TRADING BASED ON RUMOURS OR TRADING BASED ON RESEARCH?

Before I start with anything, I would like to welcome a long time friend to the 'trading club'. He knows this message is for him when he reads this. Welcome to the club bro.

Well..... I received a text from the other fellow investor a few days ago, 'knapa x beli uemworld leh buat duit le beb n hubline, gtronic beli le cepat'. I replied , 'pasal hubline leh naik?'. He responded, 'Sbb lama tak gerak n business dia v good this year.'

Hmm.... and so I texted my remiser to buy 35 lots. A small investment to that counter considering I am not going to dump all my money on this one. This counter is not even in the 20 counters that I tracked. I bought because I trust my friend and he is an experience investor. He took a lot of market rumours seriously and so far he gained a lot out of it. He took a lot of bold transactions too which I don't even consider. I target medium term investment for this counter, between 3 to 6 months and let see how it goes. At present it is going down.... *sigh*. Even if I am not going to make money on this counter, it is alright for me. I just want see if my friend's hunch is working.

I have changed my investment strategy recently. I am putting my money in a few counters instead of one counter like I used to do before. I researched the 20 counters that I tracked. The capital, the profit and lost, the shareholders etc. I have a good idea at what price to buy and what price I should sell. I am waiting for market shocks, and I would go in and buy. Shocks normally happen a few times in a year. You just can't believe the price of a good counters drop down rapidly at that time.

Just let see what 2008 would land me in.

WHATEVER HAPPENS TO OUR STOCK MARKET?

My Ms. Pretty remiser texted me a few days ago.
"Our msian gov is not helping our mkt wt the announcement of proton".

I replied.
"The present leadership memang tak market friendly pun. So many market unfriendly issues. How are you?"

She texted back.
"Our leaders r very dumb. They r just not thinkin bout msian welfare. Cakap aje byk. Im ok., just angry wth d govt thats all"

Well.... I can smell it that the people in the market are becoming more and more restless. They want to see some market friendly moves. Issues of failure to get Proton's foreign partner, Bersih Rally, Hindraf Rally, VK Lingam saga, wasting money on Angkasawan and so many more are damaging our reputation and our market.

Our government's damage control failure is hurting the market. Just admit it.

I am pulling my money from the market, at a lost, as for now. Cash is King, but stock market is not. At least for now.

THE MALAYSIAN CURRENCY CRISIS, HOW AND WHY IT HAPPENED - A SUGGESTED READING

Well,well. Do you think that I am going to suggest a newly published book to read? Maybe later, but this time I would like to suggest you to read The Malaysian Currency Crisis by the former Malaysian PM.

For those who have not read this book, I suggest you to go and get one. It explains what is the Asian Currency Crisis 1997-1998 all about and how wrong the decisions made by the former DPM cum Finance Minister which almost brought us to total collapse.

Ironically I haven't heard a single refute from the former DPM nor his famous threat to bring the former PM to court on the issues raised in the book. Or probably there were that missed my attention. Or there were none to bring the whole truth from his viewpoint.

I finished reading the Malaysian Currency Crisis in one day (it is a small thin book anyway). I had read this book afew times over and over again.

I had also read Anwar Ibrahim's Asian Renaissance. I read up to 6 pages, closed the book and kept it in my bookshelf until today. Never open it again.

The self-proclaimed Renaissance Man just couldn't come close to the stature of the Grand Old Man or a Statesman to be exact.

... AND HERE IT IS, ANOTHER SUB-PRIME CRISIS

Right after the rattle of sub-prime mortgage crisis seems to subside, another sub-prime menace is already here, waiting for us in the horizon. This time a much bigger sub-prime crisis, the credit cards debts estimated at US$915 billions. We will have to accept it now that the US is heavily indebted. The Americans are living their 'American Dreams' on the borrowed money. Unlike the Euros, the US dollar is not back-up by gold reserves. It is back-up by the words 'In God We Trust'. It is a matter of time the crisis in the US would burst wide open. When thats happen, we will go down the drain with them.

On top of that, the petrol price is keep on rising, as a result of weak US Dollars. Petrol price is quoted in US Dollars in the world market and if you remember Dr. Mahathir had many times suggested for petrol to be traded in the Euros, a suggestion that fell into deaf ears. Now we are paying for the price.

I filled up my car this morning and got shocked that the price today is £1.01 (around RM7.00) per litre. It was £0.69 when I arrived in the UK. A more than 40% increase. So brace yourself for an evitable rise of gasoline price in Malaysia, which is happening very soon or latest right after the anticipated General Election.

MISS PLAY SAFE AND MR GAMBLER

I have two remisers. First is Ms. Pretty from CIMB Securities and the second is Mr. Jerawat Gambler from AM Securities. When asked for advise, both of them give me different views on the same subject matter. When asked about certain counters in the top volume league, Ms. Pretty always shy away from counters like Iris or Keladi. She said these are sydicated counters and she won't even look at them. She said these are companies of no value and punters buy and sell just to make short term gain. She prefer counters like Bursa, Maybank, Tenaga, Digi and the likes. Mr Gambler meanwhile always ask me to play margin (he uses term play rather than invest), like buying Iris at 0.235 and sell at 0.24 or 0.245 in the same day and take profit from the lower commission charged.

I think as a woman, Ms. Pretty always follow her maternal instinct which result of her being so protective over my investment. I wanted to buy Bursa in one low time at price of 8.50 and she asked me to wait for the next day afternoon as the price was going down. The price drop was actually stop at 8.50 and started to climb. In the next few days it went up to 11.80. I didn't make profit for that particular time. Again recently I wanted to buy Tebrau at 1.21 and she asked me to reconfirm a few times which made me change my mind. Tebrau went up to 1.33 the next day and another boat missed.

For Mr. Gambler, he always want to risk my investment. If I ever give him the authority over my investment, I either be very rich by now or very poor. I gave him a free hand once to do margin trading and I lost RM8K at margin call after 3 days for DBhd. Probably he didn't sell after Dbhd slided a little bit which made me lost RM1K. Thinking it may go up before the margin call, he didn't sell for 3 days and there my RM8K flew away. I didn't blame him. He probably did that in a good faith got caught in a diffucult situation. It is me to be blamed as I gave him a free hand.

I changed my strategy after that. No more free hand. I seek their advise and I didn't really follow what they say. I make my own market research and decide on the counters that I wanted to track. I study the fair prices of their shares. If their prices go down much below than their fair value without a good reason, then I will buy. It is not a difficult job. This always work and I have recouped all my previous losses. In investing, I am always learning. There will always be a new situation that I have to deal with.

I don't think Ms Pretty and Mr. Gambler have all the time to track a a few counters like what I did. I bet they have so many clients who do not track the same counters that I tracked. They look at hundreds counters everyday and my counters may not even show in their radar.

So the best option for me, just make my own decision regardless what they say. So far it works.

DON'T BE GREEDY

Haven't post for quite sometime now. Not to worry, I don't think anybody is missing me because my blog is a low traffic in a slow lane. On top of that life has been very busy from the start of Ramadhan. A lot of projects have to be finalised within 2 months. Hmmm... looks like I have to work until 9.00pm everyday.

Anyway..... a little news on investment. Well I have been ignoring my remiser for quite sometime and I didn't lock my investment to any counter since, just to be safe in the present time rough seas. She texted me the day before yesterday asking me on what is happening.

I straight replied with a question, "Tebrau berapa?".

She responded "1.16".

I instructed "Buy all my holding for Tebrau" and after 10 minutes she responded "K done at 1.144". Hmmm... a better price. I smiled, maybe duit raya is coming.

The next day I texted her "Berapa dah" and she responded "Ok 1.12". I didn't get what that ok actually means. Ok for for my investment not going down that far? Or ok that it will go up later in the day?. On my way to office, when I emerged from the tube station, I received a text from her "Tebrau is now 1.21". I quickly responded "Jual all my holding". After 20 minutes she replied "Done @1.22". Well.... I just made 6.64% return for my one day investment.

When the market closed for the day Tebrau closed at 1.29, which means my return would have been 12.76% if sold at that price, a slash of 6.12% when I sold at 1.22.

Well I have taught myself not to be greedy. No investment Guru will recommend buying at rock bottom and selling at the most peak because nobody knows when is the rock bottom and when is the most peak. The return of 6.64% in one day has translated to my duit raya already.

$1 AND A DREAM

I have two collegues who are looking at things in a very different perspective. One is a smoker and the other one is a lottery buyer.

The smoker is not at all into buying lottery. His argument is that the probability for one to strike a winning number is very remote. It is just like a dream and it is a waste of money to buy a lottery. He might as well smoke and make more friends. By smoking he will also fill certain vacuum in his life (to kill boring I suppose). Come to think of it, he is quite right. Smokers will make friends easily. A smoker can easily approached another stranger smoker and asked for a lighter. They have this kind of bond and from there they break the ice and start to have a conversation.

The lottery buyer has a different view. To him smoking is also a waste of money. What he gets just smoke, destroyed lungs and destroying other people lungs. To him by buying a lottery he will get the same satisfaction in smoking. He got this feeling of suspense and excitement while waiting from the time he buys until the time when winning numbers are announced, the same kind of excitement to win a girl's heart. To him he will never get to his dream if he doesn't buy it. Well, come to think of it he is quite right too.

MY FRIEND ISMIT ULAM RAJA.....

kring.... kring....

"Hello"

"Is that east43street?"

"Well good morning to you too. Yes this is he. Whose on the line please"

"Alloooo east43street, this is me, Ismit lah".

Ismit? My old buddy Ismit? What a pleasant surprise. Haven't heard from him for almost 7 years. It's must be something very important. And where he got my number from??

"I will be coming down to New York in a few days time. I will see you then"

"Is that all Ismit? Just you are coming down to visit me? What a priviledge. Tell me more, what you are up to this time?"

"Nothing lah. Will call you before I depart. Salam to your better half". He hanged up without leaving his number. Just typical Ismit. Always leave me in suspense. It is good anyway. Got to see him after all those years and to catch up the good old times.

Ismit is an entrepreneur. He owns a hard chrome factory in Puchong. Hard chrome is a specialise industry and he is among a few players around. His services are bespoked and have to comply with high Japanese standard micron of hard chroming. He told me once that he can chrome my car sports rim for free. He can even chrome my whole car if I wanted to. Phew.... awesome.

Ismit called again after 2 days. Time is the essence he said. He asked me to check if there was a new airport project completed in Abuja, Nigeria. I was confused. At that time Abuja was named as a new capital of Nigeria, but it was still a desert. He hanged up without leaving his number again. Well... well.... he must have thought that I am James Bond. Give me a little assignment and I will try to follow his trail. Ok, I will pay along. I did a little research and it was confirmed that Abuja was still a bare land. Nothing on it and the Nigerian government will start developing it after a few years. No airport, no nothing in Abuja just yet.

Two days later Ismit called again and this time he told me what it was about. He told me that he is finalising a business transaction and the other party has asked him to choose the venue between London and New York. He chose New York because I am in New York. He also told me that if everything goes well he will loaned me some money to start a new business, a new life probably. Wow! This must be big. Ismit is going big and I am so anxious to know what it is.

He told me that he was being contacted by the Nigerian government project manager handling Abuja International Airport project. The airport was completed and there was an excess of US$15 millions from the project. Ismit was offered 30% of that amount if he agreed to use his bank account to transfer the money out of Nigeria. What Ismit has to do is just provide his company bank account number and issue a fake invoice to the tune of US$15 millions. The format of the invoice would be supplied and Ismit just had to copy it to his letter head.

I told Ismit that there was no airport in Abuja and the fact that Abuja was just being declared as a new capital and it will take years to develop. I was surprised that Ismit did not believe me.

I kept on asking Ismit that there must be a catch to it. Nobody will transfer US$15 millions to a stranger. He finally conceded that he had to pay 0.15% bank transfer fee which will come up to US$22,500. So Ismit will have to pay US$22,500 of bank transfer fee to get his US$4.5 millions. How convenient.

I finally managed to get Ismit to his senses. I warned him that if he ever come to New York for that transaction, I will break his leg. Ismit did not make his trip to New York. Not because I was going to break his leg, but I think because he knew that he was being conned.

According to US government reports, US lost about US$3 billions every year to this kind of scam. The victims rarely report to the authorities because what they are doing is against the law anyway.

Ismit is still himself the last time I saw him. At least he got a dream to be rich for a short while.

SUBPRIME MORTGAGE CRISIS, AN OPPORTUNITY.

Subprime mortgage crisis in the US.... KLCI went down below psychological 1200 pts. The best time to pick. Seized the moment, so I picked Bursa Bhd counter at RM8.10. It went up to RM10.8. I didn't sell, thinking to sell after it crosses RM11.00. Dow Jones dropped 280 points yesterday and KLCI went down..... I got feverish. So.... sold my Bursa counter at RM9.95. Real profit 22.47%. If sold at RM10.80, should have a return of 33.33%. Well, less profit but no loss here.

Now....sakit hati time!!! Dow Jones rockets back 250 points today. I don't think I can buy Bursa counter at same price RM9.95 when its open in 2 hours. Need to learn where I went wrong.

But at least, I got better return (as for now) compared to ASB of anticipated 7.5% at the end of the year. A 22.47% return in a week in KLSE is not bad at all.

Say if I have RM100K (hypothetically). The above should translate to RM22K odd return in a week. But............. I don't have RM100K. My real return?? Heh... heh... bole la bawak kekawan open table teh tarik aje.

LITTLE RULES FOR MY SMALL INVESTMENT

1) Cash is king.

2) Buy at bear.

3) Sell at bull.

4) Reward your remiser.

Only 4 rules at the moment. Why? Because the investment is still very tiny. Hope to have the momentum and a little luck. It is a long way to join the big boys.

If you have other rules, glad to hear them.

WHERE DID THE BULL AND BEAR GET THEIR NAMES?

Bull and Bear. I'll buy at bear and I'll sell at Bull. But sometimes people get caught buying at bear, only later it become more bearish. Or selling at bull when it is more bullish.