Fundamental Investment $2

Keyword #2: Niche Product
Staffs' creativity & competency make good companies stay ahead of competitor with it's niche in unbeatable value-added products. In the same time, excellent customer service only further boost performance.

-Monetized idea is OK but old-school is better
Malaysia no longer able to depend on manufacturing industry as what it used to be. Lower manufacturing cost esp. from China & India made no benefits to us but to gain knowledge & skill to extend another step of it's value-chain industry. Successfully companies change to meet demand but silly companies change to meet supply. Therefore, it's vital to identify companies that can drive changes to their advantage rather than resist.

In the excitement of ever-changing environment we are living in, fundamentalist normally chose the bored one. Top of the list are consumer-based industries which least affected by any abrupt changes in the market. Companies like Gillette, CoCa-CoLa & AMEX has continuous demand regardless of what ones' financial status will be as it deemed as 'necessary' nowadays. It is proven throughout the time & that is why they were favorite to Buffet.

-Does Bursa has it?
There are plenty of listed companies under consumerism column. Be noted that, some are not really consumer-based industry. Personal view, consumer-based can be anything regardless of industries as long as it customers are mass population (or bulk of it's earnings derived from retail customer). PPB Group is a great but PETRONAS Dagangan is not bad too.

Lesson: Working in boring industry is boring, but too much changes cause depression.

Petroleum Engineers ??

In oil & gas industry, PE is general nick-name to Petroleum Engineer. But in Stock, P/E or PER referred to Price-Earning Ratio. It is just a matter of Price of the underlaying shares divided by it's earning-per-share (EPS). E.g. If Maybank priced at RM12.50 with lastest reported earning of RM0.75 per share, then it's P/E will be 16.7.

Basically, investors use P/E to justify if the stock is cheap. However, bare in mind that P/E itself is useless. Common practices is comparing P/E within the same industry. As a simple example, for banking industry, compare Maybank's, Public Bank's & Bank Islam's P/E. Lower P/E means cheaper in value.

Another 'analyst' way is comparing the stock' P/E within the same industry, with almost similar business model but to other region. E.g. comparing Air Asia with Virgin Air. Conclusion, price itself doesn't indicate it's value of cheap/expensive.

Fundamental Investment $1

Warren Buffet known as one of the most successful stock investor. His believe in 'Fundamental Investment' made him the richest man in the world after Bill Gates. Hold excellent stocks for ever might not working for some, but not to him. At least, his success story able to live up those who believe in buy-&-hold strategy. In fact, 'value investing' guru back then; Benjamin Graham, suddenly became so famous. So, how to succeed in this type of investment philosophy? How to make money without selling the stock? Last but not least, does it really work with Bursa Malaysia?

Keyword #1: Invest In business
As the name says for itself, one have to select which business to be in & finalized the chosen company. Identifying a fine industry might be difficult, but to discover a 'profitable germ' is more than tricky.

-Brain is #1 asset
Before proceed to record profit, one should consider effective management 1st. While property market is all about location, stock is a matter of the company's management. Let alone proven track record for analysis, one might not able to chart it's future undertakings.

The other tricky question will be, how can we (retail investor) evaluate it's management effectiveness & efficiencies? Well...one of the way will be reading clippings as much as possible on the company's news & profile. Interpret as much as possible on how the management deal with challenges, solve problems & moves forward. Silly companies normally give billions if not millions of detailed reason why they failed to meet expectations, but superb 'profitable germ' will only plan to execute solutions.

E.g. while average property-based companies keep on blaming the shortage of foreign workers available & increase in construction material cost, superb one will only identify new business opportunity with higher profit margin that able to mitigate the increase of cost & manpower shortage.

The other way of analyzing company's management is simply by looking it's working employee. While first-class leaders set world-class visions, effective management will make it happen; which success be measured by pool of staffs of energetic & competent.

E.g. if you are customers to several banks in Malaysia, you can easily noticed how one banks do than another. Excellent banks don't let his customer frustrated from long Q, made application easy & continuously enjoy entertaining the most irritating customer (ade ke bank M'sia camnih???...HaHaHa....c4urself!!). Once it's staff act as an owner, they enjoy with what they are doing & able to perform.

Lesson: Competent workforce easily available in profitable companies for their better salary

Trading ASTROMAX

I consider ASTRO as a safe bet. Fundamentally, it is in cash-rich position, strong management, monopoly factor & the most important thing is it has lot growth opportunity. I'd been trading it for the past three months with 2.9% return for each trade. Sure the figure not catchy enough, but successfully traded three times made it annualized return of 34.8% (ideal case). In fact, I am still doing it now!!! As a beginner, I simply chose the strong fundamental companies with moderate trading margin. My objective is simple, just to beat what other unit trusts / mutual funds able to deliver which normally fall within range 8%-15%. This acknowledge my ability to trade..HaHaHa..... Me..... without finance/accounting/economics background is at par or better compared to these professional fund managers... Nothing than made me feel good.

However, bare in mind that ASTRO didn't come without risk; it operating in high capex industry & problematic JV with the neighborhood country. Perhaps, that is the reason y ASTRO fall flat for the whole 2006. Despite the problem, I love trading ASTRO. Which stock has no risk at all anyway???

My Exposure

15yrs ago I was an ordinary child who wanted almost everything; remote car, transformer, lego & last but not least my doraemon comics (never missed collection since vol 01!!!) That time I only own toys bought from pasar malam (night market) which the most cost RM3.20. Looking at other kids toys, of course I want more! esp d one that been promoted in TV, wic only made available in shopping complex not pasar malam (recalled, the most luxurious shopping mall visited was WARTA in Selayang). I cannot help myself than cried all the way from night market or shopping mall to home & to room when my father didn't bought toys that I wanted. I refused to eat for days as a sign of my frustation....haha....

One evening, my father ask me to learn about stock (imagine, only 10 that time) but he simply put it as 'avenue to make money'. He made an agreement to buy anything that I want, provided I make money from stock. As a naughty silly child, I just accept. I thought it was as easy as 'buy & sell', but since I had to 'borrow' my father's money to get started, I had to justify wic company I proposed to buy. Damn tough to get through him wic then I became bored & no more interested.

As we always had vacation during school holidays, I cannot forget when he said 'jalan2 kali ni sponsored by company "X"' ('this trip is sponsored by company "X"). I really thought that time company X give money to my father for us to spend during holidays.... nice hotel, full-tank gas, delicious food, joyful activities etc... My thinking was, if there exist such a generous company like that, y i cannot get what i want (super remote control car) last time. Then only he explained the money came from stock...Hmmm.... my interest in stock start to blossom.....

While looking for job upon graduation, I took that free time opportunity to learn more about stocks. I spent hundreds of ringgit for book regarding stocks after searching no less than 49 bookstore in KL. From finance to accounting, investment style & philosophy as well as it's key behavior & attitude, i studied them all within six-months. I didn't physically attend any classes or seminar cos NO MONEY!!!! After completing all the books, I merely discuss & debate with my fathers from global economics to personal accounting (P/S: he is Malaysian Chartered Accountant). For me, he is truly a coach. After going two bulls & bears cycle in Malaysia throughout his venture into stocks, more or less I have better understanding this new "Unknown Market".

Only after another six-months of digestion of all sort of info, I began my first venture into stocks. As what people said, experience is the best teacher. Only after my purchase, I realized it is very difficult to make theory into practice in stocks, esp for beginners. Whole lots of different environment I were breathing in. Once stocks bought, emotional start to came in, forget all of the game plan. Only then my learning curve start to accelerate at tremendously. To novice investor like me, do not worry & stay calm, that is just a trick & cheat of the game.

STAY TUNE.....