Wednesday, May 8, 2013

Is it time to hold cash?

When Bob Pisani of CNBC said that many markets are now at all time or at least 52 weeks high, he forgot to say about Malaysian market as well. Before election, Bursa had already reached all time high. Post election, it went berserk, with the KLCI climbed beyond 1,800 points to later taper down to around 1,750 points. Now, after 3 days it is at around 1,770 points.

Is the market overpriced? I don't think so, if you consider the amount of liquidity that are available in the market. Bernanke is still printing money, not leaving his foot from the gas pedal. Japan is even more aggressive, looking at doubling its issuance of bonds. Basically, everywhere in the world, we are seeing people (rich people that is) do not know where to put their money. In Asia, property has gone to prices where it has never reached before.

Well, so it seems for stocks as well. People whom are holding cash will feel like cash is NOT KING. I provide a scenario. Even with stocks, a decent pick would have its dividend return better than returning a 3.2% interest from Fixed Deposits. Don't believe me. Look at the comparison between Fixed Deposit vs dividends.

Fixed Deposits earned if I would have put the money from Felice's Fund
Based on above, the total FD that I would have earned from the money put in is only RM2,664.55. Against the dividend earned from the portfolio, which one provides me with a better return so far? Few years ago, no one would have expected total dividend earned to be higher than the interest earned from FD.


Now, it seems like it is an issue if one is to hold cash. The return would not even beat real inflation (do not believe the number provided to us...). Hence, all kinds of riskier assets are sought. It in fact seems to me holding cash is the riskier of them all currently.

Nevertheless, the exuberance over the last few days caused me to re-plan. I had wanted to hold Time Dotcom for a longer while, as I wanted Digi's distribution as part of my holding. But it seems that with the sudden rise in stocks over the last few days, I think that selling Time Dotcom would be the better thing to do while I look for another stock to hold.

Sold Time Dotcom

I think I know which one to have if the price is right as there are some stocks which retreated a bit despite the rise in KLCI.

p.s. the sale is partly to do with I believe some of the hands are pushing some stocks up to prove some point...

14 comments:

hng said...

felicity

I think Timecom still have at least 10% upside potential. Coming these 20 May, once EGM approved DIGI distribution and announce its entitlement date of every timecom entitle 0.24 DIGI share, Timecom share price should be able response positively.

Bear mind, after distribution, Timecom still retain remaining 0.24 DIGI/Timecom share, for future distribution.

felicity said...

Let's hope so. :)

Pan said...

i'm your new blogger reader,what is your opinion on TUNEINS is this a good counter for buy and hold.

felicity said...

I think TUNEINS is expensive. But do go to an article I wrote on TUNEINS. Have been wrong though based on the price trend recently on the stock.

Cheers

miao miao said...

Hi, Felicity,

How do you think MNRB?
Profit has been fluctuating in the past.. due to catastrophe events...and very large asset base..but ROE not very good.

But it's quite cheaply valued..at forward PE less than 6.
Dividend last year of 15 cent..and translate into DY yield of 4.5%..

In view of current bull run, would ROE (management of business, qualitative side) - Phillip Fisher kind philosophy or Valuation (buy at discounted value) - Benjamin kind philosophy..shall prevail?

Knowing that in long run, quality of business is definitely more important than cheap valuation..when growth kick in

Chin Thiem Hee said...

Hi, Felicity,

How do you think about SKPRES?
Someone said its fair value is near RM2.46, based on EPS growth within 6 years... however, its NTA only RM0.21 based on financial result...i also keep on with MIECO, its NTA RM1.52, but now only trade around RM0.4, i think may be due to its high liabilities, how do you think about it? thanks

felicity said...

I actually like Fisher better. If you study Benjamin Graham, he does not care the stocks - as long as it strictly follows his principles, it will pass his test.

I prefer to buy what I feel I would know.

Which is where I am coming at - MNRB, SKPRES are very decent stocks. SKPRES is pretty much in plastic moulding. As I understand it is a very tough business. SKPRES seems to do well, but my skepticism prevent me from buying.

On MNRB, it will always be a volatile earning company due to the nature of its risk it is taking. I don't have a feel of how good the people behind the company.

Mieco at one point of time did quite badly. Let's see how it goes.

miao miao said...

Thanks, Felicity,

Yeah..that's what i feel also..the management of MNRB not exactly very capable..though it's only reinsurer in Malaysia from the past..but not really capitalising on it..The venture into takaful business via takaful ikhsal is not exactly very profitable as well..

Suprisingly its market cap is less than RM1b ...compared to TuneIns with market cap of RM1.2b +...


Black Ink said...

Thanks for the heads up on Wing Tai.

Uniqlo is a strong brand and partner. Pricing and customer service is unbeatable.

Some insight: http://media.bfm.my/assets/files/Resource_centre/2013_05_06_Resource_Centre_Uniqlo_Yuichi%20Ito.mp3

alwayswin111 said...

Felicity
How about PADINI now?

felicity said...

Padini is still an investible company despite the drop in earnings recently.

山下聖人 said...

If you like dividend, I think STAR is the best now, offering around 7%

felicity said...

I am not too keen on Star though.

Multi Bagger said...

It is very difficult to understand the accounts of MNRB and the fluctuation in results make one wonder whether it was due to error made earlier and adjusted in subsequent quarter, especially islamic way of profit recognition. I never like something I can't predict the business, worst can't understand their financials.