer to SGD1.27 fair value

Rex International  (REXI SP)                BUY 

Price/Target: S$0.605/S$1.27        Market Cap: S$662.4m                

Bridging the gap between current distressed 60cts share price & fair value of existing Oil assets at SGD1.27

Our View:

1.        Rex's share price has been a dog, underperforming -20% post-76cts placement to Institutional Funds because:

        a.        Investors, mainly retailers/HNW that have participated in Rex's share price >80cts are selling at distressed levels because:

                i.        Investors getting sceptical on Rex's technology being able to find Oil

                        (To mitigate this, Rex has proven that Virtual Technology works as recent in its Norway's North Energy Test where it has 85% success rate. Oman Oil find likely at end Dec 13 or early Jan 14 will put these misplaced fears to rest; Oman had started drilling at end Nov 13 & all points to a very likely commercial Oil end Dec 13/early Jan 14.

                ii.        Investors misperceived that Newsflow has been erratic

                        (This has not been true. Rex has given on average one major newsflow in 2 weeks over the last 2 months. It has at least made the Institutional Investors stay the course & wait for the major oil find in Oman, Norway, UAE & US which will re-rate stock closer to our fair SGD1.27 value.

2.        Going forward, Rex's Mgt likely to try to bridge the current distressed 60cts share price closer to its SGD1.27 fair value by:

        a.        More active & regular newsflow (targetted likely once a week) until Feb 2014 to:

                i.        Rex's Mgt is actively looking at its Long-Term growth & at the same time mindful that in the Short-Term, share price do not erode below a distressed threshold that will break the psychology of genuine Mid-Term investors i.e. Global Funds & strong HNW holders

                ii.        Assure Global Institutional Investors that Rex is having major newsflow that is cashflow & profit impactful in 2014 & beyond

        b.        More active engagement with Global Institutional Funds via roadshow & meetings with relevant Oil & Gas partners

        c.        Getting more Global brokers to cover Rex to have new & larger global investors buying into Rex i.e. likely to happen post-Oman by end Dec 13/early Jan 14

3.        Newsflow is likely to be more frequent, consistent & material to mitigate the bad sentiment against S'pore Small Caps:

        a.         Subsequent to the penny stock saga, poor market sentiments have affected the performance of E&P stocks like Rex. However, nothing has changed fundamentally as Rex seeks to revolutionize the E&P industry with its proprietary and innovative Rex technology. Rex has also been able to grow its licence portfolio through leveraging on Rex Technology to farm in to licenses from E&P companies like North Energy.  Key dates to note are the results of Rex's first exploration well in Oman which is expected to be known by end Dec 13/Jan 14. Thanks. Mans

What's New:

·        To acquire 20% stake in new Norway licence, PL509. Rex's 65% owned entity, Lime Petroleum (Lime), has signed an agreement with Oslo Axess listed, North Energy, to acquire a 20% stake in a new licence in Norway, PL509. (pending regulatory approval)

·        About PL509: 977 km2 of oil prospects in the North Sea. The prospect has been reviewed using Rex Virtual Drilling, and the company is very excited about the prospects there.

·        New license bring current total no. of licenses which Rex has interest in to 16. 7 Norway licenses,  Rak Onshore, Sharjah offshore, Oman Block 50 offshore, Rak North Offshore, 3 Trinidad & Tobago Onshore licenses, 2 US onshore licenses

·        North Energy is a believer of Rex Technology. In their 2Q results presentation earlier this year, North Energy shared the results of the 59 prospects that they had analyzed using Rex Virtual Drilling over the past 2 years. Of the 41 wells drilled, 35 predictions were forecasted accurately (85% success rate)

16 predicted positive – 11 drilled with commercial oil (69% accuracy)

25 predicted negative—24 were dry (96% accuracy)

·        Strategic relationship with North Energy. As a result of the positive record North Energy had with Rex Technology, Rex shares a very strong strategic relationship with North Energy. All 7 Norwegian licenses held through Lime Petroleum were acquired from North Energy.

·        Growing its license portfolio through North Energy. In the 22nd licensing round by the Norwegian Oil & energy Department in June 2013, North Energy was awarded 6 licenses-- the second largest license awardee. Rex expects Lime to grow its portfolio to up to 15 licences in 2014.

Invest Stock - http://oceanforestcorp.com

Any expression of trading idea found on this website is for sharing only and does not constitute an invitation to trade or investment advice. Please read disclaimer page here.

20131205_RIH_PressRelease_PL509 by Mu Quek Siong

Asean’s prospects in 2014

In Indonesia, Malaysia on 07/12/2013 at 6:25 am

(Asean round-up)

The Centre for Economics and Business Research (Cebr) says Asean is looking gd: Asean as a whole to grow 5.0 per cent this year, still weighed down by Thailand’s recession. And although the country is tipped to recover in the second half of this year, it may be affected by China’s soft landing, which is projected to extend into next year and dampen its demand for Asean’s goods and services.

As for individual countries (I’ve excluded S’pore as I will analyse it next week with reference to politics):

Not only is economic growth in the Philippines expected to take a hit, the report says intra-regional trade will suffer, hampering growth in other Asean countries.

Strong government spending and higher exports to China in the second half of the year were tipped to boost the Philippine GDP to 6.9 per cent this year, but Typhoon Haiyan is expected to make growth “noticeably weaker” in the final quarter of the year.

Slower government spending and a tighter US monetary policy will cap growth at 5.8 per cent next year, said the report.

Stubbornly high unemployment and extreme poverty, along with the need to lift interest rates to attract capital, will trim the country’s GDP growth to 4.8 per cent in 2015, it added.

The Cebr report’s prediction for Thailand is that its economy will grow 3.4 per cent this year. Thanks to healthier consumption and export growth, it will jump by 4.4 per cent next year; stronger exports to Western markets will nudge the Thai economy up 4.5 per cent in 2015. [Note thar report was written before the recent bout of trouble]

In Malaysia, growth will be at 4.6 per cent courtesy of a lift from China’s economy. But weakened Chinese growth will depress Malaysia’s growth to 4.2 per cent next year.

A revamped general sales tax in 2015 could further hinder growth, but a stronger global economy should ease this somewhat. Cebr forecasts that Malaysia’s GDP growth will be 4.1 per cent in 2015.

Indonesia, Asean’s biggest economy, is likely to grow 5.7 per cent this year, as a slight uptick in the Chinese economy in the second half of the year is expected to soften the effect of China’s cooling economy on Indonesian exports.

But the report said the US’ tighter monetary policy and higher interest rates will lower Indonesia’s growth to 5.6 per cent next year and the year after.

Dividend Stock Tracker

2 Approaches to Value Investing – Qualitative vs Quantitative

Not many people are aware of the existence of the two approaches to Value Investing. Most investors understood the qualitative method, but fewer have heard about the quantitative method. I think it isn’t the fault of investors but rather, the success of Warren Buffett puts the qualitative approach to the fore. I first wrote about investing in assets versus investing in earnings, and this article extends the discussion on the differences.

Benjamin Graham coined the terms “Qualitative” and “Quantitative” approach to investing in his book, “The Intelligent Investor”. I quote,

“Our statement that the current price reflects both known facts and future expectations was intended to emphasize the double basis for market valuations. Corresponding with these two kinds of value elements are two basically different approaches to security analysis. To be sure, every competent analyst looks forward to the future rather than backward to the past, and he realizes that his work will prove good or bad depending on what will happen and not on what has happened. Nevertheless, the future itself can be approached in two different ways, which may be called the way of prediction (or projection) and the way of protection.

Those who emphasize prediction will endeavor to anticipate fairly accurately just what the company will accomplish in future years – in particular whether earnings will show pronounced and persistent growth. These conclusions may be based on a very careful study of such factors as supply and demand in the industry – or volume, price, and costs – or else they may be derived from a rather naive projection of the line of past growth into the future. If these authorities are convinced that the fairly long-term prospects are unusually favorable, they will almost always recommend the stock for purchase without paying too much regard to the level at which it is selling…

By contrast, those who emphasize protection are always especially concerned with the price of the issue at the time of study. Their main effort is to assure themselves of a substantial margin of indicated present value above the market price – which margin could absorb unfavorable developments in the future. Generally speaking, therefore, it is not so necessary for them to be enthusiastic over the company’s long-run prospects as it is to be reasonably confident that the enterprise will get along.

The first, or predictive, approach could also be called the qualitative approach, since it emphasizes prospects, management, and other nonmeasurable, albeit highly important, factors that go under the heading of quality. The second, or protective, approach may be called quantitative or statistical approach, since it emphasizes the measurable relationships between selling price and earnings, assets, dividends, and so forth.”

Qualitative Value Investing

As Graham mentioned, qualitative approach entails assessment of nonmeasurable factors such as management integrity and ability, competitive advantage, brand equity, etc. Warren Buffett adopts such qualitative approach and in particular, he wrote about the qualitative factors he considers in one of his essays:

• The certainty with which the long-term economic characteristics of the business can be evaluated;
• The certainty with which management can be evaluated, both as to its ability to realize the full potential of the business and to wisely employ its cash flows;
• The certainty with which management can be counted on to channel the reward from the business to the shareholders rather than to itself;
• The purchase price of the business;
• The levels of taxation and inflation that will be experienced and that will determine the degree by which an investor’s purchasing-power return is reduced from his gross return.

Such evaluations definitely require more guesswork and most people will fail terribly at it. Warren Buffett has a knack of getting it right in the business he understands. But most retail investors are not Warren Buffett. We do not have his skills and insights to project the future with a certain degree of certainty.

Even our highly intelligent and knowledgeable financial analysts aren’t able to do it well enough. Without a doubt, the future returns are high with the qualitative approach. However, there is no point of fantasizing about mouth-watering returns when we cannot do it accurately enough. It will often backfire with disappointing returns, even worse than the stock index returns.

Quantitative Value Investing

Quantitative approach entails the analysis of the current state of the business. While qualitative approach buys a business less than what it is worth in the future, quantitative approach pays less than what the business is worth today. This requires the use of financial ratios such as Price-to-Book and Price-to-Earnings to evaluate the strength of the company.

Quantitaive approach’s risk management centralises on margin of safety as well as diversification. First, buy as low as possible below the value of the company. Second, diversify into many undervalued stocks. Below is a list of rules Walter Schloss advocated (not exhaustive, he has more rules than these):

• Diversify into many stocks
• Stocks trading below book value
• Stocks with little to no debt
• Stocks trading at new price lows

Most of these rules are quantifiable. They are less subjective as the qualitative approach. It also doesn’t require the investor to know a company deeply to ascertain her future prospects. The analysis of a company can be completed within minutes just by the numbers. Hence, the quantitative approach suits the investor with a full-time job, and he is unable to intimately keep up with in depth company research and developments.

Qualitative or Quantitative approach?

This article is biased towards the quantitative approach because I opined it is more suited to investors who have not much time and experience, and yet it can yield decent returns of 12-15% per annum. Of course, there is nothing wrong if an investor wish to pursue the qualitative approach and aim for a higher return than a quantitative approach could. However, the success rate of the former isn’t high.

- See more at: http://www.bigfatpurse.com/2013/12/2-approaches-to-value-investing-qualitative-vs-quantitative/?utm_source=rss&utm_medium=rss&utm_campaign=2-approaches-to-value-investing-qualitative-vs-quantitative#sthash.8g5u8mW2.dpuf

Asia Pacific - Economic Compass 2014

Asia Pacific - Economic Compass 2014

Written By Stock Fanatic on Saturday, December 7, 2013 | 7.12.13

Managing growth transitions

2014 will be a watershed year for the global economy and financial markets as investors continue to keep an eye on the Fed's untested dialing-back of monetary stimulus. We expect the monetary exit to be orderly as long as the withdrawal is well timed, carefully calibrated and clearly communicated. Amid the tail risks and event risks in the US, we believe that the emerging economies will successfully manage their growth transitions in an environment of tightened liquidity or capital inflows and rising interest rates. 

The domestic drivers, aided by a moderate recovery in exports, are expected to support the uneven growth momentum in emerging economies.

"The recovery is real, but at a slow speed, and there may be turbulence on the horizon. There is a risk of another brinkmanship in the US, and there is also a risk that tapering of asset purchases by the US Federal Reserve could bring a renewed bout of instability.”

– OECD Secretary-General Angel Gurria

2014 - a year of untested growth transition

The global economy is expected to end the year 2013 on a mixed note, with further improvement in the mature economies but a general slowdown in growth for the emerging economies. The challenge in 2014 will be managing global growth transitions in the face of less buoyant capital flows in the emerging markets. From 2015 onwards, the challenge will be the rising interest rates in the mature economies.

Continued divergence in global growth dynamics

Amid tail risks and event risks in the US, the impetus for global growth will come from the G3, with the US economy taking the lead, underpinned by solid private demand. Japan's buoyant economic rebound will normalise in 2014 as the stimulus spending unwinds while the eurozone’s growth drivers will stabilise after emerging from a recession. China will continue its transition to a more balanced and sustainable growth path.

EM - not slow in strengthening growth drivers

The growth momentum in the emerging markets (EM) is coming off its cyclical peak due to cyclical and structural reasons in China and India. Faced with the progressive tightening of external funding conditions due to the capital reversals, the emerging markets will be compelled to define their growth prospects and relative attractiveness.

The growth drivers are still the low real interest rates that foster consumption and investment, aided by the moderate pick-up in exports. Certain economies are expected to expedite their structural and policy reforms to ensure sustainable growth drivers, with private sector spending calling the shots, backed by targeted fiscal support.