Tuesday, November 30, 2010

Be Prepared !

Be prepared to see some selling pressure in the next 3 weeks. Short term view is still bearish, however the long term view is still bullish as the KLCI is still trading above the 200-day Moving Average.

EPF Nomination, Have You Done it?

Today I’m not going to talk about investment, but something equally important to us, which is Personal Financial Planning! According to EPF, as at March 2010, about as much as 74% of the EPF members have not made nomination to their EPF savings. Many EPF members are either not aware of the importance of nominating beneficiaries for their EPF savings or they are just too lazy to act! Hence, there’s an urgency for those who have not done it to act immediately!

Let me tell you the consequence of not having a nomination. First, the EPF savings will be termed ‘EPF savings without nomination’ after the demise of the EPF member. Then the EPF authority will disperse RM20,000 of the deceased money in two stages to the next of kin in 2 months time, and the balance will only be released upon the submission of Letter of Administration/ Grant of Probate/ Faraid Certificate which may take minimum 6 months or up to a maximum of 7 years. Imagine your love ones have to go through this tedious process, especially if you have schooling kids, it will be nightmares for them for not having enough money for education.

In addition, many EPF members did nominate beneficiaries but the names are not up to date. For example, they nominated their parents or their ex-girlfriends or boyfriends long time ago when they stepped into the workforce. There are cases whereby the nominees are no longer alive and the EPF savings will go to ‘EPF savings without nomination’. This is not too bad if you were to compare to other cases when the EPF savings went to the ex-lovers and your love ones will be left with nothing!

Act now! Either you want to do a nomination or an update, there is only one form to fill. Go to the nearest EPF office, complete Form KWSP 4 (AHL) and submit in person because they need to verify with your identification card.

If you’ve done this, congratulations! Your wise move will help prevent any dispute in claiming of the EPF money, and you have a peace of mind that your love ones will receive the payments promptly.

Tuesday, November 23, 2010

Benjamin Graham’s Number

Any value investor should have heard of Benjamin Graham. He was the teacher of Warren Buffett at Columbia University and was known as the ‘Father of Value Investing’. Graham is famous for his stringent stock criteria to pick the undervalued stocks. His idea was to buy the liquid assets such as cash and its equivalent of a company at a discount which is known as the Net Current Asset Value (NCAV).

Here’s the calculation: Take the total current assets of a company, minus the total short term and long term debt of the company, the value times two-third.

Formula = (Current asset – Total Debt) x 2/3

This means that Graham is only willing to pay 2/3 of the net current assets of the company!

In layman term, you are actually looking for a campany with solid financial position that can pay off all its short term and long term debt in a short period of time.

To give you an idea how stringent the criteria is I have calculated some cash rich companies in our Bursa Malaysia. Many stocks are in negatives with this NCAV formula, however I managed to scout for a few that are with positive NCAV per share:

Genting Malaysia RM0.73
Maybulk RM1.01
Petronas Gas RM0.47

And Graham was only willing to pay 2/3 of the above values! You may say
that’s impossible! However, in modern days, we may improvise the formula and work out one that is suitable for your risk profile and your investment plan.


Happy investing,

Pauline Yong

Thursday, November 11, 2010

Pauline Yong Investment Seminar @ CIMB

How To Be A Long Term Winner in the Stock Market

There are 3 sessions

Date &Time
1. 20th November 2010 (Saturday)
10.30 am - 12.30 pm
(Registration starts at 10.00am)

2. 20th November 2010 (Saturday)
2.00pm - 4.00pm
(Registration starts at 1.30pm)

3. 3rd December 2010 (Friday)
12.30 pm – 2.00 pm
(Registration starts at 10.30pm)
(Registration closed for 3rd Dec as it was fully booked)

Venue
CIMB Securities Tropicana City Branch
Level G
Tropicana City Office Tower
3 Jalan SS20/27
47400 Petaling Jaya
Selangor

Topics:
1. Personal Financial Planning
2. About value investing
3. Fundamental Analysis
- Annual reports
- Financial ratios
- Analyst reports
4. Technical Analysis
- Price volume analysis
- Price charts
- Technical indicator
5. Market Psychology


See you there!

Tuesday, November 9, 2010

At 1526 KLCI, Where Do We Go From Here?

No body can predict the market. Even Warren Buffett said: “Don’t try to time the market.” However, we can always make our decisions based on facts and probabilities. Take a look at our KLCI chart, at 1526 it’s our all time high now, is there room for growth?

All the technical indicators and analyst reports are bullish about our stock market, mostly based on the favourable news from US that the US Federal Reserve announced they are going to pump in more liquidity in the market (its called the Quantitative Easing) and the possibility that our Malaysia general election might be coming soon, hence, many analysts predicted our KLCI will reach 1800 in 2 years time!

In order not to be crowded by all the noises in the market, we must be firmed with our own investment plan. In your investment plan, ask yourself these:
• What is your investment horizon? 2 years, 5 years or longer?
• What are my stocks? Dividend stocks, blue chips, or tech-stocks?
• Do I have the holding power if my investment portfolio reduced by 50%?

If you intend to hold a longer investment horizon for your retirement or your children education fund, most likely you will be holding dividend and blue chip stocks in your portfolio. In addition, you must have the holding power should the economy turns bad, then by all means invest in the stock market regularly because in any stock market there is only one trend in the long run – that’s UP!

Personally, I did not sell my Maybank and Public Bank shares during the recent financial crisis, however, I did buy more when Maybank was at RM3 and Public Bank was at RM8.65. Hence, I was able to lower the average cost of my portfolio during the financial crisis. Moreover, I do invest in the stock market regularly but now I’m investing at a slower pace now.

However, if you just want to make quick bucks out the stock market, then my advice is: make sure you have the right tips and to take profits in time. Lastly, I want to leave you with a piece of advice from the popular investment guru, Warren Buffett:

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”


Happy investing,

Pauline Yong

Tuesday, November 2, 2010

Get Organised With An Investment Form

Last week I mentioned about the importance of reading the analyst reports, however, just sitting down with a pile of financial statements isn't a very efficient or effective way of determining whether or not a company is a good investment decision. You've got to organize your thoughts - otherwise you're just going to be spinning your wheels. That's why creating your own investment analysis form can be one of the most valuable investment tools in your arsenal. An investment analysis form is a tool that you can use to help gather numbers and essential information needed to make an investment decision in one easy-to-use format.

An investment analysis form allows you to better interpret your data systematically, as all of the information is collected into a standardized format. Because information is plugged in uniformly, you're guaranteed not to miss anything that you have deemed important.

Moreover, an investment analysis form also allows an investor to simplify his or her research by only looking at information that is relevant to the investment decision.

The first step of creating an analysis form is to decide what you want to include in it. For example, you may want to include the PRINCED rule as your stock investment criteria, together with the 52-wk high/low, and some technical indicators information.

Once you're all set up with a form of your own, you'll probably find that collecting your thoughts is a lot easier than it used to be. It just simplifies the process of investment analysis.

What I like about the investment analysis form is that when you're trying to browse through the various companies in the analyst reports, your mind stays active while you jot down the key figures. This helps you to analyse your investment better. Just don't forget that an investment analysis form is just an aide. It won't tell you whether a particular stock is a smart investment, but it can help you organize your thoughts and data so that you can make an informed decision yourself based on facts and figures.




Happy investing,

Pauline Yong

Is Stock Investment A Passive Income or Active Income ?

Many people say property and share investments are sources of passive income. Well, yes and no! No doubt, if you are a value investor that practices long term hold strategy, you may not sell your share until 5 or 10 years later. Hence, you get dividends and capital appreciation during the holding period, and yes that’s passive income. However, as an investor, before we buy any investment, be it properties or shares, we need to “actively” searching for the relevant information available to us, and to scan for any fundamental problem for the particular investment that we are buying, as there must be a reason why a certain investment is too cheap.

There are many sources of information available in the stock investing business. One good source is the analyst report. Just two months ago in August, it was the Chinese “Hungry Ghost Festival”, traditionally, investors would think that it is not a good month for investment, however, when I read the analyst reports from various brokerage firms, most of them recommend overweight on the banking sector. Not long after the reports, I saw the banking stocks jumping 10sen, 20 sen per day!

Our stock market is very much driven by so called “investment themes”. Besides the above banking sector theme, other examples are: Iskandar Development Region (IDR), Economic Transform Program (ETP), and The Budget that will have impact on the stock market. Hence, we must breathe the same air as other market participants, but don’t follow the trend blindly. Stay objective and try to make decisions based on probabilities and reasons.

Hence, from today onwards, give yourself some time to read the analyst reports every week, it doesn’t matter how much you can absorbed, at least by browsing through them will give you some investment ideas.


Happy investing,

Pauline Yong