Joe : Caffè Mocha, please.
John : (back with a tray with two cups of nice Mocha and some muffins). Joe, here is your Caffè Mocha.
Joe : Thanks. John, what a beauty MacBook Air you got there.
John : Cool huh, cost me quite a bit but worth every Ringgit I paid for it.
Joe : Did you read my blog lately.
John : Sorry, I didn't, busy closing a M&A deal lately. I just got back from Shanghai preparing for due dilligence.
Joe : Is everything going on very smoothly?
John : Nope, let's talk something else, need a break. Let's talk about your favorite subject making money out of stock market.
Joe : Cross border investing is one of the hottest topics around. I got a bit of pressure in almost every cocktail party. Their impression on me was just a Lat's kampung boy, unsophicated.
John : U hum, sounds like you got peer pressure going on there. Me too. My bosses and clients talk about commodities, futures, buying the US stocks, goreng a bit of stocks in Hong Kong. Looking into Superfunds. They got burnt very badly last year. They managed to get back a big chunk of good money recently and got them going ga ga again.
Joe : Same boat-huh. Well I can pretend because I can read those stuffs over the Internet and start talking like an expert. Construct a hedge-fund like portfolio : 10% GLD(Gold ETF), 10% SLV(Silver ETF), 10% DBA(Agriculture Commodity Index), 10% DBC(Commodity Index ETF), 10% EEV(Short-Emerging market ETF), 10% FXI(China market ETF), 20% SSO(Proshares Ultra S&P500) and 20% Cash. I can scream like idiot Jim Cramer too!
John : Haa....haaa. Jim? O yea, I agree whole heartly -- he is an idiot. Your thoughts on portfolio construction looks pretty neat.
Joe : I'm seriously thinking of liquidating my Malaysian stocks and play like a global investor.
John : Must be a big sum there, RM 300 - 350 k ?
Joe : Not that much.
John : If not, why ? I thought the whole idea of it is to look sophicated, stay diversified, play with volatility because the markets are a lot more efficient and liquid than Malaysian market.
Joe : I was thinking to put in RM 200 k or about USD 55 k.
John : Wow!, sounds like you are almost going for zero weight on Malaysia?
Joe : Not exactly, basically I'm thinking of just leave RM 50 k(20%) to invest in Malaysian stocks only. I am getting very fed up with long term prospect of Malaysia, politicians, lack of domestic market size and I can go on and on.
John : What makes you think that the pasture is greener over there? We are going to play against the best of the best you know. I know that you got really pissed when you could not into the local university. Your father got to mortgage his house to send you to RMIT. You had 2 part time jobs while schooling, I can understand your frustrations.
Joe : I can invest a lot more efficiently because there are whole lots of information available with great analysis compared to Malaysian stock brokers. Just get on to SeekingAlpha, The Bloomberg, the WSJ, the Economist, etc. Plus I can tap into our bosses and clients' trade gossips.
John : You got to know that they got millions and just a drop in the ocean for them but us ? Yea, we got a nice semi-D, a beamer - a thirty something millionaire by definition - but our investable fund is just a peanut.
Joe : Come on, we are smart, I think we can outsmart those guys. We just got to work harder. We were on the Dean list OK?
John : Unfortunately, Joe, market don't care a damn how smart, how hard we work. The best fund managers can't beat S&P 500 most of the time. Each transaction is going to cost us RM 200. To keep transaction fees less than 1%, we got to commit RM 20,000 for every shot. If we obey our cut loss rule of 20%, when the value drop to RM 16,000, transaction cost going to up to 1.3% when you sell. Not to mention about the forex buy-sell spread. That's going to cut our return easily by 4-5%. Assuming we are that smart and lucky, a gross 23% annual compounding(Warren's record) will cut to 19%, can't we achieve the same return rate from Malaysia market?
Joe : You got a good point there. So open a cross border with our local boys are really not worth it huh? What about open a foreign saving account and trading account? That way at least we don't lose out in the forex. Our local broker is sucking our blood, they charge us at least USD 25 per trade, you can get around US 12-15 with US brokers. Even they allow us to open a USD saving account, we still need some serious money.
John : What about looking into some of the off-shore mutual funds?
Joe : Oooops, Judy asked me to pick her from Marie France now. May be we catch up about this topic later. Ciao!
John : Ciao!
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