Free Technical Analysis Seminars (by ChartNexus and StarOnline)

In collaboration with ChartNexus and The Star Online, two beginners seminars on technical analaysis will be held on 10 November and 24 November 2007 at Menara Star. This is basically a two part (yet can stand on its own) seminar which Part I is about Fibonacci retracements and Part II is about candlestick charts and MACD. The admission of both events were free of charge but requires registration as seats were limited.

Justin Tan, who is the chief trainer and market strategist of ChartNexus, will be the speaker for both events and will guide you through in using these two technical analysis tools in evaluating the current trends of a particular stock in an easy to understand manner. The seminar will also feature case study which will strengthen your understanding of the concepts and how to use these tools.

Having personally attended these two seminars being held in October, I strongly recommend these events to everyone (there's even veterans attending when I was there). Especially for beginners who wanted to learn and know a bit on technical analysis, this serves as a good introduction on the topic.

For those interested, go ahead and register NOW as seats are limited and will be snapped out very fast (based on personal experience).

Malaysia Financial Exhibition 2007 (MYFex 2007)

Perbadanan Insurans Deposit Malaysia (PIDM) is currently organizing the Malaysia Financial Exhibition 2007 (MYFex 2007) at Mid Valley Exhibition Centre, Hall 3 starting from today (30 October) to 4 November. The exhibition itself advertised itself as a one-stop centre to

create financial awareness among the public. It's a one-stop information center for anyone to get answers to their financial inquiries and also update themselves on how to improve their personal finance.

Out of curiousity I have attended the event today and it seemed that the main focus of the exhibition is the "financing" part of personal finance: at least that's my sight-seeing evaluation of noticing most brochures being laid out were about loans of some form. For one thing, judging from the exhibitor list which were mostly banks, I'm not surprised. But the target group doesn't seemed to be aimed at working individuals but also budding entrepreneurs and SME holders. There's no booths that was focused on investments (read: unit trust) and insurance products, but there is one booth that answers taxation inquiries set up by the Inland Revenue Board and another booth on certified finance planners.

So for those who have inquiries regarding financing needs, this is a good exhibition for you to shop around and ask questions. After all, having all major Malaysian banks representatives being gathered in one hall, that certainly make gathering information easier, isn't it? :)

As a recap, here's the event details:

Event: Malaysia Financial Exhibition 2007 (MYFex 2007)
Venue: Mid Valley Exhibition Centre, Hall 3 (Centre court, top floor)
Date: 30 October - 4 November
Admission: Free with welcome gift (A4 sized tote bag and A5 sized notebook)

Replying to a Young Friend

by klse.8k
Translated by Felix Leong
[Link to original article (Simplified Chinese)]

The original question from a forum user:

Thank you, klse.8k, for your advice.

Actually I'm an administrator for a company. In the recent months I have read several books on investing and your articles, and these had influenced a change in my own thinking. I'm starting to have interest in investing and starting a business. Before I was exposed to such knowledge, I only thought about improving myself in my own field of work, in hopes of getting a better promotion or job opportunity. Now that my mindset had changed, I'm not sure whether is it for the good or bad?

I'm starting to feel fed up with my job, the management of the company is really bad and that I'm sadden by the fact. My work had been dull and I find myself doing nothing most of the time. But my company had compensated me well and had provided me with great benefits (from my own point of view). Currently I earned RM3000 per month (I'm now 30 years old), based on where I lived in, that's pretty good.

Now that I don't liked my job and that my mindset has changed, I think it's time for me to start my own business. But I don't know what I can do in such a vast marketplace: I never had any experience in doing business and am not sure where and how to start. I really needed your advice as I have great trust in you: with your experiences and thoughts that differed from others.

Could you give me any advice?

And there's another thing that I should let you know: all my other family members were business people, I'm the one being employed by others. But they deal in small businesses. Even though they were in the business for just a few years only, but their business was doing quite well.

Now I'm beginning to feel confused and not sure what's the next step. I had nobody to discuss this with and nobody ever gave me any advice. I hope that you are able to give me some guidance and tell me your experiences.

Thank you very much.

---

Reply from klse.8k:

You asked me for advice, but it took me two days to contemplate on your questions

To tell you the truth, I'm really not qualified enough to decide anything for you, because I'm not a financial adviser in any way. But, just not to let you down, I still decided to share my thoughts with you.

I am a businessman myself, although I'm now in a half-retirement state myself. But I still had keen interest in "being in business". Now stock market investing has became my main income source and my business became secondary. Therefore I consider myself to have become half-retired.

Most of my friends around me are business people in various different businesses. Among them there's some who started their own business on their own: some of them very successful, some of them so-so. Being in business for many years, I deeply understood the pros of having your own company and at the same time understanding the hardships of starting one. But, I know even better the fact that being a great entrepreneur is an extremely challenging task.

Building a small business is very easy, expanding that business to a medium enterprise wasn't that hard either. But to expand that medium enterprise into a large corporation is not something that any normal people is capable to achieve. Luckily not everyone wants to make it extremely big, most of them would be greatly satisfied to make their own company a medium sized one, because just by achieving the goal of making it a medium enterprise is enough to make you a millionaire.

To a normal employed person, being able to own a million dollars is considered very successful. But to a business owner, having a million is just something normal, the ability to make yourself among the people who amassed tens of millions can only be considered as being successful CEOs. But the problem is that being a millionaire of ten-millions boss is as scarce as millionaire employees.

To be extremely frank, if your aim is merely to become a millionaire, then being an entrepreneur is the shortcut. But if everyone wants to be the boss, then who would want to work for others?

Luckily the education system today only encourages young people to work for others. Ask any graduates about their future plans, their answer will almost be synonymous: to find a job that pays well, work hard; then further their studies and try to obtain a better remuneration package with such qualifications. Very few of them would want to become their own boss as they strongly believe that doing so would waste what they had learnt from the courses they took. Business ventures from graduates were often either taken as a last resort due to dire circumstances, or that the graduate were met with some sort of special influences and circumstances that leads them there.

From my own observation, to become your own boss, what it needs is courage, not knowledge.

And finally, it's time for the ultimate question: Should I encourage you to start a business?

As much as I'm interesting in entrepreneurship, I'm even more interested in stock investments. I always said that investing in the stock market is equivalent to doing business: by becoming a small shareholder in the company. To me, starting your own business and investing in stocks were the same, as it shares the same goal of getting financial returns.

So long you invest in companies that are profitable, that is already doing business! How much does your investment dollar earned can be identified using their EPS (Earning per Share). For example, own 100 lots* of EON for a price of RM12.20 is equivalent to investing RM122,000. (12.20 x 10000 = 122,000) EON's EPS is RM2.00, therefore the earnings obtained with your investment is RM20,000: which means your RM122,000 invested earns RM20,000 per year. That's the same as doing business! That's my investment mindset.

Now that you still haven't decide what kind of business you wanted to venture into, investing in the stock market would be your next best choice. Through stock investment, that would be the same as being in business! Until the time you had your own goals, you can sell your shares anytime and making it the seed capital for your venture. If you believe that your business will give you a return greater than through stock investment, then you can consider starting your own business.

In my case, the money I earned from my business is incapable to compete with the returns I obtained from the stock market, therefore stock investment being my main source of income is the natural outcome of such a situation.

As for your situation, only you will know best. But don't feel discouraged, the reason why stock investment can make you rich is because your investment can easily be doubled. So long that your technique is correct, doubling your investment income is not something that hard to do.

To make one million from 30k would only require you to doubling your investment five times. If doubling your investment would require three years, that's only a timeframe of 15 years for you to become a millionaire. And I'm sure most of the friends on Cari understood that feat wasn't impossible.

That's all I would like to say for now.

*Translation notes: One lot is now 100 units of shares as of 2007. It used to be in units of 1,000 shares when the article was first posted.

Requiring Little Needs, But Having Too Many Wants

by klse.8k
Translated by Felix Leong
[Link to original article (Simplified Chinese)]

Comparing a pair of Nike shoes worth $199 and a pair of normal sports shoes worth $59, which do you think is a "need" and which is a "want"? I had once asked a girl who had just done with her part-time job during the holidays, and she asked me rhetorically: A woman bought one kilogram of rice* daily, do you think that she "needs" it or "wanted" it?

I later realized that she often encountered the same customer with such buying habits when she was working there. At one time, with great curiosity, she asked the woman why she didn't buy the five kilogram pack of rice as it was cheaper. The woman then asked her back: Do you think this is what I wanted?

To that poor woman, the ability to buy five kilograms of rice is already a "want", due to the fact that she can't afford it, she had to resolve for the lesser and only bought the one kilogram of rice that she "needed".

At first when I heard my famous friend telling me that "A person doesn't need a lot, but our desires are never satisfiable", it had me thinking for several nights. If you want to learn how to manage your finances and become rich, this quote must be kept to heart. In order to pursue what they "wanted" but not something that they needed, many people didn't hesitate to borrow their "future money" (read: taking up loans) in order to satisfy their impulses.

Such behaviour is like the person XXXXX* described in his book who took up a bank loan in order to beautify the gate of his bungalow: such renovations will only attract thieves, was such a spending of his future dollars was really "needed"? Being able to live in a bungalow must be someone capable, even such a person is incapable to manage his money properly, don't you think such personal finance knowledge is lacking among the people around us?

Physical things can easily be identified as "needs" and "wants", however there are some things that aren't as clear cut. Say, for example, smoking and drinking. One of my friends who smoked a lot told me that cigarettes is a "need" and not a "want", if you don't believe it you can ask the ones who smoked. Later on another friend who successfully quit smoking told me that before you are addicted to it, it's not a need and not a want, until the time you are addicted it had became a need: those who were addicted to smoke will more willing to eat less but never wanted to smoke less.

The reason that I'm suddenly concerned with the ones who smoked is because I noticed smokers spent almost $200 a month* just to satisfy their urges: quite a large amount of great concern. When you start to add up such small numbers and assuming that the money was used for investments that carries a 12% return, we only needed 35 years to become a millionaire (See table below).

Therefore, to those who haven't started smoking or those who had just started, I'd like to strongly advise to avoid them at all cost if you wanted to become rich sooner.

That reminds me of a party many years ago, all my friends on my table was wearing a Rolex and I'm the odd one out, then I realized that it's time to "need" one for myself. But at that time I only knew to use my money to invest in the stock market and that I don't even have any spare cash to buy one Rolex. Therefore I promised myself that once I reached my goal in the future I'll definitely buy one of the best Rolex. Later on I finally bought one gold Rolex and felt the immense satisfaction of attaining something after my own hardwork, I'll definitely will tell that to my friend on day.

Therefore I dared to say this at the expense of a risk being called as a "show-off".

Year	Savings	Return	Total
1	2400	0	2400
2	2400	288	5088
3	2400	611	8099
4	2400	972	11470
5	2400	1376	15247
6	2400	1830	19476
7	2400	2337	24214
8	2400	2906	29519
9	2400	3542	35462
10	2400	4255	42117
11	2400	5054	49571
12	2400	5949	57920
13	2400	6950	67270
14	2400	8072	77742
15	2400	9329	89471
16	2400	10737	102608
17	2400	12313	117321
18	2400	14078	133799
19	2400	16056	152255
20	2400	18271	172926
21	2400	20751	196077
22	2400	23529	222006
23	2400	26641	251047
24	2400	30126	283573
25	2400	34029	320001
26	2400	38400	360801
27	2400	43296	406498
28	2400	48780	457677
29	2400	54921	514999
30	2400	61800	579198
31	2400	69504	651102
32	2400	78132	731635
33	2400	87796	821831
34	2400	98620	922850
35	2400	110742	1035992

*Translator notes:
#1: In most East Asian countries, rice is a dietary staple of the people. Therefore the significance of rice was very prevalent in these countries and was often used as a symbol of quality of life.

#2: XXXXX is refering to Azizi Ali, which he mentioned this story in his book "MILLIONAIRES are from a different PLANET!"

#3: Note that this article was written at 2001, with the constant sin tax hike on cigarettes, I won't be surprised if the present value would have already doubled at the time of translation (2007)

#4: For those interested about klse.8k's calculation of return, here's my explanation: The yearly total is calculated with the formula (previous year's total * 112%) + current year's saving. Which equates to the assumption that the yearly savings was made at the end of the year as a lump sum and therefore does not bear any returns.

So what would be the return if the yearly lump sum savings was broken down as a monthly saving instead, assuming the same annual return of 12%? Using the "How much will my savings be worth?" calculator provided by The Montley Fool (with the tax and inflation rates set as 0%), the amount came up to be $1,286,192! That's a whopping 250k addition to your savings!

That should give you a more compelling reason to start early :).

HLeBroking: Now serving news from Reuters

Just accessed my HLeBroking account, and I was pleasantly surprised with their new page layout and more importantly: the Reuters logo. According to the announcement, the world market news will now be provided by Reuters.

So, what does it means to us?

From my unofficial mouse-clicking browsing, it seemed that the archive only goes as far back as August 2007, which means only one months worth of news archive. That's a sign that HLeBroking's subscription was pretty limited at the moment, which, at its present state, might not be as useful as we would think. So as much they do provide a search feature that searches based on stock code, it would only be quite useful for large-cap companies which has more news coverage with only a month's archive.

Hopefully, HLeBroking would opt for a subscription package that allows its users so access a larger archive, that would prove to be a useful tool for investors having an account there.

If you have an account at HLeBroking, you can access Reuter's news archive under the Research menu.

A Simple Logic

by klse.8k
Translated by Felix Leong
[Link to original article (Simplified Chinese)]

A friend asked me would I be interested to buy a second-hand luxury car, saying that the car owner wants to sell it together with the license plate. It was a single digit license plate, which the owner had spent more than 30 thousand ringgit to win the bid for that particular number at that time.

Seeing that how much money was spent just to bid for that license plate, you can imagine what kind of person the owner was.

My friend told me that during those days the owner was a high income earner with monthly salaries that amounts to tens of thousands. So buying a 30-over thousand license plate wasn't a big deal back then. But now his income was far from what he earned in the past and he was forced to sell his car together with the license plate in order to relieve some financial burden.

This reminds me of what my friend, a high income earner, had said to me: Those in the high income group have a higher social standing, and therefore having their expenses being much higher compared to your average Joe.

In order to maintain a exclusive lifestyle, it would require a luxurious car and a classy house to match. These things were so expensive that even those who earned tens of thousands per month would have to take up a loan in order to purchase such luxuries. And the ability to repay the loan installments greatly depends on your future income! There's a potential to wreck financial disasters if you mistakenly overestimated your ability to earn money for years to come.

The taste of crashing down from the skies and having your face falling flat on earth is definitely not enjoyable at all.

And the sad thing is that those who are too full with themselves will never come to understand this.

Those who are successful in their careers will always think this way: My month income was more than ten thousand dollars, the load installments of my car is just a mere two thousand a month, wasn't that a "purchase with great discretion" already?

The real problem is on whether your income be able to outlast your installments.

The times when one is over confident is the time when he will overestimate his own abilities and only believes the the path ahead will only be smoother as he continues to walk ahead. He will never imagine or thought of the times of an unpredictable rainy day. And only when the storm comes that he will be shocked to realize that how inadequate he was in having himself prepared for such a situation.

Those who spends more than he earns will never be able to save at all! Savings can only happen when you tone down your lifestyle. Therefore, understanding how to trim the fat in your lifestyle is extremely important!

If a person earning ten thousand a month can maintain his lifestyle like those who earn eight thousand a month will be able to save at least two thousand a month. If a person earning five thousand a month can maintain his lifestyle like those who earn four thousand a month will be able to save at least a thousand a month.

Most importantly: Try not to upgrade your lifestyle/standards of living! Try not to attain physical luxuries beyond your means! Only that you'll be able to increase your savings.

So, will those who knows how to save will live happily ever after?

I had a friend who is working hard to save and works overtime almost everyday. His wife is also an office worker, so the total of their income is pretty significant. He told me that with their current income they can afford to let the family to live a comfortable life.

But calculating his children's education and considering that he had only about 10 years before he retires, he believes that he have to work even harder to save in order to achieve a golden future of their own.

The excessive amount of work has taken up all his time available, causing him to lose the opportunity to think on how to let the money to do the work of earning more money. Therefore, he only knows how to utilize the "him working for money" mindset to accumulate wealth, but never dared to think of how to "have money working for him".

"Working diligently before retirement is the only sure way to ensure the better days in his future", that's his belief.

Of course I believe that his "future" will be happy. But I also believe that his "present" is a bit arduous! Working diligently can only last for a short few years, but it is something that should never be done until retirement.

Does wealth accumulation really needs to be achieve through "us working for money"? Of course I don't believe that! I only believe that "having money to work for us" is the fastest way to amass riches. The starting years will be the time when money has to be earned through hard labour, but after that it depends on how you let your money to do that job for you!

Only through "having money working for you" will free yourself the time to enjoy life! Having less work, completely relaxed and being stress-free is the best life you can ever have! All of this can only happen if you learn how to let the "money working for you"!

Therefore I always advise my friends that so long that you don't rush yourself into improving your lifestyle, you'll be able to reduce your workload and spend the time to enjoy life and think on ways to let the "money working harder for you".

So long you understand how to let money working for you, our future will be full of bliss!

Too bad such a simple logic is rarely understood.

How Should a Fresh Graduate Start to Invest in Stock Markets

by klse.8k
Translated by Felix Leong
[Link to original article (Simplified Chinese)]

Students who had just graduated from university often lacked the capital and experience needed in investing, especially the case with experience which plays an important role in investing. Therefore, my advice to them are:

1. Get a job first, earn your living and accumulate capital and experience at the same time
2. Don't waste money unnecessarily, so that you can accumulate some money to be used for investments purposes as soon as possible
3. Do not borrow to invest, you must use your own money to invest. And that the amount invested must be the amount that you are capable to bear in case you lose everything in your investments, this is the volume which you need to take control of.
4. Find some books on finances, so that you'll be able to comprehend and analyze financial reports. Also, find a couple of books on the stock market, so that you'll be able to understand some financial jargons
5. Practice value investing, never speculate, never think of it as a gamble, do not expect you'll become rich overnight. Investing is a marathon, not a sprint
6. Before you start dipping yourself in the stock market you must do your homework, do not blindly enter the market: because every single cent does not come easy. A good mentality is important, never be rash or impatient.
7. Scan through all stocks across the whole stock market, and from there search for candidates. Then lastly select the stocks that you wanted to invest from your list of candidates. Do not spread your money across too many stocks, three to five counters should be sufficient.
8. Steps of selecting viable candidates are as follows (At every step, those that does not fulfill the requirement can be filtered out, so at each stage the number of possible candidates will decrease):
1. The company must not bear a loss for the past five years (which therefore filter out all companies which has reported financial irregularities as well)
2. The company must have reported increased profit every year (thus will disqualify even more candidates)
3. Total liabilities must be less than half the holdings of share owners (i.e. debts must not be too much)
4. Total liabilities must be less than one fifth of the year's total of net profits and reserves for deprecation (this is also to make sure that the company was not too deep in debt)
5. Price-Earning (PE) ratio must not be larger than 25 (This recommendation is based on the situation in China, for foreign stocks I choose those not greater than 10), the lesser the better
6. Calculate the estimated long term investment return rate, which is "Long term investment return rate = (1/PE ratio) + Average compounded earning growth rate for many years". The return rate must be greater than 25%, otherwise it must be disqualified
7. The current stock price must not be greater than five times the net tangible asset (for foreign stocks, I chose those not greater than three times the value)
8. The company must have a good management team with caliber (those companies that have a management personnel with bad track records must be disqualified)
9. According to whatever the company is doing, you estimated that the profits are capable of growing for the coming years
9. From your list of candidates only choose a few which you ranked amongst the best in your list, buy and then hold them until they no longer satisfy your fixed criteria (i.e. sell them when the time comes). Otherwise do not do anything.

The selection process above may cause you to miss a few fast growing opportunities, but it is also capable to prevent you from taking unnecessary risks. You can say that the stocks/companies which fits in the above criteria will only be a handful, but the fact that it had passed such a stringent selection makes it a good investment.

[*Translator note: It seemed that the author might not have completed the last lines of this article, since there's a dangling character "Long" in the original article. From my guess it should read among the lines of encouraging long term investment, which it is capable to generate greater returns in the long run. But of course, that's just my speculation]