KLSE update 090505 1009

How long have I been gone ?  Wow ... are we supposed to be sad for the swine flu or should we be excited about the market bullish movement ?

real time world market performance at stock.malpf.com

The key difference of this recent surge than before is that it breaks 200 days Moving Average.  A common indicator used by the western world that a down turn is over.  And today's investment is the world for technical analysis.  So everyone would most probably be following blindly on this signal alone - recession is over !  Yeah !

200 days MA is suitable for mature markets like USA and Europe, with some internal justification, I use 220 for KLSE, Malaysia market.  And this is the chart for it.

It tells the same thing, you all should rush into it NOW !  ( I didn't say that, the chart did )

As far as the 1view world chart and technical chart show, correction will not kick in today.  Even if it did, it wouldn't be a huge correction.  In other words, you may still have some fun yet.

but NOT me ...

Well I have 30% of my investment fund in KLSE which I initially planned to profit take 5-10 years later.  Due to this recent hike, I am selling them now.  I set my selling price slightly higher than market price because I am not that desperate yet.  If the sale proceed today or tomorrow, I would have gain about 70% from this transaction alone and may satisfy my annual target of 15%.  But then I will have to work something out for next year.

We will see ...

Personal Finance in 1Picture

I started this Blog with very fundamental talks on personal finance on lay man write up. I have to apologize if recent posts have become quite cryptic and speculative. So let’s get back to some of the unfinished fundamentals on personal finance.

First you must have an income. Income can be any form of received money including pocket money for kids, household money received from bread earner, begged etc.

No matter how you get your income, you must setup an automated system to save part of your incom; BEFORE you do anything else ! Remember you need your ASS - Automated Saving System.

In today standard, this automated saving system should give you some interest, preferably matching fix deposit rate.

No matter if your income makes you a Rich, Average or Poor person, if you don't have an ASS you may find yourself in trouble one day. Some even cost them their lives.

Once you have enough money in your ASS, ie. can substain your lifestyle for 3, 6 or 9 months. You will need to start thinking about Money Earns Money - MeM. 'Passive' is the keyword. Something that you do once now and enjoy a life long extra income in future.

There are standard methods or PF tools to achieve MeM. Each level up the pyramid requires more learning. Entering into any of this with the wrong preception or knowledge may bring negative MeM.

At this stage, many will tell you high risk high return, low risk low return. While they are not wrong, but that concept is not entirely helpful to your personal finance. In order to focus on what can helps, you may need 21st century understanding on Risk.

Further in future, you may see that MalPF will preach that

1) Personal Risk is what you know, the more you know the better it is, irrelevant to what PF tool it is

2) PF Tool Risk is fixed no matter who invest in it, irrelevan to who you are

Bundle together that 2 concepts result one simple action to position yourself well in MeM - keep learning ( the easy part ) and learn the right stuff ( the harder part - due to Rich Conspiracy ).

There are 2 BIG parts in MeM. The part mentioned above is Earn 2 with 1 or Doubling your money - MeMx2 The crucial part left out here on purpose is Time - which is also the variable for individuals.

We use Rule of 72 to quickly calculate this variable. For example, it takes 6 years to double my money if I get 12% return from my investment.

So far MalPF model works well without the need of setting goals. However MeMx2 is the part where you may see a distinctive difference between a person do it with goals and another without.

Should one still find it hard to find own goals, simply follow the magic number - 7. Setup 7 MeMx2 accounts for the following:

1. Car

2. House

3. Family

4. Education

5. Retirement

6. Charity

7. Holiday and Travels

The good thing about none goal specific MeMx2 is that they are flexible and interchangable. You should start all 7 accounts at once even if you think you don't need it. Even putting in 1 cent a month into each account is better than putting 10 cent into one investment account only. ( No, this is NOT diversification, this is just broaden your availability when you don't have a target, like spreading a fish net when you don't have a hook/bait )

The second part of MeM is to Buy 100 with 1 or Secure Future Money - MeM100. Also commonly treated as insurance. While MeMx2 urges us to learn more, gain more knowledge but there are always something we haven't learned yet or will never able to 'finish' learning. Hence for all the stuff we don't know, we apply MeM100 to it.

This is especially useful when you have goals in MeMx2. For example, I want to save $100 a month for 20 years with 12% return so that I can get my $100,000 for my retirement. So I can buy a $100,000 insurance just incase if I lost my ability to save that $100, I will still get my $100,000 regardless.

There are 5 big areas in MeM100:

1. Die Early

2. Living Dead

3. Fail to Die

4. Accident

5. Income Replacement

If you still don't have clear goals in life up to this stage. Then you will not be able to have an optimized Personal finance plan ie. Buy Term Invest The Rest. You would probably go for something traditional called Whole Life Plan. Its not bad at all for someone who cann't even figure out a single goal after 20+ years of life. Try This ...

and this is what this picture is all about ... ( may be not All but the nutshell yes )

Sorry about that lack of posts folks

I really don't have anything to say.

In my opinion, we are in a temporary stabilisation driven by low interest rates and the realisation that the financial world did not come to an end, despite the irresponsible actions of the elite who run it.

Nothing goes straight up or down and we were due for a bounce, to let some anxious buyers get on board.

I am waiting until after June to see what happens to prices.

I suspect there is a lot of inventory waiting for see firmness to list. If so, being human, they will wait and wait, until the first sign of weakness and then try and unload.

Time will tell...

Why is it so tough to earn from stock market ?

The theory to earn easy money from stock market is one of the simplest theory in this world.  It is proven practical as well when some of the dumpest men on earth has successfully gained from it.  But yet majority of the so called analyst experts fail to predict the market correctly.  Why ?

In order to consistently earn money from an investment, one must KNOW the investment vehicle very well, how it works, the tips and tricks etc.  For example, in stock investment you need to know MOTS, Best Speculatable Price Range, Value a stock worth, trends, strategy to earn despite any movements, stock pick methods, successful trader methods, world influence, fee effect, ...

But in order to CONSISTENTLY earn from stock market, one must NOT follow too closely until emotion takes over the investment strategy.  In order NOT to follow too close, one MUST NOT KNOW about it.

So you must KNOW about it first, 

take action and then

NOT KNOW about it at all 

in order to become a TRUE investor.

It is almost IMPossible to Unlearn something once you learned it, especially when you have found a Winning Formula, it is Darn Tough to forget about something that you think is a sure win strategy, isn't it ?

Well, that's why its tough to earn from stock market ...

The Knowing part is the Science part, it requires a lot of logical thinking and analysis  ... the NOT Knowing part is the Art part.  Try to NOT KNOWing what you already know and you may feel the level of understanding you may need.  ( sorry for the creepy sentence, but its required to deliver the message )

Well, there you go, now you know why most people simply cann't make money from stock market consistently.  Simply because they fail to NOT KNOWing ... or forgot the Art part in stock investment.

Don't worry too much, there is also simple to follow methods to NOT KNOWing ... but thats future topic ...

Ironically enough if you DO NOT KNOW anything to start with but do the SAME Action as if those who know it, then you don't need to try hard to forget anything and yet able to enjoy the same big gain.  Thats why some old dump investors are earning so much better and more consistently than the experts ...

never knew this is how it turns out ...

Ironically enough on how the stock market turns out to be ...

Everyone was watching closely on politics, economy, commodities, oils and golds ... but at the end, its the pig who triggers the market crash ...

Most may say this is totally irrelevant and just an arbituary incident.  But I cann't help to think that 

recession brings out the greed

more people cut cost into the ethic arena

animals are not fed right

environment is not kept well

which eventually trigger the out spread of the micro organism ...

"If you big guys don't want the world, we will take over just like how you took over dinasour last time!" - virus said.

Welcome to the balanced market

We have moved from a rapidly descending market to one where a bid has appeared for listings.

MOI is in the 5-6 range. Some of the huge drops from list/sell have disappeared and most sold prices I see are coming in near (within 5-15%) the ask price.

This was to be expected. Record low mortgage rates have brought the cost of owning, even at inflated prices, closer to renting, as I showed you in the renting v owning post earlier this month.

As the market strengthens, it then panics those who sat out the long run-up, with the thought that the drop we just had may be it! and we will now embark on a new round of price rises.

I think this current blip will take out the buyers who had been sitting waiting for the smallest drop to get in. Then the driver will be the economic situation once again. On that score things are not a lot better. We had stopped falling as fast, but things are far from a rebound or even stability yet, with huge job cuts continuing in the US and Canada. And we will now have to see what transpires with this swine flu.

This darned disease is another brake on the velocity of money, and an economic damper, when we can least afford it.

I posted before that I thought the market would be stable until June and would then resume it's downward pressure. Lets see if my guess was right and let us hope that the RE market is the only thing we have to worry about.

.....................................................................

From Mohican's post http://housing-analysis.blogspot.com/2009/04/teranet-house-price-index.html Vancouver's Housing index is at 135, with 100 being the 2005 price. So we are now 35% over 2005 prices now. Toronto is already down to 106.

I would be very surprised if that's IT for us and we don't get nearer 100. However, as mentioned, we may have price stability for a few months. Then reality rears it's ugly head again.

I suspect the economy and the Olympics have buried any chance of a budget surplus or even a balanced budget for the foreseeable future, so don't expect the Provincial government to be able to bail anyone out.

another food price analysis obsession - burger

It’s Burger King, my favorite beef burger store !

 And this time is more serious analysis than previous queue-in-line KFC example.  It comes with proper price gap analysis and order optimizing system.  I had to analyse in proper spreadsheet before I place order.  ( can you feel the obsession I have with numbers yet ? )

It all started when I saw an advertisement that if you buy up to RM 50 in Burger King, they will give you one FREE Chicken Royale burger and a FREE Touch N Go card!  I do vaguely remember I need an extra TouchNgo card but I forgot for what reason!  Normal price of a TouchNgo card is RM 10, and the FREE burger would be around RM10 too.  So saving RM 20 out of a RM 50 price is a HUGE 40% discount !!  

All I wanted was just ONE Whopper and see what advertisement has up sold me to.

Ok, this is the price list ...

First, all upgrades from medium to large set add RM1 standard across the board.  Size upgrade for individual fries and drinks add up to RM 1.20 so ALL sets upgrade saves 20 cents.  So this is as straight forward as if you want to eat more, simply get the size upgrades on the set.

Then I check the price differences between Ala-Carte and medium set.  The set costs extra from RM 1.40 to RM 4.85 with an average of RM 3.50.  So I presume I do not want to buy the set if the set extra cost is more than the average RM 3.50, marked in pink color.

The set comes with fries and drinks.  If you want only one of the items i.e. drink, then the extra fries is NOT really a saving but a redundancy.  The drink is RM 3 and the fries are RM 3.55 so I use RM 3 as the smaller price item. So I also decided not to get the set if the ala carte to set cost more than RM 3, marked in peach color.

Very soon, I have new order logic.  If I were to order sets in burger king, I should only consider whopper set and chicken tender set.  All other sets provide less value than these 2 sets.  And chicken tender set is the cheapest way to get your set.

So now I know what to order ala-carte and what to order sets, let match the RM 50 deal.  I wrote some formulas into the spreadsheet and auto calculate how much more to order in order to match my target.  Not to forget the 5% government tax in the calculation.  Items that can be purchased to match the target will pop up in green (in excel it would, not in google docs).

First select what I want to eat ... wait a minute, how to finish all these RM50 burgers by myself?  I quickly made a few calls and throw a small family dinner party.  The meal maker does not need to cook that much and the kids would love it too!  Add in a few more considerations like some doesn't eat beef etc.  Walla !!  Here is my order:

1 Chicken Tender medium set and ala-carte whopper, single mushroom swiss, fish, grill chicken and 9 pcs chicken tender.  Total RM 50.14 after tax.

Just in case they require before tax amount to be RM 50, I also come up with a similar order of:

1 whopper medium set and 1 chicken tender medium set.
Ala-carte single mushroom swiss, fish, french chicken, grill chicken one each.

Totalling at exact RM 50 before tax !

Did I just waste more money or have I just saved some?  I should have a great dinner party tonight and goes home with an extra TouchNgo card.  That couldn't be too bad right?