ASNB Funds: Taxation of Dividends

All these years many of us have taken for granted that dividends derived from ASNB funds are not taxed forever unlike mutual funds managed by other companies. Well it's not strictly correct that these ASNB funds are going to be tax-exempted forever except perhaps for ASB.

Reading the Master Prospectus 2013 -2014 today , I discovered that the tax exemptions for all funds except ASB are temporary in nature and investors should not be taken by surprise if the time should come when all their dividends issued by the various ASNB funds will be taxed in the future.

The current taxation status of the funds are as below:

The Funds managed by ASNB are granted an exemption from income tax under Section 127(3)(b) of the Income Tax Act, 1967

Funds	Taxation Status
ASB	The Fund is exempted from income tax for the year of assessment 1991 and subsequent years.
ASN ASN 2 ASN 3 ASG-Pendidikan ASG-Kesihatan ASG-Persaraan ASW 2020 ASM ASD	These Funds are granted an extension on the period of exemption from income tax for the year of assessment 2007 to the year of assessment 2016.
AS 1Malaysia	The Fund is exempted from income tax for the year of assessment 2009 to the year of assessment 2018.

Source: ASNB Master Prospectus 2013 -2014

There are many other aspects of these funds which are unknown unless you care to read the voluminous Master Prospectus. The point is if so-called new developments are taking place, you cannot feign ignorance as they are all already stated in the prospectus . So, go on read the prospectus to increase your knowledge about the funds you are investing in.

IHH - Solid Performance and Planned Expansion

I remember when IHH was about to be listed, I had already made up my mind that I would apply for its IPO, failing which I would still purchase it on the market. In fact one of my best friends advised me to ensure I wouldn't miss this stock. She is one of the country's heads of major hospitals who was offered the pink form ( apply and you would sure get) How lucky could one be!

Well, I managed to get 75% of my applications at an IPO price of 2.80 per share and proceeded to buy  more after waiting for about a week and the price had never gone down following its opening price! And I thought Westports would follow the same trend but I was dead wrong. Anyway, IHH has gradually uptrended right up to 4.16 and had a jolt late December 2013 following reports of the political turmoil with high inflation in Turkey and the decline of its currency. IHH has stakes in  Turkish hospitals (the group’s newly opened Acibadem Bodrum Hospital and Acibadem Ankara Hospital)

IHH showing a decline in its share price due to anxiety
on political upheaval, high inflation and weak Lira in Turkey.
(Source: Bursa Malaysia)

I am not perturbed as when you are looking for growth and long term prospects, you would see this kind of glitches as an opportunity to buy additional shares due to its lower price. The stock has since remained volatile and its closing price last Friday 14 March was 3.69 ( target price is 3.60)

According to Alliance Research,the company's 4QFY13 is within expectation.The group has proposed a first and final single tier cash dividend of 2 sen for FY13. Management has also announced its newly formulated dividend policy of paying minimum 20% of PATMI (  profits after tax and minority interests)  , excluding exceptional items. A low rate but the unrealised capital appreciation has been more than 30% as of last week. Under normal circumstances,  a fully established healthcare business with good governance would generally generate profit allowing it to distribute dividend to its shareholders on a regular basis.

I will stick with this company for a fair bit longer while hoping that things will improve in Turkey. Its operations (Gleneagles Hospitals) in Malaysia and Singapore are on track and it is building another 500-bed hospital in Hong Kong that is scheduled for operation in early 2017. The one in Kota Kinabalu is being completed by 2015. I am actually tempted to buy more IHH shares at the current price and keep them.

Westports - My Very First Dividend

Westports definitely has not attracted the attention of investors, retail or big fund managers, looking at the performance of its stock since listing on Bursa about four months ago. At one time the price came down to its IPO price of 2.50. Looks like its support level seems to be at 2.52. And yet it's too early to speculate.

Westports' lacklustre performance post-listing
Source: Bursa Malaysia

The situation apparently resulted from its biggest customer rerouting some of their ships to another port and that entails a loss of shipping volumes translating into a loss of revenues for the company. Despite reassurances from its CEO, the market continues to overreact.

As the lock-up period is coming up soon for cornerstone investors of this stock, I am more apprehensive as to the level of decline in its price if these big guys start selling. But from my experience similar stocks could actually transform as some smart investors, waiting quietly in the sidelines, start grabbing the stock at a lower price and only for it to soar a few months later. Well, I am willing to wait for the later scenario.

What I like about Westports is the company's promise to distribute as dividend 75% of its annual profit and from the financial report, I am convinced that I should stay with them. Last financial year (2013)(excluding special dividend payment)  the total dividend paid was a bit more than 9 sen per share, a return of roughly 3.6% based on NAV of 2.50. Hence the more the profit the more the dividend.

And believe you me, despite the bleak sentiment, yours truly decided to acquire more Westports shares before its dividend ex date on 26 February. Incorrigible? Even my better half is shaking his head as there is hardly a breakout in the price trend following the dividend announcement.

I went through the company's report and its financial results and I believe that things will pick up, given their good management and their rolling out of more services on their infrastructural expansion, barring any socio-economic and political obstacles, the usual risk factors. This is just my layman's analysis. You all buy the stock at your own risk!

Patiently waiting to ride
Westports' uptrend :)

I am keenly looking at the stock's price appreciation which could take a couple of years and unless its annual dividend is going towards more than 14 sen per share ( in my case, a modest return of 5.4%), I will liquidate my position and invest elsewhere..

In the meantime, let me enjoy my first single-tier dividend of 5.22 sen per share ( a return of a mere 2.0% ) from  Westports, announced on 13 February 2014 and  to be credited into my bank account on 11 March 2014. It will be used to top up my unit trust fund, AMBVTF which consistently, over a period of more than five years, gives an annual yield of more than 15%. Hopefully the trend will continue.

Nevertheless, being pathologically optimistic, I am looking forward to Westports financial year 2014 and possibly 2015.

MAXIS - The final dividend for 2012

I just happened to check my dividend-paying portfolios and did not fail to notice that Maxis would be paying an 8 sen per unit dividend on 28 December. What a nice end to the year of 2012. All together Maxis has paid out 40 sen per unit for this year. It is substantial as far as I am concerned. At the same time its market price is rising steadily.

Whatever happens  I am going to keep this golden goose. I like the idea of getting dividend every three months. It kind of makes you feel your money is breeding right in front of you. I wish TM would do the same  as currently it is giving dividend every six months.

Maxis seems more robust in terms of its competitiveness. You notice that it has a number of innovative products to capture the broadband market. I think it still has some growth potential as it fights to get the migrant market share now being capitalised by DIGI.

About six weeks ago, Maxis share price was down due to profit taking activities of likely to be foreign fund managers and now they are coming back to lift up the stock price. As it has always been said, you can make money in a volatile market provided you have ready capital at hand. I had wanted to accumulate more shares       through the redemption of my recent ASIM dividend but instead I decided at a rather last minute to buy more AMB units as it was selling at a discount of 3% coupled with its low unit price which went down to below its issue price of 50 sen. Well, looking at the risk, it's better to be with an index rather than an individual stock especially during this uncertain financial times. I am a bit risk-averse here.

Having learnt certain lessons, I did not flinch this time around when Maxis share price went down to below the price I acquired it. The consistent dividend which makes me take the long position. It is like Warren Buffet and his golden Coca-Cola stock. Why do we need to ever dispose of it when the company is strong fundamentally and when communication will never be out of fashion?

So here's to Maxis.. a toast to our "partnership"

Investment- REITs Versus PNB Unit Trusts

I have been mulling over taking out my maximum investment in a REIT and place it instead in a PNB unit trust such as AS1M or ASM. Though the unit trusts are fully subscribed but you can always get them bit by bit following daily redemption activities of other investors.

PNB Unit Trust is Stockmarket-dependent

The REIT is giving a good dividend of 6.50% per annum which is the same as that given by PNB product. The advantage of the latter is it is credited back into your trust account and you just leave it for the compounding principle to do its wonderful job.

The REIT has some prime properties in the capital plus it is also doing more acquisitions of services to expand its capability of paying more dividend to its investors in the future. Whereas the PNB products are depending on the performance of the stock market in general. Both are managed by fund managers so one does not need to keep a close watch on the daily stock market activities.

REITs- Location,location.. occupation,occupation..

I would expect both investment instruments to behave more or less the same way in varying financial environments. Thus if the economy is down, both would not be able to perform as well. Even if one were to perform slightly better, there could not be that the dividend would be too much different. Could it? Could the REIT give a dividend of say 10% per annum? Like BSDReit which gives more than 9% for the last couple of years.Hmmmm... I am cracking my head now as I have to make a fast decision before end of this month.

You know that feeling of wanting to have everything? Not greed but call it diversification if you like to make it appear and sound better. By May next month I will get back my capital investment in Central Bank of Malaysia (BNM) bond or sukkuk. Perhaps I would use this 50k and leave the same amount in my REIT and see the performance pattern  from then on. In this way, I will still be able to transfer 75% of my REIT investment to a PNB unit trust.... a kind of compromise.

Really REITs may have higher dividend potential given more market confidence in the property sector in the future but I am in no mood to face the risks at the moment.

Felda Global IPO - Acquisition through portfolio restructuring

Details on Felda Global IPO are still hazy at this stage though it has apparently been slated for listing on 10 May 2012. Investors are waiting for analysts to run through the offer and share their findings. As it is people do not appear as excited seeing that it would be joining  the already crowded plantation counters on Bursa. Nevertheless the IPO is touted to be the biggest so far this year.

Biggest IPO so far in 2012

While waiting for the prospectus, I am already making preparations to apply for the IPO. As usual the fund would come from my savings and the sale of my current stocks which have appreciated in values. I am now thinking hard which one of them to dispose off. Among my favourite holdings are Axiata,TM and Pchem, the first two have meteorically appreciated over the last couple of years. I am into that mood again, being in love with the performing stocks. I am rather sad to part with them. May be I could just sell a small proportion of shares of each stock? The problem now is the IPO price for Felda Global has not been announced yet for me to ensure I only sell the needed number of shares.

I have other stocks like Faber,MRCB and BSDReit. The first one has appreciated from 1.52 to 1.78. I am losing on MRCB purchased at 2.20 and now is at 2.01, quite a sizable amount! BSDReit, bought in 2009 at 1.40 has now risen to 1.72 and am highly reluctant to part with it as its annual dividend at more than 9% is rather attractive.

I might sell all of my Faber shares instead and spare TM because my relentless aim is to own 100k shares of the blue chip. Was elated beyond measures when I sold off all my Maxis  shares at 5.42 and acquired additional TM shares at 4.30 and which later climbed up to 5.19! But as my luck would have it, the minute I sold off Maxis,  its price sky rocketed  to 6.00 within 10 days! My only consolation is that TM's rise is bigger for a lower unit price.

Have to make the decision soon while the market is still in an exciting mode following Dow Jones reaching 13000 points last week, the highest since 2008. I might miss the boat otherwise.

 This portfolio restructuring would be fruitful if I were to be a successful applicant of the IPO. I am itching to own one plantation stock because I had sadly disposed off all of them back in 2010 at great losses which fortunately have been compensated by my new telco stocks. I have noted though that the prices of my old stocks like SwkPlant,THPlant,MHC,UNICO  and Kwantas  have all since recovered from their lows during the 24 months' period  (2008-2010)..... can't help looking back at old stocks and unconsciously emit that veritable sigh and then snap myself out of it.

I hope for a better luck with Felda Global.

JCY and the "touching" Dividend of less than a Sen

I wrote about the blunder I made by buying the technology stock in June 2010 before the Euro Debt Crisis was highlighted. As everyone knows, the IPO for JCY listed late in 2009 was 1.60 so who would blame me when I rushed in to buy it as it started to fall below the offer price? My only guilt was I did not read about the chip makers' supplier's news a week before! It was so funny that as it was falling, I kept on buying on the basis of dollar cost averaging. I only stopped when I read the news belatedly!

I bought the technology stock because I wanted to diversify my portfolios, as simple as that. Unfortunately I went in with the wrong step. My spirit lifted a bit a couple of months back when the JCY CEO maintained that this industry is cyclical and the time will come (When oh When?) that it will pick up again. So I am supposed to leave my money to hibernate in the market till such  a time comes. I kind of decided to just let it be and not to think much of the stock for the time being. Let us see the development by 2012.

So it is indeed a surprise that JCY announced a dividend of 0.75 sen in the last week of December 2010. Oh gosh! I salute the company for honouring its promise to give a dividend from their annual profit though I have not expected this. I thought they need the money more than we do especially when they have to pay workers' salary, maintain their machinery, building etc. This is the company I will stick to till it has fully recovered.

What was really funny was when I calculated the amount due to me at the end of this month. I thought I had a windfall considering the substantial number of  JCY shares I have. When I saw the amount I couldn't believe it, look Maxis has posted profit quarterly and yet the dividend for last quarter is only 8 sen. I have almost equal number of shares in both company.... then I realised that I needed to multiply it with 0.0075 and not 0.075!!  A slip of the mind and a non-cerebral act of the pen, it is  0.75 sen and not 7.5 sen.

It is touching nevertheless. But I am sure JCY will be able to give its investors more dividend and perhaps a bonus once this "low demand" thing is over. In the meantime I hope the company will innovate its products as the new iPad apparently  is no longer using the usual  traditional hard disk drive but flash memory instead and as its popularity is increasing among the gadget-conscious consumers, it is time for the technology industry such as leading hard drive manufacturers, Western Digital and Seagate to formulate new strategy.

I intend to give the JCY  dividend as "ang pow" come the New Year of the Rabbit!

Amanah Saham 1 Malaysia's declared lower -than - expected dividend

When I received the news of the declared dividend on 23 Sept 2010, I was relaxing on the Royal Caribbean Cruise to Venice from the Greek's island of Corfu. I decided to check on my email from the ship's 24-hr online center after a hectic stop at our last port of call. I was a little disappointed at the declared rate of 6.38% as I had expected it to be 7.0%. But if you look at the other declared dividends of PNB unit trusts like ASM, ASW and ASD  at 6.35 you would notice that AS1M's is just a wee bit higher by 0.03!

It does look like PNB is no longer able to give "special" dividends like it used to give to its  latest products like on previous occasions such as ASM (amanah saham Malaysia) and ASW ( amanah saham wawasan) prior to 2008. The SIME Darby's debacle publicized early this year could have contributed to this lower than expected declared dividend coupled with the prevailing global financial uncertainties.

At its height in January 2010, SIME stock was trading at 9.11 and it tumbled precipitously down to 7.20 at one stage due to investors' crisis of confidence following the news of the company's billion dollar loss. It didn't recover till late August following the new CEO's restructuring announcement. PNB's interest in SIME is quite substantial. So you do face risk even in unit trusts such as this, the only comforting fact is that your capital is protected unlike the variably-priced mutual funds.

But folks, ASIM's dividend is still the highest declared by PNB so far this year. And as I was hoping for that "whopping" dividend, I was encouraged to add more money  progressively into the fund as a result I received more than the amount had I otherwise stopped at my initial investment in September 2009 when the fund was first launched by the PM.

Look at this way, AS1M is just one of the PNB's stable of financial products that gives you an opportunity to earn more than your savings in the banks. Due to my bad experience with mutual funds, I would still put some of my investing money in PNB's unit trusts. Moreover the varying period of dividends' declaration of the respective trusts ensures a steady  income throughout the year.

Personally I would have made more money from my investment in AS1M had I not reduced it by buying a technology stock (JCY) 10 days before it tumbled pathetically! Some times it is hard to reign in your risk appetite.

Welcome then to the exciting world of wealth creation.

TA Dividend in Specie.... what is this?

My friend sent a text message yesterday and asked me to check for him why TA stock suddenly dropped drastically. The stock seemed to be doing well, from about 60 sen early this year to the highest of 1.48 just last Monday.

In fact he had bought this stock at a high price of about 2.02 last year well before the financial crash in October 2008 and was caught with his pants down so to speak. He lost a lot. So as a way of recouping some of his losses I advised him to buy more of this stock at the current low price (ringgit cost averaging). He finally did and bought some at 1.26 and sure enough it appreciated in a matter of a few weeks due to the recent "bullish" financial stocks.

Quietly, he sold his newly acquired shares at 1.47 and made a tidy sum. When I found out about this, I told him he was being impatient, he should have waited longer as I was sure he would gain more. He said something about not being greedy... well, what could I say?

Yesterday TA shares dropped to 0.78 and we actually missed the Bursa announcement on 15 Oct that the company would issue dividend in specie. Well what it means is that instead of issuing a cash dividend, this company, likely lacking in cash, has decided to give stock dividends instead, that is like for every five existing shares you hold they might give you an additional three shares, for example. Yes, he now has more shares but the whole value is much lower!

He was grinning cheek to cheek that he had made an earlier decision to sell the stock at 1.47 as , if he were to do it after this dividend in specie, he would have lost nearly 50% of his money. He was glad he did not ask for my "advise"...... well , after all didn't I say I was not trained in finance :D

Madoff... the Fraudster Par Excellence.

Disgraced financier,
Bernard Madoff

The sentence to 150 years in jail of the American financier, Bernard Madoff last Monday 29 June 2009 brought some kind of closure to the many people who he defrauded. Many of these people have lost their lifetime savings and are about to retire. Just imagine what their lives would be like, penniless in the twilight of their years?

The Ponzi scheme created by Madoff was only discovered when the recession started in 2008. Investors were scared and they wanted to cash in their investments only to discover that there was no money to be paid to them. The earlier years were good as they received consistently "high return" because there were new investors, individual and institutional, who had provided the money through their investments! The "fund" just collapsed when investors, in large numbers, liquidate their investments and at the same time there was hardly any new investors to prop up the fund. Had the recession not set in, the scheme would have continued.

If you had your investment now with the Madoff's fund, you are not likely to get it back.

Madoff got away with this fraud because he had built around him an air of "trustworthiness". Operating right at the centre of the world financial hub, ex non-executive chairman of NASDAQ stock exchange, a philantropist and a respectable member of an elite club in Palm Beach, Florida. Who could have suspected the fraud that he was? His fund was investigated twice by the SCR (Security Commission Regulator) and "found" nothing irregular despite an independent investigator's report that Madoff's fund was actually a Ponzi scheme! SCR has failed in its duty to protect the investors and should be restructured to regain public confidence.

Madoff at 71, can look forward to spending the rest of his life in jail for causing massive financial problems to the people who trusted him. His wealth creation activities were both unlawful and morally wrong. They also have worldwide ramifications.

Stock Market Sale is Starting......

As expected the rally at the stock market is short-lived as it is not driven by fundamentals instead by sentiments probably by news of possible economic recovery especially in the US. There were also talks about the entry of foreign funds being parked in our market and this it seemed had pushed up the prices. At the height of the rally KLCI had reached 1090, the rise was too fast and too soon. I am not surprised that many investors will be selling-off, contributing to the downtrend (translated by fear) and signaling the start of the needed correction.

Investors are taking a breather now and will be looking at the depth of this downtrend, is it a "V" or a "U"? Some will be taking this opportunity to get some bargains, some will take a longer time to snap up the stocks and some will continue looking and by the time they realize it, the prices are too high for them to afford. No risk no gain, now, in which group are you in?

Savvy investors will look at contributing factors and historical data and of course, the companies' fundamentals before they dive in. Yes, if you do not have time to monitor the stocks, please just stick to unit trusts and leave the excitement to risk-loving nerds!

Looks to me the stock sale is just starting but unlike the departmental stores' sale where shoppers come in droves, you will notice that the shoppers (investors) will tend to stay away from this sale. They instead will stomp in when the market is selling at rising prices... greed is sticking out a mile! I am going to visit this deserted market.....

A Blue Collar Trader... Looks like me, Sounds like me.. but...

It's heaven on Earth!

Having been aware of the need to create wealth some years ago, I decided to be financially literate by learning things outside of my profession. After calculating my income minus taxes and inflation rates and projecting it to a number of years in the future, I found that I could not sustain my life style in retirement if what I did was only regular saving in the old bank. Despite my saving affinity, I discovered that the increased saving through compound interest, an amazing factor in itself, would still fall short of my expected financial requirement at that golden age eventhough I would actually not be too badly off.

I love my profession and would not dream of doing something else. I was already thinking how to multiply my income without leaving my profession, at the same time I was not about to do double job or moonlighting. Other income-generating business related to my profession would also be deemed unethical. How then to make money work for me and not me working for money all my life? That question had, inadvertently, brought me onto the road of wealth creation. Apparently the same question was posed by Robert Kiyosaki, the author of the book "Rich Dad, Poor Dad" and look how fabulously wealthy he is now.

I started off with the safe capital protected unit trusts,then progressed to variable priced funds and finally graduated to the risky stock market through purchases of IPOs (Initial Public Offering). At the start of my "adventure", I chose my stocks haphazardly ( listening to rumours etcetera) and due to the then bullish market, I made money regardless. No hotshot fund manager was advising me. Then, one day, I finally grew up after the Asian stock market crash, as one of the companies I invested in was put under PN4 and has since been de listed from KLSE, and what a disastrous loss it was! That financial debacle taught me a lesson. I realise how important it is to know the companies well before you invest in them. I now invest only in those companies with strong fundamentals. I learned to read financial reports. Balance sheet, income statement and cash flow were all Greek to me once.

Lacking in investing skills and engaging the services of financial consultants are a hallmark of a blue collar trader who actually doesn't regard trading as a major source of income and who deals generally with low-risk investments such as mutual funds to get extra income through dividends and bonuses. On the other hand, I have a diversified portfolios and different asset classes and I am not really risk-averse as a blue collar trader is... I like risk as that is where the thrill is.

On reflection, yes I am an investor, on most occasions, I buy and hold stocks ,applying dollar cost averaging and making my money work for me 24/7 . In the meantime I am enjoying doing what I am qualified for... enough for my pocket money.

A rAlly in A BeAr MarKet?

The current rally in the stock market has given a lot of joy to some investors but several market analysts have cautioned against aggressive engagements as the economic fundamentals and export data are not yet that encouraging, though US job data in first quarter 2009 appear to point to a recovery. Some people opined that stock market precedes these data by three to six months... hard to believe unless you have been studying the market trend under different circumstances over the years... Warren Buffet's domain!

Some stocks in Bursa Malaysia have outperformed the market, rising rapidly from their 52-week lows by large margins. While other low beta stocks are underperforming and tactically safer to purchase now and keep for the longer term. The KLCI has gone over 1060 well below Fibonacci Retracement target level of 1080 at 38.2% according to a recent survey by Malaysian Business. So what do a minnow investor like me do? First I have missed the rally... now I have to wait for that predicted fierce selling-down..... fear and a wee bit greed?... But, hey, remember this is an all-weather investment strategy and not for short-terms gain... so no sleepless nights, thank you.

The same situation is apparently happening in the US, the current stock rally seems to be resilient despite the uncertainties of the market recovery. Fund managers said they were bullish and yet nervous at the same time. The rise in stock prices seem to defy logic and some market watchers have expressed concern whether it is now nearer to a point where smart money is getting out and dumb money is rushing in. Investors taking a short position have to be cautious because buying stocks at this stage may not achieve your desired risk/reward ratio. A rally in a bear market is exciting but small investors , especially, will need to monitor market behaviour very closely lest they lose their investment at the blink of the eye!

TM stock..... DIvEs today 27 May 2009

Time is Money

As expected the TM shares took a beating today..... from RM3.84, diving to RM 2.85, covering an entire capital repayment value... my current position is still fine at this level.... if it goes lower than RM 2.70, I am in for the long haul folk! The capital repayment will be used to buy more of TM shares and let it ride... ride because it is not a question of if , it is a question of when it will ever soar... and I am going to be loyal to "my company" and reap its fruits of success in the vibrant Malaysian economy ( why can't the politicians behave themselves?) and let avid investors, including minnows like yours truly help the economy back to its feet through investing!

But the TM story has not yet ended, there might be some surprises before the end of 2009 and I certainly hope to follow all those people laughing all the way to the bank!..... Dream a little as always and keeping the excitement alive and basking in the fun.

TM stock.. to dispose or not to dispose, that is the question.

After staying out of the market for what seems a long time following the depth of the financial turmoil, the current clear, albeit, small global recovery, persuaded me to visit the market.On 23 April I was contemplating buying TM (Telekom Malaysia) shares, it was then below RM3.25, having risen from about RM 2.20 in Nov 2008. It did look attractive. It continued to rise a few days before ex-date 20 May for dividend of 14.25 sen, following which the price adjusted downwards from 3.96 to 3.84 and down to 3.76 and I decided to buy some shares during this period, eyeing the 98 sen per share capital repayment ex-date 27 May.

However, according to some savvy fellow investors, the selling pressure seen after the dividend payout last week seemed to indicate that the same downward price adjustment covering the entire capital repayment is likely to occur, pushing the unit share value well below the reference price (pre ex-date price),thus likely to be about 2.70 or below, and that certainly will wipe out some of my initial capital investment in the short term! Yes, I will get some cash if I do not sell before 27 May but I would lose some money at the end of the exercise UNLESS the stock price adjusts only slightly downward. Will the herd mentality (especially the institutional investors) repeat their behaviour pattern? As the medium term business outlook for TM is not that great.. this may well be the outcome.

Yet, I believe growing with the company, I take the long position and I love the annual dividend and taking part in voting during shareholders' meeting. Then to dispose or not to dispose should not be the question! Of course if the price is right I will not hesitate to clear my position... Hmmm, this is going to be fun!

Time to hibernate

As readers of my blog must have noticed, I have now rarely posted anything on wealth creation activities. To tell you the truth, I have not checked my portfolios for months on end. The reason is obvious, the market has been deserted. Despite, the rolls of stimulus packages all over the globe, it still refuses to be stimulated, like a giant in a drunken stupor, oblivious of its surrounding.

I still check the prices of blue chips every now and then and am waiting for the right time to grab them, and yet when is the right time? As I have moved some of my investments to safer capital-protected instruments and eyeing the money market, I am contented to just monitor the market situation especially from the international perspectives.

The suggestion that we should spend rather than save now makes me cringe though I have been thinking of replacing my nine-year old car but unfortunately I am not that keen on the new model. See, since my student's days in Australia, I only like to drive a certain brand of car and that certainly limits my choices.

With annual inflation, the saving will definitely depreciate and this is made worse by the current low interest rate. This is the time when neither saving nor investing is really fun... time to hibernate and dwell on other issues.

Pre-September 16 Stock Market Tumble

It is interesting to see the panic in the market for the last week or so. As everyone knows that this is the week preceding September 16 threat by an opposition party leader that he would usurp political power through the shifting of allegiance by some existing members of parliament. The market response is anticipated given the political instability experienced by the country at the moment.

Whilst for some it is a moment of uneasy frustration, for others who have some cash , this is the time to buy. Remember this is a cyclical phenomenon. A lot of other factors contribute to market situation for example the current low CPO prices have affected the plantation sector badly and so has the windfall tax on the industry imposed by the government in the last budget. How much the current political instability is affecting the market still remains to be seen.

For those who dare take risks, it is time to get those bluechips .....enjoy the tumble !

Child Endowment Fund- Did I Make the Right Decision?

Like any other insurance products, the financial gain is calculated on risks. On many occasions, the purchaser of this kind of "forced saving scheme" base the decision to buy on the strength of trust on the agent. I took out mine because the agent was my ex-staff. Dutifully I paid the premium through a bank standing instruction and have forgotten about it for years till it matured recently.

I hardly looked at the finer points of the documents and only remembered the amount due to me at the end of the maturity period. So when I finally received the cheque I was surprised to discover that had I saved that amount in the bank I would have got the same amount of "interest" and had I invested the same amount in PNB Unit Trusts I would have got double the amount via so called 'dividends". The only factor in the equation was "the risk" that was, should anything have happened to my child during the period, I would be paid the insured amount... Hmmm.. one can always be wise after the event. But then, for the aggressive risk-taker, this is not a good method of wealth creation especially when there are currently so many good financial products offered by banks and Unit Trust Managers.

By the way I received about 9% less than the amount promised and my agent has long migrated to Australia!