Lion Industries Corp disposed Parkson Holding Berhad

On one hand, Parkson Holding Berhad buys back shares regularly, on the other hand Lion Industries Corp disposed 7.5 million shares of Parkson Holding Berhad. The disposal was made on 23 April 2008 in the open market. On the previous day, 22 April 2008, Parkson Holding Berhad bought 1.2 million shares, paid in the range of $6.25 to $ 6.60. I am getting a confusing message, is the company undervalued or not undervalued? If it is undervalued, why the disposal? Or something else? Parkson Holding Berhad has promising growth prospects but why creating unnecessary doubts with this kind of actions? It is still on my buy list but a bit disappointed.

Shall Turtle Trade?

I received regular comments from a reader. After he read my post yesterday, The King of Buy and Hold-Warren Buffet, Myth or Reality?, he suggested that I should trade instead of going the turtle way.

This turtle journey is to generate annual compounding growth rate of 10%. By the end of 15 years, I just want to accumulate a sum of RM 350,000. See my first blog for more details: Can Amateurs Beat Professionals? It is also my intention to demonstrate how frustrated it is for a guy with such a small budget to achieve the target, only $888/month saving???. It is also very tempting to churn, see my entries on performance pressure and capital allocation III.

But don't, I am very clear, by the end of 2009, I should have around $ 27,000. Achieving this target will be quite satisfactory to me but NOT very glamorous though. The first few years is mastering the discipline of saving money, resisting temptations and not making mistakes. It is characters building to master Rule No 1, Never Lose Money.

I just wanted to demonstrate why many believe in compounding power but have no staying power to finally seeing the flat curve rise to parabolic shape. To do that, you need to make zero mistakes for a long time. I believe many have read the power of compounding in many personal finance books, drop me a comment if you wish me to write a short entry.

The point I was hoping to convey yesterday was: very good companies are very hard to come by especially those who can outperform an index for a longtime. If you can find it, sell at a reasonable price, put down a big bet and keep it forever. Five were simply good enough, that's why it constituted almost 61% of Buffet marketable securities holdings. Let's not forget Buffet kept a lot of main street businesses for more than 15 years. Many have wrote what to buy but not many have think it through when to sell to reinvest. I will spend some time to elaborate this point later.

The King of Buy and Hold: Warren Buffet - Myth or Reality?

We all have been advised to invest for the longterm. Warren Buffet declared that he doesn't need an exit strategy because the selling is never if you pick the right stocks! I've traced Warren Buffet's major holdings over a period of 26 years from 1982 to 2007. This is what I found:



In his significant transactions, he bought and sold a total of 48 companies, only 13% of his holdings are older than 15 years and he is still holding it: The Washington Post, The Coca-Cola Company, Wells Fargo, American Express, Gillette ( P & G) and Geico. He has taken Geico private, the remaining 5 companies that are still publicly traded, made up about 61% of his 2007 marketable securities.

From Yahoo chart, it is seems that most of his buy and hold forever companies managed to outperform S & P 500 with exception of the Washington Post.


The next finding is going to rock you, 27% of them are less than 1 year old and 43% of them are between 2 - 5 years. If you add these two categories together, it is close to about 70%. Does that change the way you look at Buy and Hold?

Have a great week ahead.

Did iCapital walk the talk?

Moola posted an interesting topic for discussion: did iCapital walk the talk? iCapital calling himself absolutely bullish while selling out stocks? Since I have quoted iCapital several times and iCapital is on my buy list, it is about time I express my views.

Facts: iCapital raised RM 38 million cash by selling stocks in 9 months ended February 2008, TTB also bought RM 19 million of shares at the same time. I am in opinion he is just doing some house keeping. This lead to a question, is he a short-term trader or long-term investor? Generally, one should sell when you see another much more undervalued stocks or if you think sentiments are going much worse despite of very exciting fundamentals. It is not wrong to take advantage of Mr. Market. Holding time is a rough guide, no sacred cow in the world of investing. Turtle will not hessitate to sell MUI if Parkson drops to RM 3/share on Monday.



Cash/total asset ratio is 35% 9 months ended 2008 vs. 35% 9 months ended May 2007. One needs to understand that he is always sitting on a big pile of cash to exploit on cheap sales. That is the way he operates since day one, pretty consistent here. He always say that his approach is Top-Down especially comes to emerging market investing, no way you can do bottom up approach. The other observation I have: he is not a pure Graham or Buffet, he will buy technology stocks, small caps, big caps, growth, workout, etc. He will just continue to buy and sell as long as a stock is undervalued in his perspective.

I guess the only issue left is definition of bullish, does it mean one need to be 100% invested and not selling stocks?!. He knows the major open-ended funds weakness is funds need to be long all the time and force the fund managers sell out at the wrong timing, hence he came out with closed-end fund to give him that flexibility.

However, this is the most important point I want to make, we all need to use our own judgment no matter who says what, we all are human, we can screw up, could screw up big time. Having a good investment adviser will reduce the chances of avoiding accidents but no guarantee of not losing our own money. He also has many anchor bolt stocks calls that you can see in his 2nd chance portfolio. All his mistakes are right there.

Have a nice weekend!

Rates not the answer to high food prices?

Malaysia's central bank chief Zeti said interest rates are not the answer to curb high food prices? This is a structural problem that has be dealt with supply. Really? Or is she trying to tone down the expectation of rate hike to slow down hot money flows? If rate is not the answer, is exchange rate the answer? Well, it will depend our big brother, China.

If most think Yuan still undervaued by 10-15%, Ringgit will be heading to 2.8-2.9 esspecially most perceived both are moving in a lockstep? Does this means bond and equity market will continue to enjoy the rally?

The recent worldwide equities markets rally will put some pressure to those who have not participated. Is it too late to buy? The current rally is selling on the story of high inflation will stop Fed from keep cutting interest rate. This will lead to rebound in US $ therefore buy US $ asset. This is only a short term story but longterm could still looking pretty bleak when presidential election reaching its tail end by year end.

Turtle has more than 50% invested and will still maintain his stance of not buying at this point. Turtle is going to save more money, when the right opportunity arise, strike without fear! Turtle is willing to forego a small mini rally and do not think he is missing a superbull run!


KUALA LUMPUR(The Edge): Malaysia's central bank does not believe interest rates are the answer to curbing high food prices, central bank chief Zeti Akhtar Aziz said on April 25 .

Annual inflation hit a 13-month high of 2.8% in March, driven mainly by costlier food, prompting some economists to speculate that the central bank may have to raise interest rates, among Asia's lowest, by the end of the year.

But Zeti told reporters food-price inflation was being driven by structural problems with supply and that it would be better dealt with by boosting supply rather than adjusting rates.

"This increase in prices is due to structural developments that relate mainly to supply conditions that are not able to meet demand," she said after releasing a report on Malaysia's offshore financial centre of Labuan.

"Interest rates generally respond to changing demand conditions. In this situation, therefore, to address the issue of rising prices, we need to address it by addressing the structural issues...Therefore interest rates are not the answer in this kind of environment and under these conditions."

Malaysian inflation has crept up since late last year but remains among the lowest in Southeast Asia, thanks largely to price controls on essential goods such as flour and cooking oil.

These controls, combined with the enormous cost of energy subsidies, are putting a severe strain on government finances, which are already in chronic deficit.

The government, as a first step, has begun a campaign to boost agricultural production and announced plans to develop stockpiles of essential foodstuffs like rice and cooking oil. -- Reuters

Speculating vs. Investing - Hua An, Part IV

I'm travelling today. Post will be short. iCapital rated Hua An as trading buy with target price of $ 0.90/share yesterday. This is strictly based on technical chart reading. The Chinese government cut trading stamp from 0.3% to 0.1% hope to revive the stock market again. Hong Kong stock market will get some boost but it is approaching 26,000. Not sure what is Hua Ann price today, odds are increasingly not attractive if price continue to rise.

My readers, I'm on record, this blog is not dedicated to trading but for long term wealth building. The entries serve as a purpose to capture my thoughts what will happen if I'm trading. Just to record events leading to rise and fall of prices. We will conclude over time whether such efforts worthwhile, spending too much time chasing a few hundred Ringgit a month?

US $ 150 Oil

In last December, people were calling for US $ 200 oil. Today, they've compromised a bit, calling for US $ 150, another 28% upside from US $ 117. Part of me being a little bit of a contrarian has turned cautious. There is almost no use of looking for facts in newspapers, government reports or investment research reports, all say the same thing: demand and supply are very tight. The global boom has created endless thirst for oil. I read somewhere saying Russia is running out of oil but no one seems react to news Brazil discovered a large oil field. In the short term, a little bit of hiccup like one Japanese ship being attacked in Nigeria will send price soaring. Overreactions? The latest I read in the Wall Street Journal says this:

"Next year, if all goes well, Saudi Arabia will turn the spigots on the largest oil field to come online anywhere in the world since the late 1970s.

The Khurais complex, sprawling across a swath of red dunes and rocky plains half the size of Connecticut, is expected to add 1.2 million barrels a day to an oil market caught between growing demand and a paucity of significant new discoveries. The twin forces have led to historically high prices for crude oil, which settled at a record $117.48 on Monday.

But the project also illustrates a darker point: Even in Saudi Arabia, home to more than a quarter of the world's known recoverable reserves, the age of cheap and easily pumped oil is over.

To tap Khurais, Saudi Arabian Oil Co., known as Aramco, has embarked on the most complex earth- and water-moving project in its history. It is spending up to $15 billion on a vast network of pipes, oil-treatment facilities, deep horizontal wells and water-injection systems that it calls "one of the largest industrial projects being executed in the world today."



Bottom line, supply will remain tight. It will come on line between 2009 and 2011 from Saudi which supply 6% of the worldwide demand.

Commodities gurus like Jim Rogers and Soros said be careful. "Value" guys like Mark Mobius of Templeton and Buffet own oil stocks now. This oil bull run took off strongly in 2003 but has not pulled back significantly except in Janauary 2007. The only guy that totally missed this bull run is Bill Miller and still refuse to participate, I am not sure why. I agree that oil price will remain high but what is the fair value? US $ 60, US $ 70, US $ 80, US $ 90, US $ 100, US $ 125, US $ 150 or beyond???? How much should we pay for the premium on top of geopolitical risks + US $ depreciation + exploration costs + extraction costs, etc? What is the price level that will eventually hurting the whole world?

BTW, oil hit a new record after I wrote this, US $ 120.