Wednesday, July 4, 2012

Beyond stocks investing

I know that property prices have gone very high recently especially in the cities. Some may opt to wait for it to taper down and only then decide your purchase. Problem is "time waits for no man". I have advised people I know who finds it tough to buy especially with the continuous rise in prices of properties. I really do not know whether properties will crash or will it encounter a soft landing or will it not even drop at all. The thing I know is that the programs and books I read on US property crash recently, we are nowhere near that mishap caused by speculations and secondary market such as subprime. In Malaysia, there are speculations for sure - healthy or not, I am not sure. The fact I know though is that property prices in Malaysia is beyond the reach of many young working adults. That is a warning. However, remember this...


You cannot wait forever. You do not get to enjoy anything if your savings no matter how large or how little  - is stuck in your shares or even your savings account or FD. The thing I found out In life is that, Home is most important even if it is a small one. You do not need to buy your dreamed home. But home first, then only think about investing. Investments is for savings and old age, home is for now.

12 comments:

Anonymous said...

ya, well said. Home is for now. If we cant afford the dream house that we want, we need to settle down some how a lower budget house.

Anonymous said...

Hi Emily, you are one of the best female investors I have ever seen! =)

Sunny said...

I have been crawling on your blog for quite some time. I am really interested to know how old you are and what are you doing as your job. I started to discover the wonders of stock and the fundamental things only when I was 27, when I read the first book recommended by my university ex-classmate. I started with very small amount, and now the averaged monthly capital and dividend return has become almost always greater than the savings from my salary, after 4~5 years of fully committed investment. I have been investing almost all of my assets in the stock and still find it the safest place to keep my money. I have been recently boost it to occupying slightly above 100% of my assets by using share margin, at low gearing, to avoid dividend received from sleeping too long in the trust account while waiting for my own buy call because I think that is a kind of "interest loss" , concluded after intense calculation and analysis, base on current BLR - 2%. Down these 4 or 5 years, I always beat most of the unit trust fund and might have been in the top 10 or close to top 10, consistently whether it is measured annually or 4~5 years accumulated. Sometime I think that I should do the fund managers job, continue to do my "buying RM 1 at 50 sen or 70 sen" activities, I would get a much better job satisfaction. But I do not have talent to write a report as fine as you do.

Coconut Man

Felicity Cheah said...

HI Sunny

Thanks for reading, it will keep me on continuing to write. The return you get is amazing. It is difficult to keep that up consistently. In fact I would love to know what you are looking at and why you put your money into those stocks. For me, there are good and bad years. The most important thing though is to consistently beat the market, at least for most years.
As for the way you invest, I guess it all depends on risk appetite of individuals. I have family hence may not be able to put all my eggs into stocks alone. I do even diversify to overseas market and over the last few years Malaysia actually performed better than US though.

As for fund management, you can try. May not be totally worthwhile as compared to investing your own money as it is other people's money you are dealing with. Picking with RM100k for example is different from picking with RM100 million. I have a short career in the sell side, never on the buy side.
What am I doing now? The business experience I gained, helps in my picking of stocks. That's all I can say.

Cheers
BTW, you write well enough.

Sunny said...

You're right. I also think that it is difficult to keep that up consistently. I am just an engineer who has not received formal education in accounting, finance or business. I also do not involve in sales or purchasing in my career. Because of these limitation of knowledge and limited exposure to commercial environment, I do not keen to pick a giant company which owns too many businesses, with huge trading volume and capital, associated with complicated financing (such as options, call warrant, ICULS, etc.), because there are too many smart guys out there doing the calculation and analysis and promoting the (sales of the) shares. It is hard to beat them. And because they have the influence over the price through the media (by putting a buy or sell call), it reduces the chances for me to buy at lower prices. It is hard to get attractively undervalued stock which too many analysts are tracking and constantly publishing on the newspaper. So I pick those that draw less attention, and slowly accumulate them.

Sunny said...

In fact, in the very beginning when I started to be serious in stock investment 5~6 years ago, before reading my very first stock investment book, I wanted a sustainable 7% dividend gain only. Therefore majority of my investment consisted of brewery and tobacco stock such as GUINNESS and JTi. My small capital remained intact during the US recession in 2008 and enjoyed good dividend gain at the same time. In those days, you can hardly see any analyst promoting these "non-moving" stock, most of them are fancy about plantation stock and others. That conservative approach has preserved the valuable capital for my later investment in stock such as HAIO, KPJ, MFLOUR, etc.

Sunny said...

At that time HAIO was celebrating fantastic growth. I knew that was not sustainable but I decided to ride base on the belief that the price will follow the exponential growth of sales and profit until the business model fails or fail to keep the profit growth. I believed that I would be able to be warned by certain signs before the share price experience catastrophic fall. Then it came the news of constraint by the government for the business to recruit new members. This is a structural and irreversible damage to the profitability of the business. As a result, EPS retreated consecutively for two quarters and I began to see the sign of "diworsification". I came to know that HAIO spent some capital to do R&D on a "high tech" heat exchanger. But when I read on the report about the technology I felt that it was written in a way very not professional and scientific and I doubt that it could be finally commercialized. I have even suspected that it was just a trick to distract attention on the deteriorating earning per share or perhaps the director has been cheated (I recall that I have been cheated for RM 400 by a middle-aged China man years ago). The share price dropped from the peak of around RM 4.50 to RM 3.70. I sold all of them without hesitate and realized 120~135% capital gain exclusive the dividend collected during the holding period. Unfortunately, my father bought some at that time quietly when he saw me riding on the share price. I couldn’t save him. Luckily he did not buy too much. You know what happened to the share price later.

Sunny said...

About MFLOUR, I bought it at the average price of 3.20 during 2010 Chinese New Year Eve due to its very attractive balance sheet and income statement, spending almost 25% of assets on it. I still remember that I was about not being happy with my year end bonus when I made the decision to buy MFLOUR. At that time I also persuaded my dad and mum to buy. My younger brother bought some at later stage. And then I accumulated it slowly as the profit and price grow, but in reducing volume. The last time I bought was at the price of RM 6.38 on 13th May 2011, about 1~2 months before the multiple proposal, amounting to almost 30% of my total assets. Later on I realized that the multiple proposal was actually “share printing”, pretty much like “money printing” by many of the governments today, I dump all of them at around RM 8.19 before any of the multiple proposal came to effect. I also thought that bad news may be come (or uncovered) just after the share inflation, and it seemed I was right. This is the biggest single lottery ticket I hit so far (140~150% capital gain exclusive dividend gain, or around 95% return per annum for an average holding period of around 1.3~1.4 years).

Sunny said...

KPJ is all about luck and feeling. I pay monthly for insurance. If insurance company’s business is good, so does KPJ, because the former is the fertilizer for the later. I bought at the right time. But I sold too early.

Sunny said...

After that I adopted a more careful procedure to pick the stock, but continue to like fertile company with fair or attractive prices. I guess you know my style and investment pattern now. I stick to my rule – “low risks for medium return”, “set standard of 5~6% return p.a., target at 10~15% return p.a., stand a chance at >=20% p.a.”. It is just add to my luck when I actually yield >= 20% p.a. for consecutively 3~4 years.

Sunny said...

Among the most difficult parts are discipline, patience, and emotion control.

End of my story.

Benson said...

Hi Sunny, thx for ur sharing, mind to share wat stock are u currently holding? Thx a lot.