Thursday, September 29, 2011

Double track investment strategy clarified

In my yesterday entry, I talked about Double Track Investment Strategy. I wish to make a follow up to clarify further because I do not want to mislead/confuse my readers.

Working on two investment strategies are very difficult for a lot of people. It is very confusing because most people will find excuse to flip flop between short term and long term investment strategies. That is how people really can screw up their total return, sitting on heavy losses on speculative investment while taking profit too soon on their long term investment portfolio that is finally delivering.

Even though I am coming out here to share for free of charge but it does not mean I can talk anything I like. I still need to try my very best to maintain high level of ethics and reasonable care.

Why I do double track investment strategy?

I will not talk so much about he long term investment strategy because the benefits and merits are quite clear.

I guess the question is why do I do short term trading.

To confirm my hypothesis. This will force me to keep in touch with market psychology and macro development analysis. I will put a small sum of money to test out my theory.

My most recent hypothesis is Greece default can be contained.

You will be a lot more serious with what you are doing if you have real money on the line.

I cannot tahan when I see over-sold situation. When I see stocks or markets are in very oversold territory. It will be foolish if I don't exploit the situation.

How frequent I do that?

Just may be about 10 trades a year. Remember over trading is bad! I normally consider the money I make as bonus.

How long I hold on to trading positions?

Normally no longer than 4 days.

How much do I commit to this strategy?

Small sum, very small sum. I never commit any serious money to this strategy. It is just for fun.

Why don't I publish this portfolio?

I have no idea whether I have been influencing my readers with what I have written with my Turtle Portfolio. If those readers were to act on what I write, I do not think they will lose money so far.

However, if I put up a short term portfolio, when I really cut losses to minimize damage, and they don't. That will do tremendous damage to their wealth for 2 reasons. First they may get the sizing wrong(placing a lot bigger per bet). Two, they cannot pull off the cut loss trigger. So, it is best I keep this private.


Tuesday, September 27, 2011

All clear?

I mentioned in my commentary that we need to watch Dow 10,719. Why? It's because the market was hanging by a thread. Surprisingly the market made a big U turn after tested it twice and closed above that level. Can I explain? Nope. Do I need to explain? Nope. I've almost given up hope to explain why markets go up or down. I think we need to give Greece a break. It has been the beating boy whenever people are running out of reasons to explain things.

Some smart people have finally try to estimate how big will be the problem if Greece was to default. The IMF estimated the default cost about 400 billion. This does not look like a big number but the financial markets have become so complicated with derivatives, swap and etc... worst still if these instruments were chopped and diced and sold to investors all over the world. I doubt people can quantify it and the only historical reference was 2008/2009 CDS fiasco. That's why people were so freaking paranoid. Why haven't I figured this out? Damn, by the time people like me can explain this in English, I have reasonable reasons to believe we are almost at the end of this European fiasco............

I do monitor my own level of bearishness. I remember my mood was very bearish around March 2009 , I was expecting Public Bank to go down a lot. This time, I noticed that I was very bearish about Tenaga and expect it to go down to 4.5 level. Below 5 but not very close. I also noticed that almost 29/30 FBM KLCI stocks were down yesterday. That was a sign of people throwing towels.

When the market opened this morning, the spread between buy an sell was totally unrealistic. The buyers were expecting people to sell them at lower than yesterday closing price. That's extreme. When I saw stocks like Genting Malaysia got beaten down to less than $3, SP Setia down to less than $ 3. To be honest, even a bull like myself was also shaken. Dare not publish a word on my blog. That is a sign that blood is on the street. These are signs of capitulation.

Under environment like this, I devise a two-track-strategy. One track is for buy and hold strategy like Turtle portfolio with almost zero turnover and another track is market-timing strategy. After this U turn, my market-timing strategy is telling me to watch Dow 11,500 level. Dow went into free fall(twice) when it failed to crack above this level. That is why you see the split personalities in me, if you have not noticed it already.

The 6 million dollar question is did I buy stocks last two days? :-)

Sunday, September 25, 2011

Found good gardening resource

A couple of months ago, a reader asked me what would I recommend to have a garden with minimum maintenance. Unfortunately, this does not exist in the world of gardening. If you really like to have a garden but do not have knowledge or time for it, you will have to compensate with the weakness with money. You may have to cough out about $ 200 - $ 300/month to get some services from a nursery. They will perform maintenance routine like pruning, fertilizing, treating diseases and lawning. Even you are prepared to spend money, the very minimum task you have to perform is watering. Worse still, if you abandon your garden half way, it will turn into a jungle and that will really make you depress. I'm not trying to scarce you but it really demands commitment.

I found a lot of ideas from


What I like the most is the BEFORE and AFTER effects of each project. There are a lot of things we can learn from each project. This is an example of low maintenance garden. I would not recommend the waterfall though(it's high maintenance actually).


garden designer in bangkok


garden maintenance thailand

thai gardener


pebble and rock garden

thai garden


The other blogspot that I found was



The blogger has stopped blogging but he left a lot of tips on growing rose. Check it out.

Photobucket






Thursday, September 22, 2011

Market commentary

Watch Dow 10,719 diligently.

The market tested these lows and survived. We are just couple points away to re-test this low again. As I entered this entry at 10.53 pm in Penang, Dow stood at 10,796. Breaching this low, program selling is going to send this index and other stocks lower. I saw a couple of analysis that pundits/investors were capitulated twice over the last 2 months. The sentiment is pretty depressed now. But then, I will not argue with the market. Only time can heal. Give the market a bit more time.

Market volatility is affecting business and consumer confidence. Talked to a few friends in the industry. Yes, there is no doubt that we have slow down but the slow down was not like 2009. It was seems like a normal pause to us to allow the overshoot to correct itself. But the feeling I'm getting is like people are expecting great depression.

Also saw this chart.


A lot of people said after Q2 ended, there is no liquidity support to fuel more speculation in financial assets. Not true. If we look at the chart, M1 YoY% growth is getting stronger.


Many also draw the parallel comparison between Greece and Lehman Brother. When the Fed allowed Lehman to belly up, it dragged the whole world with it -- to hell. Will the Euro members want that? Probably not. There is obviously some political maneuvers here and there but those leaders in charge know the consequence.

KLCI fundamentals have not changed much but sentiment is. Most of the stock leaders are throwing in towels. We have not got any meaningful correction for at least 3 years. Even the index retraced back to 1,350, it's only 15% pull back which I think it's a healthy correction.

Congratulation to those managed to jump out around 1,500-1,600 ++ but just remember not to get overly bearish like expecting KLCI to go down to 1,000 points or below. When the tide turns, it could happen very quickly in the next leg up.

Tuesday, September 20, 2011

To hire or not to hire a property agent ?

Let me cut the chase and go straight to pros and cons.

For hiring a property agent

1. These guys/gals are doing it for a living, hence they are much more specialized and knowledgeable. They are also supposedly to be a good negotiator. Though this is not a rocket science or required by law that you must sell through an agent, having an expert around to handle a large sum of money will help us to avoid silly mistakes.

2. When money is involved, especially for a large sum, we tend to be emotional. They will be able to advise us in much more objectively(I hope) to come up with a more accurate valuation of the property that we wish to sell. Like investing in share, we tend to anchor or make reference to something that is familiar to us. In this case, we tend to make reference to new launches. But often times, unless you are sitting on hot area, second hand house will tend to be valuated at transacted price. There are owners will not want to let go simply that they perceive that they have lost too much on realizable value. 20% discount to a new house is common.

3. They can access to a larger pool of legal resources and also financial institutions. This will help the buyer a lot in getting legal advice or a loan. This certainly makes the transaction can go through much faster.

4. They help us to screen through the genuine buyers or information seekers. The will make all the arrangement to view our house. If we were to sell it ourselves, then we will have to attend to every potential buyer.

5. If you don’t have time, it’s better to forgo 2% of commission expense and they will do all the works like advertising, taking phone calls, distributing flyers and etc for us.

Against hiring a property agent

1. Why don’t we save the money ourselves? 2% commission on 200 k is 4k, 300 k = 6k, 500 k = 10 k and 1 million = 20 k?

2. A potential buyer will perceive that they paid for the commission. A potential buyer will also suspect the property agent will mark up the price from the minimum value a seller is willing to let go. Some of them will want agent to be eliminated.

3. A property agent may not be familiar with the house and unable to sell the strength of your “product” especially if your house is heavily renovated. Unless the agent is familiar with your area, they may not know where the school, market, mini market, hardware shop, banks, etc……

4. They may want to push the easy sell – good location, high $$$ value, etc. If your house is in the disadvantage situation, it’s the last one they will recommend. This is especially true if you let some of more established property agents to handle them. I contacted one of the very reputable agents and they don’t even return my call after I briefed them my property.

5. In some extreme case of they are motivated by greed (maximum commission), they may push the price to the highest and may reach to a level of not saleable.

6. Online advertising is getting more and more common nowadays. It can reach wider audiences. You can also start to communicate with them via e-mail or cellphone and exchange a few photographs to screen through the potential buyers. If you feel they are genuinely interested in your house, then you can arrange a physical viewing.

7. You are in-charge of the negotiation. You can see all body language and can decide how hard you want to push your selling price. In other words, you are getting all the first hand information.

Monday, September 19, 2011

Tips on selling your old house

I sold my house in a pretty short time. I've done a couple of things on my own based on my common sense like

  • First impression counts. I repainted outside of my house six month before I moved out. That clean look would have probably created a very powerful halo effect. I also left a nice pot of palm tree at the entrance. That created a much more inviting welcome.
  • Repaint the house interior with white color. It's not expensive, the material cost was less than RM 100 but the effect was good. The other price that I have to pay was myself. I just have to roll up my sleeve and do the job. Always go for neutral color. There is no need to show your personality. Let's the new owner to decide what color they want.
  • Mop the whole house to keep it sparkle clean. I did it once a week and luckily I do not have to do it for too long.
  • Remove most of the things out of the house. I am sure that you have tonnes of old things that you left in your old house when you moved out. Forget about the sentimental value, just ship it out. If you can't get somebody to do it.
  • I removed the Cross from the old house. I know many Christians brothers and sisters may want to condemn me that I sometimes live like a pagan. Unless you want to narrow your potential buyers to your own religion, remember this is a commercial decision. Just pray in our heart that Our Lord will bless the new owner and hope some day the whole family will be converted.
  • Bought a big bottle of ceramic cleaner. Get rid of the tiles stain in your bathroom. Just try to make it as "new" as possible.
  • I left the house lighting on. A bright house will go no wrong. RM 20 electricity bill will not kill you. Also remember to fix all the faulty bulbs.
  • The only accessory that I left was the curtain. This will create a homely feeling.
  • Fix the leaking tap.........minor things like this can create a wrong impression. A tap costs RM 10 only.
  • Do not do unto others what you do not want others do unto you. Try to put yourself into others' people shoes. People will feel better if you have tried your best to handover a good property to them.

I will share with you more later: whether you should sell the house yourself or go through a property agent.

Saturday, September 17, 2011

Connect the dots . .





Can you connect the two dots?

BE CAREFUL WITH HIGH FOREIGN HOLDING STOCKS

Wednesday, September 14, 2011

Shall we bet on Tenaga?



First let's look at the chart. Well it has not even reached extreme fear of 2009 yet which was at the low end of RM 4 and still very far from 1998.

Then let me take you back all the way back to 1997/1998.



How not to dump share to RM 1++ when you see Tenaga lost almost RM 2 billion plus? If I'm not mistaken that they got hit due to depreciation of Ringgit that had a huge impact on interest expense which dominated in foreign borrowings. For some reasons they were able to get themselves out of the trouble after that.

This time round, the gas shortage is the culprit. It is going to hit them hard, very hard. In quarter 3 ended May 31, they lost almost half a billion. Their chief said, they have spent this much on alternative to gas:

TNB president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said the company had spent close to RM2.1 billion from January 2010 to August this year to substitute gas with distillates (diesel) as a temporary measure.

Read more: TNB: Gas shortage may force us to borrow http://www.btimes.com.my/Current_News/BTIMES/articles/jrtnb/Article/index_html#ixzz1XvvQQDPh


2.1 billion?? the number seems to be very big. He expects there will be an additional spending of 900 million from September - December, wow that is almost 225 million/month. He also expect this will last until next July, which mean another 1.5-1.6 billion expenses on distillates? If what he said is true, Tenaga can report as much as 2 billion losses over next 12 months? I am not really sure investors get the message and able to swallow this huge loss.

I know analysts are still reluctant to cut their rating citing the valuation is cheap.



Agree if you have a long term view and very long term view. I also know their profitability can recover but I want to see how investors react when they see Q4 '11 results. Let say they can make 2 - 3 billion profit per year. Their annual depreciation is about 4 billion and their capex is about 3 - 4 billion. So they can generate Free Cash Flow about 2 - 3 billion per year. They should be able to get themselves out of this mess in 1 to 1.5 year.

BUT..........I doubt many have that long term view. So.............

I will want to wait for a while and see whether 2009 low will be tested before place some chips.

Monday, September 12, 2011

What the hell happened to you Turtle?

Just in case you are wondering what had happened to me, I'm here just to say a few words to tell my readers that I'm still alive. I decided to keep my big mouth stop talking for a while because the market is very confusing and I certainly don't want to add more fuel to the burning bush.

I was thinking whether I should write a piece of serious entry like value investing, ROE here and there. Moat moat here and moat moat there but had decided to save my breathe for another day. Everybody is yawning and waiting for the market for more attractive entry.

Furthermore, most of my visitors are pros. They probably can quote almost any gurus at back of their palms. Just give them the names.

Then I was thinking to scold some of these corporate taikors on their recent corporate exercises but then my fingers were too slow. Most of the exciting and hot news already commented by others. Aiyah, too slow lar, too old but hey I'm still competitive man. Seriously, these taikors are just like crazy Malaysian drivers. Their bad habits seem to be impossible to kick. Like crazy motorists, they seem to take every traffic rule as suggestion only. Nothing seems to work. You fine them, counsel them, blacklist them and now they talk about teaching kids in the school to be a polite driver. Well, when they see their father and mother potong Q from emergency lane, go 100 to 180 km in 3.4 seconds(in Myvi some more) to beat yellow light, do you think these kids will apply what they learn in school? Diversion pulak, why am I talking about this topic? Entah lar. May be some Myvi potong my Perrari from left side leaving me in dust!@#

Seriously, I think we should re-introduce short selling to keep these buggers honest. If you allow them to short to zero, then I think this process will clean up half of these walking deadman on the bursa. Just let these vultures circling those poor fundamental companies and they will kill dishonest management. If you reward those guys that can analyze bad things, I am sure they will a superb job for investors. So no need our SC to issue UMA, query our big shots why do RPT on a willing buyer and a willing seller basis, etc......

But then being uniquely Malaysian, later when we have some small guys lose money(kena short and shot) and after a few demonstrations di sana sini or complaining to a few big guns who are very well connected politically -- short selling rules will be banned again. Here you go again, Malaysians like to drive round and round of a roundabout. This bad habit that we inherited from our old British masters seem to be difficult to kick. Memang first class Opium. That is why divide, confuse and conquer work. The taikors keep screwing and small guys keep get screwed. Sons, stop gambling in bursa Malaysia. Give your money to your mama. She can beat the KLCI benchmark. Wow, how???!!!

FD ma, son. That is how you do it!!!

Saturday, September 3, 2011

Should you close both eyes and buy ?

When a company declares big dividend, should you close both eyes and buy? One of the examples is Opcom.

They declared 22.5 sen special dividend recently. And stock price shot to the moon.



However, if you look at the lower chart, the indicator points to distribution immediately. Shit, someone has been accumulating prior to the announcement.

Those rush in and buy are really stupid. Why I said that? When the stock go ex, it will come back to 80 sen. So what is your gain? ZERO, absolutely ZERO. Worst still, after paying 1.4% to broker and I hope it is income tax free, you might even suffer a minor loss.

I think the chance price of this stock to higher is slim. Wrong you said, the company has 72 million cash sitting nicely on its balance sheet. After minus 29 million of this special dividend, it still has about 42 million cash. That will translate to cash per share of 0.33. May be they will pay another round of special dividend?

Well, we will have to take a look how robust is their business. Opcom is in manufacturing of fiber optic. Their business depends a lot on one single customer that is Telekom Malaysia. A few years ago they lost some parts of their business to Leader cable. O Yea, being Mahathir's son was not been able to help. The got to compete on a level field. Their margins suffer when they have to compete. But it has bounced back strongly in FY 2011.


The question is why their revenue doubled in 2010? They said their shipments had doubled. Why it is so? Digging into their annual reports, they said Fiber to Home program has gone up from 350,000 homes to 800,000 homes from 2009 to 2010 and they expect to add another 500,000 homes by 2012. The growth potential seems to be fantastic but end markets growth does not equal to Opcom's top line growth, why ? We got to differentiate installed capacity and utilization. Telekom could have invested way ahead while the utilization is low. Unless, I can get a good data and understand this factor, I will not be able to forecast what will be their growth potential for the next 3 years. It may grow or it may not. If one were to commit fund to it without proper understanding on this key success factor, it's merely gambling.

Thursday, September 1, 2011

Turtle Portfolio Update: August 2011, A Terrible Month.



What a terrible August month Turtle Portfolio had. Portfolio shrunk by about 6% comparing August to July. The gain through August 31 is now stood at 13.94%. Portfolio is now 91% invested. I hope the Portfolio will recover in September a bit but again, traditionally this is a very weak month.