Sunday, 29 June 2014

Nam Cheong Barging Forward - Accom Work Barge Orders & Shares buybacks.

Barging Forward

While outstation this week, I read that Nam Cheong continues to “Cheong” (Hokkien for charge) forward with USD84mil orders to build two Malaysia’s largest Accommodation Work Barges (AWB) of 500-men with options to build two more, for repeat client Perdana. Unlike its usual Build to Stock model, the two AWB would be constructed under the build-to-order (BTO) model with delivery scheduled for 2016.

Order book now stands at MYR1.5b vs End March of MYR1.4b. Nam Cheong had  also managed to registered strong growth yoy since 2009. FY2013 net profit saw 51% growth to RM206.2 million. To reward its shareholders, Nam Cheong also raised its dividend to 1 cent a share for FY2013, double the amount in FY2012. The FY2013 dividends amounted to S$21.0 million, representing a payout ratio of 27%.

Its recent 1Q2014 results announced in May also seen net profit surged of 99% to a record high of RM71.3m from RM35.8m in 1Q2013. Gross profit margin is also up by 2.6% to 21.2%, while net gearing ratio of 0.35x ensures headroom for growth.

Base on Nam Cheong last close price of 39.5c, PE is undemanding at 7.4 (based on annualized 1Q14 EPS).

Last year Nam Cheong is also awarded at the SIAS Investor’s Choice Awards as winner for the Most Transparent Company for the category of Foreign Listing. 

Share Buybacks

Nam Cheong also initiated a series of buybacks in the last month or so. It bought back 2 million shares at 37.5c apiece on May 23 and 3.5 million shares on Jun 16 at 38.5c apiece. On three occasions in August and October last year, its CEO Leong Seng Keat also bought a total of 10 million shares at between average price of 27c a share.

Nam Cheong stock price had rose impressively from 11c in Dec 2011 to 24c in Apr 2013 and 38c in Jun 2014.

Companies normally buy back their shares aggressively when their stock prices are at disappointing low. The management then believes that the stock price is undervalued and buy at a good bargain. In the case of Nam Cheong, it is exact opposite! It repurchases shares in the market at all-time record high pricing in the past weeks.

This is a clear indication that the company is confident on her business prospects and thinks that its share price is undervalued even at record highs.  

Rolf’s View

With the robust offshore and marine sector outlook particularly in the shallow water segment, expect Nam Cheong to continue its “cheong” with improved performance at least for the next two to three years. 

Its growth is also facilitated from excess ship-producing capacity in China as it outsources most of its orders to Chinese yards and gets preferential rates currently.

Saturday, 28 June 2014

Vallianz - Dragged by Swiber and Shares Placement?

I was asked by one of the readers what to do after the placement of Vallianz shares, and how will Swiber potential decline in business affect Vallianz. Instead of replying direct, I decide to write a post.

What to do after Shares Placement?

After the share placements at 0.13545, share price falls from 0.157 on 16 June to 0.137 end of last trading day. What should I do? I do not really know! Probably do nothing.

Frankly for the past years with this share, I had not done a lot of buy/sell, except for exercising rights once few years back, and selling off part of the shareholding to cash out more of my initial investments while retaining unrealized profits in it. The reason of doing is pretty obvious! As much as Vallianz is viewed as a high growth stock, it contains excessive leverage and risk. Keeping your profits in the shareholdings makes more sense than putting your entire bet on it.

At present, I am still confident of the company. This is fortified by institutional investors’ confidence lately. Probably the right exit timing is critical. This requires more in-depth understanding on the oil and gas market and its cyclical nature.

Swiber - Challenges ahead

Swiber order book decline from US$1.1 billion as of May 2013 to almost half of US$650 million as of May 2014. Revenue also dropped sharply last quarter. It is undeniably that Vallianz is reliant on Swiber and Rawabi-Swiber for its business. Vallianz derived US$17.7mil out of US19.9mil (89%) of her income from her major shareholders. Latin America is an important market for Swiber, which she announced a latest contract win of US$80mil earlier this month. Swiber success in the near future is greatly affected by her progress in Latin America mainly Mexico as well as her venture into new market of Africa regions.

With that in mind, decline in Swiber business will directly affect Vallianz business going forward.  

For the time being, as long as Swiber still maintain her fleet and execute her orderbooks, Vallianz short term income from chartering and vessel management is more or less guaranteed. Any newbuildings by Swiber will also benefit Vallianz in vessel management fees charged.

Vallianz Growth attributed to Bright Outlook of Offshore and Marine Sector

To me, Vallianz aggressive growth plan may be a direct consequence of the bright outlook within the O&M sector rather than solely dependent on the outlook of Swiber. Please refer to the link of previous post on Offshore and Marine outlook at the end of the post.

Swiber has a fleet of Offshore Construction Vessels (OCVs) including pipelay, accommodation and maintenance vessels etc. In order for Swiber to fulfill an EPIC (Engineering Procurement Installation Construction) project awarded by Oil Majors, Swiber's OCV will require the support of Vallianz Offshore Support Vessels (OSVs). 

Yet, we must be aware that OSVs are not only supporting OCV, but also Rigs, Oil & Gas Platforms and many other works. Therefore while Vallianz current income is generated solely from Swiber related subsidiaries, it does not mean that its future business is only confined to Swiber.

Diversification of Fleets into New Market

Vallianz recently diversify her fleet to target different market segments within the small to medium PSV market. This includes acquisition of two Ulstein P/PX128 Platform Support Vessels (PSVs). It was also announced that an addition of ten PX128 vessels will be added to the Vallianz fleet subsequently.

This is in line with Vallianz currently bidding for up to US$1.2 billion in projects across Asia, Middle East and Latin America. With the addition of these Ulstein PSVs, Vallianz will be in a position to potentially capitalise on new opportunities in new regions such as Europe, Gulf of Mexico and Africa.

Cost Competitiveness  

Vallianz tends to keep the cost of newbuilding very competitive. Most of her vessels were built in Chinese yards or ASL whom Vallianz had established a long term relationship many years back. This good relationship often allow Vallianz to get favorable financing from established and financially sound Chinese state-owned yards.

Vallianz also does not a big team of personnel. This keep fixed overheads low and being located in the same building with Swiber, Vallianz can also take advantage of shared-services such as IT, HR, or even in-house design capabilities. Vallianz competitiveness together with the young age (ave age 2.5yrs) of her fleet will enable her to penetrate and win tenders in South East Asia, India, Middle East and Latin America. These regions require competitive price structure most of the times.

De-Risk Future Growth from partnership with Chinese State Owned Yard

Excerpt from Religare Report “On April 23rd Vallianz announced an MOU with an undisclosed ‘first class’ Chinese shipyard, whereby Vallianz will provide the yard with market intelligence in exchange for the right of first refusal for up to 200 OSVs over the next four to five years. Vallianz will advise the yard on the type and timing of OSVs to be built. The yard will begin building vessels according to Vallianz’s guidance however Vallianz will not be required to enter into any contractual obligation to purchase the vessels and hence will also not be required to place any down payment. Vallianz will however enjoy the right of first refusal for vessels at completion. This partnership will thus allow Vallianz to substantially de-risk its fleet expansion, allowing Vallianz to confidently bid for contracts knowing that potential OSV vessels are available, however only requiring Vallianz to purchase such vessels if and only if Vallianz has secured a contract for them.”

However, we note that most of the 24 vessels in Vallianz’s current expansion plan are unlikely to come from this new China relationship due to timing of vessel construction periods (it takes 15-18 months to build a vessel and this new relationship was just only recently confirmed).

Hence Vallianz’s ROFR for 200 vessels will likely fuel future fleet growth beyond the 24 vessels announced in April. We note that if Vallianz were to purchase 200 vessels, it would expand its fleet size by many multiples. This 200 vessel ROFR provides opportunities for substantial growth for years to come, Vallianz will just need sufficient contract wins (which it can bid for without vessel construction commitment) and of course sufficient financing (but financing should be relatively easy given these vessels will only be purchased once a contract has been won)

Rolf's View

Although Vallianz future seems exceptionally bright, this company is growing at a rate that nobody else in the market is doing. It is dangerous!

Institutional participation recently may signal short term interest more than long term prospects of the company. Another thing I dislike about Vallianz, is the non-transparency on her projects and clientele. This is unlike Nam Cheong who disclosed all its projects and buyers of its vessels. Competitions are also intense in the market with more and more OSV companies in aggressive growth mode. They include POSH, Miclyn, Mermaid-Jaya and many more.

Fleet growth require human resources growth too. The shortage of experience personnel within the market is well-known and this can be a great challenge to maintain the quality of the services Vallianz provides to her clients.

But for now the growth story painted looks convincing unless impeded by an unprecedented financial crisis.   

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Contrarian Investment Strategies – Rule 22 to 41

Apologies for the delay of part two of Contrarian Investment Strategies. It had been a really busy and tough week out for business trip. Anyway, continue from the previous post of Contrarian rules, below you will find the complete rules from 22th to 41st. 

I tend to agree with most of the rules. To elaborate some of the points, I had also added comments, info and examples either from the author or myself in italics blue.

Invest Long Term

Rule 22: Look beyond obvious similarities between a current investment situa­tion and one that appears equivalent in the past. Consider other impor­tant factors that may result in a markedly different outcome.

During the 1987 financial crash, many people compare it the to 1929 depression due to many similarities. It is incorrect. The 1929 depression lasted for more than ten years into 1940s, on the other hand, throughout the ten years after the 1987 crisis, market recovered fast and actually quadruple in 1997.   

Rule 23: Don’t be influenced by the short-term (3 or 5 year) record of a money manager, bro­ker, analyst or advisor, no matter how impressive; don’t accept cursory economic or investment news without significant substantiation.

Rule 24: Don’t rely solely on the “case rate.” Take into account the “base rate“­ – the prior probabilities of profit or loss.

The past outcomes are prior probabilities and not necessary reflecting the current practical situation. Instead, we need to evaluate the fundamentals a company and compare it with similar companies within the industry.

Rule 25: Don’t be seduced by recent rates of return for individual stocks or the market when they deviate sharply from past norms (the “case rate”). Long term returns of stocks (the “base rate”) are far more likely to be established again. If returns are particularly high or low, they are likely to be abnormal.

Rule 26: Don’t expect the strategy you adopt will prove a quick success in the market; give it a reasonable time to work out.

It was mentioned: “One of most common questions is if the stock is so good why it don’t go up?” Contrarian explains that in most situations, it will take some time for the value (the input) of the stock to be recognized in the price (output) by the market. If investors demand immediate, though incorrect feedback, they can make serious mistakes as a consequence.

Rule 22 to 26 seems easy but it is a lot harder to follow than we think. This is because of the cognitive psychology of biases indicated that even when people are warned of such biases they appear not to be able to adjust to the effects. It takes lot of concentration and effort and understanding to avoid these pitfalls.

Rule 27: The push toward an average rate of return is a fundamental principle of competitive markets.

Psychological Reactions

Rule 28: It is far safer to project a continuation of the psychological reactions of investors than it is to project the visibility of the companies themselves.

Crisis Management

Rule 29: Political and financial crises lead investors to sell stocks. This is pre­cisely the wrong reaction. Buy during a panic, don’t sell.

Rule 30: In a crisis, carefully analyse the reasons put forward to support lower: stock prices-more often than not they will disintegrate under scrutiny.

Source: Yahoo Finance

The above charts show Singapore STI Index from 1995 to current & US S&P500 Index from 2008 to current.

After the 1997 Asian Crisis, STI rose from below 1000 to 2500 points in 2000. Likewise after SARs 2003, STI rose from below 1500 to above 3500 points in 2007/08. Again after the Global Financial Crisis 2008/09, STI rose from 1600 to above 3000 points now in 2014. Similar trend is observed in the S&P 500 index. After GFC, it rose from below 800 to above 1900 points now in 2014.

Therefore it is not difficult to understand why we should buy during situations of panic and sell during euphoria. 

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” – Warren Buffett

It is also noteworthy that during crisis, even great companies will see its PE or PB ratios taken a hit and fall drastically. It is common. A good way to radar good stocks is to identify those that are still having sustainable dividend payouts. The better stocks even increase their dividend pay outs.

Rule 31: (A) Diversify extensively. No matter how cheap a group of stocks looks, you never know for sure that you aren't getting a clinker. (B) Use the value lifelines as explained. In a crisis, these criteria get dramatically better as prices plummet, markedly improving your chances of a big score.

During crisis, sometimes even good company may go wrong. Contrarian approach advises to have adequate diversification. For instance, a fund manager has $1million, do extensive research and put $200k (20%) of his portfolio into the banking industry. He then spread 200k investments into 10 banks or more such that each bank has less than 20k (2%) of the overall holding. So even if 1-2 banks collapse due to unprecedented cases, it will not be so bad.

Volatility is not risk

Rule 32: Volatility is not risk. Avoid investment advice based on volatility.

Some investor use volatility index (VIX) to track risk. 

Small-cap Investing

Rule 33: Small-cap investing: Buy companies that are strong financially (nor­mally no more than 60% debt in the capital structure for a manufacturing firm).

Rule 34: Small-cap investing: Buy companies with increasing and well-protected dividends that also provide an above-market yield.

Rule 35: Small-cap investing: Pick companies with above-average earnings growth rates.

Rule 36: Small-cap investing: Diversify widely, particularly in small companies, because these issues have far less liquidity. A good portfolio should contain about twice as many stocks as an equivalent large-cap one.

Rule 37: Small-cap investing: Be patient. Nothing works every year, but when smaller caps click, returns are often tremendous.

Rule 38: Small-company trading (e.g., Nasdaq): Don’t trade thin issues with large spreads unless you are almost certain you have a big winner.

Rule 39: When making a trade in small, illiquid stocks, consider not only com­missions, but also the bid /ask spread to see how large your total cost will be.

Rule 40: Avoid the small, fast-track mutual funds. The track often ends at the bottom of a cliff.

Rule 41: A given in markets is that perceptions change rapidly.

Straits Times Index (STI) comprises the largest 30 companies by full market capitalisation that meets stated eligibility requirements. FTSE ST Mid Cap Index comprises the next 50 companies by full market capitalisation that meet stated eligibility requirements. FTSE ST Small Cap Index comprises of the constituents within the top 98% of the SGX Mainboard by full market capitalisation. They will also need to meet the stated eligibility requirements, but are not constituents of the STI and the FTSE ST Mid Cap Index. As of May 2014, Cambridge Industrial Trust is the largest constituent of STI small cap company with a market capitalisation of approx S$960mil. Refer to link for FTSE ST Index series.

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Monday, 23 June 2014

Contrarian Investment Strategies – Rule 1 to 21

As mentioned in previous post, I just completed reading "Contrarian Investment Strategies" by David Dreman last week. The book contains over 400 pages, but author summarized the contents into 41 rules.  Let's take a look at the 1st to 21st rules with Rolf's two cents opinion in italics. It is no expert comments and may be biased and wrong, please bear with me and appreciate any valuable opinions. 

Myths of Past Information

Rule 1: Do not use market-timing or technical analysis. These techniques can only cost you money.
Do not agree. TA is an important tool for Traders and provides indications of when to buy/sell even for long term investors. While frequent trading is discouraged, case by case trading is still valid.   

Rule 2: Respect the difficulty of working with a mass of information. Few of us can use it successfully. In-depth information does not translate into in­-depth profits.
In-depth info is useful when it is organised properly, convert into action preceded by a plan. Sometimes I also rely on my “gut feel” after performing extensive research. 

Rule 3: Do not make an investment decision based on correlations. All correla­tions in the market, whether real or illusory, will shift and soon disappear.

Rule 4: Tread carefully with current investment methods. Our limitations in processing complex information correctly prevent their successful use by most of us.

Analysts’ Forecast

Rule 5: There are no highly predictable industries in which you can count on analysts’ forecasts. Relying on these estimates will lead to trouble.
Analyst info such as factual statistics compiled is useful for reference. Beware against forecast / estimates and perform your own research extensively. Always be conservative on Analyst reports. 

Rule 6: Analysts’ forecasts are usually optimistic. Make the appropriate down­ward adjustment to your earnings estimate.

Rule 7: Most current security analysis requires a precision in analysts’ estimates that is impossible to provide. Avoid methods that demand this level of accuracy.

Past as Reference but cannot predict Current

Rule 8: It is impossible, in a dynamic economy with constantly changing polit­ical, economic, industrial, and competitive conditions, to use the past accurately to estimate the future. The past gives some frame of reference but cannot be exact.

Prepare for the Worst

Rule 9: Be realistic about the downside of an investment, recognizing our hu­man tendency to be both overly optimistic and overly confident. Expect the worst to be much more severe than your initial projection.

Invest in out-of-favour stocks

Rule 10: Take advantage of the high rate of analyst forecast error by simply in­vesting in out-of-favour stocks.
Do not agree! Perform your own research. Buy stocks that possess the 3Rs - Right Management, Right Business Model and Right Value  (FA).

Positive /Negative Surprises - How it affects Favoured /Out-of- Favoured Stocks 

Rule 11: Positive and negative surprises affect “best” and “worst” stocks in a di­ametrically opposite manner.
This means that if there are positive surprises that cause a rise in stock price, it will trend upwards in a faster manner, because people are expecting more out of the stock for a huge profit. Conversely, if there are negative surprises that cause a slide in stock price, it will trend downwards in a slower manner, because people are not expecting too much with a price decline. Have to do with Greed, kind of agree.

Rule 12: 
(A) Surprises, as a group, improve the performance of out-of-favour stocks, while impairing the performance of favourites.
(B) Positive surprises result in major appreciation for out-of-favour stocks, while having minimal impact on favourites.
(C) Negative surprises result in major drops in the price of favourites, while having virtually no impact on out-of-favour stocks.
(D) The effect of an earnings surprise continues for an extended pe­riod of time.
Contrarian advocates that we buy out-of-favoured stocks that have solid fundamentals because when positive surprises crop up, it normally goes up at a faster rate! On the contrary if you buy darling stocks, and negative surprises surface, it will fall dramatically. Kind of agree. One example is Super Group price free-fall due to the crisis in Thailand. Use to be a darling stocks with PE of 27. Hit by political crisis, PE drop to 16 and below at one stage. 

Rule 13: Favoured stocks under-perform the market, while out-of-favour companies outperform the market, but the reappraisal often happens slowly, even glacially.

Rule 14: Buy solid companies currently out of market favour, as measured by their low price-to-earnings, price-to-cash flow or price-to-book value ratios, or by their high yields.
Agree on the 4 strategies, but there can be situations that the out of favoured stocks stay unnoticed for many years (or for reasons unknown to retail investors), even when fundamentals seems to be strong. Examples Triyards and Marco Polo Marine within the O&G sector trading at PE way below their peers.

Rule 15: Don’t speculate on highly priced concept stocks to make above-average returns. The blue chip stocks that widows and orphans traditionally choose are equally valuable for the more aggressive businessman or woman.

Avoid Trading

Rule 16: Avoid unnecessary trading. The costs can significantly lower your re­turns over time. Low price-to-value strategies provide well above mar­ket returns for years, and are an excellent means of eliminating excessive transaction costs.
Case by case, but keep trading to minimum. Rolf suggest trading cost within 1-2% of cost of investments. My average trading cost is 0.5%.

Contrarian Stocks

Rule 17: Buy only contrarian stocks because of their superior performance char­acteristics.

Diversify across Industries

Rule 18: Invest equally in 20 to 30 stocks, diversified among 15 or more indus­tries (if your assets are of sufficient size).
Diversification across industries is important but make sure your portfolio is sizeable to diversify and do not incur high trading fees. 

Buy Large and Medium sized stocks listed in NYSE

Rule 19: Buy medium-or large-sized stocks listed on the New York Stock Ex­change, or only larger companies on Nasdaq or the American Stock Ex­change.

Buy using Four Contrarian Strategies

Rule 20: Buy the least expensive stocks within an industry, as determined by the four contrarian strategies, regardless of how high or low the general price of the industry group.

Rule 21: Sell a stock when its P/E ratio (or other contrarian indicator) approaches that of the overall market, regardless of how favourable prospects may appear. Replace it with another contrarian stock.
Case by case. Some smaller-cap stocks have PE above market value, due to their growth potentials. It does not mean that we should immediately sell. One likely example is Vallianz holdings.   

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Sunday, 22 June 2014

When to Buy, Hold and Sell a Stock - Contrarian Approach

Contrarian Investment Strategies – David Dreman

Finished reading a book last week titled "Contrarian Investment Strategies" by David Dreman. While the book contains over 400 pages, the author had summarized it into 41 rules. I will publish the rules in my next post. For now, instead we will discuss key strategies to buy and sell a stock directly taken from the Contrarian Approach. 

When to Buy?

Contrarian Main Strategies
  • Low Price to Earnings (bottom 40% stocks)
  • Low Price to Book
  • Low Price to Cash Flow
  • Low Price to Dividend yield
  • Diversify. Hold at least 20-30 different stocks from different industries.

Financial Analysis

  • Strong financial position. current ratio, cash etc
  • As many favourable operating and financial ratios as possible. ROA ROE ROC
  • Higher earnings growth than S&P (STI) in immediate past, and likelihood that it will not plummet in the near future 
  • Earning estimate should always be conservative
  • An above average yield which company can sustain and increase
Sometimes the stock will experience a plunge due to over-reaction in the market resulted from a temporary political or financial crisis. How should we react? – to buy right after the plunge or wait till dusk clear? Contrarian approach suggests that we do not be a hero and charge into the initial panic. It pays to sit on the side-line for a while. In all probability, you will get plenty of chances to buy it cheaper in the next 90 days. When there is negative surprise, the poorer the results, even first rate companies are sure to fall for a while.

Financial Analysis does not work - When?

Prime growth company
Financial Analysis forecast build base on past earnings, and not necessary on growth trends! Normally prime growth company has high debts and that is when Financial Analysis dislike.

What is the proper PE? 
Especially for growth company! Initially in 1997 when you say Tech stocks PE 20 is high, but how can you imagine that it can grow to 50-60 or even 100 later.

Changing PE
A rapid growth company can trade at PE of 40/50 then drop to 25/15/10 as investors change their mind on value. 

Unnoticed Stock
A stock may be highly undervalued, but there is no guarantee that market will recognize or spot it. May linger in the dumps for years.

When to Sell?

Consider following situation: You buy a stock at $1.00 and pre-set a sell price at $1.50 (50% increase.) When the stock price reaches $1.50 and in its rise, it is accompanied by even more good news. You start to ponder should I sell now, because you may think that it is likely that the stock may go higher to $2, then to $2.50 then to $3.00. Yet, sometimes the reverse can be true! It is very common to see Investors riding the stocks all the way to its high and ride it all the way down again. 

Therefore it is critical to know when to sell a stock. Since human beings are run by emotions, very often, selling a stock can be one of the most difficult decision. 

Pick a sell point, do not be greedy
Before you purchase a stock, it is good to set a sell point. In the above example, if your pre-set price is $1.50 after buying it at $1.00 once it reaches $1.50, you should sell the stock immediately. Do not be greedy. Grit your teeth, brace yourself and get rid of the stock. You are probably unhappy when later it goes up, but you should not be bothered. Remember that you already reap your profit, unless there are other reasons you are 100% sure that the stock price will rise later. 

Imagine you bought a stock at PE 10 compare to the industry average of 15. With earnings unchanged, PE rises to 20 after announcement of some good news. Contrarian approach suggests even with the impending bright prospects, we should sell the overvalued stocks and replaced it by another low PE stock. 

Do not fall in love with your stocks
2.5 to 3yrs is adequate waiting period. For a cyclical stock with fall in earnings now, it may take 3 to 3.5yrs before its right time to sell. But you still need to have a plan and stick to your time frame. Do not be stubborn to hold forever.

Long term fundamentals deteriorate
Do not sell your stock just because it has a poor Quarter of results, due to one-off temporary reason and PE becomes large. On the contrary, if the fundamentals of the company are affected such that the outlook is bleak, sell the stock no matter how painful it is!

Sell to rebalance portfolio

Try to have fix number of stocks and buy and sell to rebalance your portfolio! While doing so, please avoid dangers of overtrading and incur on hefty trading charges. 

When to Hold?

Relevant to Book value

There are times when you do not sell your stock even when it reaches the pre-set sell point. This kind of situation is when book value of the stock also increases with the stock price rise, such that stock is still selling below its PB ratio. In this situation you may consider to hold the stock. 

Hold Forever

Warren Buffett once said “Our favourite holding period is forever”

I think it probably relates to specific stocks and situations and how you design your portfolio. For instance, you may classify your stock portfolio, into long term (>5 years), mid-term (3-5 years) and short-term (1-2 years). The long term group normally belongs to “blue chips” with very strong fundamentals with slow and steady growth yoy, that you consider holding it as long as you can. The mid-term ones are probably cyclical stocks or stocks with a mid-term aggressive growth outlook. The short-term stocks probably inject adrenaline and make your investments livelier. 

As a matter of fact, whether to buy, sell or hold, it depends a lot on your portfolio and strategies. There are no hard and fast rules. 

Rolf’s View

I tend to agree with the Contrarian "Buy" approach of low PE, PB, PCF, High dividend approach. However it is definitely not easy to find a stock with all the four characteristics. A combination of 3 with solid fundamentals and growth opportunity may well justify the buy call.

Diversification is important but make sure your portfolio is sizeable to diversify and not to incur high trading fees. Probably it is wise to ensure your trading fees incurred at 1 or 2% or less of the trade cost. I try always to keep my trading cost at 0.5% and below. 

Over-reaction is a good time to buy, but do not jump into the plunge. Probably 90 days suggested by Contrarian approach is way too long. For me, as long as the price plummet to a level that justify a low PE, PB, PCF, High Dividend over its peers, it is fine to take the buy position. 

Before you buy a stock, always have a plan for it - different for different stocks. Sell the stock as long as pre-set objectives are met. Similarly, when market over-value the stock and the fundamental of the business deteriorate, let go of the stocks with no emotions attach. 

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Friday, 20 June 2014

From “Lazy” to “Avid” Reader

I remember in the 1980s when I was in primary school, we had a “Master Reader Program”.

The program required each and every student in the class to finish reading at least one story book a month. Of course the more books you completed reading, the better it will be. Eventually the Reader with the most number of books completed will be crowned “The Master Reader” of the class or school.

Each student will have an “exercise book” and after each completed story book, he or she will require to record the Title, Author and Date with an additional column for Teacher’s assessment. The assessment will be done in a particular day of the month or week. Students were then required to bring along their completed storybook(s) on that day.

During the assessment, our teacher will flip randomly to a particular page of the book, and asked questions related to the contents of the book. If your answers were “satisfactory” or even if it was not, but somehow your body language did not betray, you will be deem to have “passed”! Upon passing the test, a “star shaped sticker” will be pasted on our notebook, for each completed story book read. At the end of the year, any student who completed a minimum of thirty books will be “crowned” “Master Reader” rewarded by a 'Badge', you can proudly wear for the rest of next year!

Reading storybooks was downright nightmare for me then. Frankly, reading books outside school textbooks remain dreadful for most part of my education. As far as I can recall, I average five or less completed books each year throughout the Master Reader Program. This is not to mention some of the "star stickers" were earned trying so hard to “faked the body language to convince” rather than earnestly completed the reading of the book.

I was labeled the undisputable “Lazy Reader" by my teacher.

More than 20 years later, I enjoyed reading and writing.  This is how life can changed the way that you least expected!

For now, I had added "a new page in my blog", which display the list of Books, Videos and Courses that has impacted my life since 2010.

 “Think before you speak. Read before you think.” - Frances Ann Lebowitz

I think of life as a good book. The further you get into it, the more it begins to make sense. - Harold Kushner