Friday, September 26, 2014

Buy TA Enterprise

This is not a massive purchase, but I like the stock particularly its strong asset backing. TA as a stockbroker is no longer dominant - quite the right thing to do as the business is not as profitable as what it used to be before. Commissions is now reduced.

However, TA is still a careful and diligent investor. TA has nowadays been more interested into buying assets overseas - hence if you want some exposure overseas, this is one company. It has been buying hotels - good long term asset hold in very established markets.

I have written about TA some time ago, and during then was cheaper. I think it is not too late though.

Thursday, September 25, 2014

So what's the right PE?

You tell me! (Let's not talk about other valuation methods - strictly PE)

I remember when I started investing, people (or some books) used to tell - anything that is above 8x PE is considered expensive. That practice is still within some Malaysian VCs, investors where they would even look at prospective PE of 3x - 5x. Is this archaic measurement realistic?

Times change, appetite changes as well. However, if one is to look at the global interest rate trend, starting with the US Fed Funds rate - where it has come down from a high of almost 20% in 1980 during the Volcker period to now post-2008 subprime crisis where the Feds are keeping rates at almost zero, should it signify something?

Similarly, Japan has even kept rates at zero for much longer period, basically for the entire 21st century thus far (see below).

In Malaysia, I am pulling out the time (fixed) deposit rate where it has dropped from above 8% to hovering around 3.0% to 3.5% for more than 10 years now, where does one expect to put their money? - in FD still? Would one's risk appetite be higher investing into stocks, properties, even commodities etc? Surely.

If one has a higher risk appetite, due to the low deposit rates together with low financing rates from banks - would the accepted average PE generally be higher? Again surely.

If one is to look at the general trend from US to EU to Japan as well as in a period where funds are able to move freely, would you think that these funds would look at opportunities all over the world? It is much easier for some of the funds to get financed from a low interest rate country and invests their money in any investments that would get them anything that would provide between 8% to 10%, sometimes lesser - assuming currencies exchange does not change much.

So, what's the right PE? Anything that provides me higher than the 3.4% what banks is giving me, or for some bigger funds - anything higher than high quality bonds, with a little bit of buffer.

With that wouldn't you think that any business that has a good consistent growth, a PE of somewhere between 15x to 20x, be even digestible?

Or someone has a crystal ball and can see that interest rates are moving upward fast in the near future?

Monday, September 22, 2014

Keuro-WE: Let it go!

Well, I have just let go 6000 units of Keuro-WE.

If you have read Chinese newspaper, Oriental Daily, basically the project has already commenced. Some part of it is expected to complete by 2018, while the entire project supposed to complete by 2019. So what is the expected risk in this project - you will have to hold for long term and will not know how good a prospect it will be. There is not going to be dividend for the next few years, at the very least. For now, I am hoping that the stock will go into consolidation phase if that is the case.

My portfolio looks like below.

Saturday, September 20, 2014

What happened to commodities?

I am not so much of a commodity person. For an investor in commodity, I have always believed that the investor has to have a much better macro picture i.e. consumption of steel in the construction industry. Another example, edible oil market i.e. comparison between sunflower vs soy vs palm oil. What are their prices per metric ton. Which are consumed more etc? These are things that I am not able to understand well.

Look at the prices of major commodities here especially over their 52 weeks price range.

Similarly, for platinum, silver there must be some use for those i.e supply and demand - or real industrial use. Over the last decade commodities were doing well.

However, these have not been so for the last one year or even more. Read the news I picked up from BusinessInsider below.
Silver is getting crushed.
On Friday, Silver fell more than 3% to less than $18 an ounce, its lowest level in more than four years.

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The price of gold also fell about 0.8% and touched its lowest level since January. Gold has been weak recently and is approaching a four-year low.

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Platinum also fell to a nine-month low.
What actually happened. These commodities are no longer used for its real purpose i.e. industrial, consumption etc. They have been pretty much speculated. Or could it be China's slowed consumption? I am pretty sure we are not worse off today as compared to four years ago globally. Although it made some sense that gold were sought after during bad times or during period of uncertainties, but what about platinum, copper or silver? Aren't they sought after for industrial purposes?
For that matter I am not really sure whether palm oil has found its low.
For a while, investors have been very speculatively positive over commodities and they seemed to have lost their fangs recently.