Fair Value: RM 4.12

Current Price: RM 5.12

Recommendation: HOLD/SELL

Yesterday's quarter earnings report shows that its earnings is still in a downtrend. I'm revising my Fair Value further down. If you need to cash out your investment in this particular stock in the short term (less than 1 year), I suggest that you SELL off all your holdings of this stock (even if you have to cut lost). I'm sorry for failing to give a SELL call in the month of June after Topglov annouced a lower quarter profit. I failed to see that the exterior factors (latex price uptrend, weakening US dollar & aggresive expansion by the rubber glove industry causing over supply) are actually fundamental changes affecting the company. The surge in price during that month due to the Bonus Issue announcement have clouded my judgement of the fundamental changes of this company, which call for a SELL.

However, for those of you who intent to invest in this stock for the long term (more than 3 years), I still stick to my earlier suggestion: Don't sell off all of your shares, just Hold half and Sell half. This is because we can't be sure where the bottom is. Don't average down or buy back now, even though the price have dropped substantially from your initial Sell price. I suggest that you begin to average down or buy back ONLY WHEN the company begin to show signs of uptrend in its earnings.

Note: For Supermax, my advice is the same as above - Sell off all if you're short term; Hold half and Sell half if you're long term.

By Ooi Kok Hwa

Although the economic situation now compares with that of 1993, the last push must come from local retail investors


THE recent rally in our local bourse has prompted many seasoned investors, especially those who experienced the super bull run in 1993, to wonder whether the current rally is about to turn into a real bull run. Of course, nobody can tell for sure what will happen next, but we certainly can do some homework, comparing the circumstances back in 1993 against the current situation.

In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020. In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.

Before 1993, foreign investment in Malaysia was mainly dominated by long-term direct investment in the manufacturing sector. However, as a result of measures taken to develop our domestic equity market, coupled with the strong economic backdrop, we saw a massive influx of foreign capital inflow, which helped fuel the super bull-run in 1993. Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. This had also driven the market into a highly speculative one, which lured many retailers into the market, thinking of making fast and easy money.

With the presence of new and unfamiliar players, the market became a huge “casino”. Retail investors bought into stocks based on rumours rather than company fundamentals. Among the hottest topics during that time were the awards of government mega projects, privatisation candidates, sector play and regular news on upward revision of corporate earnings. Examples for the highly speculative stocks were Ekran, Ayer Molek Rubber Co, Berjuntai Tin Dredging and Kramat Tin Dredging.

In 1993, with the economy booming, the Government planned several mega projects, including the KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil). The news of contract awarding immediately sent the market into speculative mood on those potential candidates. Similarly, the news of the Government planning on privatising some of the its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.














Dreaming: Will the super bull run come?


Besides, the ease of accessing bank credit by investors also contributed to the market rally. We noticed that a high percentage of loans was channelled to broad property sector as well as the purchase of securities.

As a result of massive inflow of foreign funds and the super bull run in stock market, Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,

Recently, our Prime Minister Datuk Seri Najib Tun Razak unveiled the Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. The programme is to attract investment not only from the Government, but also (more importantly) from domestic direct investment as well as foreign direct investment. In view of strong economic growth, our GDP growth is anticipated to increase by 6% this year.

In September, we notice that there was a net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day. Almost every day, the top 10 highly traded stocks were those speculative stocks with poor fundamentals. In addition, we noticed that some retail investors had started to get excited again in the stock market.

According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.

Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit. However, our local retailer participation is yet to get boiling, which may be the last push factor towards the bull run. Hence, once the participation of the local investors starts to get heated up, together with more inflow of foreign fund, that may be the signs of the market heading for a ‘mini’ super bull run.

Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.





Fair Value: RM4.52

Current Price: RM 4.50
 
Recommendation: SELL/HOLD

The next quarterly report will be out some time this month. There is a possibility that the result will be less encouraging like Topglove. As the US government continue to print money, the US dollar will continue to be weakened, and this will hurt the earnings of rubber glove companies.

There is a possibility that the market price of Supermax will continue to drop. Or it might not. So the best strategy is to sell half and hold half. :-P If the market price continue to drop, you would have some extra cash to buy at a lower price. If the market price goes up instead, you would have the other half to ride the uptrend and use the other half in cash for other stocks when the boat of opportunity arrives.





Source: TheEdge Malaysia

KUALA LUMPUR: Top Glove Corp Bhd reported net profit of RM45.06 million in the fourth quarter ended Aug 31, 2010, down 20.6% from RM56.81 million a year ago.

It said on Wednesday, Oct 6 that revenue was 27.5% higher at RM541.38 million from RM424.51 million a year ago. Earnings per share were 7.3 sen versus 9.39 sen. It declared dividend of nine sen per share compared with 7.5 sen.

It said the earnings showed a decline despite higher sales due to normalised demand and oversupply of capacity situation.

“This was further aggravated with persistently high latex prices and weakening of US dollar, which affected the group’s revenue and profit margins. To date, latex price has increased by around 55% and US dollar has weakened against the ringgit by around 13% since beginning of the financial year 2010 (12 months ago),” it said.

For the financial year ended Aug 31, 201, net profit rose 45% to RM245.28 million from RM169.13 million. Revenue increased 35.9% to RM2.079 billion from RM1.529 billion.

Daniel Wong's Recommendation:
 
 Fair Value: RM 5.49

Current Price: RM 5.50

Recommendation: HOLD/SELL

There's a possibility that the earnings of Topglove will continue to drop in the next 3 to 6 months. Thus, the share price will continue to drop as well. But in the long term (more than 3 years), I expect the earnings to go back up for 2 reasons: 1) Demand on rubber gloves continue to grow every year, albeit at a normalised rate now; 2) I believe the over capacity problem is just temporary. As all the rubber glove manufacturers began to 'come to their senses' that they shouldn't expand too much and too fast, their plan for factories expansion will be deferred. So in times to come, I expect that the economics of supply-demand will be back in equilibrium. When that time comes, Topglove will be able to effectively increase the price of rubber gloves to cover the increasing latex cost. In fact, latex price does not always go up, as you can see here: http://spreadsheets.google.com/pub?key=pjJte0uaKGHGoQmtO_6VUMQ


However, there are 'signs' that the US Dollar will continue to be weaken against the Ringgit. For this reason, I personally would Sell at least half of my holdings in rubber glove shares to take advantage of the sharp drop in their market prices, if it is to happen. ;-)

Free Seminars on Financial Intelligence

Posted by Daniel Wong | 11:05 PM | 0 comments »

Andrew Chia, the author of Money Secrets and Money,Greed & Power, will be organizing 4 seminars this week and next week.

The details of the seminar are here: http://andrewchia.com/?page_id=1548

You may email or sms Nic to book your seats. Entrance is free.

Fair Value: RM 5.49

Current Price: RM 5.35

Recommendation: BUY

As the current market price is below my Fair Value, I'm upgrading my recommendation from Hold to Buy. Same as for my description for Supermax, I'm not sure if the market price will drop further from this price. So the best strategy would be to buy in stages.

Refer to previous write-up here for more info on this company.


Fair Value: RM4.52

Current Price: RM 4.03
 
Recommendation: BUY

As the current market price is below my Fair Value, I'm upgrading my recommendation from Hold to Buy. However, I'm not sure if the market price will drop further from this price. I believe a strong bull sentiment on this stock will only come back when there is an increase in the next quarter earnings. Otherwise, the market price may drop further. But I don't expect the downtrend in quarterly earnings to last more than 1 year. Therefore, the best strategy will be to buy in stages.

Refer to previous write-up here for more info about this company.

Generation Y Giving Cars a Pass

Posted by Daniel Wong | 10:55 PM | | 0 comments »

 

VS






Looking at this news:
http://autos.yahoo.com/articles/autos_content_landing_pages/1523/generation-y-giving-cars-a-pass/

Perhaps long term investment in automobile company is no longer a good idea?

Fair Value: RM 2.57

Current Price: RM 2.22

Recommendation: BUY

On the 24th of Aug, the company announced its 2nd Quarter report for Financial Year 2010. Profit for 2Q10 has increased 11.47% compared to the 1Q10. However, the 2Q10's revenue continue to be in the downtrend since 1Q10. I'm maintaining a cautious outlook on the company's profit due to the slow global economic recovery. Therefore, I'm maintaining the Fair Value at RM2.57. As the current market price is below the Fair Value, I'm maintaining a Buy recommendation for the long term.

Refer to previous write-up here for more info on this company


Fair Value: RM4.52

Current Price: RM 5.21
 
Recommendation: HOLD

Based on the recent Q2 report, the company's profit had dropped 10.9% compared to the previous quarter. However, its revenue had increased 6.4%. This is most probably due to the strengthening of Ringgit against the US Dollar. Thus, I believe the demand for the company's rubber gloves is still increasing, but most probably at a slower rate compared to during H1N1 outbreak. At worst, I'm expecting the company's profit to remain flat at the next quarter. Thus, I'm revising the Fair Value for this company from RM5.76 to RM4.52  As the current market price is above the current Fair Value, I'm maintaining my recommendation to Hold.


For those of you who have bought this stock earlier based on my recommendation, I'm sorry for causing you to have paper loss. This company's business is quite resillient and its business was not affected during the 2008 US recession and I believe it will not be affected by the current slower global economic recovery as well. Thus, it is safe to average down your cost per share for this company.

Some of you might want to sell off at the current price to cut-lost and hope to buy it back at a much lower price. But personally, I would not recommend you to use this strategy UNLESS you need the money in the short term (within 3 months). Never try to time the market. This is because the market price might or might not drop to my current Fair Value, which is based on my worst expectation that the next quarter profit may remain flat. The market price might not drop much after you've sold it. So if you have the patience to hold on to this stock for a longer term (more than 1 year), the best strategy is to average down.  


Investing for the long term has a lower risk of losing money, compared to trading for the short term.

Refer to previous write-up here for more info about this company.

By Ooi Kok Hwa

(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/8/11/business/6832498&sec=business)

Prices are influenced by intrinsic value and time value

LATELY, we notice that there are growing numbers of call warrants getting listed on Bursa Malaysia. Even though there are many call warrants issued and traded in the market, the trading volumes of these call warrants are relatively low compared with the normal warrants.

Besides, a lot of investors have been complaining that they are unable to make money from the call warrants that they have bought.

Many investors cannot differentiate between a warrant and a call warrant.

A warrant is a transferable option certificate issued by a company which entitles the holder to buy a specific number of shares in that company at a specific price (or exercise price) at a specific time in the future. It is normally issued by a listed company.

A call warrant (like a call option) also gives investors a right to buy stocks in a company within a fixed period of time. However, warrants are issued by listed companies whereas call warrants are issued by investment banks.

If investors exercise the rights in warrants, they will receive the listed companies’ shares.

Meanwhile, upon maturity of call warrants, investment banks will only pay investors in cash if the closing price of the listed companies is higher than the exercise price of the call warrants. Investors will get nothing if the closing price of the listed companies is lower than the exercise price.

There are many risks in buying into call warrants. Call warrants have shorter maturity period as compared to warrants. Normally, warrants have maturity period of five years or more whereas call warrants have very short maturity period of less than a year.

In many instances, investors who have bought into these call warrants do not realise that their call warrants have expired. Nevertheless, call warrants will be automatically exercised upon the maturity date if the settlement price is higher than the exercise price.

As mentioned earlier, a lot of call warrants are not actively traded in the market. In fact, a majority of them do not have trading volume on a daily basis. We believe one of the possible reasons is that some of these call warrants are getting nearer to maturity date.

The prices of call warrants are influenced by their intrinsic value and time value.

If the call warrants are getting nearer to their maturity date, the time value will be closer to zero. In addition, if the mother price of the listed companies is being traded at a lower price than the exercise price plus the premium that the investors have paid for the call warrant, the market price of these call warrants will fall below their original issue price.

For those who have subscribed into these call warrants, rather than cutting losses and selling them into the market, they will likely hold on to the call warrants and hope that the mother price will recover one day. Unfortunately, in many instances, investors get nothing upon maturity of these call warrants.

Given that the gap between the buying and selling prices is quite big for some call warrants, many investors find it difficult to buy or sell the call warrants. Hence the fact that call warrants usually have low trading volume implies that this is an instrument with very high liquidity risks.

The main reason for a lot of investors to purchase call warrants is the hope of getting payments from investment banks. However, investors need to understand that the majority of the call warrants are European-styled, which means investors cannot exercise them before the maturity date.


The majority of call warrants are settled in cash for the difference between closing price and exercise price. The formula for cash settlement amount is equal to the number of call warrants x (closing price – exercise price) x 1/exercise ratio. Hence, investors need to pay attention to the exercise price, exercise ratio and premium that they have paid.


For example, the exercise price on Call Warrant Company A (Company A CA) is RM10, the exercise ratio is 10 Company A CA to 1 Company A share and the premium investors need to pay is 10 sen for each Company A CA. To the call warrant holders, in order to breakeven, the mother share price of Company A needs to go higher than RM11 or RM10 plus RM1 (10x10 sen, which is the total premium that they have paid).

Lastly, investors need to pay attention to the fundamentals of the mother companies and check the potential price appreciations for these companies.


Companies with good prospects will have higher possibilities of price appreciation and therefore lower risk of buying into the call warrants.


Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

SEATTLE: Forty wealthy families and individuals have joined Microsoft Corp. co-founder Bill Gates and billionaire investor Warren Buffett in a pledge to give at least half their wealth to charity.

Six weeks after launching a campaign to get other billionaires to donate most of their fortunes, the chairman and CEO of Berkshire Hathaway Inc. released the first list Wednesday of people who have signed what he and Gates call the "giving pledge."

Buffett decided in 2006 to give 99 percent of his fortune to charity. Then, he was worth about $44 billion. After five years of investment returns while making annual gifts to five foundations, Buffett's fortune totals nearly $46 billion.

Bill and Melinda Gates do most of their philanthropic giving through their foundation, which had assets of $33 billion as of June 30 and has made at least $22.93 billion in total grant commitments since 1994.

Buffett said he, the Gateses and others have made 70 to 80 calls to some of America's wealthiest individuals. The people who agreed to the pledge are from 13 states, with the most participants in California and New York.

FILE: In this May 6, 2007 file photo, Microsoft co-founder Bill Gates, left, and billionaire investor Warren Buffett are seen during the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. Gates and Buffett are launching a campaign to get other American billionaires to give at least half their wealth to charity. (AP Photo/Nati Harnik)

Among those who haven't signed the pledge, some prefer to keep their philanthropy anonymous, some were not available to talk, and others were not interested, Buffett said.

Many on the list will be asked to call others, and small dinners will be held across the country in coming months to talk about the campaign.

"We're off to a terrific start," Buffett said.

Buffett said he and Bill Gates also will meet with groups of wealthy people in China and India within the next six months to talk about philanthropy. They hope the idea of generosity will spread, but they have no plans to lead a global campaign, Buffett said.

Gates and Buffett estimate their efforts could generate $600 billion dollars in charitable giving. In 2009, American philanthropies received a total of about $300 billion in donations, according to The Chronicle of Philanthropy.

Stacy Palmer, editor of The Chronicle, was surprised and impressed by the speed at which the giving pledge idea has been accepted.

"I think it's remarkably fast that so many people went public with their commitments. The world of philanthropy tends to be very slow moving," she said.

Palmer noted that many of names on the list are people who are known for their philanthropic generosity. She said she would be more excited when she sees names that have not been on other major donor lists.

Taking the idea past billionaires toward millionaires and regular working people could make an even bigger impact, Palmer added.

Jason Franklin, executive director Bolder Giving, a relatively new organization that encourages big gifts from everyday people, agreed.

The Bill & Melinda Gates Foundation gave Bolder Giving a $675,000 challenge grant earlier this year to encourage more people to give at least 20 percent of their personal wealth to charity.

Franklin estimates the giving power of the world's millionaires eclipses the potential donations from U.S. billionaires many times over.

Gates and Buffett are asking billionaires not just to make a donation commitment, but to also pledge to give wisely and learn from their peers.

Their group has no plans for combined giving, and none of the philanthropists will be told how or when to give their money.

"Everybody has their own interests," said New York Mayor Michael Bloomberg, who participated in a teleconference with Buffett on Wednesday as one of the individuals who has signed the giving pledge. "That's what's wonderful about private philanthropy."

Bloomberg, who has a fortune estimated by Forbes magazine at $18 billion, said he has changed his personal philosophy over the years from wanting to be more private about his giving toward trying to play a leadership role. He said his whole family is in tune with his giving plan.

"I've always thought your kids get more benefit out of your philanthropy than your will," he added.

Others who have signed the pledge include filmmaker George Lucas, media mogul Ted Turner and Microsoft co-founder Paul Allen. - AP





Fair Value: RM 5.49

Current Price: RM 7.16

Recommendation: HOLD

On the 16th July (last Friday), the company exercised a 1:1 Bonus Issue. Thus, I revising the current Fair Value to RM 5.49 to reflect the capital changes.

Refer to previous write-up here for more info on this company

Investor Expo 2010

Posted by Daniel Wong | 2:28 PM | | 0 comments »

Dear Readers,

There is an exhibition on investment starting today, 17th and 18th July 2010 (Sat & Sun) 10am to 8 pm at KL Convention Centre.  The exhibition will feature the various investment vehicles including property, shares and other money-making projects such as options and futures trading as well as forex trading.  They even have funds for you to invest in wines and other less conventional investments such as offshore land.

Andrew Chia will be speaking at this expo which is the largest investment expo in Malaysia, organised by Malaysian Investor Relations Association (MIRA) together with ShareInvestor, a subsidiary of Singapore media giant, Singapore Press Holdings.  He will be speaking on 18th July (Sunday) at 5 pm, topic "How new investors can generate immense wealth from their investments". 

More details here: http://www.investorexpo.com.my/

Fair Value: RM 5.76 
 
Current Price: RM 6.44
 
Recommendation: HOLD

As the current market price had overshot the Fair Value, I'm revising my recommendation from Buy to Hold.


Refer to previous write-up here for more info about this company.


Company
Recommended Date
Price (RM)*
Current/Sold
Price (RM) **
Gain ***
15-09-09
2.13
3.87
81.69%
20-09-09
1.96



04-11-09
1.71




**** 1.83
2.28
24.59%
10-10-09
8.23
13.64
65.74%
23-04-10
5.59
5.80
3.76%
Average Gained *****


35.16%

* Adjusted price due to capital changes such as Bonus Issue and Shares Split.
** As of July 2nd 2010 closing price. For the latest price, go to http://biz.thestar.com.my and enter the stock quote in the upper right search box.
*** Including both Paper Gain (still Holding) and Actual Gain (already Sold), not including dividends received.
**** Average Buy Price for COASTAL, assuming that same units of shares had been bought.
***** Assuming equal amount of money had been invested for each recommended Buy date.


Fair Value: RM 1.84
Current Price: RM 3.87
Recommendation: SELL

Last Friday (25th June 2010), the company annouced its 4th quarter profit report. The 4Q10 profit had dropped 5.5% compared to 4Q09. Compared to 3Q10, the current profit had dropped 17.6%. I believe this is a sign of a downtrend in the company's earnings. Therefore, I'm revising the Fair Value in anticipation of a downtrend in the company's earnings in the next 4 quarters.

Refer to previous write-up here for more info about this company.






Fair Value: RM 10.98

Current Price: RM 12.92

Recommendation: HOLD

Recently, Top Glove annouced its 3rd Quarter report for the Financial Year 2010. Profit for 3Q10 has increased 54.37% compared to the 3Q09. However, the 3Q10's profit has decreased 9.52% compared to 2Q10. Therefore, I'm revising the Fair Value to RM10.98 from RM11.85 in anticipation of a downtrend in the next 3 quarters' earnings.

Refer to previous write-up here for more info on this company

 
Fair Value: RM 5.76 
 
Current Price: RM 5.60
 
Recommendation: BUY

The Fair Value is adjusted to reflect the Bonus Issue of 1:4 (1 Bonus share for every 4 existing Supermax shares held) that was exercised on the 16th of June 2010.

Refer to previous write-up here for more info about this company.

Fair Value: RM 2.57

Current Price: RM 2.31

Recommendation: BUY

On the 25th May, the company announced its 1st Quarter report for Financial Year 2010. Profit for 1Q10 has increased 55.97% compared to the 1Q09. However, the 1Q10's profit has decreased 19.85% compared to 4Q09. Therefore, I'm revising the Fair Value to RM2.57 from RM2.97 in anticipation of a downtrend in the next 3 quarters' earnings.

Refer to previous write-up here for more info on this company

Stock Market Windfall is coming

Posted by Daniel Wong | 10:23 AM | | 1 comments »

By Andrew Chia

"History and the numbers say we're due for a giant correction; here's how it's going to unfold..."
Fortune article dated 17th May 2010

You can see the full article here,

Also, author of all-time best-selling personal finance book Rich Dad Poor Dad says in his latest book Conspiracy of the Rich that the recent stock market rally is a "suckers' rally"; the most dangerous type of rally.  Things look great during the rally but the underlying weakness is frightening.  According to him, the problems from the subprime have not gone away at all.

Fortune's article says that the big crash will occur within this year and it is going to be like 1987 all over again.

While crashes are bad for business and the economy, it is good news for investors and financially intelligent people.  Great transfers of wealth occur during market turmoil.  The question is, are you ready when the transfer of wealth occurs?  

If you talk about receiving big bonuses from the stock market, you can do it if you know the answers to the following questions.

1.  What stocks to buy?
2.  At what price to buy?
3.  When to buy?
4.  How much to buy?
5.  What to do after I buy?

Properties and stocks are the two most common ways that people create wealth and achieve financial independence.

If you are anxious to be ready for the next crash, you should quickly learn the answers to the above five questions.  I have an upcoming full-day workshop to help you do just that.  It's on Sunday, 30th May 2010.

For details and to register, just click on this link, http://andrewchia.com/?page_id=1548

Daniel Wong's Note: Seats are limited, so hurry! Book your seat now ;)

As promised in my previous post, I shall reveal the mistakes that the investors of Maika Holding have made.

Take a loan to buy shares
 As the stock market is a volatile investment vehicle, one should not take a loan to buy shares. One cannot be certain if the return on investment (ROI) will be profitable enough to cover the loan interest in the short term. If the ROI is low or not high enough to cover the loan interest, one could easily make a lost.

Confidence in Government-linked companies (GLC)
This is one of the myth that uninformed new investors are led to believe. In the past decades, history has shown that not all GLCs are well-managed and performed well financially. Some even have negative ROE! You may ask, "Aren't GLCs stable companies and won't go bankrupt because they are backed-up by the government?" It may be true that GLCs won't go bankrupt but one must always remember this fundamental investment principle: Share price movement is always fundamentally tied to the company's earnings. As there are better companies with better financial performance out there, why invest in a losing company (even though it's a GLC)?

Hop into the train too early
Many unwary investors lost money when they buy into IPOs or new investment scheme. To reduce the risk of losing money, it's wiser to wait for the company to mature for at least 10 years before deciding to hop into the 'train' or not. As there are many 'trains' with at least 10 years proven track record, why hop into the 'new train' with lots of uncertainty?

Sharpen Your Axe

Posted by Daniel Wong | 12:41 PM | | 1 comments »


By ROSHAN THIRAN
(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6255605&sec=business)

“Employ your time in improving yourself by other men's writings, so that you shall gain easily what others have laboured hard for.” - Socrates

A few years ago, while at Lawas in Sarawak, I was told this story of a very strong and skilled Kayan woodcutter who asked for a job with a timber merchant.

He got the job with a good salary and decent work conditions. And so, the woodcutter was determined to do his best for the boss. His boss gave him an axe and on his first day, the woodcutter cut down 15 trees. The boss was pleased and said: “Well done, good work!”

Highly motivated, the woodcutter tried harder the next day, but could only fell 13 trees. The third day, he tried even harder, but only 11 trees were chopped down.

Day after day, he tried harder but he cut down fewer trees. “I must be losing my strength,” the Kayan woodcutter thought. He apologised to the boss, claiming he could not understand why.

Great leaders like Steve Jobs, Mahatma Gandhi and Nelson Mandela have a continuous appetite for learning and growth.

“When was the last time you sharpened your axe?” the boss asked. “Sharpen? I had no time to sharpen my axe. I have been too busy cutting down trees,” said the woodcutter.

He sharpened his axe and immediately was back to 15 trees a day. Since then, he begins the day by sharpening his axe.

Most leaders are too busy doing and trying to achieve, that they never take time to learn and grow. Most of us don't have the time or patience to update skills, knowledge, and beliefs about an industry, or to take time to think and reflect. Many assume that learning ends at school and so sharpening our axe is not a priority.

So, what exactly is sharpening the axe? Dr Steven Covey, who popularised the term, believes it means “increasing your personal production capacity by daily self care and self-maintenance.”

Most people fail to understand what it means and mistake it for taking a break or vacation. If you're overworking yourself and your productivity drops off, take a break.

However, that isn't sharpening the axe; that's putting the axe down. When you put down a dull blade and rest, the blade will still be dull when you pick it up.

The woodcutter does need downtime to rest, but it is not “sharpening the axe.” The woodcutter only becomes more productive by sharpening his blade, analysing new woodcutting techniques, exercising to become stronger, and learning from other woodcutters.

Sharpening the axe is an activity. You too can sharpen the axe of your life. Here are 10 ways:

● Read a book every day;

● Get out of your comfort zone by changing jobs. A new job forces you to learn;

● Have a deep conversation with someone you find interesting. Sharpen your axe through that interaction;

● Pick up a new hobby. Stretch yourself physically, mentally or emotionally;

● Study something new;

● Overcome a specific fear you have or quit a bad habit;

● Have a daily exercise routine or take part in some competition;

● Identify your blind spots. Understand, acknowledge, and address it;

● Ask for feedback and get a mentor; and

● Learn from people who inspire you. Subscribe to YouTube/leaderonomicsmedia and watch interviews of great leaders.

You have to do it as often as possible. But if you're so focused on your task at hand with no time for discussion, introspection, or study, you're not really moving forward. Just as a car needs to be refuelled to keep going, we too need refuelling through learning.

The Management Mythbuster author David Axson believes most organisations still rely on outdated management strategies. Unless we are sharpening our axe daily by observing the changing world and changing ourselves accordingly, we risk becoming irrelevant.

Andrew Grove reinvented Intel and oversaw a 4,500 times increase in market capitalisation by his daily habitual “axe-sharpening” ritual of understanding global changes and taking advantage of these to ensure Intel remained relevant.

Employees at Japanese organisations like Toyota believe it's a crisis if they do not create improvement each day. The “Kaizen mindset” means that every day, whether you're a line worker or executive, you find ways to learn something new and apply it to what you're doing. This forces employees to be alert, mindful and constantly improving.

Great leaders like Mahatma Gandhi, Nelson Mandela and Steve Jobs have a continuous appetite for learning and growth. They always listen and watch in the hope of learning new ideas and discovering new truths and realities.

Many of us do just the opposite. By staying in the same job for many years, although we become experts and our roles become easy, our learning flattens.

We don't like changing jobs as there is pain and struggle in taking on new roles. But the more we struggle, the more we learn.

When a new boss with new expectations takes over, we sometimes find ourselves struggling even though we have been in the same role for years. We try harder but still fail to impress. Why does this happen?

Much like the woodcutter, trying harder will not yield results. This is because we did not upgrade ourselves nor grow in the “easy” years. Our years of experience count for nothing as we did not keep up with the world around us and were ignorant and mindless of things that were evolving daily around us.

Two weeks ago, I interviewed Harvard Prof Ellen Langer, who reminded me of our natural inclination to be mindless. Mindlessness is our human tendency to operate on autopilot, whether by stereotyping, performing mechanically or simply not paying attention.

We are all victims of being mindless at times. By sharpening our axe, we move from a mindless state to a mindful state; from “blindly going with the flow” to thinking and “breaking boundaries.”

Why then do so many people fail to sharpen their axe? Well, axe sharpening isn't as fun as whacking away at the tree. And it is painful and tedious work.

Religious leader David O. McKay once said: “The greatest battles of life are fought out daily in the silent chambers of the soul.”

Sharpening the axe is a daily inner battle. Research reveals that self-educated presidents like George Washington and Abraham Lincoln sharpened their axe daily by cultivating the discipline of reading.

In a number of Asian organisations, when there is a crisis or financial situation, the first thing that gets slashed is training programmes for employees. Yet, in a crisis, there is a greater need for employees to have sharpened axes to deal with issues.

Crises often helps companies to become great because they finally take time to sharpen their axe by re-looking at their current strategies and reinventing their industries, sometimes through painful reforms.

Before the 1998 Asian financial crisis, the Korean auto industry were jaguh kampung and known for low-quality cars with strong domestic car sales.

The crisis forced them to take a step back, sharpen their axe, become mindful to the world and move to sell the majority of their cars outside South Korea.

Of course, too much or aimless axe sharpening can become another form of procrastination. Many like to attend training courses and classes but end up never using the axe. After sharpening the axe, use it or all is in vain.

How are your various blades doing? Your skills, your knowledge, your mind, your physical body, your relationships, your motivation, your commitment to succeed, your capacity for growth, your emotions - are all of them still sharp? If not, which ones are dull, and what can you do to sharpen them?

Lincoln once said: “Give me six hours to chop down a tree and I'll spend the first four sharpening my axe.” What are you doing to sharpen your axe? Take a step back this weekend and start sharpening your axe.

Daniel Wong's Note: One of my favourtite philosophy in life is: The more you learn, the more you earn. The current Europe's debt crisis provides the opportunity for value investors to buy fundamentally good stocks below their intrinsic value. Readers of the Bursa Winners ebook would have been "sharpening their axes" to "chop down more trees" ;)

StarBizWeek's EUGENE MAHALINGAM spoke to a few Maika shareholders to gauge their sentiments then and now.

■ Lured by the potential of good returns, like thousands of others, retiree JESWANT KAUR, 64, took a loan to buy 5,000 shares in Maika. She was then assistant examiner at the Inland Revenue Board. Why has she held on to the shares for so long when many others have given up hoping and sold theirs? “I just kept the shares as I was quite confident something good will happen. After all, it's the MIC's investment arm and MIC is part of the Government. You can't really lose much,” she says. On what are her thoughts on the latest offer on the table by Tan Sri G. Gnanalingam, she seems quite upbeat. “At least I get back my money. Some people may have lost their capital but I will get mine back. What's the alternative? None. So I'm quite happy with the solution,” she says.

■ For lorry driver BALA (not his real name), 47, the Maika Holdings saga is a painful but distant memory. His father, now deceased, had purchased the shares. “Back then, my father, an oil palm estate worker, had heard about this (Maika) and was quite taken with what was being offered. I remember they promised a lot of things and my father felt that it would be a good investment,” says Bala, who lives in Rawang. “It was a very long time ago. I think my father had forgotten about it.” Bala's father only ear ned RM180 a mont h. “Although he didn't have much money, my father still wanted to invest. I remember him complaining in the past that Maika had promised so much but there was little to show for it.” According to Bala, just weeks before the recent Hulu Selangor by-election, he had “several visitors” who came over to speak to him and other Maika investors, on what seemed like a fact-finding mission to ascertain how many members were still active. “I'm not sure who they were. I gave them a photocopy of the details of my father's investments. But since the by-election, we have not heard from them,” he says. Naturally, Bala's patience to see a resolution to this Maika issue has thinned out.

■ ARULDASS SANDASAMY's father, a Maika shareholder, passed away 20 years ago. The father was then an estate worker earning RM200 a month. He bought 500 shares. His mother was also an estate worke r and they raised eight children. “My parents used up their savings to invest in Maika shares as they believed then it would earn them decent returns,” he recalls. Aruldass also remembers that they had received a couple of cheques over the years, which was probably dividend payouts in the early years. “We received a cheque twice for about RM30 but that's about it. Of course, my father was very unhappy with the returns. After putting in RM500, what happened to the rest of the money? Back then, RM500 was a lot of money. It's disheartening that we don't even know where the money went to.” After waiting for years, they simply “gave up hoping.”

■ K. CHANDRAGOPAL, 60, a retired teacher, laughs mockingly when asked about his investment in Maika. “It's so long ago. It's easy to forget! In fact, I had forgotten all about it until I read about our “white knight” (Tan Sri G. Gnanalingam),” he says. Chandragopal bought RM300 worth of shares in Maika. “A few of us teachers had invested in it because we thought there was a future. Unfortunately, it was all hype and talk, no action. “I feel sad and cheated about the whole thing. They really did promise us a lot but in the end, we got nothing. It feels like we Indians are always on the losing end.”


Daniel Wong's Note: Can you identify what are the mistakes that these investors had made? Try going through their stories again and see if you can identify them. I shall reveal the answer to you next week ;)

Mothers - investing for life

Posted by Daniel Wong | 1:58 AM | | 0 comments »

By TAY HAN CHONG
(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6250980&sec=business)

LAST Sunday was Mother's Day. It also marked the end of my son's first week at playschool.

Although it was only a two-hour trial session, his mother was not allowed to remain in school.

It was probably a lot more emotional for my wife than for my son as she lingered outside the school gates, straining her ears and listening for the familiar cries or perhaps the occasional laughter.

It was another milestone in the journey of life for my young son, and a milestone for my wife and I as parents.

Special meaning

Mother's Day holds special meaning for us, as our son was born on this day two years ago.

After a “stressful” week for the three of us, perhaps this is what my son might say if he could articulate it himself (Of course, I am making the assumption that I can read his mind and his heart): “My mother is a source of inspiration. She sacrificed her career to be with me every step of my way. I am indeed privileged. My mother is my pillar of strength. I was so relieved when I saw her after my first day at school. I tried to be strong, but I was very scared too.

“My mother is a source of comfort. Her kisses will make all sorts of pain go away. I am always comforted by her magical touch.”

Many would remember an old Chinese children's song that glorifies a mother's love for her children. Translated in English, it goes something like this:

“In the world only mothers are good. Children with mothers are like precious treasure. When one is in the embrace of one's mother, it is a blessing without compare...”

As far as I can remember, there has not been a song written about fathers with the same level of importance as when compared to songs written about mothers. Perhaps, in the past, fathers were the breadwinners and mothers the caregivers.

However, over time, fathers are becoming more involved in the parenting process.

In fact, I know of someone (let's call him EJ) who took a break from his career to spend time with his children. Now that his children are grown up, he has gone back to work.

A well-known personality and an accomplished journalist, he shares the opportunity cost of being at home with his children.

But he says it is well worth it. He went through the experience of seeing his children grow up first-hand.

From a financial perspective, the sacrifice or opportunity made by the stay-home caregiver can be easily computed in dollars and cents.

It is a very simple computation - monthly salary plus benefits plus annual bonus multiplied by the number of years, factoring in inflation and potential increment. This cost can be significant.

Intangible cost

On top of that, sacrifices made in the form of lifestyle adjustments, which are almost always required when a family with children changes from dual income to single income, also have to be taken into account.

This intangible social/family cost is less easy to compute but can be easily appreciated by most families.

Some might think that being a full time stay-home parent equates a life of luxury. My wife would be the first to refute that.

She is not living the life of a “tai tai”. For stay-home parents, life is physically tiring, emotionally draining and financially straining. No pay, no days off and no medical leave.

But just like EJ, my wife knows that it is indeed a privilege to be a stay-home mother. One does not get to hear from the maid or the caretaker how one's child took his very first step, how he articulated his first word, or even how he fell off the bed. My wife experienced all these first-hand.

Hence, allow me to be a contrarian and turn this equation of economic and social costs upside down. Spending time with our children is not a cost, but an investment.

A cost or investment?

What is the difference between a cost and an investment? A cost is an expense and outlay, just like a teh tarik, which costs RM1.40, or a holiday costing RM2,000.

But an investment is like a RM20,000 master's degree programme, a RM100,000 unit trust investment or a RM1mil shophouse.

When we think of investments, we automatically think of the payback and returns.

EJ had invested in his children and my wife is still investing in our child. Not only does EJ not regret his choice, he proudly proclaims that his “payback and returns” are his emotional wealth and experiences that are unique to him alone.

No amount of money can replace or replicate something as intangible as that. In fact, he says that he would do the same all over again.

My wife echoes that sentiment, and I know many stay-home parents will agree too.

To them, Mother's Day and Father's Day are not just days for them to receive a rose, a box of chocolates or a special meal.

It is a day when one receives the annual statement of one's time-honoured and privileged investment made in the names of one's own children.

There is no perfect guide to parenthood; no “control-alternate-delete” function to reboot and restart. Parenthood is tough and sometimes mistakes are made.

However, by being there to guide and love our children, hopefully we can raise them up to be the better person we all hope to be.

“Investment” is not always about money, and I quote Joyce Maynard: “It's not only children who grow. Parents do too. As much as we watch to see what our children do with their lives, they are watching us to see what we do with ours. I can't tell my children to reach for the sun. All I can do is reach for it, myself.”

To all mothers, hope you had a happy Mother's Day. And as for fathers, our moment of recognition will come next month!

Tay is senior vice-president and senior head of UOB's personal financial services division.


Hello readers,

It's been quite some time since I last updated my blog. I was busy with the other part of my life..hehe..Initially I thought that I could update my blog at least once a week, but I guess I was too ambitious =P

As we're observing the debt crisis in Europe and how it affects the stocks in Bursa Malaysia, one fundamental question investors would ask themselves is: Should I hold or sell my stocks?

Answering this question would depend on the invidividual investors. If one needs to cash out the money from the stock market for some urgent/important purposes, then I think it's good to sell off one's stocks because the current bearish trend could last for months before the start of another strong bullish trend. On the other hand, if one doesn't need to use the money and has a medium to long term horizon for one's investment (5 years to 10 years), then the Europe's debt crisis should not bother you. In fact, this is a good opportunity for bargain hunting to increase one's holding of fundamentally strong stocks. Readers of Andrew Chia's Bursa Winners' ebook would have equipped themselves with the right knowledge and tools to shop for undervalued stocks =)

Having a medium to long term horizon for your investment, good money management and an investment strategy helps to keep you from making irrational buy/sell decision based on the emotion of fear and greed (fear that the current Europe's debt crisis will wipe out your investment capital and greed in chasing after overvalued stocks).

Disclaimer

This is a personal weblog, reflecting the author's personal views. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.