Knowledge-Based Stock Challenge Lesson

So have you joined the first knowledge-based stock challenge held in March 2010 earlier? If you missed it, no worry. It is organized twice every year, many chances for you to participate. 

Result has been released. I feel disappointed because I'm defeated by a UM student and 2 engineers. The student managed to grab away with RM8,888, which suppose to belong to me in the first place. According to the 26 year old student (the winner) interview, he has 3 years trading experience. He makes use of  RHB Analyzer and RHB ShareInsight. And he said he spent 3 to 4 hours daily to study the fundamental and price chart of the companies. He also mentioned that he would like to use the winning money to invest in RHBCAP.

Okay, the winner looks like a nerd. He deserved the prize.

From the look at it, I highly suspecting RHB Investment taught him to provide such a commercial speech. We all know RHB trying to utilize the winner to promote it's products. Damn, I don't think I can trust him anymore. But one thing for sure he deserves the win and prize, he did his homework. He spent 3 to 4 hours a day to do his homework, where I only spent 5 to 10 minutes to do some stock scanning and trading. I don't have a trading plan some more. How can I beat him? No way.

So, in order to win in KLSE, spend plenty of time to do homework seems like an honest feedback from the winner to us. This is the best route if we want to make money with dignity. Okay I get the picture now, will I be the winner of the next round contest? 

Ops, I should stop dreaming from now.

Market Will Continue Down or Up?

I believe this theme has been bothering most of the traders for the past 2 weeks, due to one or two negative news attacking the global market, Euro debts worsen and dispute between South and North Korea. I saw many trading bloggers took profit and watch the global market slump. With no surprise, KLCI index has gone down nearly 100 points for the past 9 days, and finally rebounded strongly on yesterday. So what did you do during the past 10 days?

For me, I missed this interesting drama and I was doing other more important things for the past 10 days. I'm not even spend my time well to blog, really sorry about that, folks! I know I should have listen to other bloggers to take some profits before May. Once I have a look at my portfolio 2 days back, my unrealized profit gathered since end of February was all wiped out by this little bear, and turn into unrealized loss. What a joke! However, somehow the market rebounded strongly on yesterday. 

                                                            Why bear? Because bear's eyes are facing down.

If you have unrealized loss, don't worry, I'm with you for the time being. I'm not sure (of course) whether this little bear will extend it's attack, but Malaysia and global economy outlook is obviously under recovery and in a bright side. Most of the companies are making money. So if little bear attack the market, it is an opportunity for everyone of us. I'm surprise that everyone is very hot in discussing about the market and stock during the past 10 days, especially in forum. That's a good sign, because they learned from their mistakes and busy doing their homework?

Whatever it is, the advice is always unchanged. If you want to make money from any field, you got to do your homework. That's the deal. That's mean, after away for 10 days, I also need to do my homework from now on. 

Let's fight (enjoy) together, for money. 

The Pros of Technical Analysis

What's so great about Technical Analysis (TA), folks? We always heard people complaint and doubt about the accuracy of TA. To TA expert, this is not always true, because FA also has it's own weaknesses. And some TA experts only use TA to make money from stock market.

Today, let's look at what TA can offers us as a trader, as below:.

I don't really use to draw my price chart looks like this complicated.

1) To Catch the Right Entry and Exit Timing

TA can provides you the signal of entry and exit. Even though the signal is not always right (still depends on how you create your signal), it is a good reference to support your decision. The concept is based on the level of supply and demand.

2) Faster to Discover a Potential Stock

With TA, accumulating volume via stock scan for example, you may able to lead the rests to discover various stocks that have potential to go upside, instead of reading the company annual report one by one. You may also take one step ahead over stock analysts and investors to discover the gems!

3) Easy to Learn and Use, Save Your Time

TA saves you plenty of time, because most of the tools are ready made and available for free. You just need to tune them to fit into your trading strategy. With stock scanning subscription available in the market, it only takes you a tens of minutes a day to do your homework. Of course, the existing KLSE tools are a lot more to improve compare to Forex investment tools.

4) Ability to Detects the 'Lousy' Stock

FA traders always claimed that TA traders might bought a poor fundamental stock, if they merely based on TA. To TA investors, price chart also can tell a stock whether a stock is healthy. For example, if the stock has poor fundamental, normally there will be selling pressure. Once they notice it, they won't even look at it. Price chart analysis also enable you to obtain the pre-signal whether the market or certain stock is going for the downside.


5) Potential to Make Money in the Short-Term
TA traders have the ability to make money in a very short-term, by referring to the shorter term price chart, such as hourly and daily. You always manage to obtain a more accurate entry point, such as trend line breakout (after correction or sideway), rebound from the bottom, etc. And exit to cut loss or grab profit earlier than others when there is selling pressure detected.

Do you think this trend line breakout really works?

There are other pros to use TA for stock trading.

How about FA vs TA? In fact, both FA and TA have their own blind spots, even you use the combination of them. To me, it really doesn't matter to argue which one is better. Do you think the 90% traders have not try each of the method before? Why they are still donating money to the minority?

Like what Deng Xiao Ping said, 'it does not matter a white or a black cat, whichever can catch a mouse is a good cat'. So, just stick to whichever method works for you. else, look for a better one.

Note: The post above is just my personal opinion, I believe you would have yours too. ;)

BJCORP Part II

Why BJCORP again? I hope you are yet to sick about it. We all learn from mistaken, isn't it? 

It became the star of KLSE on yesterday, after the government told reporters that they may issue soccer betting licenses, and the speculation goes to Berjaya and MPHB. It's a good news and wise decision from government, I guess? By right, they should legalize it in many years back.

I personally prefer simple business, because it uses less brain and time to take care. Problem may be easier to spot, in addition. By removing the complexity of the businesses from BJCORP, it really has many positive earning outlooks for the coming 3 to 5 years, the corporate's plans including:

Tan Sri Vincent Tan, 10th richest man in Malaysia and 828th in the world.

(1) Strong development projects at Vietnam

With the purpose of mimic what BJCORP has done in Malaysia, it is aggressively developing Vietnam projects that worth US$12 billions. This year should be falls at phase 3.

(2) Thumbs up for Cosway

I believe you have seen how Cosway grows. It's strong growth is one of the strong key for BJCORP. For the coming 5 to 10 years, it will continue to expand the business to around 50 countries around the world. So the future Cosway income shall be contributed by overseas revenues.

(3) Car making venture with BYD Auto Co Ltd.

If BJCORP managed to obtain car making and parts license, the production factory shall be setup in Malaysia. If the venture goes well, Tan Sri Vincent shall make the vehicle division another listed company in Malaysia.

(4) Expansion of gambling business

So far BJCORP has successfully obtained betting licenses at Philippines and South Korea. Tan Sri Vincent is now applying an official license in Malaysia itself. And now we talk about gambling license for soccer in Malaysia. It's cool, isn't it?

Tan Sri Vincent is aggressively restructuring it's current businesses in order to walk out from the past failures. With these 4 strong positive earning outlooks in mind, do we still need to take it's current poor earning and negative ROE into consideration? Well, based on the current Malaysia economy and earning outlook of BJCORP, the profits will definitely improve, with the support from BJTOTO and Cosway revenues. 

The corrected price of  RM1.43 on yesterday morning at 61.8% retracement seems a very good investment entry point.

Happy investing, folks!

Note: The post above is just my personal opinion. I'm not responsible for any of your trading decision. ;)

Why Buffet Chose Coca-Cola?

Needless to say, many investors are the admirers of Warren Buffet, who is one the current greatest investor in the world. Well, we might know how Buffet picks stock. He picks what he likes and understand. According to Buffet, he likes to to have drink contained with caffeine, and that's why he chose to   buy 7% of Coca-Cola shares at 1988, up to USD1.02 billions.   

Up to February 2007, Coca-Cola bringing more than 20% annual return for Warren Buffet. That's what Buffet described Coca-Cola as an irresistible, low risk, long-term holding company. He also likes the simple business model from the company, with high ROE of over 30%.

Coca-Cola is really doing very well in China market these few years.

By looking at similar stock in Malaysia, it seems like only BAT and Nestle are meeting the requirements. They have created a wide moat that most of the consumers need them daily, with steadily growing market share and revenue, as well as simple business model. So if you are invested and holding these 2 companies' shares since 10 years back, are you getting around 20% annual return?

Well, we are not Warren Buffet, and of course we are not the same. But the concept seems work on a small pool of stocks. So which companies are having similar characteristics now? If there is, are you willing to dump your money to that company, wait for 10 years to see and enjoy the average of 20% annual return?

Not surprising that many people are reluctant to do so. All they want is to buy a stock today, and get 20% on tomorrow or the maximum deadline is next month.

Happy Investing, folks.