Risks vs Interest in Financial Investments

When comes to the term "Investment", most of the people have the same feeling - "It is RISKY"! Well, it might be true and at least it apply to some of them. From my personal perspective, I split them into 3 groups:

• Group A: Those are fresh, no experience, not being educated in investment stuff
• Group B: Those are half financial educated/experience, trying an error and in the progress of trying to taste the "feeling of winning in the market"
• Group C: Those are "over experience" as they were burnt and lost their hard earn money in the market during economy crisis

I personally feel "Risk" is everywhere, life is a risk. "Risk" can be defined as hazard; a source of danger; a possibility of incurring loss or misfortune; For ex: "drinking alcohol is a health hazard", but still so many of them drinking. People see risk is partly due to the lack of experience and knowledge, we see risk in driving when we do not know driving, we see risk in getting sack from employment when we can not perform, we see risk in passing exam when we are not competent/confident. Thus, people see risk in investment is because they have no idea about the products well.

Since everywhere in our life is full of Risk, then I do not feel this is the main factor stopping you from investment, as please remember that "RISK IS MANAGABLE"! The question here should be "Are you interested in investment"? If you are highly motivated and interested in investment, you will automatically see the opportunity to overcome the resistances and managing the risk within self capability level. In the other way, we manage risk to minimum, subsequently bringing up the return probability. Our task and objective is very clear: "Min. Risk vs Max. Return"! Of course that is just an ideal case, it may vary when comes to practical.

There are many ways to deal with risk and manage risk, each risk that you have identified. Some of the suggestions are:

• Accept it
• Transfer it
• Reduce it
• Eliminate it
  

For example, you may decide to accept a risk because the cost of eliminating it completely is too high. You might decide to transfer the risk, which is typically done with insurance. Or you may be able to reduce the risk by introducing new safety measures or eliminate it completely by changing the way you produce your product.

Finally, the conclusion is it is totally up to individual's interest and willingness to taking the risk in financial investment. If the answer is yes, then just focus on improving the knowledges and experiences, equipped yourself well to prosper later. There is nothing comes free in the world, but I strongly believe "Hard Work Pays"!

Stocks Pick - 2nd Half 2010

Is has been a good bull run for the 1st half of 2010, with most of the stocks continued the uptrend since from the bottom in March 2009 economy crisis. Nevertheless, there was some profit taking happened when the KLCI peaked in May 2010. It was mainly caused by the slowing down of the recovery, as in line with those economist comment it will not be a smooth recovery.

Now, let's look at the 2nd half of 2010. If we observe the current stocks prices in details, we can easily find some of the good fundamental stocks are near the 52-weeks high, while the others have been dropping about 20-30% from the peak in May 2010. From here, once again concludes that "If we wish to make money from the stock market, we have to focus on investing in good organizations"!

Please find below for some of the 2nd half 2010 stocks pick from the research of OSK Investment house:

Table: Stocks pick by RHB research house (Source: China Press)

Besides, there are some 12-months target prices for the stocks pick from RHB Research house:

1. Maybank: RM8.96


2. CIMB: RM8.12


3. TENAGA: RM10.40


4. GENTING: RM8.95


5. KLK: RM18.25


6. FABER: RM3.40


7. UNISEM: RM4.06


8. TOPGLOVE: RM15.50


9. NOTION: RM4.68


10. MAXIS: RM6.20

KLCI Daily chart analysis - 27062010

KLCI movement commentary

KLCI is moving rangebound within a tight range of 1320 - 1335 level for the past 5 trading days. Most of the Asian markets except Japan are holding firm wihle US and EU markets were experiencing higher pressure of profit taking and retreated about 3-5% last week. Some Asian markets have been supported by strong economy data like Singapore announced a better than expected exports figure at about 54% growth, while Malaysia major infrastructure plans of LRT & MRT projects news flowing out, and Malaysia open door for China funds coming in. Most indicators are supporting the local market and the market is waiting more news to leads the future direction. The market sentiment is remains bullish as most top ten counters are still trading in posive regions though the FBM KLCI index is in consolidating mode.

Technical analysis
Beware of "Head & Shoulders" or "Double Top" patterns forming, a save entry point will only confirmed after index successfully break 1347 level.

Strategy

Cautious (Half yearly windows dressing kicks in), Hold on to the position, reduce stock holding level.

Greatest Depression Beyond 2008 Financial Crisis!

I have highlighted about the unique of the "Financial System Cycle" in my earlier subject, it is started with economy grow, higher GDP and most economy data showing improvement & growing sign. At that moment, the overall market sentiment is bullish, people are getting easier life with low unemployment rate, wages increase, everyone is willing to spend and being so optimistic about the economy. This subsequently supporting and extending the economy grow period, for ex: Demand is created during economy grow, things are getting more & more expensive when the supply is less than demand, this apply to the stock market as well, stock price increase align with organizations grow.

This is the early stage of the cycle that creates the negative side effects at the other end - "the Economy Bubble", such as high commodities like crude oil, rubber, palm oil - Commodities Bubble, properties price flying - Property Bubble, finance interest increase - Credit Bubble. These are some of the bubbles that lead the inflation higher and "Eroded" the "Paper - Money" value at the same time. In the other way, it generates the illusion to people who think they are as rich as they owned the money they have at that moment. The truth fact is their paper value is eroded by the inflation silently without making known.

That means that we have to work harder and smarter to compete and tackle the problems like inflation. However, when things are getting tougher and people are feeling less optimistic and confidence about the economy, they tend to slow down the spending and increase the savings. Remember this may be just one of the tiny factor leads to the "Bubble burst"!

Refer to the past records in the history, there are many proven huge economy crisis happening, some of the famous and recent crisises are year 1987, year 1997 Asian Crisis, year 2001 IT crisis, year 2008 United States Sub prime Mortgage crisis. All the bad news just kept flowing out to the market during economy crisis or "Depression". For instance the global stock market crash after peak in early 2008, GDP came down, unemployment rate increase, many companies close down etc... This again shows the "Danger" is just around the corner whenever things are almost perfect! Just be more alert and cautious with the wonderful data in the future!

Anyhow, whatever happened is happened, and I strongly believe that "Everything happens for a reason". The latest data shows the number of millionaires and the total of the wealth (especially in Asian) are much more higher compare to the data shown in the end of 2007, pre 2008 bubble burst! So, it is up to you whether you see it as a crisis or an opportunity! The richer get much richer in every economy crisis! I do not mean that this is 100% the possible, but at least you will have the higher possibility to get benefited if you "Choose to see the Bright side".

Let's move forward to analyse what will happen after the crisis and the possible problems are going to happen in the coming future. First of all, we have to admit that thanks to the global economy stimulus packages to pulling us out from the pool! The hard work pays and getting fruitful results which I believe everyone is feeling it now. It has been 15 months after the bottom of the crisis, all the economy data is improving significantly and we are out from recession - The "Recession" is declared after GDP data is in the negative region for the 2 quarters continuously.

Nevertheless, the economy is showing some clouds again since the beginning of May 2010 when some of the economy data shown is not as ideal as most economist predicted. One of the poor data is unemployment rate in United States and European countries still do not showing signs of good improvement yet. The unemployment rate is still hanging around 9.7% stubbornly. The other weak signal is commodities prices are reverting down again while China is trying to control the overheated economy condition. While most of the data are still showing positive grow by comparing year-to-year basis, some have actually started showing negative grow if comparing month-to-month basis.

Overall, the current economy condition is definitely in a good recovery path. It is just the matter of how smooth the journey is? Can it be sustainable? How solid and how fast is the recovery? Is the stimulus package works and will it leads to overheating and other side effects behind the scene? Below are some of the points that I feel we should cautiously monitor the progress and react accordingly, it is always better to keep the "Awareness" high enough to avoid unnecessary troubles ahead.

High Unemployment Rate:

The unemployment rate in Unites States and European Unions is staying at the high side (~9.7%) stubbornly, it is expected to remains high and coming down gently over the next few months towards 2011, to align with economy recovery path.

Assets/Properties Prices Decreasing:

Assets like properties price in United States and European Unions still do not showing much improvement, the housing price in some cities still dropping. this may indirectly impact consumer spending sentiment.

China Economy Overheated:

Assets like properties prices in Asian countries (Excluding Japan) are showing "Bubble" sign, the housing price has been increased substantially and breaking records high. This may caused by the "Hot money" over speculates side effects! China is trying to overcome and slowing down the properties prices recently. Some analyst predicted the "Asset Bubble" is going to burst in year 2012!

Weak Consumer Spending Sentiment:

Consumer spending sentiment in United States and European Unions are decreasing since June 2010, data shows most consumers prefer to "Save more" even though the fact is most of them are earning more at the moment. This may bring the question of "Is the economy growth can be sustainable without stimulus package"? Looks like there is very high possibility the consumers have to bear the "higher responsibility" and "more importance role" to grow the economy now and in the future. Thus, the consumers need to have to "courageous" and willing/must spend more! In the other way, the command is "do not save"!

High Liability/Debt:

After several huge stimulus package supporting and expanding the economy growth, most of the governments are in over "Highly Debt" now. Such as Japan, United States, European unions like Portugal, Italy, Greek, Spain, which also called (PIGS). The governments have no choice other than cutting down the Debt to avoid being "Bankrupt". In order to funding to stimulate the economy, most countries have issued Bonds with paying higher interest rates. Now, the problem is some of them are actually tight up with "Short term bond", and subsequently going to be due in near period starting this year end towards year 2012. I personally do not feel comfortable and doubt all the highly debt countries can escape from this "Overly debt crisis"! It may burst in year 2012!

The Key messages to everyone:

The message I would like to share with everyone is after taken all the considerations above, we have to be very cautious & sensitive with the economy data announced. Nevertheless, we are no doubt in the right recovery journey, with a little noises & interferences appear to distor the path, which I would comments it is very common as life is just like riding a "Roller Coaster". The point is if we have reach the half of the recovery, meaning that there is another half to reach the "Peak"! Base on the calculation, I presume it may happen between July 2011 - July 2012! When it happen, it will be easily few times more serious than the year 2008 crisis, that is the reason I call it "The Greatest Depression Beyond 2008 Financial Crisis"!

KLCI Daily chart analysis - 20062010

KLCI movement commentary

KLCI is successfully breaking few resistance and building a strong technical rebound after strong sold down happening in May 2010. It broke 1300 level and close at 1317 on 18th June 2010. KLCI is holding very well above 1300 level after some profit taking activities kicked in. Referring to the technical chart shown on 10062010, the current market will only confirmed Bullish after breaking resistance 1324 & 1347 levels. Anyway, the market sentiment is improving after recent negative news like EU debt problems waned. Market tends to move sideway bias to bullish to test 1324 & 1347 in coming weeks.

Technical analysis
Beware of "Head & Shoulders" or "Double Top" patterns forming, a save entry point will only confirmed after index successfully break 1347 level.

Strategy

Cautious (Half yearly windows dressing kicks in), Hold on to the position, reduce stock holding level.

Increase your winning rate according to the Stock market investment checklist

Most of the investors understand the stock market react ahead of economy sentiment, that is the reason it has being called the "Economy indicator". In order to make money from the stock market, the most important is to identify the market trend. It will definitely increase your winning rate if you able to apply the right strategy according to the trends. Nevertheless, this is the matter that concerning most of the investors. We can categorize the market trends into 3 different cycles:

• Bull market: Economy sentiment good (Optimistic), market volume increase as market moving up
• Consolidation market: Market consolidating and waiting economy news to drive it to Bull/Bear market trend, it is also called Profit taking/Filtration process
• Bear market: Economy sentiment bad (Pessimistic), market volume decrease as market moving down

If we analyse the market in details, the markets are trading sideways and consolidating most of the time due to the profit taking activity and filtration process kicks in. It is also called "Bull & Bear" fighting to determine the winner later! Well, everyone knows there are only 2 directions for the market to move, either up or down. In the other way, you have the winning rate of about 50% to get it right only!

If you wish to make money from the market, you have to make a good guess or excellent prediction, meaning that you can see through the future. It is somehow difficult for the experience investor to predict the market movement in the near term as the market is so volatile and can travel between positive & negative zones few times within a day. There are many factors and methods you should consider to increase your winning rate in the stock market. Some of the homework you should be doing are analysing the fundamental & technical perspective, constantly update information about global economy news like GDP, CPI, PPI, Unemployment rate, Inflation rate, etc...

Some of you might feel very frustrating analysing all the information when the market not moving the direction as predicted. In normal circumstances, the market should move up accompanied with positive news, and move down with negative news. This is very common reaction with the simple reason that the market just prefer the positive data and sentiment to support the bull run. However, you may easily find out that the market react the opposite ways occasionally. It is annoying and frustrating if the market always react against the prediction. This is one of the filtration process, to filter out the weaker trader. Do not forget that the market is there to make money out of anyone. A trade is only completed when a buyer price meet a seller price. It means whenever there is a winner, there is automatically another loser out there, otherwise where are those money/capital come from?

Interesting?? I am still in the progress of getting my very personal stock investment checklist completed and hopes will be able to share with you soon. Just make sure you read it and try to utilise the guidelines as much as possible, as it may benefit you to winning the battle!

Let's your money work for you

According to the research analysis, there are only about max. of 5% richest people contributing and controlling most of the economy activities globally. Thus, the rest of the people fall under poor to medium income group category. This means that if anyone of us wish to get richer, the only way is to breakout from the category and excel ourselves into the rich people group.

If we look into details about the their success story and the secrets of getting wealthy, you may easily find out that most of them are not getting prosper through working for money, they are just being smarter in making their money working for them! The simple reason is it is exhausting and time consuming to work for money, we have to spend our time and energy to convert them into rewards - Money. In order to maintain and grow the income, we have to continuously working harder and smarter to make more.

By the time you thought you have achieved your life time target of the first million you made, you may already wasted about 10 or even 20 years for that. The sad thing is your millions of money is definitely not as value as the millions at 10 to 20 years ago. This is purely "depreciated" or "diluted" by the inflation. We always experiencing the inflation such as the property appreciating, living cost increase, income stagnant. This will directly impact our hard work and we will not getting the rewards as planned! In order to achieve our dream, we have to counter the inflation and working harder without rest, it is tiring and exhausting as I meant. The most interesting about using financial investment as working tool is you are actually treating it as own business, can anytime travel the whole world by just bringing a Lap-top to perform online trading anytime, anywhere as you wish! It is totally under your control!

Here, the simpler and smarter way is: "Let's your money work for you"! The main advantage is you are freed from the time and energy spend to work for money. Your money will be 24hrs continuously working for you even though while you are sleeping, taking holiday and going for vacation. You have freed up your time for others and worry-free in case you are ill. Your money will responsible to do your job and generate more income for you.

There are many ways to let your money working for you like Savings in banks, Retirement fund, Fixed deposit, stock market investment. You choose the product you know and suits you the most. It is very subjective to individual, depends on what type of life style you wish it to be and what are the dreams of your life, you design it and setting your lifetime goal for it. Before simply risking yourself into financial investment, I would advise that you must work hard to equiped yourself enough knowledge, and ensure you are confident enough with it. Lastly, please do not forget that you are the one responsible and decide you life pattern! You manage it!

KLCI Daily chart analysis - 10062010

KLCI movement commentary

KLCI is consolidating between 1285 - 1295 level after strong rebounded from the recent low of 1244, it's trying to test 1300 level and the KLCI will only turn bullish after breaking the middle line of Bollinger bands. Otherwise it may retreat to 1244 level as aligned with current Bearish view. Market tends to move sideway until further fresh news to lead the direction.

Strategy
Cautious, Sell/Short into strength, reduce stock holding level.

Crisis = Opportunity

I am hearing people talking and discussing about economy recession, market recovery, GDP going up and down, BLR (Base lending rate) going up and down, Inflation, deflation, stagflation. Guess this is what most human do - Complaining and criticising, without taking any afford to improve the situation, simply because they prefer to stay in their "Comfort Zone".

Here, I would like to congratulates those who are complaining about the economy crisis - recession! The bad thing is it is happening and affecting you but it is unavoidable, the very direct impact is your job security, finance interest, personal income, market value of the assets, stocks and the business you own. However, the good thing is at least you are "Conscious" and fully aware about the problem! Now what you should consider is to act or only talk about it, and I strongly suggest you better "WALK THE TALK"!

If we really drill into details and observe, everything is very logical and most of the thing is happening as routine and cycle. Starting from the sunrise to sunset, day and night, 7 days a week, 12 months a year, 4 seasons a year, electrion every 5 years, economy inflation - stagflation - deflation, money being earn and expense, thing just happening in this way - from the very tiny thing happening to ourselves, global and the universe. It is applying to global economy and stock markets as well - Major recession is happening every 10 years and 12 years, then minor economy downturn in every 3 years and 5 years. No matter you like it or not, it is designed in this matter - the cycle of financial system.

Majority of people choose to look at the crisis as pessimistic as they feel, subsequently emerge poorer. However, only a small group of people looking at the other angle - the "Greatest Opportunity" over "Great Depression"! Billions of dollars have been made by those who see the opportunity, and became millionaires or even billionaires! Stock market is where everybody call as "Economy termometer", it react sensitively to economy condition. Stock market react about 6 months ahead of economy, it tends to Bottoming when economy begins entering recession, and it starting moving near top and turning down again after economy recovers from recession.

As Warren Buffett remarked: "Be greedy while others are fearful, be fearful while others are greedy". Thus, anyone of you may have the chance to getting wealthy if you choose to see the opportunity!

KLCI daily chart analysis - 04062010

KLCI movement commentary
KLCI rebounded from the recent low of 1244 to 1294, it's trying to test 1300 level and the KLCI will only turn bullish after breaking the middle line of Bollinger bands.

Risk
KLCI may retreat to 1244 level as aligned with current Bearish view.

Strategy
Sell/Short into strength.

Starting your journey to Win Big in financial market investment

1. Self-interest/Right attitude/Mins-set

Always get conscious & Create awareness to knowing yourself better - Acknowledge the strength & weakness. Few importance attitudes is a must:

• Self-interest - You must have high interest in what you are doing, to creating optimum performance.
• Hard work pays - Continuously & consistantly doing research, to upgrading knowledge & experience in Global financial system, economy, investment stuff.
• Discipline - Take charge of your own financial future, follow the "System". Not Greedy in Bull market, Not "Fearful" in Bear market
• It's all about begin with "Not How Much You Make, It's all about How Much You Lose"

2. Education

• Continuously & persistently upgrading knnowledge & experience in Global financial system, economy, investment stuff like fundamental/technical analysis.
  (Ex: Losing money is one of the importance learning stage, it is described as paying for lesson and mostly happen at the very beginning of investment stage. Therefore, "Ask yourself how much you are preparing to LOSE!").
  

3. How to Win/Profit from Global market?

• "Buy low sell high" - (Ex: Buy RM1, Sell RM2, profit=RM1)
• "Trend is your friend, follow the trend" - (Ex: Identify Bull/Bear market)
• "Right Product vs Capital vs Timing" - (Ex: Identify prospect-strong fundamental shares , maximise fund utilisation, Bull trend)

4. Products available in Financial investment market
There are plenty of products available, rank according to the Risk factor, Return On Investment, individual confidence in the products:

• Unit trust funds
• Real estate investment - Assets like properties
• Real estate investment trusts - REITs
• Local / Global stock markets - Public listed companies like Maybank, CIMB, Genting
• Derivatives - Futures market like FKLI, FCPO
• Commodities - Crude Oil, Cocoa, Soybean
• Forex - Pair of currencies like Euro/Usd, Pound/Usd, Yen/Usd

5. Minimum capital required for the beginning
It varies among individual products. It's all depends on how do you wish to take charge of your financial future. Everything in the world comes from "Small", start small to grow big, never start never improve.

6. When is the "Perfect Timing" to start?
"Perfect Timing"? The market is "Always" there waiting for you. You are the only one responsible for your financial future! You take charge of it! Try to ask yourself: "If it's not now, then when?" Here are some of the checklist you may take into consideration:

• As long as you feel the "Confidence"
• Choose the preferable product
• Get ready the require capital - Fund available
• Understand the products, risk, rules, and the games