Pulses magazine- A must have for investors

The revamped issue of Pulses is being produce by Business Times and is a must have for investors. It provide up to date and accurate company analysis,valuable market insights by experts and analysts recommendation for stocks . If you want to what is hot and what is not for year 2008. Go get a copy of Pulses

Stock market prediction in 2008

2007 has been a good year for investors, Singapore's economy has seen strong healthy growth. Also, there are many upcoming events like F1 and completion of integrated resort will push our economy to grow in years to come. However, things are not looking that good in US. Sub prime mortgage problem has taken a toll on its economy. Financial stocks has taken a beating and housing price fell to its lowest many years.
The main questions for investors in 2008 is whether Us will go into recession? I feel that US will experience a period of slow growth in next year but not recession. US election is coming next year and you seldom see US economy experiencing recession when there is election. Also there is no sign there US consumers is slowing down on its spending. As long as US is still spending, all should be fine in the year 2008. And Singapore should be able to grow wihout the hidurance of the US economy.

Happy investing
Cheers
Wishing my readers Happy New Year

Seven investor traits

Mark Sellers, founder of a Chicago-based hedge fund, argues that the best investors are born with particular psychological traits that others can never learn
By TEH HOOI LING SENIOR CORRESPONDENT

WHAT makes someone a great investor? It's something you have to be born with, said Mark Sellers, founder and managing member of Sellers Capital LLC, a long/short equity hedge fund based in Chicago. Apparently, it's not about your IQ, the education you've had, the books you've read, or the experience you've accumulated. 'If it's experience, then all the great money managers would have their best years in their 60s and 70s and 80s, and we know that's not true,' he said in a speech to a class of Harvard MBA students. Intelligence and learning are obviously necessary too, and are sources of competitive advantage for an investor, but there are structural assets some possess that cannot be copied or learnt by others. 'They have to do with psychology and psychology is hard wired into your brain. It's part of you. You can't do much to change it even if you read a lot of books on the subject,' said Mr Sellers. He said that there are seven traits great investors share that are true sources of advantage because they cannot be learned. You are either born with them or you aren't.

The seven traits are: One, the ability to buy stocks while others are panicking, and the ability to sell at a time when other investors are euphoric. 'Everyone thinks they can do this, but then when October 19, 1987, comes around and the market is crashing all around you, almost no one has the stomach to buy,' Mr Sellers said. 'When the year 1999 comes around and the market is going up almost every day, you can't bring yourself to sell, because if you do, you may fall behind your peers. 'The vast majority of the people who manage money have MBAs and high IQs and have read a lot of books. By late 1999, all these people knew with great certainty that stocks were overvalued, and yet they couldn't bring themselves to take money off the table because of the 'institutional imperative', as Buffett calls it.'

Two, the great investor has to be obsessive about playing the game and wanting to win. 'These people don't just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they're still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they're going to neutralise that risk. 'They often have a hard time with personal relationships because, though they may truly enjoy other people, they don't always give them much time. Their head is always in the clouds, dreaming about stocks. Unfortunately, you can't learn to be obsessive about something. You either are, or you aren't. And if you aren't, you can't be the next Bruce Berkowitz.' (Berkowitz was a managing director of Smith Barney and set up his fund Fairholme Capital Management in 1999. Since inception, Fairholme Fund has returned 18.7 per cent annually on average.)

The third trait of a great investor is the willingness to learn from past mistakes. 'The thing that is so hard for people and what sets some investors apart is an intense desire to learn from their own mistakes so they can avoid repeating them. Most people would much rather just move on and ignore the dumb things they've done in the past. 'I believe the term for this is 'repression'. But if you ignore mistakes without fully analysing them, you will undoubtedly make a similar mistake later in your career. And in fact, even if you do analyse them it's tough to avoid repeating the same mistakes.'

A fourth trait is an inherent sense of risk based on common sense. 'Most people know the story of Long Term Capital Management, where a team of 60 or 70 PhDs with sophisticated risk models failed to realise what, in retrospect, seemed obvious: they were dramatically overleveraged. They never stepped back and said to themselves, 'Hey, even though the computer says this is OK, does it really make sense in real life?' 'The ability to do this is not as prevalent among human beings as you might think. I believe the greatest risk control is common sense, but people fall into the habit of sleeping well at night because the computer says they should. They ignore common sense, a mistake I see repeated over and over in the investment world.'

Five, great investors have confidence in their own convictions and stick with them, even when facing criticism. 'Buffett never get into the dotcom mania, though he was being criticised publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship and Barron's was publishing a picture of him on the cover with the headline 'What's Wrong, Warren?'. Of course, it worked out brilliantly for him and made Barron's look like a perfect contrary indicator.' Mr Sellers said that he is amazed at how little conviction most investors have in the stocks they buy. 'Instead of putting 20 per cent of their portfolio into a stock, as the Kelly Formula might say to do, they'll put 2 per cent into it. Mathematically, using the Kelly Formula, it can be shown that a 2 per cent position is the equivalent of betting on a stock which has only a 51 per cent chance of going up, and a 49 per cent chance of going down. Why would you waste your time even making that bet?' The Kelly Formula arose from the work of John Kelly at AT&T's Bell Labs in 1956. His original formulas dealt with the signal noise of long-distance telephone transmission. It was then adapted to calculate the optimal amount to bet on something in order to maximise the growth of one's money over the long term.

Six, it is important to have both sides of your brain working, not just the left side - the side that's good at maths and organisation. 'In business school, I met a lot of people who were incredibly smart. But those who were majoring in finance couldn't write worth a darn and had a hard time coming up with inventive ways to look at a problem,' said Mr Sellers. 'I was a little shocked at this. I later learned that some really smart people have only one side of their brains working, and that is enough to do very well in the world but not enough to be an entrepreneurial investor who thinks differently from the masses. 'On the other hand, if the right side of your brain is dominant, you probably loathe math and therefore you don't often find these people in the world of finance to begin with.' So finance people tend to be very left-brain oriented - and Mr Sellers said that that is a problem. A great investor needs to have both sides turned on, he said. 'As an investor, you need to perform calculations and have a logical investment thesis. This is your left brain working. But you also need to be able to do things such as judging a management team from subtle cues they give off. 'You need to be able to step back and take a big picture view of certain situations rather than analysing them to death. You need to have a sense of humour and humility and common sense. And most important, I believe you need to be a good writer.' He cited Warren Buffett as one of the best writers ever in the business world. 'It's not a coincidence that he's also one of the best investors of all time. If you can't write clearly, it is my opinion that you don't think very clearly,' Mr Sellers said.

And finally the most important, and rarest, trait of all: the ability to live through volatility without changing your investment thought process. This, said Mr Sellers, is almost impossible for most people to do; when the chips are down they have a terrible time not selling their stocks at a loss. They have a really hard time getting themselves to average down or to put any money into stocks at all when the market is going down. 'People don't like short-term pain even if it would result in better long-term results, he said. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. 'This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. 'But most people just can't see it that way; their brains won't let them. Their panic instinct steps in and shuts down the normal brain function.'

HAPPY DEEPAVALI

WISHING OUR INDIAN READERS

HAPPY DEEPAVALI

George Soros words bring investment opportunities

Billionaire George Soros who is famous for causing the collapse of Bank of England warn that US might be on a verge of a serious correction.

"We have borrowed an awful lot of money and now the bill is coming to us," he said during a lecture at the New York University, also adding that the war on terror "has thrown America out of the rails."

Asked whether a recession was inevitable, Soros said: "I think we are definitely in for a slowdown that I think will be a bigger slowdown than (Fed Chairman Ben) Bernanke is seeing."

Soros said that, for now, China is the "absolute winner" in economic terms, and will continue to see its economy soaring during the next few years.

If China's economy is to expand and grow, it would be wise for investors to allocate some funds to invest in good quality China company.

I would highly recommend investors to sell away shares of companies that highly dependent of US for revenue.

If a company has weak accounts watch out

Three Suggestions for investors: First,beware of companies displaying weak accounting. If a company still does not treat options as an expense, or its pension assumptions are fanciful, watch out.

When managements take the low road in aspects that are visible, it is likely that they are following a similar path behind the scenes. There is seldom just one cockroach in the kitchen.

Trumpeting Ebitda is a particular pernicious practice. Doing so implies that depreciation is not truly an expense, given that is a "non-cash" charge. That is nonsense.

Second, unitelligible footnotes usually indicate untrustyworthy management. if you cannot understand a footnote or other managerial explanation, it is usually because the chief executive does not want you to.

Finally, be suspicious of companies that trumpet earning projections and growth expectations. Businesses seldom operate in tranquil, no surprise projection and growth expectations.

Let the recent sembmarine froeign exchange lossses be a reminder to investor to watch out for company that have weak account.

Report by OCBC on S-share

Interest in S-shares looks sustainable. Despite recording good gains this year and the slight sell-down in the past few days, the buying momentum in S-shares looks sustainable as most recovered yesterday from intra-day lows. Overall, the PrimePartners China Index hit a high of 317.96 on 1 Oct 2007 but over the course of the past few days, the index corrected and touched an intra-day low of 288.53 yesterday, before staging a strong rebound of 7.3% to close at 309.69. This seems to indicate underlying strength and interest in S-shares. As a recap, the approval of the third QDII fund in early October 2007 sparked a rally in S shares, which led to a 13.5% gain for the Prime Partners China Index on 1 October 2007. In addition, higher share prices and increased liquidity in S-shares have also seen these shares play catch up with their highly-valued peers in Shanghai, Shenzhen and Hong Kong.

Singapore is still cheaper than China and Hong Kong. The Shanghai A Share Index is trading at 55.4x historical earnings and 48.2x forward earnings while the Shenzhen A Share Index is trading at 73.8x historical earnings and 53.6x forward earnings. This is much higher than the valuations seen for the Hang Seng Index (HSI) and Straits Times Index (STI). The HSI is trading at 19.5x historical earnings and 20.9x forward earnings, while the STI remains the lowest valued at 14.8x historical earnings and 18.1x forward earnings.

Fishing for value among S-shares. While several S-shares have run up recently, there are still stocks that have yet to catch up with their peers. In this report, we have done a comparison of stocks within the same sector to identify the undervalued stocks vis-à-vis their Singapore-listed peers. From our findings AsiaPharm Group (BUY, fair value S$0.84), China Milk Products Group, Celestial Nutrifoods, China Sports International, Midsouth Holdings (BUY, fair value S$1.01), Fujian Zhenyun Plastics Industry and Reyoung Pharmaceutical Holdings appear to be trading at discounts to their peers.

Potential shift to other shares that are growing via the PRC market.While the market has been abuzz with interest in S-shares, there is another category of shares that are potentially interesting. These are not S-shares, but are positioned to grow their businesses via the PRC market. Amongst these, we continue to like Man Wah Holdings Ltd (BUY, fair value S$0.74), Karin Technology (BUY, S$0.44), Pacific Andes (BUY, S$0.965) and Tsit Wing International (BUY, S$0.305).


Conclusion
If US is to go into recession, Singapore shares will definitely be affected. US is still Singapore biggest consumer of Singapore’s goods. If US is to go into recession, Singapore stock market will definitely be affected to some extend. So what can investors do when US go into recession? Investors can consider buying S-shares. China domestic consumption is growing day by day and becoming less dependent on US. S-share here has shown good earning and valuation is still fairly attractive when compare against Hong Kong and China. My top pick s-share would be the property sector and have particularly interest on Sunshine Hlgs.

CHINA OILFIELD TECHNOLOGY SERVICES GROUP LIMITED---IPO

Established in 1995, China Oilfield is a major one-stop customised solutions provider of integrated tertiary oil recovery equipment and technology to enhance oil extraction in the Daqing oilfield region in PRC.The Daqing oilfield is one of the first oilfields the the PRC to adopt tertiary oil recovery technology.

Oil price is hovering at all time high and analysts predict that oil prices may hit US$100 per barrel in the coming year. I dont see any reason why this new IPO will not do well. With the current S-shares fever, I reckon that this share will trade at something much higher that its current 22.8x FY06 PE.

China HongXing

China HongXing share price surge to a closing of 1.25 on 1 oct. News on QDII fund allow to invest in chinese company outside of China push the share price on a new record high. I would recommend investor to hold or buy into China HongXing as i believe that olympic fever will drive the demand of sports shoes.



For those who have saw my posting on May 16 and invested on China HongXing at a share price of 0.74 will make substantial profits. Congrats

Tuan Sing- A good defensive stock to buy in these times of uncertainty

Tuan Sing
BUY
Sept 25 2007 close : $0.375

Tuan Sing share price surge 17.2% from $0.32 to $0.375 on report in a business times article that it has a lot of upside potential. What so interesting about this share is that investors failed to notice that Tuan Sing has 3 commercial properties right at the heart of the commercial district. Valuation of these 3 properties done last year is worth 154 millions. However, property prices has increased significantly this year and Tuan Sing 3 commercial properties could be well worth over 154 millions. Stock price for Tuan Sing will definitely move to a higher region when it shed more light on the revaluation of its 3 properties.

111111

I will reccomend a buy as I feel that it is still undervalued based on its current stock price.

Looming threats

Earlier in the year, Greenspan warn the world that there is one out of three chance that the US economy will set into a recession. But now he has raises the probability to somewhat less than 50 percent.

The biggest risk of the US economy still lies at subprime problems. If the whole problem worsen or intensify, it would have a spillover effect on the global economy and Singapore too will not be spared.

Singapore on Monday 17 september reported its key exports rose an annual 11 percent in August, boosted by increased shipments of pharmaceuticals. Despite all the problems in the US, macro-economic fundamentals remain fairly good in Singapore and Asia. However, Singapore economy is still really dependent on the US.

Come 18 september, the fed will decide on benchmark federal funds interest rates. The Fed is widely expected to lower benchmark interest rates, now at 5.25 percent, by at least a quarter-percentage point to help the economy weather a housing downturn and a credit crunch. But bear in mind, lowering of interest rate will cause inflation. We just do not know which is of the lesser evil. Hopefully, the fed will make the right decision. We shall wait and see.

High volaitility ahead

The Straits Times index had rebounded past recent high of 3442 to close at 3466 on 5th Sep. However, I caution Investors to take a conservative approach in the coming week as Dow Jones dive 231.76 points. I expect higher volatility in the coming week and patiently wait for any buying opportunity. Investors can look into high yield stocks and move some of thier money to safer investment option ahead of the 18 sept FOMC meeting.

InvestFair 07

This year Invest Fair 07 organized by Shareinvestor saw many retail and professional investors participating. The crowd participating was over whelming and seminar rooms were packed with eager investors waiting what the experts have to say. As like I would like to stay longer, I had only time to go for 3 seminars.

The first seminar I went is by Christopher Lee who is the co-founder of ShareInvestor. In his seminar, he mentioned about what are the different ways to generate incomes in order to achieve financial freedom. Through his own personal experience, he found out the best way to achieve financial freedom is by investing. He is more of a fundamental investor that a technical practitioner but occasionally he will do some trading. He went on to explain on how he choose stock that is fundamentally sound. Basically he uses PE and NAV to choose stock that are undervalue.

The second seminar that I went was by Song Seng Wun, regional economist- Head research of CIMB. He stated that the macro economic environment of Singapore is still relatively intact despite the Sub prime mortgage risk in US. Economic indicators suggested that the global economy is still growing especially China and India.
He advice investors to dump away penny stocks as prices have reached unsustainable level due to speculation of investors and the stock market Bull Run. Instead, buy on shares that are undervalue and has high yield. Shipping and construction shares are a great buy as he sees great potential in both of the industries

Ray Barros was the speaker for the third seminar. He touch on the topic on how to trade effectively and make money. He briefly introduce us the RSI and teaches us how to use the RSI to see whether the market is going up, down or sideway.

All in all, I have learn a lot of stuffs in the InvestFair. I was being introduce to other new investment instruments beside stocks and warrants.

Cheers

Aging Population- The main concern of PM Lee

At this year National Day Rally Speech, Prime Minister Lee Hsien Loong has unveiled a series of comprehensive strategies to tackle Singapore income gap widening problem. The most attention grabbing strategy is the one percent interest hike on first $20 000 of ordinary account and on a total of $60 000 in special, retirement and medisave accounts. This is a bold move by the government to tackle Singapore income widening gap problem. The start up of this programme will cost the government $700 million and much more as interest compound. This would provide incentive for Singaporean to put more money in their CPF account and provide a bigger nest-egg for their old age.

Housing grant will also be increase from $20 000 to $30 000 to help low income-earner to buy HDB flat. This will cover half of Singapore households. To ensure Singaporeans particularly the low income group has enough to survive in their golden years, compulsory annuities will be introduced.

In attempt to cope with Singapore rapidly aging population, the government will pass a law under which, from 2012, workers reaching the retirement age of 62 will be offered re-employment till 65 and eventually till 67. To encourage employers to do so, Workfare Income Supplement could pay 20% of the salary of a 60 year old who earns $1000 a month- up from 10%.

Another key area that will underpin the government strategy is education. A fourth university will be built to raise the quality of our workforce for the next generation. He mentioned that payoff of education is going up and the best way to reduce income gap. The fourth university will be ready by latest 2011 according to our Minister of Education. This will create 2400 additional places and it will have its own unique strengths and character.

Estate renewal have been brought up again in this year National Day Rally Speech Singaporeans speech but this time much of the focus is on private estate. Funds will be allocated to private estate to make enhancement as the community deem fit.

Crisis in the making or just a short-term turbulance

The Dow Jones industrial average tumbled about 207 points to 13,028 or 1.6 percent. The S&P 500 down 26 points to 1,426 and Nasdaq Composite down 43 points to 2,499 respectively at yesterday 14 august. The big question in investors’ minds must be whether the bull market is over and is it the start or a bear market Singapore.
Investors should be aware that many banks and companies in Singapore have little exposure to the sub prime mortgage problem in US. In the coming months, I believe that the Fed will decrease interest rate and inject liquidity to ease off some pressure in the credit market.

For long-term investors, I feel that the bull market in Singapore stock market is still intact despite concern of credit and inflation problem in US. Between now to 2010, I see Singapore with tremendous growth potential and opportunity. Next year, Singapore will host their first ever Formula One race. Year 2009 will see the newly built integrated resort and following the year after will be Singapore general election. With all these events in line, Singapore will be a city full of buzz and excitement. I reckon that Singapore tourism, retail and hotel industry still would a lot of growth potential due to all these major events coming up.

All in all, I urge investors to stay compose during these turbulence period and firmly believe that the stock market will continue to pick up its momentum by next year. Investors should not sell into strength but buy when there is blood on the street.

Baltic Dry Index

What is Baltic Dry Index. It is a shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea.

The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) - Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement.

So why is this index inportant to investor? Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth.

China , India and Middle East have shown enormous appetite for building material such as coal steel, cement etc. I believe that the Baltic Dry Index still have a lot of upside potential. Invest in company that deals with transporting of raw material.

YongXin IPO

Producer of high precision steel strips for high energy batteries and optic fibre communication cables. Some of the strenghts of this company include strong R & D capablities , ISO9001:2000 accreditation for quality management system since August 2003, barrier of entry is high with a patented product in hand.

In view of the growing demand for high-precision steel strips industry and the cheap price of the stock i would reccomend a buy.
IPO PRICE $0.3


Chances of getting the share : Low

CHINA HONGXING SPORTS LIMITED

CHINA HONGXING SPORTS LIMITED
Price-0.740
BUY
In view of next year 2008 Bejing Olympics, I believe demand for sport related products will increase significantly especially sport apparels and sport shoes which is what China Hongxing sports is selling. The group has also enhance brand visibility actively involved in various advertising and promotion activities, advertising its products inprint media such as magazines and newspapers, on TV media, and on websites. It has also gone on to sponsor prominent sporting events and teams such as the Women’s Tennis Association tour, the North Korean Olympics Team and North Korean national women’s soccer team that will enhance its brand visibility across the PRC. Stay tune for more analyis of this stock

My Investment Philosophy and Approach

My investment philosophy is greatly influence by one of legendary figures of investing, Warren Buffett. Warren Buffett is deemed as one of the most success investor in our times. Buffett is a strong beliver of value investing, he was of the belief that as long as the market undervalued them relative to their intrinsic value he was making a solid investment. In addition, he believes that the business has to have solid economics behind it and the price bought must be resonable.

The following are some questions that i would ask myself before buying a stock.

1) Does the company have a competitive edge over its compeititors ?

2) Is the debt-to-equity ratio low or is the earnings-to-debt ratio high?

3) Do the company talk freely to investor even when times of trouble and disapointment?

4) Can the company grow?

5) Are the owner earning on an upward trend with good and consistent margins?

6) Doe the comany has depth to its management?

Below are some of the Finacial Ratios that I normally look out for

1)PE

2)Dividend Yield

3)Net Profit margin

4)Market/Book ratio

5)Debt Ratio

6)ROE

7)Inventory Turnover

Occasionally, I will use technical analysis to analyse stocks