1) Stocks must be down by half on 52 weeks basis.
2) Hopefully, the stock must have no debt or gearing cannot exceed 30% of shareholder funds.
3) Must have rational & good management.
4) Growth rate over PER must be 1 or more, eg if growth rate is 10%, then would be willing to pay 10x PER.
5) ROE must exceed 12%.
6) Signs of insider buying.
Just to share my personal investment feeling throughout the journey of learning to be a market investor
Friday, October 5, 2012
Saturday, July 2, 2011
Blue Chip Performance
Since the market has just been recovered & possible to start the last rally of bull run, I have an idea to keep track for the blue chips if they will rally first before 2nd liners & penny stocks to be followed subsequently. Current STI index has stayed at 3139 pts, and with the catalyst of last rally, STI is possible to reach previous high at 3900 pts in 2007, or even new high at 4200 pts with the calculation of market PE at 10. So based on previous high 3900 pts, there is around 25% room for improvement for the blue chips to reach the level. Let's take a look for individual STI index stocks for their fair value if reach the level. That can be explained why we should focus on penny stocks (with strong fundamental), which probably have 50~100% return in last phase of bull run.
Below is the comparison table for STI blue chips (Updated as 2-July-11):
Below is the comparison table for STI blue chips (Updated as 2-July-11):
From the table, it is obviously that NOL, SGX & Capitaland are laggard far behind STI index. Let's see if all blue chips will be rallying according to analysis table.
Thursday, June 30, 2011
"How an Economy Grows and Why It Crashes" by Peter D. Schiff
Some hightlight & quotes from the book:
"Home prices were firmly tied to people's ability to pay, which is a function of income and credit availability."
"From 1997 to 2006 US national home prices gained an astounding 19.4% per year on average. Over that time incomes barely budged. So why could people pay so much? The difference was credit, which governement policy made much cheaper & easier to get. But credit could not expand forever, and eventually conditions tightened. When they did, there was nothing to hold prices up.
So when the market crested, the easy money that for years had poured into the economy stopped flowing. Even if there had been no other economic reversals that followed the housing bust (which there were), the economy would have had to shrink without all the free cash. A recession was not only inevitable but absolutely necessary to rebalance the economy.
But when the economy started to contract, lawmakers and economists treated the development not as the inevitable consequence of years of easy money and overspending, but as the problem itself. In other words, they mistook the cure for the disease.
The policy goals of both the Bush and Obama administrations have been to encourage consumers to spend as they had before the housing crash. But how? If unemployment rose, and incomes and home prices fell, where would consumers get the money?
Economists have declared that if the people can't spend, the government needs to step up and do it for them. But the government doesn't have any money. All it has is what it collects in taxes and what it borrows or prints.
For now, this process is just creating massive public debt ($1.6 trillion per year and counting). And although the numbers look bad, we are still able to sell most of this debt on the open market, primarily to foreigners.
But out "good fortune" can't last forever. Ultimately the US government will have only two options: default (tell our creditors that we can't pay, and negotiate a settlement) or inflation (print money to pay off maturing debt). Either option will lead to painful consequences. Default, which does offer the possibility of a real reckoning and a fresh beginning, is actually the better alternative. Unfortunately, while inflation is worse, it is also the more politically expedient."
"One option for the government to increase revenue by raising taxes. This path is never popular wih citizens, and in a democracy is hard to push through. Even in authoritarian states (where there are no pesky elections), tax increases are problematic. Higher rates always discourage productivity and deflate economic vitality. There is a limit to how high taxes can go. Raise them enough, and people stop working. Raise them higher, and they may even start rioting.
A far better option is to cut government spending. However, this is often more difficult than raising taxes. Politicians make lots of promises to secure their elections and voters rarely consider the ability of taxpayers to actually foot the bills. For political leaders, default can be rather embarrassing, as it amounts to an official acknowledgement of insolvency. To avoid this, many opt to simply print money to pay debts, effectively repudiating their obligations by inflating them away. Since inflation is usually the easiest choice to make, it is often the most likely. But while it may seem easy at first, it ultimately exacts the harshest toll.
Inflation allows governments to avoid hard choices and dispose of their debt on the sly. By printing money governments can nominally pay back all that they owe, but they do so by diluting their currency. Creditors get paid, but what they get isn't worth much, and if inflation turns into hyperinflation, it's worth nothing.
Inflation is simply a means to transfer wealth from anyone who has savings in a particular currency to anyone who has debt in the same currency. With hyperinflation, the value of savings gets completely wiped out and the burden of debt is removed. (Hard assets will rise in nominal value when inflation flares up)"
"Artificially low interest rates (which made the economy appear healthy) invigorated the market for adjustable rate mortgages and gave birth to the teaser rate, which made overpriced homes seam afforable."
"As consumers logically stopped spending after the housing boom deprived them of easy money, the government stepped in with a massive $700 billion stimulus in order to keep the registers ringing. This spending, which the government has borrowed from future generations, has kept us from the pain of living within our means.
By refusing to allow market forces to rein in excess spending, liquidate bad investments, replenish depleted savings, fund capital investment, and help workers transition from the service sector to the manufacturing sector, the government has resisted the cure while exacerbating the disease. In the process, we have turned just about all forms of debt into government debt, and have blown up another bubble, this time in Treasury bonds.
Unfortunately, this bubble threatens to dwarf all preceding asset bubbles. Its eventual bursting, which will cause consumer prices and interest rates to soar, will have even more devastating effects on the economy than the dot-com and housing bubbles combined."
"Home prices were firmly tied to people's ability to pay, which is a function of income and credit availability."
"From 1997 to 2006 US national home prices gained an astounding 19.4% per year on average. Over that time incomes barely budged. So why could people pay so much? The difference was credit, which governement policy made much cheaper & easier to get. But credit could not expand forever, and eventually conditions tightened. When they did, there was nothing to hold prices up.
So when the market crested, the easy money that for years had poured into the economy stopped flowing. Even if there had been no other economic reversals that followed the housing bust (which there were), the economy would have had to shrink without all the free cash. A recession was not only inevitable but absolutely necessary to rebalance the economy.
But when the economy started to contract, lawmakers and economists treated the development not as the inevitable consequence of years of easy money and overspending, but as the problem itself. In other words, they mistook the cure for the disease.
The policy goals of both the Bush and Obama administrations have been to encourage consumers to spend as they had before the housing crash. But how? If unemployment rose, and incomes and home prices fell, where would consumers get the money?
Economists have declared that if the people can't spend, the government needs to step up and do it for them. But the government doesn't have any money. All it has is what it collects in taxes and what it borrows or prints.
For now, this process is just creating massive public debt ($1.6 trillion per year and counting). And although the numbers look bad, we are still able to sell most of this debt on the open market, primarily to foreigners.
But out "good fortune" can't last forever. Ultimately the US government will have only two options: default (tell our creditors that we can't pay, and negotiate a settlement) or inflation (print money to pay off maturing debt). Either option will lead to painful consequences. Default, which does offer the possibility of a real reckoning and a fresh beginning, is actually the better alternative. Unfortunately, while inflation is worse, it is also the more politically expedient."
"One option for the government to increase revenue by raising taxes. This path is never popular wih citizens, and in a democracy is hard to push through. Even in authoritarian states (where there are no pesky elections), tax increases are problematic. Higher rates always discourage productivity and deflate economic vitality. There is a limit to how high taxes can go. Raise them enough, and people stop working. Raise them higher, and they may even start rioting.
A far better option is to cut government spending. However, this is often more difficult than raising taxes. Politicians make lots of promises to secure their elections and voters rarely consider the ability of taxpayers to actually foot the bills. For political leaders, default can be rather embarrassing, as it amounts to an official acknowledgement of insolvency. To avoid this, many opt to simply print money to pay debts, effectively repudiating their obligations by inflating them away. Since inflation is usually the easiest choice to make, it is often the most likely. But while it may seem easy at first, it ultimately exacts the harshest toll.
Inflation allows governments to avoid hard choices and dispose of their debt on the sly. By printing money governments can nominally pay back all that they owe, but they do so by diluting their currency. Creditors get paid, but what they get isn't worth much, and if inflation turns into hyperinflation, it's worth nothing.
Inflation is simply a means to transfer wealth from anyone who has savings in a particular currency to anyone who has debt in the same currency. With hyperinflation, the value of savings gets completely wiped out and the burden of debt is removed. (Hard assets will rise in nominal value when inflation flares up)"
"Artificially low interest rates (which made the economy appear healthy) invigorated the market for adjustable rate mortgages and gave birth to the teaser rate, which made overpriced homes seam afforable."
"As consumers logically stopped spending after the housing boom deprived them of easy money, the government stepped in with a massive $700 billion stimulus in order to keep the registers ringing. This spending, which the government has borrowed from future generations, has kept us from the pain of living within our means.
By refusing to allow market forces to rein in excess spending, liquidate bad investments, replenish depleted savings, fund capital investment, and help workers transition from the service sector to the manufacturing sector, the government has resisted the cure while exacerbating the disease. In the process, we have turned just about all forms of debt into government debt, and have blown up another bubble, this time in Treasury bonds.
Unfortunately, this bubble threatens to dwarf all preceding asset bubbles. Its eventual bursting, which will cause consumer prices and interest rates to soar, will have even more devastating effects on the economy than the dot-com and housing bubbles combined."
Thursday, June 16, 2011
Euro debt crisis again!
Gosh! Europe debt crisis reappear on the surface again. Even with the bailout amount of 110 billion euro from EU previously, Greece still cannot manage to recover from recession & repay the debt.
The ultimate grace for Greece in order to get another bailout from EU & IMF is to lay down a 5 years financial budget on tightening their monetary, e.g increase taxes, cut government expenses & sell country assets etc. All these measures will definitely create social unrest, woes or even workforce strike. But what they can do in order to survive & prevent bankruptcy of country? Their people, nation & citizens have to suffer & compromise for the "malignant tumor" left by their past government.
I believe Greece is not the only country to suffer the debt crisis now, others e.g Portugal, Ireland, Italy & Spain will be the next to face all these in order to receive bailout if they still without any financial tightening plan. The final outcome may likely to disrupt the EU to only keeping the fundamental strong economy countries in the union & slashing those weaker countries, which might apparently destroy the liquidity of Euro currency as the replacement of US dollar.
In the end, China RMB may appear to be the strongest currency to replace US dollar in the next decades.
The ultimate grace for Greece in order to get another bailout from EU & IMF is to lay down a 5 years financial budget on tightening their monetary, e.g increase taxes, cut government expenses & sell country assets etc. All these measures will definitely create social unrest, woes or even workforce strike. But what they can do in order to survive & prevent bankruptcy of country? Their people, nation & citizens have to suffer & compromise for the "malignant tumor" left by their past government.
I believe Greece is not the only country to suffer the debt crisis now, others e.g Portugal, Ireland, Italy & Spain will be the next to face all these in order to receive bailout if they still without any financial tightening plan. The final outcome may likely to disrupt the EU to only keeping the fundamental strong economy countries in the union & slashing those weaker countries, which might apparently destroy the liquidity of Euro currency as the replacement of US dollar.
In the end, China RMB may appear to be the strongest currency to replace US dollar in the next decades.
Saturday, May 21, 2011
3rd MasterYourFinance.com Gathering – 16 May 11
Below is the summary for the information shared by Dennis Ng during seminar graduates gathering, courtesy thanks to Alvin Chow (from www.bigfatpurse.com) for his unselfish & quick summarize for the topics.
http://www.bigfatpurse.com/2011/05/3rd-masteryourfinance-com-gathering-%e2%80%93-16-may-11/
http://www.bigfatpurse.com/2011/05/3rd-masteryourfinance-com-gathering-%e2%80%93-16-may-11/
Saturday, May 14, 2011
Review for Silver movement
Silver price has been plunged from close to record high at US$49 to current price US$35.5, which around 38% major correction. So what's the reason behind for this time round correction? From I think are 1) profit taking as the psychological barrier at US$50; 2) increase of the deposit for Silver futures in US market cause the weaker holder short sell or profit taking; 3) Big financial institution, e.g. George Soros leading fund & World richest man - Carlos Slim Helú has been selling Silver to earn big bucks. But in terms of fundamental view of Silver situation, it still has not been changed all the while as the supply is limited and the demand from emerging markets is robust.
What can you learn from this time round of correction? The only regret I have is not able to sell 50% (Note: not 100% as I still think bullish of Silver) of my holding at the high price, and buy back at low price later. Currently, I'm still enjoying ROI of 26% for my Silver, which in fact, the strategies I have thought is probably I'm going to increase my stake on Silver as the price plunge or stay sideline if the price increase. The mid-term support level is at US$30, as the current price is ranging between US$33 - 36. Compare to the downside (at US$30) & upside (at US$49 as previous record) for Silver price, the decision has come clear that upside is definitely double than downside. Thus I have made my mind to increase the stake.
From the TA, the current price is below 50 MA (US$39.1), slight above 100MA (US$35.35) & far above 200 MA (US$28.84). We shall see if a pattern of head & shoulder will be formed on next few weeks before it might reverse the chart to bearish again.
What can you learn from this time round of correction? The only regret I have is not able to sell 50% (Note: not 100% as I still think bullish of Silver) of my holding at the high price, and buy back at low price later. Currently, I'm still enjoying ROI of 26% for my Silver, which in fact, the strategies I have thought is probably I'm going to increase my stake on Silver as the price plunge or stay sideline if the price increase. The mid-term support level is at US$30, as the current price is ranging between US$33 - 36. Compare to the downside (at US$30) & upside (at US$49 as previous record) for Silver price, the decision has come clear that upside is definitely double than downside. Thus I have made my mind to increase the stake.
From the TA, the current price is below 50 MA (US$39.1), slight above 100MA (US$35.35) & far above 200 MA (US$28.84). We shall see if a pattern of head & shoulder will be formed on next few weeks before it might reverse the chart to bearish again.
Saturday, April 2, 2011
Investment Feeling on 01-Apr-11
A new start of the month, STI index has closed above 3100 level at 3120 pts. The investing atmosphere in the past 1 week has been improved significantly from previous bearish trend though current situation (e.g. Libya war, Japanese Nuclear crisis) still remain uncertain at the mean time. The overnight Dow Jones market has remain bullish with the reduce of unemployment rate since 2 years. So the next week STI market will be looked forward to the next level of resistance at 3200 pts or even 3300 pts (provided strong bullish if nothing big happen on next week.
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