Abraham Lincoln's Advice

You Cannot keep out of trouble by spending more than you earn.

REIT market to swing upwards in value

More information on REITs.......

KUALA LUMPUR: Malaysia’s real estate investment trust (REIT) market is expected to swing upwards closer to their net asset value (NAV) in the next six months, with the entry of new players that can attract foreign investors, said Hall Chadwick Asia Sdn Bhd chairman Kumar Tharmalingam.

Besides YTL Corp Bhd’s Starhill REIT, he said the bigger ones that could cross the RM4bil threshold include Sunway REIT, which has a stable brand name including Sunway Resort and Monash University.

“The moment an individual REIT achieves a value of RM4bil, it will attract foreign investments.

“Foreigners may put in US$100,000 into the REIT, or maybe buy 5% or 10% of it,” he told reporters after speaking at The Edge Investment Forum on Real Estate 2010 on Saturday.

He said with a bigger local REIT market, foreign investors may even opt to put a large sum in one of the larger REITs and spread the rest of the investments into smaller REITs.

“Right now, with the exception of Axis REIT, most are trading at about 15%-18% below NAV, compared with property stocks, which are trading at 30% below NAV,” he said.

Among those that are expected to trade closer to NAV are Quill Capita Trust, Axis REIT, Starhill REIT and UOA REIT as they have plans to attract foreign investors, he said.

Tharmalingam said the NAV would also rise due to the revaluation of undervalued properties such as those under UOA REIT. — Bernama

Sunway City undertakes corporate exercise for multi-billion ringgit REIT

Another REIT for your consideration soon. :)

KUALA LUMPUR: SUNWAY CITY BHD group is undertaking a corporate exercise to unlock the value of its PROPERTIES which will see it injecting its shopping malls, office towers, hotels and hypermarket into its proposed multi-billion ringgit Sunway real estate investment trust (REIT) which will be listed on Bursa Malaysia.

SunCity Group said on Wednesday, April 7 the proposed properties include the Sunway Pyramid shopping mall; 19-storey, five-star Sunway Resort Hotel & Spa; nine-storey Pyramid Tower Hotel; the Menara Sunway office tower block; five-storey Sunway Carnival Mall in Penang; 17-storey Sunway Hotel Seberang Jaya, SunCity Ipoh Hypermarket and the 33-storey Sunway Tower.

The corporate exercise also includes Sunway City disposing of three parcels of leasehold land, measuring 19,406 sq metres in Selangor, to its subsidiary -- Sunway Pyramid Sdn Bhd (SPSB). Sunway City owns a 52% stake of SPSB while the other 48% stake is held by Reco Pyramid Sdn Bhd. The princiapl activity of SPSB is operating a shopping mall.

Sunway City has also proposed to acquire 48 million shares or 48% of SPSB from Reco Pyramid (M) Sdn Bhd (RPSB) and 9.6 million shares or 48% stake in Sunway Resort Hotel Sdn Bhd (SRH) from Reco Resort Hotel (M) Sdn Bhd (RRHSB).

Sunway City said the Sunway REIT's investment objectives is to provide the unitholders with an exposure to a diversified portfolio of authorised investments that will provide stable cash distributions with the potential for sustainable growth of the net asset value per unit.

"Subject to the approvals of the relevant authorities, Sunway REIT proposes to undertake a public issue of units in Sunway REIT and subsequent listing of and quotation for its entire issued and paid-up units on the Main Market of Bursa Malaysia Securities Bhd," it said.

Sunway City said the proposed disposal of SCB land and properties will allow the group to realise their investments in the properties.

The proceeds from the proposed disposal of SCB land and the proposed disposal of properties will be used to acquire land bank, working capital, future business expansion and to repay the group's borrowings.

It added the disposal of the land and properties will also enable the group to enhance the development of the real estate investment market in Malaysia through its proposed holdings in the units in Sunway REIT as well as its involvement in the management of Sunway REIT upon the completion of the proposed listing.

Sunway City said upon disposal of properties to Sunway REIT, RPSB and RRHSB would sell their 48% stake in SPSB and SRH to Sunway City. Sunway City also agreed to acquire their 48% stakes.

This would then see SPSB continueing to operate Sunway Pyramid Shopping Mall as a premier shopping mall with ice rink and bowling facilities. SRH, which will enter into a hotel master lease with Sunway REIT, will continue to operate Sunway Resort Hotel & Spa and Pyramid Tower Hotel.

Another Gem Stock - ?????

Ta ta !!! The stock that i mentioned/spotted last month is ...... yes FAVCO !!!
But too bad only managed to grab a small some, not being able to accumulate more. :(

Today this counter has appreciated 25% ever since i first bought, since there isn't much chance for me to buy more, i decide to blog it up here now.

Look at the earning of FAVCO, strengthening every year. Revenue increase every year and go in tandem with profit, EPS and NA. In fact a Marvelous growth.

The Company's subsidiaries include Favelle Favco Cranes (M) Sdn. Bhd., which is engaged in designing, manufacturing, supply , servicing, trading and renting of cranes; Favelle Favco Cranes Pte.

As of today, the EPS has come to 16.2sen (Please refer to latest earning of FAVCO). Would expect a better earning this year as well. FAVCO has so far registered an annual revenue growth of about 25%, assuming this translate to a mere 15% profit that will represent approximately 32millions net profit, which mean, the EPS will further increase to 19sen. For such a growth rate, simple calculation of fair value is 5.5 X 19 = RM1.04.

Furthermore, there is a pending 4sen dividend to be declared sometime end May, that represent a total of 4% DY basing on current price at RM0.945.

When we buy stock, we are buying into future. When we can assure future earnings then we are more or less safeguard over investment.

DY of 4%, steady EPS and low PE, an undervalue stock that fit in my searching criterias. A buy call from me but trade with your own risk.

Under Value Stocks Under My Radar List

Just briefly list out some of the "undervalue" stocks under my radar board. However only 2 fulfill my criteria, as i always stress that dividend yielding is my main criteria in picking stocks, try see below whether you can spot which one of it is my preference :-

1) EMIVEST
2) KHIND
3) GOPENG
4) KFIMA
5) TOMEI

Of the above, I have not listed one of my pick which recently i have just acquired some the other day. That counter has so far appreciated about 14% since i first pick, i am still in the accumulate stage if it ever drop to my target price.

Back to the above, only KFIMA is in my holding, i have yet to venture into any of the above. Of course, the above picked might not serve as save stocks to invest eventhough it is truely undervalue (under my own term) under current circumtances. Stock market changes everyday, no one can truely assured of anything but being "undervalue" certain risk has be diminished. For example it has steady earnings, good EPS, healthy BS and dividend & etc....

The above just serve as reference, so do not follow blindly as this may not fit into your way of pcking stocks.  Till then happy trading.

A Gem Stock - LONBISC

Take a simple look at Lonbisc. A company main business on manufacturing and marketing cakes and snack food.

Use to be classified under one of the high dividend yielding stock in my list but not anymore since year 2008. Recently Lonbisc has just been given 3% TE dividend, that represent a 3% DY based on current price. EPS has step up further in 1H to 9.16sen inline with the grow on revenue for 1H where a 20% increase in tandem.

Assuming, the current momentum stay on, we would expect the EPS to reach 23.58sen for the 2 remaining Q. That will represent a PE of 4.45sen. If the company resume it dividend payout ratio of about 50%, then a minimum 10sen dividend is possible in future.

For a counter to trade in EPS of 23.58sen (in future) and having a strong NTA of RM2, that is 50% discount there basing current price. So my simple way of conservative calculation of fair value for this counter, should be around 5 X 23sen = 1.15.

This could turn out to be a gem stock. At current RM1.04 should be worth buying.

Dividend-paying companies

Personal Investments - By Ooi Kok Hwa

Despite investing in profit-making companies, a lot of investors have been complaining that they are not getting the desired returns from the companies that they have invested in.

One of the main reasons is that these companies usually pay very low dividends or no dividends to their investors.

Hence, even though these companies make good profits from their businesses, they are not sharing the profits with their minority investors.

Companies that pay good dividends to their investors imply that the major shareholders of these companies are willing to share their wealth with minority investors.

Given that minority investors have no control over these companies, they have only two sources of returns from their investments, namely dividend returns and capital gains.

If the companies refuse to reward their investors with good dividends, then investors need to make sure that they buy low and sell high in order to get capital gains.

Warren Buffett proposes one concept, which is called the one-dollar premise - for every dollar profit that a company makes, it either pays one dollar dividend to its shareholders or if that dollar is being retained, it needs to bring additional one dollar market value.

Companies with good management will always try to maximize the wealth of their investors.

The following table will show the importance of dividends to an investor.

Assuming you have invested in Company A with an average cost of RM15.

Company A generates earnings per share (EPS) of RM1.00 with price-earnings ratio (PER) of 15 times and pay out 80% of its profits as dividends or dividend per share of RM0.80.

Hence, with the purchase price of RM15, the dividend yield (DY) is 5.3%.

We also assume that Company A has a constant PER of 15 times and dividend payout ratio of 80% for the next 20 years.

Annual growth rate of EPS is 8% based on our country’s average nominal GDP growth rate of 8%.

For the first 10-year period, given that our original cost of investment is fixed at RM15, our dividend yield will be getting higher and higher.

For example, first year DY of 5.3% is computed based on DPS of RM0.80 divided by RM15.

And second year DY of 5.8% is calculated based on DPS of RM0.86 (RM0.80 x 1.08) divided by the same original purchase price of RM15.0.

As the company’s businesses continue to grow and generate higher profits, as long as the company practices a fixed dividend payout policy (our example is based on a fixed dividend payout ratio of 80%), investors’ DY will increase.

At Year 10, given that our purchase price remains the same at RM15, with a DPS of RM1.60, our DY is 10.7% (1.60/15.0).

Thus, the average DY for the first 10-year period is 7.7%.

Coupled with the annual capital gain of 8% (the share price has grown by annual growth rate of 8% from RM15 to RM29.99), investors will generate an annual total returns rate of 15.7% (7.7% + 8%)!

If we keep this stock for another 10-year period, our next 10-year annual total return is 24.7% (16.7% + 8%)!

From here, we can see that if we have invested in good companies that always reward their investors with very high dividend payments, our returns will be huge if we hold it long term.

Normally, consumer-based companies and companies that do not need high capital expenditures will be able to reward shareholders with good dividend payments.

Besides, major shareholders must be willing to share their profits with their investors through good dividend payments.

Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

Useful Information About REITs

Some useful information about REITs.

BJTOTO - Remain a Cash Cow

As expected the earning for 3Q2010 is in-line with my forecast of 97millions. BJTOTO is truely miss out a dividend this time round. Will there be a dividend in 4Q2010 ?? The chances of a dividend is better as compare to 3Q2010 as the earning is expected to be remained for 4Q2010 where it should stood at around 8 - 9sen.

Assuming 4Q2010 contribute 8sen EPS, that will give a total of 30.86sen EPS. As 19sen has been payout as advance dividend, thus, 30.86 - 19 = 11.86sen remaining for a possible dividend in 4Q2010. The introduction of the new game Supreme 6/58 may boost some earning for 4Q2010 but conservatively, would remain my estimation of 8sen EPS for 4Q due to competitive market from other betting operator.

Without clear sign of catalysts such as dividend, BJTOTO would likely to trade side way. Long term holder like me would of course dissapointed with no dividend, however, it provide opportunity of building up your piles while it is on weakness as i believe a cash cow machine would remain as cash cow machine, no matter how hard it fall. After all this is just a minor and temporary set back and recovery should be imminent.

Is Penny Auction Legal ??

A friend approached me & introduced an auctions site "PennyAuction". Wondering what is that ? Googled and found below :-

Site 1 :-

Swoopo is an online entertainment auction (a.k.a. penny auction) where individuals purchase bids to place towards an item that’s up for sale. The cost of the bids are usually $0.75 and once placed they raise the price of the item by either $0.15 or $0.01 depending on the product. A 20-second countdown timer is reset by each time a new bid is placed and when the timer reaches zero, the last bidder wins.

Site 2 :-

[Penny auctions] offer new televisions, computers, game consoles, appliances, handbags, gold bars and more for starting prices of a penny to 15 cents, depending on the site.

To "win" a product, shoppers must first buy a bundle of 10 to 700 bids for 60 cents to $1 each. Shoppers use one each time they place a virtual bid on a product. Each bid raises the price of the item by a penny to 15 cents, depending on the site. Some have automatic bidding functions similar to eBay.

Doing the math and not getting carried away is important: The final price of a product that retails for $100 might be $29, but the total price paid could be much more, depending upon the number of bids used. If a shopper bids 10 times at $1 a bid, for instance, the total price paid would jump to $39. And, there is the real possibility of using all your bids without getting the product.

Auction winners generally get their item for about 65 percent off retail but could save as much as 98 percent if there are few bidders.

Since the sites make the bulk of their revenue from the purchase of bids, they profit most when they feature a product that elicits a bidding war.

Personally, i think this type of business is more like gambling, as bidders may not able to bid successfully even spending all it bids. Secondly, it might link to legality issue where this area may be questionable since there isn't any involvement from the government and has thus far regulated this. Thirdly, the margin profit is just too tremendously huge that lead me to probably think this is a scam to bidders though the successful bidders will get thier product but the majority bidders have failed. I think better avoid this kind of activities.

Keladi Maju Berhad

Accumulate for an upside target to 19sen

Company background

KM’s key businesses are property development and property investment in

Kedah. It specializes in low and medium cost residential projects, commercial

offices, light industrial factory buildings for SMIs. KM has established a name

and solid reputation, especially in developing affordable quality properties,

delivered on timely basis.

KM’s major flagship projects include Taman Mutiara, Taman Mahsuri and

Taman Lagenda. Due to its strong management, it has consistently achieved

an average net profit margin of 21% over the last 10 years.

Technical outlook: Oversold, accumulate at 15sen

KM’s share price has surged from 52-wk low of RM0.105 in Mar 09 to 52-wk

high of RM0.19 in May 09 before consolidating range bound between RM0.15

to RM0.175 for the last nine months.

We are optimistic of KM’s mid to long-term technical outlook as share prices

continue to maintain its posture along the RM0.15 (250-d SMA) over the past 9

months. Key support is RM0.14 (61.8%FR from RM0.105-0.19) whilst the

upside resistance levels are RM0.16 (38.2%FR), RM0.17 (23.6% FR) and

RM0.18 (8-month high).

12M target price at RM0.19

Our 12-month target is RM0.19, based on 8.6x FY10 PE (in line with its 5-year

average 9x PE) and 0.83x PBV (5-year average 0.9x). At 8.6x, KM’s target PE

is also trading at 25% discount to its peers historical PE of 11.4x.

At 15.5sen, KM’s 9.7% dividend yield is the highest in the property sector.

Furthermore, its 7.1sen net cash per share is 46% of current share price. On an

ex-cash basis, KM is only trading at 3.8x FY10E P/E. Therefore, we feel that its

downside risk is limited.

13 Years Old Car

I just could not tolerate my 13 years old junk gave too much of jittering noise from the engine. The noise started the moment the engine get ignited. The noise get worst after switching on the aircond. Visited car workshop on Saturday, tauke told to replace timing belt, bearing & fan belt, estimated total cost about RM400.

Visited another workshop to get second opinion, after all this is just an old car no harm getting another qoute. Luckily end up spending just RM83 for a fan belt & alternator belt replacement, that include workmanship as well.

Sometime is good to get second opinion, you might save lots of time, journey & money. Just like shares investment, be sure you know where to look for answer.

A Closer Look at BJTOTO

Taking a closer look at BJTOTO, many have expected a dividend for 3Q including me. Judging the table above, I have to lower my dividend payout for BJTOTO to 3sen to 4sen and wish to call back the 5 to 8sen dividend previously have predicted, if a dividend were to declare. Take a look at below :-

1Q EPS = 7.97sen

2Q EPS = 7.62sen

Assuming 3Q result remain unchanged, in which I presume there isn’t much unexpected result, thus,

3Q EPS = 7.73sen

Total expected EPS = 7.97 + 7.62 + 7.73 = 23.32sen

19sen has been paid out as advance dividend previously. Hence,

23.32 – 19 = 4.32sen

If BJTOTO do not truly want to ‘miss’ out dividend for every Q, they would have to declare at least some dividend, in which I would expect ranging from 3sen to 4sen only.

This is as much as they can do for now I presume.

High Dividend Yield Stocks

Above the latest REIT closing price as at 2/3/2010.

As one should know by now, dividend play an important role in cushioning your share price, it is also serving as a good catalyst driven the share price up when a good result is announced with better dividend payout. Refer to my previous posting for dividend here and assessing REITs here.

Another important factor is “timing”. Yes, the date for REITs dividends to be paid. It is utmost important that any good result couple with higher dividend will somehow spur some excitement on share price. All REITs have a tendency to pay 90% of it net profit to shareholder as dividend or other may call it income distribution in which I find it very attractive, thus, it is worth taking a closer look if one were to opt for long term dividend and steady income "for living". Generally below are the dates of month that we should focus on :-

JAN     Ahp, Alaqar, Arreit, Atrium, Axreit, Bsdreit, Hektar, Qcapita, Stareit, Twrreit, Uoareit

MAY    AMFIRST, ATRIUM, AXREIT, HEKTAR

AUG     Ahp, Alaqar, Arreit, Atrium, Axreit, Bsdreit, Hektar, Qcapita, Stareit, Twrreit, Uoareit

NOV     AMFIRST, ATRIUM, AXREIT, HEKTAR

Knowing the months which draw nearer and REITs that may announce dividend, we may at least gauge when to increase or reduce our stake on them. Preferably holding most of it when the value you think is right and engaging them in long hual for its dividend. So, put a little effort there and enjoy picking your REITs and building up your wealth. Till then happy trading and couple with my favorite quote “May The Best Price be Yours”.

KFIMA - Fantastic 3Q result

Kumpulan Fima Berhad. The Group's principal activities are producing and trading security and confidential documents. Other activities include manufacturing and packaging of food products, estate operations and cattle farming, providing bulk handling and storage of liquid products and cargoes, warehousing and transportation and customs for forwarding services and international trading. It is also involved in rental and management of commercial properties and operating as an investment holding company. Operations are carried out in Malaysia, Papua New Guinea and Indonesia.

Fantastic 3Q result coming from Kfima. 9 months net profit 46m increased by 58%. This brings the EPS to 17.65sen (accumulate of 3Q) almost on par with last whole financial year. There is one more quarter to run, would expect a better dividend in the next quarter.

Current PE = 86/17.65 = 4.87sen, excluding the last quarter, assuming rounding the last Q to make the EPS to 20sen, that will represent a PE of 86/20 = 4.3sen.

My simple way of Fair Value for Kfima should be around = 5 X 20 = RM1.00.

Worth considering.

YILAI BERHAD Proposes 6sen TE Dividend

Yi-Lai Berhad is an investment holding company. The Company, through its subsidiaries, is principally engaged in the manufacture and sale of ceramic and homogeneous tiles.

The Company has been consistently paying good dividend all this while, with the latest 4th quarter financial result where it has registered almost double increase of net profit comparing previous 4Q. However, overall financial year end as at 31/12/2009 decreased by 10%. Proposing a 6sen TE 4Q dividend, this respresent a 7.7% dividend yield base on current price.

It is indeed a good longterm dividend play for one who opt or aim for dividend yielding. Earning has been steady, consistent dividend payout, a potential penny stock lower than RM1 and trading at around PE of 10sen. Should be worth taking a closer look while riding on the recovery of current economy.

Carlsberg Declares a Better Dividend

Carlsberg just declared a Final Dividend of 7.5 Sen and Special Dividend of 10.5 Sen, total up to 18sen for it 4Q result. Financial year end net profit of 75m almost on par with its previous year. Not a bad start for 2010. The 18sen dividend will represent a 4% dividend yield base on current price at RM4.56.

Expected to have a better earning coming Q in 2010 when Carlsberg (S) is able to contribute at least 50% of revenue to Carlsberg (M) after the acquisition. Furthermore a proposal to Purchase the Companys Own Shares of up to 10% of its issued and fully paid-up share capital. Thus, i believe we should have a better year to come for 2010.

Sailing through turbulence time with high dividend yield stocks

In bull or bear markets, high dividend yield stocks are always a safer bet. Despite the recovery in stock prices since March 09, it may be wise to turn slightly more defensive and go for dividend yielding stocks now, in preparation for any potential turbulence ahead.

High-yield stocks are an attractive alternative to low returns in fixed income instruments or fixed deposits. Currently, 3-year Malaysian Government Securities (MGS) promise yields of around 3.3% while 1-year fixed deposit rates generate returns around 2.0-2.5%.

For investors with a smaller risk appetite but wish to gain entry into the stock market may find high dividend yield stocks as a good entry points. In bear markets, stocks with high dividend yields become even more desirable because they deliver real downside protection. In the current low interest rate environment, these stocks will provide better returns on investment.

We have short listed 20 high dividend yield stocks, which we feel are worth looking at. Our criteria for selection includes:

(1) Gross dividend yield of at least 6% for FY2010

(2) Strong management

(3) Stable earnings for consistency in dividend payout

(4) Preferably trading in single digits or close to the market PER or PBV

(5) Sound balance sheets.

Other than high yield stocks, we also included five high yield REITS for their stable income streams and consistency in dividend payout.

We have also selected 13 companies with high net cash per share which we believe may offer upside surprises in future dividend payments due to its cash flow generating capability.

Flash Genting Singapore reports net loss of S$277.56m for FY2009

Last year is bygone, will need to see how it fare in the coming Q.......

KUALA LUMPUR: Genting Singapore plc posted net losses of S$277.56 million (RM 669 million) in the financial year ended Dec 31, 2009 versus S$124.80 million a year ago due to losses in derivative financial instruments, higher pre-operating expenses and lower contribution from its UK casino operations.
It told the Singapore Exchange today that consolidated revenue was S$491.2 million in FY2009 compared to S$630.7 million in 2008. The reduction is mainly due to a decrease of S$141.8 million in revenue from the group’s UK casino operations.
It added revenue from the UK casino operations were depressed by lower business volumes. The reduction was further exacerbated by the weakening of the sterling pound against the Singapore dollar.
Genting Singapore's loss before taxation increased from S$148.5 million in the previous financial year to S$265.7 million in the current financial year.
This was mainly due to:
a) Fair value loss on derivative financial instruments in the current financial year of S$108.3 million arising mainly from the valuation of the conversion option embedded in the group’s convertible bonds as compared to a fair value gain of S$37.2 million recognised in 2008;
b) Increase in pre-operating expenses incurred for the integrated resort in Singapore of S$103.4 million. The higher pre-operating costs is mainly in relation to staff costs incurred as the integrated resort begins to accelerate its recruitment, training, sales and marketing programs prior to its launch;
c) Lower interest income of S$3.8 million for the current financial year compared against S$13.2 million in 2008;
d) Share of losses from jointly controlled entities of S$8.9 million;
e) The estimated one-third share of after tax profits of the international betting division, which was disposed by the group in 2007. The group had on March 22, 2007 completed the disposal of its 50% interest in international betting operations for a cash consideration of S$3.3 million.

Remain Positive on Genting Singapore

Me too remain positive on Genting Singapore, in fact is a good time to accumulate more, the lower the better. This for one for sure will never go holland. How many time you get to have such an opportunity to buy at current low price ? Valuation may seem unattractive but what will you see in 3 years time ? You think it still worth at S$1 ? Human are just too funny, we chase when the price are high, no one dare buying when it is dirt cheap. Plan your entry level keep buying in stages to fulfill your investment for GSP and lock it in for at least 3 years. This is short term pain but long term gain. When you buy stock, you buy for future business prospective, if you think GSP will never fail you in 3 years time to come, you buy with confident just like me. We are not dealing with speculative stock, we are in serious investment and a longterm engagement with a quality stock. So, what do you foresee in 3 years time ? Won't you think it is far more better than betting on a non-quality and potatoes chip ? The share price practically rely on future earnings, 1Q result would likely to review it capability and potential future earnings. We will be able to picture GSP in a better position come May 2010 where 1Q result expected to be announced then. I have no worry at all, in fact planning more entry level with GSP, hope to capture the best price while at the same time enjoying the bargin. Good luck. 

Genting Singapore hits 5-month low


Shares of Genting Singapore Plc, which has just opened its casino in the city-state, fell to its lowest level in five months on concern valuations have become unattractive following recent gains.
“While we remain positive on the group’s business model, valuations are very demanding,” said Melvyn Boey, an analyst at Bank of America’s Merrill Lynch in Singapore. -- Bloomberg

TIME and TIME again, we should not time

Sports commentators often predict the big winners at the start of a season, only to see their forecasts fade away as their chosen teams lose. Similarly, market timers often try to predict big wins in the investment markets, only to be disappointed by the reality of unexpected turns in performance. For those who do not wish to subject their money to such a potentially risky strategy, time and not timing could be the best alternative.

What Is Market Timing?

Market timing is a strategy in which the investor tries to identify the best times to be in the market and when to get out. Relying heavily on forecasts and market analysis, market timing is often utilized by brokers, some investment advisors and market punters to attempt to reap the greatest rewards for their own or clients’ money.

Proponents of market timing say that successfully forecasting the ebbs and flows of the market can result in higher returns than other strategies. Their specific tactics for pursuing success can range from what some have termed "pure timers" to "active strategic allocation."

Pure timing requires the investor to determine when to move 100% in or 100% out of one of the three asset classes — stocks, bonds, and money markets. Perhaps the riskiest of market timing strategies, pure timing also calls for nearly 100% accurate forecasting, something nobody can claim.

On the other hand, dynamic asset allocators shift their portfolio’s weights or redistribute their assets among the various classes, based on expected market movements and the probability of return versus risk on each asset class. Professional mutual fund managers who manage asset allocation funds often use this strategy in attempting to meet their funds’ objectives.

Risks of Timing the Market

Although professionals may be able to use market timing to reap rewards, one of the biggest risks of this "strategy" is potentially missing the market’s best-performing cycles. For example, suppose an investor, believing the market will go down, removes his investment monies and places them in more conservative investments. While the money is out of stocks, the market instead can enjoy its best-performing month. The investor has, therefore, incorrectly timed the market and "missed" those top months. That is why perhaps the best move for most individual investors, especially those striving toward long-term goals might be to purchase shares and hold on to them throughout market cycles. This is commonly known as a "buy-and-hold" strategy.

The Potential Risk of Missing Out (Source : Standard & Poor’s Journal of Financial Planning, 2006)

                                                               A                 B                  C

                                                              1976-2005   1986-2005   1996-2005

[1] Untouched                                       $36,479       $9,547         $2,384

[2] Miss 10 Top-Performing Months  $ 12,742       $ 3,880        $1,109

[3] Miss 20 Top-Performing Months  $5,855          $1,931         $619

Perhaps the most significant risk of market timing is missing out on the market's best-performing cycles. Columns A, B, and C represent the growth of a $1,000 investment beginning in 1976, 1986, and 1996, and ending 31 Dec 2005.

Row 1 shows the investment if left untouched for the entire period shown above; Row 2 shows the investment if it was pulled out during the 10 top-performing months; and Row 3 shows the investment if it was pulled out during the 20 top-performing months.

As seen in the above table, purchasing investments and then withstanding the market’s ups and downs can often work to your advantage. Though past performance cannot guarantee future results, missing the top 20 months in the 30-year period ending December 31, 2005, could have cost you $30,624 in potential earnings on a $1,000 investment in Standard & Poor’s Composite Index of 500 Stocks (S&P 500). Also consider a $1,000 investment made in 1996 that was left untouched until 2005, it could have grown to $2,384. But missing only the top 20 months in that 120-month span could have cut your accumulated wealth to $619.

Though many debate the success of market timing versus a buy-and-hold strategy, forecasting the market undoubtedly requires the kind of expertise that portfolio managers use on a daily basis. Individual investors might best leave market timing to the experts and focus instead on their personal financial goals.

Compounding: Time Can Work for You

If you’re not a professional money manager, your best bet is probably to buy and hold. Through a buy-and-hold strategy, you take advantage of the power of compounding, or the potential for your invested money to make money. Even Albert Einstein took notice of compounding. When asked what was the most important thing he learned from mathematics, he replied, "Compound interest. It’s the most powerful force on earth." The compounding power of investments can also help manage risk over time.

Reevaluate Your Portfolio Regularly

Buy and hold, however, doesn’t mean ignoring your investments. Remember to give your portfolio regular checkups, as your investment needs will change over time. Most experts say annual reviews are enough to help ensure that the investments you select will keep you on track toward meeting your goals.

For example, a young investor will probably begin investing for longer-term goals such as marriage, buying a house, and even retirement. The majority of his or her portfolio may be in stocks and stock funds, as history shows they have offered the best potential for growth over time, even though they have also experienced the widest short-term fluctuations. As our young investor ages and gets closer to each goal, he or she will want to revisit the portfolio to rebalance assets as his or her financial needs warrant.

This hypothetical investor knows that how much time is available plays an important role when determining asset choice. Most experts agree that generally, a portfolio made up primarily of the "riskier" stock funds (e.g., growth, small-cap) may be best for those saving for goals more than five years away. On the other side, investors nearing retirement, or saving for shorter-term goals, or those who see a possible need for cash in the near future, might consider a portfolio weighted toward money market instruments. Remember, though, that because people are often living 20 years or more beyond their last official paycheck, even those enjoying retirement should consider the potential inflation-beating benefits as well – hence, there are still valid reasons for them to consider investing into stocks and stock mutual funds, although they may need more regular portfolio check-ups than the younger investors.

Time Can Be on Your Side

Clearly, time can be a better ally than timing. The best approach to your portfolio is to arm yourself with all the necessary information, and then take your questions to a financial professional to help with the final decision making. Above all, remember that your investment decisions, both long- and short-term should be based on your financial needs and your ability to accept the risks that go along with each investment. Your financial professional can help you determine which investments are right for you.

Points to Remember

1. Historically, although past performance is not indicative of future results, a buy-and-hold strategy has resulted in higher gains over the long run.

2. A big risk of market timing is missing out on the best-performing market cycles.

3. Missing even a few key months can substantially affect portfolio earnings.

4. Market timing "strategies" which range from putting 100% of your assets in or out of one asset class to allocation among a variety of assets are based on market performance expectations.

5. Market timing is best left to professional investment managers.

6. Though buy-and-hold is a smart strategy, regular portfolio checkups are necessary.

7. Time horizon is particularly important when determining asset choices.

8. Riskier investments can be more appropriate for longer-term goals.

9. As goals get closer, portfolios should be rebalanced.

10. Even in retirement, portfolios should contain investments for earnings to seek to keep pace with inflation.

Eyes

One old man was sitting with his 25 years old son in the train. Train is about to leave the station. All the passengers are settling down into their seats. As the train started the young man was filled with alot of joy and curiosity. He was sitting on the window side. He went out one hand and feeling the passing air. He shouted, "Papa see all the trees are going behind". Old man smile and admired his son's feelings. Beside the young man one couple was sitting and listing all the conversation between father and son. They were little awkward with the attitude of the 25 years old man behaving like a small child.

Suddenly the young man again shouted, "Papa see the pond and animals. Clouds are moving with the train". Couple was watching the young man in embarrassingly. Now its start raining and some of water drops touches the young man's hand. He is filled with joy and he closed his eyes. He shouted again," Papa it's raining, water is touching me, see papa". Couple couldn't help themselves and ask the old man. Why don't you visit the Doctor and get your son treated. Old man said," *Yes, We were from the hospital. Today my son got his eyes for the first time in his life".*

Moral of the story

**We must not come to any conclusion until we know all the** facts"*learn from the past, live in the present and work for the future.

Guinness Anchor 2Q net profit up 26.4% at RM43.82m

I have been keeping this for 7 years now, still don't intend to sell as it dividend payout still relatively sustainable judging the recent announcement below. Recently a backdrop of weaker demand as a tougher economic landscape eats into consumers' purchasing power. This can be seem in its previous 1Q where a 43% drop of net profit. However second Q has rose to 26% and maintaining a 10sen dividend for this Q. I would expect a same margin of dividend in August 2010 where a minimum of 30sen dividend is possible basing its 90% of net profit of dividend payout policy.


 
KUALA LUMPUR: GUINNESS ANCHOR BHD []'s second quarter net profit rose 26.4% to RM43.82 million from RM34.67 million a year ago and it expects a better year ahead for its brands.

It said on Tuesday, Feb 9 revenue rose 15.1% to RM378.13 million from RM328.52 million. Earnings per share were 14.5 sen versus 11.48 sen. It declared an interim dividend of 10 sen per share.

For the first half, net profit was RM70.56 million, down 14% from RM82 million in the previous corresponding period. Revenue was also lower at RM679.1 million versus RM694.32 million.

Genting SP's Licence has been issued. !!

Finally a license has been granted, likely to spur some share price movement here.. :)
Laughing All The Way To Bank !!!!!!

SINGAPORE, Feb 8 (Reuters) - Genting Singapore requested a trading halt on Monday pending an announcement, following the granting of a casino license by the city-state's regulator over the weekend.
The Straits Times newspaper reported on Monday that Genting, a unit of Malaysia's Genting Bhd , has told staff and tenants the casino and Universal Studios theme park at its Resorts World at Sentosa casino-resort will open this week. (Reporting by Kevin Lim and Harry Suhartono; Editing by Lincoln Feast) ((kevin.lim@thomsonreuters.com; +65 6403 5663; Reuters Messaging: kevin.lim.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: GENTING SINGAPORE/



SINGAPORE, Feb 6 (Reuters) - Singapore's Casino Regulatory Authority said on Saturday it had issued a licence for Resorts World Sentosa (RWS), operated by Genting Singapore PLC .
RWS is one of two casinos which will start operation in Singapore this year. (Reporting by Harry Suhartono; Editing by Nick Macfie) ((harry.suhartono@thomsonreuters.com; +65 6403 5658; Reuters Messaging: harry.suhartono.reuters.com@reuters.net)
((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: SINGAPORE CASINO/GENTING

China - The Success Story

Read up some fun story while the market is slack........

US President Obama visited China last week, primarily to find out what exactly & how exactly China is doing things that makes it such a success story, surpassing all the so-called "expert economic planners" of the US & Europe. His team found these 5 basic lessons behind China 's success - it applies equally to our country :

LESSON No 1 - BE AMBITIOUS

The Chinese believe in Setting Goals, Making Plans, & Focusing on Moving Ahead - there is always the sense of foward motion.

As an example, a huge 6-lane highway in Shanghai took only 2 years from planning to ready for traffic. In the US, 2 years will only get you the environment and local authority permit if you are lucky - in Malaysia in 2 years, they will still be calculating how to inflate the costs, and to whose abang-adik company to award the project.

LESSON No 2 - EDUCATION MATTERS

The Chinese are obsessed with ensuring kids get the right education - English, Maths & Science. They made sure that ther education system reached even the most remote rural areas - today the literacy rate in China is OVER 90%, surpassing even the USA 's 86%. According to American Educationists, the Chinese kids are way ahead of the kids in the USA .

Meanwhile in Malaysia, our Moo-Moo politicians are determined to retract our education system into the stone age.

LESSON No 3 - LOOK AFTER THE ELDERLY

The Chinese DO NOT send their elderly to nursing care centres - they personally look after & care for their parents. In the US, nursing care of the elderly is now costing each resident USD 85,000 annually, & this is rising. The Chinese also believe that the grandparents at home make the best tutors for their children. It also provides a sense of cultural continuity - this helps bind society.

Here its a growing trend to have children brought up by maids, of the lowest educational & moral quality - so our children (the future leaders) grow up with similar language & outlook capability.

LESSON No 4 - SAVE MORE

In the USA, savings dropped to zero in 2005, and is only now slowly rising to 4%. In China , the savings rate for every household has exceeded 20%.

The Chinese believe that fugality & a healthy savings rate are a sure indicator of a country's financial health. High savings lead to increased investments - results in increased productivity, innovation & job growth.

In the West, & aped by our Malaysians, the status symbol is to spend more than you earn, with as many credit cards as possible.In the end, the whole country gets into debt.

LESSON No 5 - LOOK OVER THE HORIZON

In China ,eveyone is foward looking - never backwards. New graduates make a vow - never ever will their children & grandchildren ever work in the fields again.

With this kind of foward mentality, people are always thinking & planning how, not just to succeed, BUT how to be the best in the world in everything they do.

In Malaysia , we are still, after 24 years, trying to get the window switches of the Proton to work properly.

Another Form of Charity Work

I am trying to cancel my CITIBANK choice card today as it is due for renewal in March 2010. Called up the centre and informing the intention, as usual they are asking for reason, I told them “to avoid being taxed by the government” and also I already owned a VISA shell card, this one being extra.

Was told that I got to settle my outstanding and redeem all the points before canceling. So, I did by settling my outstanding and also to redeem my reward points. Unfortunately, there being not much items to be redeemed as my reward points is just far too low for any redemptions. Go through the search items and discover below charity icon.

So decide to make a charity by donating all my reward points to this “Shelter Home For Children”…..

Remember, for those who wish to cancel your credit card and the extra points that you can’t use it for any redemption, please donate them, instead of getting those reward points burn without any contribution. It is another form of charity work. God Bless. 

Different between RON95 and RON97

I am having 2 cars, an old junk 13 years old and a new car. When government started to introduce the RON95 in September last year, i switch to use RON95 on my old car but remain using RON97 on my new car. Decision as such just because i heard too many story about new RON95 petrol about it side effect, knocking sound, less power, petrol consumption higher, engine could be spoilt, RON95 is dirtier & blah blah blah. That left me no choice to continue using RON97 for new car for fearing of the side effects and thinking of what the hack and what worst can it be on a 13 years old car, so long as i can save some money so opted RON95 on this.

After using more than 3 months RON95 on my old car this is what i can conclude:-

There is indeed a different between RON95 & RON97.......

1) Petrol consumption slightly higher but is of insignificant
2) RON95 is not as smooth as compare to RON97
3) There is engine knocking sound getting worst overtime especially when you press the accelerator

4) This is the worst one. Each time i started the engine, i normally worming up the engine for a while before engaging to drive. When i release my pedal, my car always jerk and the car engine nearing death. This happen after using RON95 for 2 months.

I was wondering could it be due to old car and the problem started to surface ?? I decided to switch back to RON97 before i send my car to work shop for checkup. To my surprise, the above problem disappear after switching back to RON97.

hmmmmm........ there is something for me to ponder here....!?

To remain RON95 or paying a higher premium for a better grade patrol !? or... should i mix the two? 2 weeks for RON97 and 1 week for RON95.........or my old junk's engine just not suitable for RON95 ?

Petrol that sold by Petronas, Shell, BHP, Esso, Caltex and Mobil is not the same i believe. Each company has its own ingredients to enhance the ability of the quality of petrol respectively. So could anyone here tell me which company offer the best RON95 ??

PBBANK has started initiation of Shares Buy Back ?

I extracted the announcement below this morning and noticed that the figure that i calculated for outstanding treasury shares is not tally. So would like to make a correction and record here. At least to make the figure near or close to accuracy so as to serve a more accurate calculation in future. Looks like PBBANK is starting the buyback activities. Remember there is initiation of 10% shares buyback here. Good Luck!! :)

1295 PBBANK PUBLIC BANK BHD


Notice of Shares Buy Back - Immediate Announcement


Date of Buy Back : 28/01/2010

Description of Shares Purchased : Ordinary shares of RM1.00 each

No. of Shares Purchased : 10,000 shares

Minimum Price Paid For Each Share Purchased : RM 11.740

Maximum Price Paid For Each Share Purchased : RM 11.740

Total Consideration Paid : RM 117,400.00

No. of Shares Purchased Retained in Treasury : 10,000 shares

No. of Shares Which Are Proposed To Be Cancelled : 0 shares

Cumulative Net Outstanding Treasury Shares As At To-Date : 68,025,318 shares

Adjusted Issued Capital After Cancellation : 0

Date Lodged With Registrar of Company :

Lodged By :



Remarks:

Total cumulative net outstanding treasury shares as at 28 January 2010 comprise

the following:

68,025,318 Local Shares (Stock Code: 1295)

12,461,850 Foreign Shares (Stock Code: 1295F)

---------------

80,487,168

=========

Genting upgraded to 'buy'

Read the snippet news below :-

Genting upgraded to 'buy' at Maybank

Genting Bhd, Southeast Asia’s largest publicly-traded casino operator, was upgraded to “buy” from “hold” at Maybank Investment Bank Bhd on optimism its Resorts World Sentosa project in Singapore “will pull in the crowds” and boost its earnings.


Maybank also raised the company’s share price estimate to RM8.85 from RM7.08. -- Bloomberg
 
Upgrade from hold to buy from RM7.08 to RM8.85. Just get the different between the two prices (8.85 – 7.08), a RM1.77 upgraded and is 25% increase in price. What does this mean ?


It means GSP/Resorts World Sentosa can boost Genting earning by 25% assuming RM7.08 is fully value price. Wow !!