Tortie Portfolio: Construction work complete
Thursday, June 29, 2006
Finally, after 4 weeks of hard works, the construction of the Tortie Portfolio has been completed. Since construction, Tortie received a bonus issue of 1:4 for CYMAO, making the total shares 5000. Tortie is also expected to received a capital repayment of RM750 from BJTOTO early next month. WINPULSE will update the performance of TORTIE from time to time, at least every quarter.
posted by winpulse @ 5:32 PM,
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Investment - 4 - Dummies: Economics and Investment
Thursday, June 22, 2006
Does Economics matter for successful investment?
Most people would agree that it matters. At the very least, even a hardcore technical analyst or a quantitative analyst would concede that the major macroeconomic trends (bulls and bears) would have substantial impact on a wide range of assets, especially equities.
Let's illustrate using one simple example. Assume Ali inherited RM 1 million from his grandfather on 1 Jan 1980 and he decided to invest all his money in the equity market. He had three choices:
Option B: Invest in Kospi (Korea Composite Stock Price Index: http://sm.krx.co.kr/webeng/tong/st/sp/tn_st_sp_kp.jsp?indx_ind_cd=01)
Option C: Invest in
In hindsight, it is obvious. Choosing the legendary Warren Buffet as your fund manager would be the most wealth-amplifying choice. RM 521.5 million (refer to the table below) would put you in the top 40 richest Malaysians (using Forbes 2005 ranking, Ali would be ranked 20th).
| Option A | Option B | Option C | |
| KLCI | KOSPI | Berkshire Share Price (USD) | |
| 4-Jan-80 | 206 | 100 | 300* |
| 20-Jun-06 | 890 | 1225 | 92500 |
| Total Return | 4.32 time | 12.25 time | 308 time |
| In RM | 4.32 million | 12.25 million | 308 million |
| In RM | 4.32 million | 11.9 million | 521.5 million |
| (adjusted for currency changes)** | |||
| *estimate | |||
| **On 4 Jan 1980, RM 2.17/US and RM3.95/1000Won; On 20 June 2006, RM 3.67/US and RM3.84/1000Won | |||
Ignoring Option C, to choose between KLCI and Kospi, one needs to know the long-term economic prospect of
If Ali sought our advice in 1980, we would had told him that doing economic research could cast some light on which country would have better prospects. Though we have not look into the economic conditions in these two countries in 1980 and before that, we believe that if we examine and compare the economic data as well as the government economic policies of these two countries in the 1960s and 1970s, the probability of concluding that
To predict what would happen to South Korean economy next week or next month accurately and how this would influence the Kospi index is probably close to impossible, but to gauge the prospects of South Korean economy in the next few years based on certain economic frameworks and data and constantly update this with new data would probably produce better results. The positive correlation of the performances between an economy and its stock market in the long run is also much stronger.
It is to illustrate that the return of investing in a particular stock is far superior than investing in stock indices. Why? This is because stock indices reflect the average performance of the large listed corporations in the economy. Out of all these listed companies, if you manage to pick the company that would have the best performance (in return of equity) over a long period of time (say 30 years), you would definitely enjoy much higher returns than the stock indices.
However, putting all eggs into a basket is also more risky. A dumb decision (even an intelligent investor would trip over his own intellectual shoelaces once in a blue moon) could potentially wipe out your entire wealth. Therefore, do homework on the economic fundamentals of the company that you intend to put a lot of eggs into thoroughly is crucial as this would greatly reduce the risk. To note, if one studies the economic fundamentals of Berkshire, one would realize that even in the 1970s, Buffet had been accumulating companies with good economic fundamentals http://www.berkshirehathaway.com/letters/1979.html: strong franchise, require minimal capital expenditure, good management and record of consistently good results. Purchasing
In a nutshell, economics is crucial for successful investment. To put it crudely, understanding macroeconomics allows an investor to have a better idea of a country's economic prospects while microeconomics give you the tools to analyze the economic fundamentals of a particular industry or a company. We hope that discussing economics in Winpulse would help our readers make better investment decisions, or to acquire the right pulse to pick the Winner.
posted by winpulse @ 2:03 PM,
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Tortie Portfolio: BJTOTO
Tuesday, June 20, 2006
The only thing Winpulse don't like about BJTOTO is Vixxxxx Txx (which is synonymous to very poor corporate governance). Otherwise it is a good investment especially when the RM0.50 capital repayment is imminent and also the RM0.15 dividend payout. Most research houses had written comprehensive reports and shouted BUY (eg, HLG, MAYBAN, RHB,Kim Eng).
The independant I-Capital also gave a BUY call:
BJTOTO [1562] > Current price RM4.70
The uptrend channel support and 200-day moving average have held up. Berjaya Sports Toto is now primed for a move in the opposite direction. Both its MACD and DMI are bullish. Despite the bearish overall market, i Capital sees Berjaya Sports Toto buckling the general trend and rates it a trading Buy. A rise to RM5.40 is seen.
(Retrieved from http://icapital.biz/ 20/6/2006).
So, Winpulse jumped into the wagon of sinful crowd and bought BJTOTO 1500 shares at RM4.76.
posted by winpulse @ 6:39 PM,
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Bunnie Portfolio: Maybank-CA
Currently there are two Maybank Call Warrants actively trading in KLSE:
Maybank-CA and Maybank-CB.
| Warrant | Price | Exercise Price | Expiry Date | Gearing | Total issued |
| Maybank-CA | 1.03 | 9.70 | 28/01/2008 (587) | 10.10 | 86,331,800 |
| Maybank-CB | 0.47 | 10.80 | 18/11/2007 (516) | 22.13 | 47,961,000 |
As can be seen here, CA offers a slightly longer life and it is 'in the money'. While CB offers a 2x higher gearing, but with a premium. Both are valid investment. Winpulse purchased 3000 shares of Maybank-CA at RM1.04, for the 71 days of extra life.
p/s: due to technical problem, winpulse only manage to buy Public Bank today. Bought PBBANK-01 1000 shares at RM 6.20.
posted by winpulse @ 5:35 PM,
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Tortie Portfolio: Public Bank Berhad - Part 2
Judging from the chart, the share price of PBB appeared to be trapped within a series of Bull-Bear cycles. The Bull phases lasted 1.5 to 2 years plus; while the the Bear lasted slightly longer, about 2 to 2.5 years. The pattern during the 1996-1998 was disrupted by the infamous economical crisis, and shown atypical picture.Let's look at the first Bull-Bear cycle on the left on the chart. PBB rise from the low of RM0.70 and slowly doubled, and then gained momentum on the 1993 Superbull and propelled to the new high of about RM3.50 at that time. That's about five-fold gain in less than 1.5 years! Subsequently the price underwent a Bear phase of two years and retraced to about RM2.00, representing 50% retracement.
The second Bull-Bear cycle commenced at the low of RM0.80 in 1998, and went up steadily to RM4.50 around early 2000. Again, another more than five-fold gain in about two years time! Again, ensuring Bear phase eroded about 50% of the gain to the low of RM2.60.
The third Bull-Bear cycle started in 2003 and ended in 2005. The price went from RM3.40 to RM7.80. Another impressive gain of 130% within two years. Please bear in mind that that was the post-crisis period when KLSE was shied away by the foreign funds due to the infamous capital control. KLSE became the famous "low beta" market at which nothing happened no matter how the outside world performed. KLCI was trading between 600-950 for that period and had never achieved the pre-crisis level. The ensuring Bear had been running from 2Q2005 until now. Current level of RM6.30 represent a third correction from the height of RM7.80, which we believed is the bottom for this phase.
Technical analysis exists for the presumption that history repeats itself. If we were right, PBB is all set for another impressive bull run soon. What if we were wrong? At RM6.30, the expected dividend for financial year 2006 is at least RM0.40, which is 6.3% gross dividend yield. Still better than FD and EPF and most trust funds.
So, head we win, tail we don't lose!
We are going to buy 1000 shares of PBB for our Tortie Portfolio.
posted by winpulse @ 11:55 AM,
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Tortie Portfolio: Public Bank Berhad - Part 1
Monday, June 12, 2006
Public Bank Berhad (1295)
Rated the highest among the country’s 10 banks by international rating agency Standard & Poor’s, Public Bank Berhad is well-known for its generous dividend payout and excellent management. For FY2005, the dividend payout was a spectacular RM0.55 per share, which was above analysts’ forecasts. Loans growth of 20% was more than double industry’s growth of 8-9%. NPL (non-performing loans) ratio continued to be the lowest among all the banks (1.8% at 3Q05 and 1.7% at 4Q05; industry’s average was 6%).
For the past 5 years, it was able to maintain double digit growth in revenue, and paying out handsome dividends. But the share price remains stagnant for the following reasons:
- 1Q06’s result was ‘within expectation’ (Miss Market is hard to please!)
- JCG acquired Asia Commercial Bank for HKD4.5bn cash. Public Bank owns 64% of
At current price of RM6.60, the dividend yield for FY06 will be 6-8% (forecasts ranged from RM0.40 to RM0.55). This alone is better than FD. Fair value estimated at RM7.20 to RM8.00, another potential 8-12% gain. So, relatively low risk potential gain of 14%-20%, an irresistible BUY.
posted by winpulse @ 11:46 AM,
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Bunnie Portfolio: Globetronics Technology Berhad
Wednesday, June 07, 2006
GTRONIC(7022) Main Board Technology
Globetronics Technology Bhd is involved in providing integrated, specialised, and advanced technology-based electronic manufacturing services.
Total issued shares: 1,310 million
Free Float about 25%
Major shareholders: Wiserite SB 23.4%, EPF 14.9%, Lembaga Tabung Haji 3.8%
Dividend payout had been quite consistent. At RM0.30 , PE is 16 and Divident Yield is 6%. Not a feasible investment fundamentally.
However, let’s take a look at the chart:
Cut loss price: RM0.27
Target price: RM0.36
Profit potential : +20% Downside risk : -10%
posted by winpulse @ 9:06 AM,
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Portfolio: Brief Introduction to the Bunnie portfolio
Bunnie Portfolio
As opposed to our flagship Tortie portfolio, the Bunnie is the 'hare'. This is more technically-inclined portfolio. However, we still don't touch loss-making companies and potential candidates of PN17. We don't recommend anybody to allocate more than 20% of the capitals into speculative plays. So, a healthy combination should be something like: 80% Tortie + 20% Bunnie.
For convenience sake, we started the Bunnie portfolio with RM20000.
==============================================================
So far, we've purchased:
6.6.2006 10,000 GTRONIC at RM0.30
posted by winpulse @ 8:50 AM,
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Portfolio: Brief introduction of the Tortie portfolio
Tuesday, June 06, 2006
Tortie Portfolio
Everybody knows the story of "The Hare and The Tortise" from the Aesop's fables. (Otherwise, please log off the computer and go back to your kindergarten teacher. Hey, don't play play kiddo, the police is coming! Get off your father's computer now!)
So, the Tortie portfolio is basically and fundamental-inclined portfolio. We put the majority of our investment capital here. For this blog, we start with a hypothetical RM50,000 capital. We will try to construct a portfolio of 5-10 stocks. Brokerage, dividends etc will be factored in. (Brokerage at 0.42% using HLGeBiz).
===========================================================
So far, we have purchased :
5.6.2006 4000 CYMAO at RM1.30 , Total cost: RM5229.92
posted by winpulse @ 2:36 PM,
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StockTalk: Beating the market with common sense
Unless you are born rich, or earning obscene amount of money consistently, the only hope to achieve financial freedom in your mortal life is through investment. There are only a few investment options available to general Malaysian public like you and me, and Genting is not of them, mind you. As far as I am concern, real property and equity market are the only two valid options to consider. I'll leave out the topic of real property and concentrate only on stock market (and maybe some derivatives) in this blog.
Investment in KLSE can either be direct trading or through buying mutual funds, unit funds, closed end funds and/or investment linked funds. Many people entrust their investments to the professionals, hoping to get decent profits. The sad truth is, most 'professionals' performed badly. It is no secret that most funds underperform, yet still a lot of people are paying the 'professionals' with a false sense of security. This article gone through an elaborated calculation to prove that point http://www.efficientfrontier.com/ef/997/tough.htm . I am too lazy to do that type of calculation. I just flipped through one of the Monday's paper, scanned through the list of unit funds and mutual funds and get a rough idea: only about 10% of the funds outperform the KLSE's market index. And the top performer give less than 20% annual return. So, do you think direct trading in the market is risky? More risky than buying unit trust funds?
Think about it, investing through 'professionals', you have about 1 in 10 chance of winning, and the windfall is only 20%. For that, you pay about 1% annual fee! While if you invest in the market directly, and you happened to pick the top perfomers, the return could easily be more than 100%! And the brokerage less than 1%.
I know, this is an oversimplification of the situation. The point is, direct investment in KLSE's stocks is not as risky as it sounds.
We believe that investment objectives could best be achieved via sound strategies, reliable knowledges, careful researches, reasonable amount of diligence, common sense, skills and a little bit of luck. Insiders tips, rumours etc have no place.
With this in mind, we have gathered a doctor, an economist, and two engineers to form an investment team with the objective of beating the market. We hope to outperform the professionals and achieve the annual return of >20%. Recognizing luck as indispensible factor, though by no means the main ingredient, of success, we pick this day to kick start our quest. Yes, we all believe in luck; and no, IRIS is not her name.
Winning is in our pulse!
Day of Luck,Month of Luck and Year of 200Luck
posted by winpulse @ 12:07 PM,
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