Sunday, 22 February 2015

Currency talk

"A while" ago I was so innocent and thought that the Kingdom of USD as the international currency will "terminate": to be replaced by CNY, thinking of how fast CN grows. I was wrong. This will not happen, at least for years to come.

In 2008 when US was trapped in the subprime crisis, they "invented" a bond buying plans, or the so-called "Quantitative Easing" -- as the euphemism goes, to stimulate the economy. Six years after the US stimulating programme, I do not see a single sign of weakness in USD. In fact, it becomes even stronger.

The experience of living in AU will let you aware that AUD is not a strong currency. Recently, Reserve Bank of Australia (RBA) cut interest rates to a record low of 2.25%. AUD has been depreciating against USD for some time since 2013, because the head of RBA  wants to see AUD to trade at 75 US cents, which I see as a really wise move, because AUD has no "qualification" to trade high (i.e. 1:1 ratio) against USD.

Strangely, many Malaysians mindset still fixed at the era of AUD 1: MYR 3.00+, or hoping that it will soon go back to 1:3+. I am sorry but this is not going to happen. Many people (Malaysians residing in Australia) do not like to hear this, I do not like to hear this as well, but it is a fact. The day of AUD 1: MYR 3.00+ is over. Now it is only AUD 1: MYR 2.80. And this is still with a recent rapid depreciation of MYR. If you really want 1:3 back in the days of 2012, you will have to hope for a quicker depreciation of MYR than AUD. But even if that happens, how worthless is MYR at that time? And how much you could do with it?

A friend of mine said he wanted to put AUD in bank to wait for it to go up. Frankly, how stupid can this thought be? Going back up? No way.

Whenever you see newspaper headlines of "MYR hits lowest in XX months/year against SGD" etc, you will see people saying the day of SGD 1: MYR 3.00 is coming next month/year. Please, even with the most basic knowledge of forex, one will know that 1:3 is not happening in at least years. Having said that, SGD is a rather strong currency in my opinion.

The European Central Bank has announced a stimulating programme last month. Well, when an idea/method is implemented for the first time, the effect is always good. But will the same trick work again for EUR (or JPY)? And how long can Greece stand before something happen? People have been speculating a collapse in EUR too. I bet this is something EUR's "rival" wants to see.  Will it happen? Only time will tell. But I do not look good on EUR.

No cure but only pernicious depreciation. The self-interest gained by you-know-who politically will cause the country to pay the price economically. Maybe 5 more years to sustain?  In these few months MYR has depreciated "considerably" against USD, and is now trading at USD 1: MYR 3.60+.

I am sorry but I do not look good at this currency. If I were to choose a currency to keep, my first choice would be USD, followed by SGD.

I am not a forex expert neither I know much about it. I just blow some water here. Don't hit me if you want AUD to go high.

Sunday, 1 February 2015

US: Is Apple expensive?

When Iphone 5s/5c was released in 2H 2013, I thought that the sales would go down as there wasn't any  "jaw-dropping" innovative features. The market proves me wrong.

In 2014, 169.22M of Iphone was sold as compared to 150.25M in 2013, a 12.6% increase, according to the global Apple Iphone sales. Note that Apple (NASDAQ: AAPL) has a financial year ends 27 Sep, such that the sales of Iphone from Oct-Dec 2013 will be reflected in Q1 2014. In fact, the sales is breaking record quarter-to-quarter if compared with the preceding year. I was terribly wrong about the trend.

So I observe the way how Apple fans stick to Apple products:  the joy and excitement of having it, the honour of using it, the sense of playing with it and the pride of owning Apple products. Last year, Iphone 6/6+ was released. While the most prominent difference with previous releases is a larger screen, which has no surprise, this time I stand on a view that Iphone 6 will create a record sales as well.

On 27 Jan, AAPL released its latest financial quarter report. 74.5M of Iphone sold in Q1 2015 as compared to 51M in Q1 2014. This is an incredible result. A record EPS of 3.06 with record profit.  2014 full year EPS of $7.36, with a current price of $117.16, this is equivalent to a PE of 15.9.

Now, the question is, is AAPL expensive? Let's look at some technology stocks:

Name    Stock Code    PE
Google    GOOL       28.1
Facebook  FB         69.13
Avago     AVGO       104.13
Amazon    AMZN       Negative EPS, Stock price stood at $354.53!

You can see how "insane" is US market. A stock trading at PE 100 is not unusual. Is AAPL really expensive at a price of $117.16? Of course, I am not suggesting to buy with expectation of AAPL to reach a PE of 100, but if you are confident that AAPL will still grow, then it may look attractive at the current price.

In 2012, my lecturer once said something wise:

20 years ago you can eat apple. But can you eat Apple now?

20 years ago, nobody will ever think that Apple is inedible. Nowadays, when the very same noun is being mentioned, how often it means Apple, and how often will people will think of apple? The answer is obvious, isn't it?

Saturday, 24 January 2015

How to choose a call warrant?

The last time I wrote about call warrant fundamentals was years ago, see CW Fundamentals 1, CW Fundamentals 2, CW Fundamentals 3 for details . Words couldn't describe how fast time flies. Today I am going to write about how I determine which CW to buy.

Make sure you do some homework before buying call warrants. Every one knows it is of high risk. Before choosing CW, I choose mother share. First, mother share must have strong fundamentals, making profits. E.g., I will not buy KNM call warrants. Second, mother share has potential upside. By only having the right mother share, you can expect to have a positive return, because call warrants follow mother share movement.

Lazy people like me will go to i3investor to have a glimpse of all structured warrants available for a particular stock. It contains useful information about warrants listed in a form of table. For example, if I am looking at MYEG CW, search for MYEG, then go to warrants drop down menu. Easy.

MYEG Call Warrant
(Figure print-screened from i3investor)

How to decide which one to go for? For me, I look at the following preference in order.

1. Expiry. No long expiry date no talk. This is so important. Preferably at least six months. Under special conditions (e.g. negative premium, high gearing etc, will consider 3-6 months. Under any condition, I will not touch CW with less than 3 months expiry)

2.1 Premium & gearing. Low premium and high gearing are preferred.

2.2 In my opinion, volume has the same importance as premium and gearing. Liquidity is important (without "so" as in expiry). First, it ensures that the CWs are easy to buy and sell. Second, the buy-sell spread is small if it is traded actively, good for us.

3. Issuer. CIMB always has the "best valued" call warrants. Recently I see that Macquarie releases a lot of structured warrants in KLSE. Isn't this the Macquarie Group, the largest investment group in Australia?

OK. By looking at the first priority, CB, CC, CE and CF are out of consideration. Then, CD has the lowest premium, which is the best among itself, CG and CH (I look at premium more than gearing). But if you look at the graph of MYEG-CD:

Listed for 6 months, it is traded for less than 20 days. Clearly, I will not buy this kind of CW. You will find it hard to buy and sell. So, we are left with CG and CH.

CH has a longer expiry date, a lower premium and s higher gearing than CG. CH is also traded more actively than CG. So the choice is clear. Actually, given its low premium, CF is a good choice too. But it is expired in 4 months. So, I would go for the safer choice with longer expiry date.

Next thing to do? Prepare money, find a target buying price and queue. For call warrant, I will be very particular, even a price bid of 0.005 difference matters to me, because it is bought in quantity.

Saturday, 3 January 2015

2014 Review

3 months return: -46.8%

OK. Faced reality. The fact is, I lost all my 9-month profit (unrealized) in the last 3 months of 2014. I vomit out all profit.

The good thing is, the capital is still there.
The bad thing is, I lost a full year of time and opportunity to grow my capital.

The number of transaction is high. The main reason is, after the "crash" in early Oct, I am completely lost, don't know what I am doing at that time. It would have been much better if I just don't look at the market, but I failed to refrain myself from doing so. I look at it even more frequently than I used to, and trade at a rate that I've never done it before. And the outcome is as expected: I lost even more.

Two big lessons learnt: 1. how to sell a share 2. not looking at the market everyday. I am even surprised at myself that I can now refrain from looking at the market for the whole day. This is really good. I don't plan to make any transaction anyway, why look at it so frequently?

Saturday, 27 December 2014

Book review: The Five People You Meet In Heaven

I realize that not looking at the stock market is a good decision. Now, I don't look at it as frequently as I used to be. It has been "a while" since I don't write non-investment stuff, today I am writing a book review, a book written by my favorite author.

Title: The Five People You Meet In Heaven
Author: Mitch Albom
Category: Fiction (Philosophy)
Year: 2003
ISBN: 978-0-7515-3614-0

The first time I saw this book was in 2008, where I have a glance through the Chinese-translated version of this book. I skimmed over it very quickly, have a feeling that this will be a good book to read. My feeling could not have been more accurate. I am impressed by the author's writing skill. Later on, I bought the English version.

The background is about an old man, Eddie, working in an amusement park for most of its life. He felt bored of the work and useless about himself for not accomplishing anything in his life. This book describes Heaven as a place where you seek answers for unanswered questions in your life. After Eddie's death, he met five people in the heaven. These people answered the questions that he has been seeking in his life, as to why these people crossed his path, as to how these people altered his life and as to why things happened as they did.

The first people he met is a guy that died for him. The whole point of this lesson is: Everything happens for a reason. I believe in this:  that what goes around comes around;  that there are no random acts; that all things are connected; This has nothing to do with religions though, is just a way of looking into life.

I like a quote in this chapter, that Eddie said it isn't fair that why the guy has to die for him and why he doesn't have to pay for his "sin". The guy replied:
"Fairness, does not govern life and death. If it did, no good person would ever die young."

The second people is Eddie's captain during war time.  Eddie lost one leg in the war. Everything changed after that. This lesson tells us that we have to make sacrifice in our lives.

Sacrifice. We made choices everyday, big and small. We inevitably need to sacrifice something to gain another. You win something, you lose something. Give and take. There is a balance to it all. The important thing is we can't keep thinking about what we've lost or what we should have chosen instead.

Another quote:
"Sometimes when you sacrifice something precious, you are not really losing it(the thing that you've sacrificed). You are just passing it on to someone else."

What a quote! This is strengthening what the author wrote for the first lesson, that all lives intersect.

The third person is a stranger to Eddie, yet she is connected with Eddie somehow. Eddie was angry with his father for the whole life, thinking that his father is accountable for all of his losses. But holding anger is a poison which eats you from inside. Hatred is a curved blade, the harm we do, we do to ourselves. That's why we need to forgive.

I like the analogy of curved blade. This is similar to people saying, when you point one finger to other, you are pointing three fingers to yourself.

The fourth person is his wife. His wife died early. Eddie lives by himself after that. His lost wife is the person that he has ever loved. This lesson is about how love goes on, even after death. Death merely ends a life, not a true love.

"Lost love is still love. It only takes a different form -- memory."
"Life has to end, but love does not."

Eddie's job is to maintain the rides in an amusement park. He felt his job is useless, boring and accomplished nothing. Therefore, the fifth person is to let Eddie knows that his job is important to maintain the safety of others, to kept the rides in the park functioning properly. The message conveyed is: Do not belittle yourself, do not feel unimportant for what you are doing. You may not know it at the time, but you will, in the future.

This is a very short review of the book. There are still a lot of great quotes and stories in the book. This is a great book. Totally awesome. However, on the way reading the story which leads to the lesson may be boring. Give it some patience, you will find the time spent is worthy.

Monday, 3 November 2014

Global market adjustment, what am I doing? (end)

I think Oct has been a roller coaster for a number of investors. Looking back for just 1 month, how many people has been played by the V-shaped rebound?

Several things to take note of:

1. If looking at the lowest point of adjustment makes me feel fortunate that I've sold my shares earlier, then what should I feel right now (i.e. as of market closed on 31 Oct)? Remember this experience.

2. The lesson of how to sell a share. To learn to let go, not to have any emotional connection with any share. This is not the first time I know this, but I didn't take it seriously. Selling INSAS 1.5 month ago taught me a lot. People say you need to forgive yourself, for all the things we didn't do, for all the things that we should have done. This is even more true in the stock market. It doesn't help if I keep on lamenting things like "I should have bought this share earlier" or "I shouldn't perform this transaction". Make peace, move on.  

3. The importance of capital protection. One of the reason why I sold INARI is that it has come to the point with the minimum acceptable profit. Of course, looking back now seems so stupid of me, but what if? No one knows what's going to happen.
As what people usually say: the stock market is always there, but will you always be ready for the market?

4. Confidence. I have to admit that I lost confidence to INARI after seeing it free fall consecutively. I even thought of something wrong is happening within the company. The is the main reason why I sell INARI (which some people raised concerns about its financial credibility before) and GHLSYS (which I bought in without any good reason except GST). But during the panic sell moment, I kept SHH, because I have confidence in the company. How to have confidence? Do homework and understand the company more.

5. Be patient. Sometimes retail investors are like patients in the stock market, looking for some guidance. So, patient needs to be patient. Even if the market is going up and I am holding cash, that's ok. Return is not determined by 1 month, look for a long term perspective.

6. At the lowest point of adjustment, a lot of shares have dropped to below my target buying price. E.g., MMSV 0.45 (lowest 0.38, current 0.58), IFCA-WA 0.30 (lowest 0.285 current 0.59) etc. At that time, I not even thought of buying any share. Ironic isn't it?

This experience makes me realize that I have no difference from most of the others,to be emotionally controlled by the market. I followed the crowd to panic sell at low point. If this is the case, how can this makes a difference in my investment return?

7.  Where do I stand in the market? I need to know what I am doing, all the rationales in buying and selling, and the plans of what if, i.e. risk management. If I know what I am doing, and know where I am standing in the market, I wouldn't have lost myself if something happens.

It is what it is. Take it as a lesson. Move forward.

Saturday, 25 October 2014

Global market adjustment, what am I doing? (2)

In one week time, things can change dramatically. The things that I hold so tight to previously, all gone in a few days. It was so near to me, yet it is now far away from me.

Ironically, I told myself that my target price is RM 2.70 for INARI before. When it reached that price, I didn't sell.

Ironically, I sold some shares at RM 3.18 before, which at that time it went to a high of ~RM 3.30+, which I thought that I've sold it at a low price. Seriously? What happen to me, that I still crave to sell at the highest point? The tighter you cling to something, the faster it is going away from you.

It has been so ironic to me, that my final selling price is not even my target price previously. Even worse, this is not the first time I experience this (see here).

I also panic sell GHLSYS at the same day. It now seems so stupid of me, that I could have had a return of 30% a few days ago before I sold, and now it became 3%.

What am I doing? The market has not adjusted for sometime, and I indulge myself to this kind of situation, to have 100% shares at ALL TIME, thinking to grab every single cent from the market.

What am I doing? I take things for granted, as if I should always be making profit, although past experiences have taught me not to (never) take things for granted.

What am I doing? I did not let my capital to rest for even a single day. I let them to subject to the daily market fluctuation, watching the portfolio rise and down, until I lost myself.

What am I doing? This experience is similar to May-Aug 2013, of which I've written some reviews in Jan 2014. I was vindictive last year, which has cost me even more, so now I decided to rest for sometime. 

[to be continued]