Current investing: My balancing act

As the stock market has been suffering due to the slowdown in global economic outlook triggered by various factors among which is China's economic issues and low commodity prices, it has not been an easy time for investors.

I have pared down my stocks to four from 13 in the heyday before the global financial crisis in 2008. I am more into defensive stocks like telcos but the foreign capital flight to the tune of about RM19b in 2015 had also affected the performance of these. At the moment I am still holding on to MAXIS and TM which have been with me for more than five years. After some calculations, I have decided that the time has come for me to let go of them as soon as the prices are right for me.

I have a plantation stock acquired through an IPO (BPlant) which unfortunately has not done that well ( nevertheless it gives a regular dividend of  5 sen per unit ). And of course my disaster of the "century", the acquisition of Icon Offshore an oil and gas stock which has come tumbling down and down and downhill from 1.90. Gees, the cheek of me.... I bought an equal number of units at 45 sen in June last year hoping to dollar average as the price was low giler (crazy) but the critter even went down further to 25 sen! Would you believe it! At present it's 41 sen. Though my hefty loss is compensated by about 50% from my telcos stocks' gain, the regret of going for an oil and gas stock at the end of the industry's cycle is enormous. The massive reduction of the price of oil from US150 to below US50 per barrel in the space of less than two years had more or less sealed my fate.

Current investing is like a sailing ship weathering a storm
(Net image)

My AMB unit trusts similarly are not performing as they are closely linked to the local equity market. From a high of 60  and 56 sen per unit in 2014 for Ethical and Value trust fund respectively to below 40 sen in December last year. You can just imagine the losses that are incurred by investors like me . I have targeted both funds for 4-5 years so I have another 2 years to see through their performance. In the meantime I bought another Unit Trust sold by HSBC, Eastspring Investment Equity Income Fund simply because I wanted to ensure my deposits in the bank complies with the amount required to enjoy my current  banking privileges as the bank interest rate is low at about 3% I tend to withdraw my money and put it somewhere else. I chose the Unit Trust after studying its prospectus and you should do the same if you want to invest in any of these trust funds.

So let's hope 2016 would be better than 2015 though I doubt Malaysian political scenario will change much and this situation has definitely affected my fun in investing.

TM and MAXIS as defensive stocks in my Portfolios.

I am back from the cold. I must say being away for almost six months has given me a sense of control over my activities including blogging. As the market environment deteriorated over those months so too my portfolio which I am managing myself.

The current market turmoil due to both external and internal factors has a great impact on wealth creation. Despite earlier knowledge that the oil and gas industry is cyclical, I fail to clear my position on a related stock on time and my loss on that is particularly staggering. I also have a plantation stock which is still giving a tiny dividend regularly but the share value has depreciated as well. And there is the stock that I bought based on its rapid rise in price only to be followed by its rapid decline. Well, these are my losing stocks which I will hold till better times come.

I am glad though I did not buy those stocks loved by foreigners like AirAsia which lost rather heavily when the capital flight out of the country started and remains so to date. I have so far, on paper, lost about 16% of my capital investment but it could have been higher if not for my two defensive stocks, MAXIS and TM. These two are quite resilient in times like this. It's so fortunate that I decided to participate in TM's dividend reinvestment scheme as I could acquire the shares at a discount and without extra charges. These two stocks have mitigated my severe paper loss on my three other stocks. TM's dividend is at 9.3 sen per unit and that of Maxis's at 5 sen per unit down by 3 sen and all due in two weeks' time. In the past the annual dividend rate for TM was 22 sen per unit and that of Maxis was 40 sen per unit.

My regret is for disposing my Axiata and IHH stocks so soon after making some capital gains. I would not have lost so muchon paper had I kept these two as they are in the defensive category in times of market depression. But as they say market will always rise after a decline and it's not a matter of if. All you need to do is to sit it out and monitor the economic and financial data of relevant countries such as the US and China, the oil and commodities' prices and of course the domestic factors which would have some impact on the Ringgit and our stock market due to bad investors' sentiment. In addition, I am hoping the Fed doesn't raise US interest rates too fast as our currency would further drop precipitously.

My unit trusts, the fixed price ones are fine albeit their dividends have lower purchasing power of imported items. The variably priced unit trusts are the ones suffering due to market's tumbling.

I am looking forward to receiving dividend for my AS1M on 01 October and thinking of investing it in AMB value trust whose price is currently low at 34 sen per unit. Life continues but investing strategies need to be changed to adjust to present market downfall.
. 

Investing in Black December

Within a space of 10 days I witness all my stocks come tumbling down. By the way the plantation and oil and gas have started the rot well before that. My capital depreciation mimicked the one in 2008 though to most big-boy league investors, losing 75k  on paper is nothing to shout about, for small-time ones, it's something to learn from. The important thing here is to have the staying power.

The current rout in our stock market is due in part to the falling price of oil and the effects on other oil and gas counters such as PChem, SKpetro and Icon. As a result the financial counters like Maybank  follow in tandem. The low crude palm oil (CPO) price has already affected the plantation sector for more than 11 months now. I only have Bplant and due to its being well-established, the decline in its price is not as alarming unlike my O&G counter, Icon, a new kid on the block. My other bad let-down counter is Caring, a pharmaceutical and healthcare/personal care products  chain, another newbie on the stock market. This one I regard as an ugly stock, a terribly bad investment and will definitely off load it as soon as my loss on it is manageable and compensated for by my other counters. By the way, this stock might go up again once its wealthy owners decide to perk it.

Caring: Gradual decline since August
Source- Bursa Malaysia

I noticed the recent surge in price of my telco stocks namely TM and MAXIS but as per my investing strategy, I have refused to sell them and in less than a week, the gain was wiped off by almost by 50%. This development is attributed to foreign selling on our Bursa, as they say, Christmas comes early to those foreign funds eager to dress up their portfolios before the start of the new year which is fast approaching.

TM: The gradual rise and the steep tumble
Source - Bursa Malaysia

MAXIS: Tumbling as well in December

Source- Bursa Malaysia

The hope for a pre-holiday stock market rally this December has gone to the wind. In fact this December has become a black one for many investors. For some of us this is the time to pick up those stocks which have been overvalued a number of months ago and wait for the bull to return because it sure will return.

You've got to stay positive in all this up and down of the market. Here's hoping a Black December's giving light to making more in the future.

In the meantime, hold on tight to the rail of your roller coaster guys!

MAXIS issues dividend as promised and soaring again

Late last year when there were talks of MAXIS being unable to pay the 32 sen annual dividend like it used to due to some financial issues, I was feeling anxious as I have fallen thoroughly "in love" with the stock and was not about to abandon this blue chip comes what may. I also have great faith in the new CEO, Morten Lundal who has a lot of experience in the telco industry being ex-CEO of Digi, Maxis's rival. He came after Johan Dennelind, another ex-Digi CEO was not able to fill the post citing family commitments.

True enough after a number of months the stock began to slide and I watched with horror as my capital was being attacked so to speak. I kept telling myself to persevere as over the years of my investing in MAXIS, I have received quite a substantial amount of dividends, far more than the amount which was eroded mercilessly during the second quarter of this year. Yes, I cringed when the shares dipped to 6.20 but I took it as part of the excitement of investing.

Heart flutterings when MAXIS dipped  and normalising
 when it starts soaring

I was elated when MAXIS third quarter financial results were rather unexpected and Maxis is still able, up to this stage, to issue another 8 sen dividend per share with its earning per share (EPS) standing at 6 sen. The dividend ex date is on 26 Nov. From then on the stock began to rise to its previous high and today it has reached 6.93.

Credit to Maxis especially its hard-working CEO for having made many transformation and market initiatives to stay competitive in the industry despite declining revenue partly as a result of a reduction in income from voice and SMS usage owing to the introduction of applications such as WhatsApp and Telegram, Viber  and Skype , all of them are free at the moment. Notwithstanding the intense competition, they have succeeded in maintaining the population mobile coverage. Apparently, greater penetration of its service via internet usage is in the pipeline. Now I know how sticky MAXIS is.

Here's hoping MAXIS would be able to sustain its efforts to stay in the mainstream of the industry and continue to add value to all the stakeholders of the company including this minnow investor.

Icon Offshore : The Shockingly Ugly Ride

It looks like my investment in Icon Offshore is going to stay there for the next two years. With the current downgrading of the oil and gas sector, we can expect many of the local players in this industry will be in the doldrums. There are several factors contributing to this state of affairs from delayed projects to the rising stiff competition from foreign concerns. And there is also the fact that this industry is cyclical in nature.

Lamenting after the event whilst irritating, need to be released so as to learn from the debacle that I let myself into and risk my fund to existing in a dormant state. I have had this heart-dipping experience before during the Global Financial Crisis (GFC) in 2007-2008 when I made extensive losses in my plantation and construction stocks. I used the "opportunity" to buy more into stocks such as MRCB,Sime Darby and HSL and managed to recoup my losses by 2010.

Icon Offshore  IPO was 1.85 on 25 June 2014
 and now on a tumbling ride

However this current scenario is different in the sense that the stock I bought is recently launched  as an IPO, though now I am encouraged to think that the stock was unfairly valuated at 1.85. It made only a slight premium for about ten days then it started falling and now it has fallen precipitously with the current declining contract rate for offshore transport services. That has sealed the fate for Icon offshore. I did think of dollar cost averaging but my instinct told me to let it go and I am glad I did just that.

Actually I was not successful in my application for Icon IPO instead I bought over the counter during those crucial 10 days after its launching and was nicely trapped by those who have prior knowledge of this industry and sold their shares relentlessly. It reminds me of the ugly Astro IPO but my loss on Icon this time is multiple that.

Then I remember a book on investment by Burton M Malkiel entitled " A Random Walk on Wall Street" where there was a warning about buying IPO stocks. He reminds that IPO stock is launched when somehow the people who own the company have negative knowledge about the environment in which it is operating. And these people are the ones who will sell their shares gleefully post IPO and make money from ignorant retail investors. They actually time their IPO launch and it is not a coincidence, it is a well thought out timing to share their losses with the public.

Remember JCY? That technology company which had made millions before deciding  to list on Bursa just before the hard drive industry started to decline? Yet had we  read the financial report of Western Digitals and Seagate which order its supplies from JCY, we would not have been so adventurous in buying into the company's stock. The financial results were showing a decline in profit! The price was from 1.60 (IPO) to as low as 0.35 sen in less than nine months. The stupid thing I did was to dollar cost average and got myself right down to the pit. No fun there I must admit.

I have not learnt my lessons simply because I thought Icon was related to some government-linked outfit and its association with Petronas, our national oil giant, and so would not go on this route of failed ride and lose 30% of my investment on paper.

Though my loss is partly compensated by the uptrend in TM stock, I found this experience humbling and will definitely think thrice about buying IPO stocks. The last eight years have seen unhealthy activities on IPO stocks like Caring which was propped up by a single wealthy person and when he sells at the height of the price, the whole stock price comes tumbling down. The market is indeed a jungle, enter at your own risk!

IPOs - Icon Offshores and Boustead Plantations: Between Failure and Success

By now most of us IPO applicants of Icon Offshores and Boustead Plantation stocks would have known whether we have been successful or not in our applications.

On 11 June, I found out that I did not have luck on Icon IPO and naturally felt rather down. I had a wrong strategy of applying at a lower amount and so had to face with a lower chance of being successfully balloted. However, for Boustead I went for a bigger amount and of course have a higher chance of success and sure enough (plus better luck here), I am being rewarded with 25% the number of shares I applied for. I just found out about this an hour ago online through my Maybank Account.

I am waiting for Boustead Plantations' listing day on 26 June to see how it would debut but as usual I am going to hold these precious shares for some time and see how the CPO price is trending in the medium to long term.

As for Icon, to be listed on 25 June, I will definitely buy on the market. It's going to be a steely watch over the debut but my broker has been well informed on what to do in case I am not able to keep glued to the screen.

From now on, it's going to be a fun ride with these two new stocks, one obtained through luck, the other would be through sweat. I will keep a close monitoring of these two companies and observe how they perform and have some time blabberings and commenting on stock analysts' reports.

Congratulations to those of you who are successful in your applications and to others you can still make something if you are able to time your purchase at market price. At any rate, good luck to all my reader-investors.

Remember, between failure and success, there is still an opportunity.

My Equity Portfolio - Reviewing Retirement Nest Egg

I have moved more than 40% of my equities to fixed income category mainly because I am my own fund manager and have less time monitoring them especially since market volatility seems to be never ending.

Build Your Retirement Nest Egg  Early

Putting my money in unit trust funds and forget about it, is the best thing that I have done over 10 years. The capital growth has been encouraging and I will continue with the conservative strategy for my retirement nest egg.

As for my remaining equities, I have two that are doing exceedingly well in the telco sector (MAXIS) and the healthcare segment (IHH). MAXIS under the new CEO, ex-DIGI Morten Lundal has shown big improvements in its share price from 6.39 over a year ago to a close of 7.27 at the end of 2013. The annual 40 sen dividend given quarterly is truly appreciated by investors like me who use it for topping up our mutual funds.

IHH has gone from 2.90 to 3.86 at the close of market on New Year's Eve. It was at its peak of 4.16 a couple of months ago. I am still holding this stock as I feel its growth will continue with the expansion of its services overseas. Barring any huge obstacles, it would start to perform better as its gearing is decreasing. I am upbeat about the stock when looking at KPJ, another healthcare equity which took a number of years to increase its value. I am prepared for the long haul with IHH though my capital has increased by more than 34%. IHH is yet to issue any dividends.

My last three stocks are not doing that well. My TM stock has been hovering over the lower end of 5.00 for months on end and only recently, following some collaboration announcements that it has crept up to 5.45-5.55. My paper loss is still substantial as I re purchased it at 5.73 following my total disposal of the shares at 6.23 pre-capital repayment of 30 sen per share in 2012. I am sticking to this behemoth because of historical capital appreciation through regular dividends of 22 sen per share. In fact, my current paper loss has been compensated by earlier capital growth. Sometimes whining can stop complacency.

My most recent acquisitions are WPRTS and PRTASCO, in transport and construction sectors respectively. As most of you keen investors have noticed, the former is doing poorly post-listing. From being a joyous applicant of its IPO, I am rather crestfallen with the stock. One of the major stockholders even repurchased more than 200k of the stocks at market value but his action is seen as insufficient to prop up the stock's price. Maybe the investing public would take notice if he had bought 200 mil units? Big deal.

Aha, even my better half is wondering why I bought PRTASCO, the company which is good at road maintenance and given successive contracts for their speciality. I bought the stock because it gives dividends regularly. I note that it never fails to give dividends of 5 to 6 sen annually since 2007. In fact the stock price was only 0.95 sen a couple of years ago and now it has uptrended to 1.35-1.42 and yours truly jumped in at 1.42! I had bought the stock before in 2012 at 0.99 and had disposed it after a couple of dividend issues due to my impatience.

And now I am renewing my relationship with the stock on the basis that it has been given a contract worth some millions by the government to build staff quarters. But the current cost-cutting measures by the government could affect the income generation of the company. I am, however looking forward to get my first dividend at 4 sen per share credited into my bank account tomorrow 02 Jan 2014. That somehow reduces the amount of my paper loss on the stock.

My game plan for 2014 is to re-invest my overseas fund into PNB unit trusts, eye those IPOs carefully and look for an opportunity to invest in selected plantation stocks. I am taking the risk of investing in plantation sector because though the CPO price is predicted to increase in 2014 due to the biodiesel oil downstream products, it might not necessarily result in higher price for the respective stocks.

But that is how things are when you are an investor. Look for the best, accept the unexpected and move on regardless.

Happy investing and may 2014 be more generous.

IPOs - The Good, The Bad And The Ugly

Discerning investors will study or carry out due diligence on  the businesses of companies raising fund through IPOs (initial public offerings). There are factors that predict and sustain good returns of particular investment and most investors make decision to go in based on their interplay. Retail investors most of the time would not have certain crucial information about these companies and may end up losing their hard earned money.

We have come across many market listings with IPOs on Bursa Malaysia over the last five years since the global financial crisis (GFC) in 2008. The best so far has been the Petronas-linked companies such as MMHE and Petchem. MSM, MAXIS, CMMT and IHH are good too in terms of their share price upside post-listing. I must admit I make money on the respective IPOs. These are all big companies raising hundreds of million through their IPOs.

For investors looking for short-term gain, the above companies are Godsend. As for me, I choose which company's stock to be purchased for dividend, long-term and short-term returns thus giving me portfolios which are diversified.

My most recently successful IPO acquisition is IHH at RM2.80 about a year ago and now the stock has appreciated to RM4.16, a capital gain of about 49%.

If only you can spot them!

Among IPOs which are a disappointment surely is JCY . I noticed that JCY after years of being private and raking in much profit, then decided to list the company.

I remember the IPO was first put at 2.20 and after much talk of overvaluation, it went down to 1.60 and in less than a year the stock tumbled down to less than 50 sen due to negative news from HD makers mainly Western Digital and Seagate: production of HD was scaled down due to lack of demand, Eurozone crisis and entry of new technology.

The timing of the JCY going public and the bad news made me wonder whether the company's owners had prior knowledge of the impending loss of revenues leading to the sharp and sustained fall of its stock price.

The same goes for WPRTS touted to be the owner of Malaysia's busiest port and yet its post-listing stock price has virtually stood still nearer to the IPO's. Then we read in the news about a shipping consortium of some kind with ships which used to dock in Port Klang Western Port have now decided to move to another port for reasons best known to them. Had the news come out before the listing date, I probably would not apply for the IPO, period.

Despite reassurances by the company's top stakeholders, the Gnanalingham, the share price has refused to move upwards indicating the market's sentiment. Now it also makes me wonder whether the company's owners also had prior knowledge of this major move by the shipping coalition and thus they decide to share the cost of this change with the public? I really hope I am wrong. I will stick with the company for a while yet as it actually has strong fundamentals though the short-term prospects don't look encouraging.

The price of WPRTS is now about RM2.55, 0.05sen above its IPO's price ( a mere 2% increase), a highly disappointing early performance indeed. However, it will likely go up once the company announces its dividend in 2014. Interesting to see this stock just before April next year.

I am also sorry for those who acquired AirAsia X's IPO which I did indicate that people should stay away from it. My prediction was correct as it has gone down below its IPO price of 1.25 despite heroic support  from Maybank Investment . It even went down below one Ringgit at one stage and now hovering around that figure, about 20% depreciation in less than a few months.

Really bad post-listing performance

ASTRO's IPO also did not do well. I now have the feeling that after the company has raked up profit over those early years of growth, they then decided to list the company when growth has declined and share their meagre income with the public. There was some uneasy stories about ASTRO's share performance post-listing as the price kept on tumbling as if people who acquired the shares before the listing were selling off. An ugly situation.

I am encouraged though Caring Pharmacy listed on 13 November at an IPO of 1.25 has gone on to RM1.71 an upside of about 37%. Unfortunately, I was overseas during the important pre listing period and was unable to participate. But all the same this is one company which, though small has managed to attract new capital simply due to its business model of dealing with everyday necessities. Its prospectus could also be credible with promises of business expansion etcetera. I have to check whether it has big cornerstone investors (which I doubt).

Before you decide to ride with any of them ,
please do your homework .

There you go. The above IPOs give some indications on investors', particularly, big fund managers' sentiment. IPOs making money for investors? I would not be so sure and am certainly not going to rush into applying for them in the near future.

An article in the Edge on 25 Nov 2013 on IPOs in Malaysia mentioned the following :

"RHB Investment Bank Bhd director and regional head of equity capital markets Gan Kim Khoon recently said that investors should ride on the wave of Malaysia’s IPO market, but only after doing their homework on the new entrants."

A wise advice indeed.

KLCC REIT versus MAXIS (or PNB Unit Trust?)

I am back in a dilemma. I have just sold 50% of my SKPetro shares when it peaked at 3.59 last Thursday 9 May 2013 and now I want to plough back the profit into the market. I was looking at the Reits and noticed that most of their prices have kind of stabilised over the last six months.

Then came this old market player, albeit in a different package, KLCC Reit which was relisted last Thursday as well. The reference price was 7.25 and it went up to 7.70  before closing at 7.64 on Friday. It was a fine debut alright. The prospects look good with the intended inclusion of more high-end properties and the fact that its current properties are all fully-tenanted. Moreover the CEO indicated that they are going to distribute 90% of their annual profit as dividend which sound attractive. By 2015 it seems the dividend can go up to 35%. The name of Petronas, the National Petroleum Company as the backer of  this Reit is also comforting.

I am disappointed though that the price is very high. In fact the price of this Reit, the biggest of the lot in terms of capitalisation, sticks like a sore thumb. All the others except for AxReit (@3.82) are priced below 2.00. Looks like this Reit is for the wealthy to be wealthier as ordinary retail investor would be hard pressed trying to own it. It doesn't look good on this government-linked company (GLC) to deprive the small investors of the shares of the wealth. Though we must realise that the foreign fund managers would have snapped this Reit had the price been much lower. Still I believe the Malaysian investors would have loved to  possess this stock and ride with the company.

A  good dividend-paying stock

KLCC REIT- Currently  lower yield than MAXIS

Now back to my dilemma. Shall I purchase KLCC Reit or MAXIS? Let's do some simple calculation. If I were to get 30k KLCC Reit shares at the price of 7.52, I would have to come up with about 227k inclusive of transaction cost. If the annual dividend is at 35% then I would get 9k after subtracting the 10% tax. That would be a yield of 4.16%.

The last price of KLCC property was 7.25 before it was suspended to repackage it  into a Reit and so unless my evaluation is wrong, I don't think the Reit's unit price  is going to get any higher than 8.00 before the year ends. Even if it uptrends, the value would be slightly higher than  MAXIS FV of 7.20.

Now if I were instead to choose MAXIS and buy an additional  30k shares at the current price of  6.99 pre-dividend ex-date on 14 May, or better still wait for it to drop slightly post-dividend, say at 6.80 then I would have to fork out only 205k and at current MAXIS annual dividend rate of 40 sen TE, I would receive  12k a yield of  5.85%. The assumption here is both stocks are changing proportionately.

But if you were conservative and risk-averse, it is better to put your 205k in a PNB unit trust with the annual dividend of 6.5 sen because you would receive about 13K and tax-free but the unit price is fixed at 1.00 and  you will have to keep that amount for 12 months to get that dividend though the advantage is you also will  have that compounding principle to embellish your annual reinvestment. Slow and steady.

But  I think for the time being  I will pick up MAXIS shares instead of the highly-touted KLCC Reit  and give PNB Unit trust a miss as I fancy a roller coaster ride. In addition, to me, MAXIS is a good defensive stock with strong fundamentals and imbued with  innovative management and good governance.

I sure hope I am  going to celebrate this decision. Here I go on an adventure ride comes 15 May 2013.

SKPetro- My Stroke of Luck

A week before the general election, I was checking on my portfolio and noticed that generally due to the lack of leads before the dissolution of parliament and the uncertainty of who was going to form the next government, my stocks have been rather static in values.

My stocks currently consist of Telcos, Entertainment, Oil and Gas, REITs and Private Healthcare.My sole  plantation stock was sold three weeks ago . All are self-managed.

I have got some shares of ASTRO through an IPO application which have been lower than the offer price of 3.00 ringgit. At one time it went down to 2.67! I have been wanting to dispose of them and when the price  went to 2.90, after much debate, I decided to sell all my shares and bought more SKPetro shares  at 3.08. My gamble paid off as after the election with the National Front being returned to power, the stock went up dizzyingly and today  it is 3.55.

The stock price rise is amazing though I am aware of the foreign fund role  post-election

Though ASTRO also rose following the election to 3.02,  it compares poorly to the rate of increase of the oil and gas company. I am glad that I reviewed my position in time and in the process gain quite substantially. I hope the stock will continue to do well before I decide to dispose it. At the moment I am loving it. How I wish I had purchased more of the stock at that price! Instead I put some more fund from the proceeds of my THPlant sale in which I made some profit buying at 1.94 and selling at 2.20 into my PNB unit trusts, safer and less risks!

Luck 1% and Effort 99% = BIG Smile

SKPetro is at the moment an attractive investment. Had I not made the regular review of my portfolio, I would not have made the gain on the stock. So the question of luck here is debatable whichever way you look at it.

It's advisable to monitor your stocks especially when market-influencing factors are in operation. This is the exciting part of doing things on your own in investment. You learn from your mistakes too.

Market in 2012 and 2013- What the Fund Managers Say

I was reading a local paper a few days ago on the market outlook by fund managers particularly in Malaysia. All of them agreed that our market underperformed in 2012 compared to those of our neighbours, Singapore, Thailand and Indonesia. Our market is said to be defensive and has been bogged down by the uncertainties of the looming general election. Certain anxiety has been expressed regarding the anticipated upheaval should there be a change of government or if the present government is returned with a reduced majority.

While the concerns regarding the effects of the Fiscal Cliff in America are expected to be resolved, the sentiment is still cautious with the Eurozone debt crisis  still simmering. Economic data from China has shown some positive trend and the Country is expected to come out of its two-year economic low. Data on jobs and housing from America is also beginning to improve so according to these managers things are looking up in 2013.

Strategies,strategies, strategies

Some managers are still sticking to defensive stocks pending the political outcome following the general election to be called by March 2013. Some are avoiding cyclical performers in the oil and gas as well as construction industries and putting their eggs in finance,plantation and consumers stocks.

Others said they would buy on weakness (when FBM KLCI is below 1601) and sell on strength when the Index goes up to 1700. A good tip for me to also follow and make some money as I have trouble selling my stock, instead getting foolishly high on paper gain!

These big-shot fund managers certainly know what they are talking about as they are not only market-savvy but they also have a vast amount of data/information, economic researchers and stock analysts working for them and they deal with billion of fund so it is good to read about what they are saying.

Guilty pleasure

As I am managing my own little fund, I have to weigh in all the information and make my conclusions and buying and selling decisions which are also based on  readings and experience.

Actually my fund in equities is only 17% of my total portfolios. So delving into stock market is more like a little money-making hobby with ego being inflated and deflated along the way. For what is life without excitement,anticipation joy and slight depression? And now time for that coffee...

Towards Lower Risk Investing and Passive Income

I have been investing on the stock market for some years now. As presently I have less time to monitor my stocks, I have decided to transfer gradually my equities to those managed by regular fund managers. So far I have moved about 70% of my portfolio values to PNB related unit trusts, selected REITS and a hedge fund.

I am happy to note that the unfortunate "financial opportunity loss" on the so-called capital- protected CIMB structured fund (2008-2011) has been compensated by the sterling performance of my selected hedge fund within a year! I still can recall the letter from the CIMB Islamic fund manager who wrote upon the fund's maturity date...... " We are happy to report that the fund has managed to protect your investment's capital...." What audacity I thought! My 100k was dormant and lay wasted for three years and some foreign fund managers must have made money on it especially when market recovered in 2009 surely. I am avoiding this kind of fund like the plague.

It is exciting to make money on the stock market especially with your stock's dizzying rise in capital but the time has come for me to cut down the excitement and the fun and let the passive income take over. I used to have 18 portfolios and now I am left with seven. I am not given to frequent trading as I tend to hold my stocks for a longer period but emerging market volatility after 2008 and the current Eurozone debt crisis as well as the US's slow economic recovery are causing the strategy to be unsustainable and  have subsequently altered my investing behaviour for now.

A Raging Bull

I am working towards a passive income of 240k annually  and continue with my profession for the love and joy of it as well as  for a monthly pocket money.  My journey towards financial freedom has been and still is  educational and challenging. The most memorable was when the bull was raging with the bear nowhere in sight. What a time it was!

And despite all these, remaining caring and yet carefree has always been my wish.

Amanah Saham Nasional (ASN) units on "sale" and dividend in two months' time

This morning I went to the local ASNB (Amanah Saham Nasional Bhd)  branch to update my AS1M (Amanah Saham 1 Malaysia) book. It is always a good feeling to see your dividend in print! And by the way, as many of us know if you do not take out the dividend as it is annually credited to your account, you are actually unleashing the power of the "compounding principle". The accumulated amount is, however, subject to the annual rate of inflation which would affect the "value" of your money in the future so just be mindful.

Not withstanding,this mechanism of multiplying your money is excellent for young people who have many years of working before their retirement either in the private or public sector or anyone else (businessman)  for that matter. Saving for one's old age when one's capacity of income generating is greatly reduced is clearly a responsible practice.

Now for those who still want to make more money in a couple of months' time and are eligible to purchase the variably-priced PNB unit trust managed by ASNB, you can buy ASN whose price has come down slightly from 0.85 to 0.80 per unit and the dividend to be declared in about 10 weeks' time is expected to be more than 5 sen per unit thus giving you a better dividend yield compared to the fixed priced PNB unit trusts.

Transaction fee currently discounted by 2%

As it is variably priced, like ASN2 and ASN3, there is an up-front  transaction fee of 5% but for the period till end of this year, the fee has been discounted to 3%. The rate will revert to 5% in the new year (2012). It is a good way of "parking" your available money  for temporary investment. When you decide to sell after the dividend is declared, there is no more transaction fee. Of course, depending on the unit price after the declaration of the dividend, you will either have a major or minor gain but unlikely to lose.

I was made to understand that ASN unit price is benchmarked against the Bursa composite indices and if the current notable recovery on the stock market is any indication, one would expect the unit price to rise in the new year. The upcoming election is expected to momentarily excite the market despite the palpable external financial turmoil.

Honestly, I am envious of people who are eligible to  purchase this unit trust as there is a high probability that they will gain. A caution here though, any decision you make to buy this unit trust is entirely at your own risk. 

Stock Market Shaking, Oil and Gas Stocks Tumbling.

There is a sense of loss as I look, transfixed  at my rapidly tumbling portfolios. My oil and gas counters have all taken a hit. Apparently the managers of foreign funds have again decided it is not worth putting their money in Asian stocks due to an anticipated poor demand from America and Europe affecting our exports. So they take flight to other so-called safer haven.

 My Pchem ,at an all time high of 7.50 about three months back has collapsed at 5.68 this morning. My Dialog is at an all time low now at 1.97 after a high of 2.70 and I bought them at 2.19 and so is my Kencana bought at 2.93 and now a measly 2.53 and as luck would have it I did not buy Armada whose IPO I failed to get. Thanks goodness!

Remember Armada was listed on 27 July 2011, hardly two months have passed, and open at 3.65 and has gone up to 4.50 and look at today, the price has tumbled down to 3.45! Shall I buy now? Or should I wait for it to fall further nearer to its IPO price of 3.03? Honestly, nobody could tell whether this declining trend will continue or stop. Everyone appears jittery. One day up, the  next day down and now, down and down.

Armada  is falling down,falling down.....

The European Union's dallying on robust debt restructuring solution for Greece's potential default and the American's job problems have all affected worldwide investors' confidence. The IMF (International Monetary Fund) has warned that time is getting short as stock markets around the world are reacting negatively to current economic outlook and recession fear. 

The present market uncertainty is extremely bad for investors. For people like me who have the tendency to buy and hold,despite many pundits' advice against it, we are at the losing end as our shares depreciate greatly in value, reminiscent of the fall in October 2008, precipitating a GFC (global financial crisis).

Things have to move on nevertheless.We have yet to reach the trough.

I am eyeing Armada after selling off my CMMT today at 1.32 and which I bought  at 1.04 last year. I am afraid to wait as I did with Dialog as the recession is looming if the Feds and the European Big Guns are not doing anything to shore up markets' confidence . Like it or not, our market is affected by their actions and manipulations.

I feel sorry for the politically-embattled Angela Merkel, the Chancellor of Germany as her people, the German taxpayers, are getting fed-up of aiding Greece which doesn't seem capable of putting her financial position back on track. And the Feds might have to come up with yet another quantitative easing 3 ( printing new money guys!) to help those banks to lend money for businesses in US. If they do then we will see some market recovery  here in Asia including Malaysia. 

Rather convoluted I must say this globalisation thing!

Averaging Up or Down- My Experience

As I was reading an article on this topic by one of my favourite bloggers,Musicwhiz, I was reminded of  my own experience in dwelling on such activities or shall I call it "plunging" into them?

It was in early 2007, nearly a year before the global financial crisis. I met with an accident and had to stay home for almost a month. As I sat in front of my computer with my left leg in a plaster cast, I noticed that the market was in an unusual vibrant mode, call it a bullish trend if you like. I had much earlier bought some "Renong" shares which was later converted to UEMworld and the unit cost then was 1.25. This counter suddenly became active and as it was going up, I kept buying without really understanding the principle of averaging up, mind you. Had I known the risk I would have been in fear and more careful.

My effort was well rewarded though, as by the time I sold off all of my UEMworld shares at 4.40, I had made a small fortune all in a matter of eight weeks or so. I was extremely pleased with myself and that rather massive gain was used to buy other shares and make up my variety of portfolios. Well, it was a success story, one based on instinct rather than a careful study of the fundamentals of the company. Certainly not to be emulated by anyone worth his salt. Average up and gain?

Then in the first quarter of 2010, as I was looking at the trend of the various sectors in the market, I noticed that the technology sector was doing relatively well in rotational plays. The new kid on the block, JCY whose IPO was at 1.60 had even gone up to 1.98. Then suddenly JCY, along with the other technology stock prices like Notion, started to fall. Mindful of the possible opportunity to buy low,  I went headlong into the market and bought JCY shares at 1.52, well it was below the IPO price wasn't it? Then it fell again and I kept buying  till I realised that I was putting my money into a bottomless pit  and ceased averaging down forthwith.

The Greek sovereign debt woes and worries on its contagion effect as well as the fall in demand for hard disks had battered down the technology stocks and I came by the news rather late. I lost a substantial sum of my hard earned money on this stock when my broker advised me to dispose all of it early this year at 0.58 sen. Luckily I followed his advice as a few weeks later it still continued to fall and now I think it is at 0.40 sen. Certainly nothing to be celebrated. Average down and lose!

I used the proceed to buy the Pchem IPO in trading and service sector and as luck would have it I was successful and able to compensate for the loss when this newly acquired stock went up by RM2.00!

In my little experience ,averaging up in a bullish market proved to be lucky and lucrative despite the apparent risk and my averaging down, while seemingly clever, in a volatile market still in the shadow of the recent GFC (global financial crisis) was disastrous. And my final disposal of the technology stock at a great loss was a fortunate decision as it went down still lower and would have suffered greater losses had I held on to those shares. And my good luck with Pchem had single handedly turned around my financial status.

There was an interesting comment which pointed out that if you keep averaging up, you are a masochistic (pain-loving) and if you do the same by averaging down you are a hedonistic (pleasure-seeking). Tell you what, when I was performing those two actions I hardly thought of the pain or pleasure.... I was just having fun with Mr Market!

MRCB or ARMADA and Market Volatility

I have some fund available for investing following my failure to secure Armada IPO last month. Instead of keeping it in some unit trust accounts, I have decided to see how the market performs with regards to Armada. It does not seem to come down, in fact it is going up gradually defying analysts' prediction of its fair value being about 3.92. Instead it goes up to 4.20. I am not about to put my money in this overvalued stock. So I wait.

My oh My!

Then that precipitous fall at New York stock market occurs on 5 Aug, DJI index declines by over 500 points, the single largest dip since 2008, and followed by other world markets the following Monday 8 Aug; Malaysian stock exchange is no different.I note an ocean of red with many favourite stocks which were making gains the week before falling by as much as 15%. I see Armada goes down to 3.80 and another stock, MRCB which I am monitoring falls from 2.55 to 2.16. I am debating which one, Armada or MRCB that I want to acquire. I read about the market not likely to recover in the short term, I read about when one goes bottom-fishing and I read all about the gloom surrounding most markets and so I waited.

Bumi Armada

Then market suddenly rallies on 10 Aug based on the Feds promise to keep interest rate to almost zero for two years and everywhere the stocks return to black! (Re: my last posting on Back to Black :D). After doing some simple calculation on stock yields, I decided on 10 Aug to get those MRCB shares which opened at  2.16 on Monday but has climbed back to 2.20. Well I thought I was not going to wait any longer, just close my eyes and told my remisier to queue for that price and I got them in less than 20 minutes... Gosh some guys really wanted to dispose of those shares! I just hope my luck holds out, in this volatile period one is supposed to focus on capital preservation and not going headlong into investing but remember no risk, no gain!

The next day, 11 Aug Thursday, MRCB along with other stocks fell again ( following Wall Street of course the evening before) and this time based on remarks about Germany's and France's exposure to down-rated Spanish and Italian bonds... Ghee, what else could be there that are going to affect the market? I know the British riots do not affect it, I supposed when China, US or the economic giants of Europe cough, we will all be sneezing as well ( a cliché I know). And so I saw the value of my MRCB stock went down to 2.09 overnight. Immediately I rang up Jenny my stock broker to buy additional MRCB shares at 2.10 to dollar cost average. But she never rang me back as the robust stock held up at 2.20.

Angela Merkel  and Sarkozy - a Powerful Pair

World markets return to black on 12 July following Wall Street overnight recovery after Angela Merkel the German Chancellor and Sarkorzy, the French President indicated  that they would get together to discuss the eurozone debt and that their exposure to Spanish and Italian bad debt is not critical. And so my MRCB shares return to 2.23 as for now.

What a historic week for stock markets around the world!  After a week of the most volatile trading sessions since the global financial crisis, the Dow Jones rose 423 points yesterday, but it remained 301 points in the red ahead of this Friday's session .Morgan Stanley Smith Barney vice-president Fabiola Gibson told the Australian online that "The difficulty in a market like this is that no one has time to think. In a market like this you need nerves of steel."

This extreme volatility tends to erode investors' sentiment towards equities and  no wonder everybody is buying gold pushing the price of the metal at an all time high.

Well for the small time retail investor like most of us "the nerves of steel" is an option for people who find investing challenging where gaining and losing is part of the game. Just sit back and relax!

Stock Market - An Ocean of RED and Back to BLACK

Since early this year I have been following news on the world's financial health especially the recently protracted partisan haggling in raising American debt ceiling. Their Congress managed to resolve the impasse just hours before default on 2 Aug 2011 much to the relief of the financial world. Most of the writings point to another possible GFC2 (global financial crisis). Things have been further confounded by  Europe's sovereign debt crisis which seems to have defied remedies and threatens more euro-zone economies.

Like most investors, I am worried , yet  I hesitated to offload some of my stocks  early last week. My hesitation does make a poor investor out of me. The intransigence was an opportunity lost. Despite being a small-time market player for quite some time, I must admit I am no savvy investor. I have created wealth no doubt but not as much as it should had I been more decisive and less greedy ... ooops!

Last evening saw the worst Wall Street sell-offs in two years. The world has seen it coming. Investors just fled the market on news of American worsening economic data and the failure of the stimulus packages to spur her economic growth. The Dow Jones Industrial Index was down by more than 500 points. I foresaw an ocean of red in our own stock market the next day which is today and as sure as the sun rising from the east, the ocean of red stares at me from the screen of my computer when market opens.

Market free falls at New York Stock Exchange Aug 4 2011 (WSJ)

Ocean of RED at Bursa Top Volume Aug 5 2011

Following the DJI steepest decline since 2008 yesterday, panic selloffs also hit other Asian stockmarkets . And the Australian stock market wiped off nearly AUD56b this morning. It seems that it is a natural reaction for most investors to panic and convert  what they have got in the market around time like this to cash and someone has made a remark that if this was the favoured technique, it should have been done before the crash!

It is envisaged that markets will continue to be tough for the next couple of months in the absence of any short-term resolutions of prevailing macroeconomic issues and investors have been advised to balance up the need for return with the absolute need to preserve their capital. It is not the time for borrowing and investing.

The Present Cliche - Credit The STAR

Well, for people who have the fund to spare for the longer term (one or two years?), it is the time to buy up those battered down stocks and wait for them to come back to black for long-term gains, reminds me of the popular song of the same name by the late and tragic British singer and composer Amy Winehouse.

Amy Winehouse-RIP

Savvy and lucky investors would have capitalised on this large hiccup in the market. As for me I tend to be wise after the event..... rather unfortunately.

Just as well I am still hanging on to my precious money and not silly enough to buy the coveted Armada shares last week, the price was rather low this morning since its launching on 28 July 2011. Time to buy I guess.. no, no, just let me wait a little bit longer as Armada's trading is in USD and I note that the greenback is weakening..... Typical me I would say. By the time I decide it would have been Back to Black.

Bumi Armada.. say what you like, investors just love it!

Bumi Armada, as expected, made a fine debut today at its relisting and I really want to congratulate a dear friend of mine DMJ who made that massive capitalisation. Gosh! that was really cool . He got 98% of his IPO application! Real lucky. Armada trading under trading and services sector opened at RM3.65 and closed at RM 4.14, more than 35% of its IPO price of RM3.03.

DMJ cleared 30% of his position at RM4.10 this afternoon... so dinner at Tatu Coffee House Shangri-La resort is on his house, ( instead of on the house ).

The stock performed well despite the current worries on American default ( I really don't think America is that foolish to make that happen) and Eurozone debt. You can see that the New York stock market is really volatile as it is rather clueless on the resolution of those two issues. So I secretly thought that Armada would not have risen so fast. In fact when my remisier Jenny rang me up on the opening price, I told her to wait till it comes down to below RM3.60... that was a joke, by 11 am, Jenny came back and reported that  the price had gone up to RM3.92 and by that time my appetite for the stock had gone sour.

As I was watching Atlantis's historic final landing at 5.57pm this evening on my desktop, I  was also listening to CNN business news on my flatscreen and understood that sentiment had gone up again because of better reported companies' earnings and market went up yesterday and today it seems to have improved further. Could tomorrow, being a Friday be a day of  minor selling off for Armada?  Anything could happen over the weekend so some people might just take their profit and sleep well over the weekend.

Interesting to watch  guys, tomorrow I will go to the market again and offload the refunded ESA at whatever the Armada's price when I  note any sign of a minor profit taking... see I was not successful this time though I cannot really complain seeing that my MSM is doing quite well. My friend did not get MSM IPO so it is fair that now he is successful with Armada though I am rather envious at the number of shares that are allotted to him  because  my successful MSM IPO was only at 30% from the total number applied.

A Market analyst has put a target price of Armada at RM3.91 at 25x PE based on  earnings in 2011 and first quarter of 2012 but also with respect to other big cap O&G service providers' peak cycle P/E's but today's closing price beat the analyst's prediction. In fact I believe, on many occasions,  it is the investors who determine the price they are comfortable with and in some cases, not unhappy to lose.

Bumi Armada is a good counter based on its fundamentals,good governance and book orders but we must be aware of its potential  downsides affecting the stock price and possible dividends, for examples  the company is subject to risks such as the following:

• Cyclical O&G industry- growth decreases at end of cycle
• Project execution risks e,g cost overrun or delay with penalty imposition
• Unexpected vessel downtime- breakdown/repairs
• Forex losses due to weak USD ( as most earnings are in USD)

Okay people, you buy this stock at your own risk ( read the prospectus!)  as I am only trying to convince myself to buy this stock before the company  reaches its peak cycle for which it would be like Pchem or MHB  and for me it is part of the fun I derive from investing. Lose or gain is taken as a challenge in creating wealth. If you are going to fret over losing money in the stockmarket, go somewhere else to multiply your precious "ringgit".

Happy investing and good luck to the well-informed risk-takers.

Ending a long love affair with....

Caught you didn't I? Sorry there is nothing as sordid as you thought in this posting. Actually I am selling off all of the remainder of my PICORP shares today despite the market being down, in fact I am disposing the blinking stock, on buy and hold silly strategy, at a ridiculously low price. I bet the person who bought them is laughing out loud today. Oh, it doesn't matter when I am already compensated by sweet gain on my successfully acquired MSM IPO shares recently ( please don't be jealous AC and gang!).

The reason I went headlong to discard PICORP purchased before 2008 world  financial crisis was to buy KENCANA Petroleum on news of its merger with SAPURA Crest (kicked myself for selling this gem despite knowing it was going to go to 4.20. I bought it at 3.63 in January this year and sold at 3.93!). Never mind if the investment bank was saying not to buy KENCANA at higher offer as the stock has been fully valued because sometimes people are not listening to stock analysts especially in this volatile market period. I am just hoping the crude oil prices will not dive steeply as to indirectly affect the income of both of these oil and gas companies.

You know what? I feel a sense of relief offloading PICORP, never again will I touch penny stocks. I learnt my lesson the hard way, buying a stock based on people's recommendation is one of the downsides of investing. Another wise-after -the event lesson is not to be greedy. Anyway, in my experience, it is better to stick to well-known companies with tangible outputs and so my purchase of blue chips TM,MAXIS and AXIATA when their prices were low prove to be my investing highlights.

I am also sad to sell off my THPLANT shares bought during the heyday of plantation stocks being the darling of investors. The consolation about THPLANT is during the massive selldown of plantation stocks in 2009 the company graciously gave us bonus issue, one to one and when the price recovered slightly many of us made gains. And it also gave relatively high dividends. I will buy back this stock later.

So here I am today ending my love affair with non-performing stocks held for more than three years and "uncautiously" beginning a new affair with oil and gas stocks. actually I have begun this affair in January this year by purchasing SAPURACrest and DIALOG. I am keeping the latter but it is climbing very slowly albeit steadily.

Looks like I am going to regret acquiring KENCANA at this knee-jerk high price today for the short term but I am taking the long position on this one. Yes, CAVEAT EMPTOR... is ringing in my ears!

Bumi Armada IPO, here we go again!

Many of my friends were not successful in their application of the recent MSM IPO and this next news-grabbing IPO may just be their next best bet. I am sure many keen investors are not going to miss this relisted stock under Ananda Krishnan's stable of companies. Such companies are reputed to be infused with good governance so you can be sure that investors will flock to get their IPOs!

Foreign funds managers' interest in this IPO is also expected to be high.

Bumi Armada is an oil and gas services provider. Yes, they provide the mechanization for oil exploration currently in more than four regions of the world. It is I believe the only company based in Malaysia that is involved in this niche industry. Bumi Armada was taken private in 2003 when its share price was RM7. Its relisting was postponed several times due to world's financial crisis and economic uncertainties.

The number of shares offered for retail investors are much more than that of MSM which by the way had a fine debut on 28 June with an upside of more than 30% of its institutional IPO price. We should expect Bumi Armada to have that kind of debut . Your chances of getting this IPO shares are slightly better than MSM.

The IPO price for Bumi Armada is set at RM3.15 and the closing date is on 7 July at 5pm and its listing on Bursa will be on 21 July. As I've  just returned from Australia, I am unable  to truly garner my finances to apply for this IPO so I am forced to sell  my PNB units to get the necessary cash. I am , by the way , offloading my non-performing stocks  just so I will be able to put back a good percentage of my withdrawal.

I will only perform my ESA on 6 July a day before the closing date as I am waiting for other financial sources to apply for this IPO so as to increase my chances of getting a portion of it. It is conceivable that at balloting the more shares you apply the greater the chances of you getting it. Many of those who applied less than 20k shares for MSM recently had failed to be picked out.

The post-listing price of Bumi Armada is not expected to be wildly dictated by market forces as its anchor institutional investors like PNB and Insurance  and investment companies are expected to keep their investment for up to two years. Pricing the IPO at RM3.15 seems to provide the company some kind of buffer in case the world economy becomes more volatile or decline on Greek Debt woe, American uncertain economic data and the easing of the economy by China. The globe is indeed  interrelated now by default.

However those who could withstand the current volatility pressure will eventually benefit. That is why it is important to buy shares using your own money and not otherwise.

And so here's wishing you all the best of luck again for your application of the Bumi Armada's IPO units.