UEM Edgenta

This post is for my own study at this moment.
The question I ask myself is whether there is opportunity to profit if I buy UEM Edgenta now?

Bear Market 2020

The stock market is right now in a bear phase and recession is imminent.
The black swan is the Covid-19.  The uncertainty caused by this deadly virus has become a pandemic.

No one is sure when this problem will blow over.

However, every crisis is also opening the door of opportunity.

This is because bad time will not last forever. If we buy stocks near the bottom and hold it till full recovery profit can be yours.

To guess when is near the market bottom it will be helpful to look at the past bear markets.

Every stock market crash is different in both cause and reaction:

1929 Great Depressions: Lost 83%, Crash Duration 2010 Days, Full Recovery 24 Years

1973/4 Oil Crisis: Lost 35%, Crash Duration 700 Days, Full Recovery 7 Years

1987 Black Friday: Lost 35%, Crash Duration 61 Days, Full Recovery 2 Years

2000 Dotcom Crash: Lost 49%, Crash Duration 944 Days, Full Recovery 7 Years

2007 Credit Crisis: Lost 58%, Crash Duration 485 Days, Full Recovery 7 Years

2020 Corona Crash: Lost 33%, Duration So Far 28 Days, Full Recovery uncertain

2020 Corona Crash is on 28 Days old ( as at 23rd March 2020).

Shortest Crash Duration is 61 days and the longest is 2010 days.

There will be dead cat bounce and if we are not careful our cash will dry up before it reaches the bottom.

Be careful and be patient.

对话20111009 对话：华商领袖郭鹤年Kuok-HD高清完整版

Batu Kawan

Batu Kawam (stock code 1899) is a dividend paying stock for many years continuously. For year ending 30th September 2017 the total dividend paid  is 60 cents per share.

Share price is currently downtrend closing at 17.36 on 3rd August 2018.

Divergence between MACD (up) and price (down) appears, as shown on the chart above.

There could be a reversal of trend soon. So watch out.

Batu Kawan issued 435,951,000 shares and so far has bought back its own shares amounting to 35,274,531 shares ( about 8.09% of issued shares) to be kept as treasury shares.

What are they (directors) going to do with these treasury shares? They can be sold back to the open market, cancelled them (thus reducing the shares issued) or they can distribute to existing share holders as dividend in specie.

AWC

AWC is listed in BursaMalaysia. The chartnexus chart of AWC (stock code 7579) shows obvious downtrend. On 18 July 2018  its closing price is 65.5 sen,

There is a divergence between price (down) and MACB (up) . Divergence usually suggests that its price  decline may come to an end and reversal of trend  will soon kick in albeit not immediately but imminent.

CIMB Research on 25 June  2018 put a target price of RM1.00. On 19 June 2108 AWC hit the lowest price of RM0.60 .and thereafter traded above this lowest price, showing some support currently.

Is this a good opportunity to accumulate? You decide.

This article first appeared in The Edge Malaysia Weekly, on January 2 - 8, 2017.

CONFECTIONERY maker Apollo Food Industries Bhd has been experiencing what could be its toughest times in recent years, sandwiched between the challenges of rising production costs and lacklustre consumer spending.

Last Thursday, the Johor-based snack food maker posted its fourth consecutive quarter of year-on-year earnings contraction.

Net profit for its second quarter ended Oct 31, 2016 (2QFY2017) plunged 55.5% to RM4.293 million from RM9.642 million a year ago, with revenue sliding 10.54% to RM48.127 million from RM53.796 million a year ago.

For the six-month period, net profit has fallen 52% to RM9.992 million from RM20.829 million a year ago. Revenue, however, only declined 5.42% to RM98.109 million from RM103.728 million a year ago.

Apollo certainly saw better results prior to 2015. Over the last five financial years, Apollo’s peak earnings were in FY2013 and FY2014, when its net profit crossed the RM30 million mark at RM32.083 million and RM33.471 million respectively.

Net profit fell 24.4% in FY2015 to RM25.29 million before rising 17.6% to RM29.7 million in FY2016.

Given Apollo’s weak 1HFY2017 results of RM9.99 million in net profit, the company has some way to go in order to end the current financial year in the RM20 million to RM30 million region that it previously enjoyed.

Apollo — which manufactures and distributes chocolate wafers, layer cakes and Swiss roll cakes — attributed the poor earnings to slower sales overseas and thinner margins due to rising raw material prices.

Apollo is not alone in facing these pressures. Its strained earnings underscore a major problem that other snack food and confectionery makers face — the rising cost of raw materials, coupled with the difficulty of passing on increased costs to consumers given the prolonged soft consumer sentiment.

What this means is that the profit margins of snack food manufacturers have been compressed, even if they have been able to maintain similar levels of sales at the very least.

What is worse is that these macroeconomic pressures are certainly not going away anytime soon. AmInvestment Research notes that the consumer sector will continue to contend with higher operating costs in 2017 owing to rising associated costs.

These include higher logistics costs, given the increased toll rates for certain Klang Valley highways, and higher energy costs, since average gas tariffs have gone up 5.95% from July 15 last year and electricity costs have risen 32% to 1.52 sen per Kwh.

Food-related manufacturers will also have to manage higher raw material costs, including a 24% hike in the price of a 25kg bag of wheat flour and a 30% to 32% increase in premium and wholesale sugar prices, AmInvestment Research adds.

Labour cost has also gone up, with the minimum wage increasing from RM900 to RM1,000 from July 1 last year and annual foreign worker levy fees rising 48% to RM1,850 from RM1,250 for the manufacturing and service sectors.

Then, there is the lacklustre ringgit, which affects manufacturers that derive a portion of their revenue from export sales and when purchasing raw materials like cocoa and palm oil that are tied to global commodity prices.

As Apollo points out, the operating environment will continue to be tougher in the current and coming financial years given rising raw material costs and the volatility of the ringgit against foreign currencies.

“Despite a challenging environment, the board is of the opinion that the group will be able to maintain its market position by implementing prudent measures and improving operational efficiency to safeguard the group’s profitability,” Apollo says in the notes to its recent financial results.

Other snack food makers face dwindling earnings

Apollo certainly is not alone. There are seven snack food and confectionery manufacturers listed on Bursa Malaysia: Apollo, Hup Seng Industries Bhd, Hwa Tai Industries Bhd, Khee San Bhd, London Biscuits Bhd, Oriental Food Industries Holdings Bhd and Pan Malaysia Corp Bhd (PMC).

All these companies have long complained of higher input cost pressures on their businesses and are finding ways to cushion these impacts. The majority — five out of the seven — have seen earnings pressure in recent quarters.

Oriental Food saw its net profit for 2QFY2017 ended Sept 30 almost halve to RM5.38 million from RM10.73 million a year ago, despite revenue rising 7.04% to RM60.05 million for the quarter. For the six-month period, Oriental Food’s net profit was down 43.54% to RM9.493 million from RM16.81 million a year ago.

Hwa Tai returned to the black in its 3QFY2016 ended Sept 30 with a net profit of RM186,000 from a net loss of RM246,000 during the same period last year. But cumulatively, it is still in the red with a net loss of RM2,000, narrowing from RM719,000 a year ago.

Hup Seng remains profitable but saw its net profit for 3QFY2016 ended Sept 30 fall 13.9% to RM9.96 million from RM11.57 million a year ago, despite revenue remaining stable at RM64.5 million. For the nine months, its net profit was down 13.63% to RM33.98 million from RM39.34 million a year ago.

PMC’s earnings also fell. Its net profit for 1QFY2017 ended Sept 30 plunged 75.5% to RM1.318 million from RM5.388 million a year ago.

This was due to a lower unrealised foreign exchange gain, given the depreciating ringgit against the Singapore dollar, when it translated the amount owed by a foreign subsidiary.

Higher domestic sales of PMC’s chocolate and confectionery products, however, did drive up revenue 8.77% to RM18.264 million.

The company says it remains cautious about its financial performance in the year ahead but will seek more emerging markets in Asia to sell its products in and explore collaborative opportunities to improve profitability.

It is noteworthy that in May 2016, PMC completed a share capital reduction exercise to rationalise its balance sheet and wipe out accumulated losses of approximately RM613.6 million based on its audited financial statements for its FY2014 ended Dec 31, 2014.

The accumulated losses were largely attributed to a provision made in 2004 totalling RM1.056 billion when it wound up its subsidiary Syahdu Pinta Bhd.

But on the whole, PMC noted that it has been profitable for the last five financial years up to Dec 31, 2014, except for FY2010 when it incurred a net loss of RM4.4 million due to unrealised foreign exchange loss, higher raw material costs and stock write-offs.

Two exceptions

Two of the seven listed snack food makers have coped better than their peers.

London Biscuits and its 19.72%-owned listed subsidiary Khee San have managed to maintain or grow profits in the recent quarters.

Khee San’s net profit for 1QFY2017 ended Sept 30 rose 7.98% to RM1.313 million from RM1.216 million a year ago, with revenue

rising 31.83% to RM36.5 million.

The group’s FY2016 net profit similarly rose 20.66% to RM4.91 million on the back of a 10.02% revenue increase to RM156.96 million.

But Khee San, which primarily manufactures sweets, expects another challenging year ahead and intends to mitigate the impact of

rising sugar prices and manage foreign exchange rates for its export business, which contributes about 47% to revenue.

London Biscuits, meanwhile, managed to maintain earnings in its 1QFY2017 ended Sept 30. Net profit for the period maintained year on year at RM5.21 million while revenue rose 1.85% to RM92.3 million.

London Biscuits’ core business is  the manufacturing of cakes, sweets, candies, snack foods and potato chips. It derives over 30% of its sales from exports.

Its net profit for FY2016 increased 23.73% to RM18.59 million from RM15.02 million a year ago, while revenue grew 8.43% to RM436.51 million.

London Biscuits remains upbeat about demand for its products given its stable order book, but says it will improve operational efficiencies to address the impact of rising sugar and flour prices and foreign exchange fluctuations. And will be conservative in setting prices.

Snack stocks are down

Given the hangover of macroeconomic pressures, investors have shunned snack food counters in the last one year, beating down their prices over the last 12 months.

Recall that most of the seven snack food counters have enjoyed steady share price increases over the last five years. Nevertheless, six of the seven have ended 2016 lower (see table).

For example, Apollo ended 2016 at a one-year low of RM5.24, erasing gains made after the stock hit a five-year high of RM6.33 on Oct 17 last year.

Of the lot, Oriental Food saw the biggest decline in its share price, losing 42.63% after ending the year at RM1.37 from RM2.388 last January.

Only Hwa Tai Industries’ shares have clocked gains of about 13.4% over the year, closing at 46.5 sen on Dec 30 from 41 sen earlier in the year.

PMC’s stock hit a one-year low of 14.5 sen on Dec 27, and closed somewhat higher on Dec 30 at 15.5 sen.

This year should see a recovery in consumer sentiment, but this is not enough reason to cheer given the expected higher input costs that producers will have to manage, says AmInvestment Research.

The research house projects that private consumption will grow at a faster rate of 6.2% this year from the estimated 5.9% in 2016, but the research house notes that private consumption growth has averaged 7% over the 10-year period to 2015.

“A faster-than-expected pickup in consumer spending will disproportionately benefit consumer discretionary companies due to up-trading activities,” AmInvestment Research says in a Dec 23 note.

The research house warns that increases in numerous operating expenses and input costs, including utilities, labour and food costs, are expected to fully take effect going into FY2017.

“While higher costs have been accounted for in our assumptions, the spillover effect across value chains could pose a downside risk to our earnings estimates,” AmInvestment Research says.

2017 is still new. What are the good sectors to invest in?

The Fire Rooster year will start from 3 February 2017. According to Dato' Joey Yap (Feng Shui astrology master) , 2017 is a good year to accumulate assets.

 There are  five elements in Feng Shui Astrology.

The sectors are Fire, Wood, Metal, Water and Earth. Sectors associated with Metal, Fire and Water elements, are good sectors to invest in.

Sectors which are in the Metal element include jewellery and goldsmith, automotive, finance, mining as well as mechanical nature field.

Fire element-related industries are oil and gas, food and beverage, airlines, information technology, metaphysics, electronics, fire arms and artillery, as well as services related sectors.

For the Water element, the industries include aquatic and fishery, shipping, tourism, trading, media and strategists and other water-related businesses such as laundry and sewage.

With this information and if you believe Feng Shui, this may help you.

(For my reference in case I need help.)

Daibochi Plastic & Packaging Industries

Daibochi chart from Jan 2014 till 11 Nov 2016

Daibochi chart from Feb 2016 till 11 Nov 2016

The first Daibochi chart shows that it is trending up since some time back. It also shows that it is paying dividend every quarter, (the blue bell sign on the chart shows the ex-date of each dividend)

The second Daibochi chart shows that it has been consolidating for a while and around September 2016 it started to move up again. The last 2 days saw renewed interest with a spike in price after the announcement of 3rd quarter financial results on 10th November, declaring a 3rd interim dividend of 1.32 sen single tier which is payable on 22nd December 2016.

The last traded price on 11 November 2016 is RM2.31. With 273.245 million shares issued it has a market capitalisation of about RM631.197 million.

Money flow for Daibochi for the duration of the past 1 year, past 1 month and past 1 week has been all positive. The positive money flow indicates either there is no selling pressure despite market uncertainty or accumulation is still on going even at RM2.31

Daibochi has an active and well-managed share buyback programme as it has in the past able to sell some of the treasury shares to long-term investors, making some decent profits for the company.

Export sales increase to 55% from 52%. Export to Australia and New Zealand is about 30% and the remaining 70% is exported to the southeast Asian countries.

52-week price range is RM1.79 - RM2.44. So at RM2.31 is near to the upper limit of the trading range.

Production line in Australia started in 3QFY16 and a second production line will start in the 4th quarter 2016. With the production located nearer to the clients it will result in some transport cost saving and hopefully increase its profit margin. In fact according to the latest quarterly financial report margin has stabilised.

This is not a recommendation to buy or sell but a record of my own observations so that I can refer to this when I need it.

Daibochi Plastic & Packaging Industries

Daibochi chart from Jan 2014 till 11 Nov 2016

Daibochi chart from Feb 2016 till 11 Nov 2016

The first Daibochi chart shows that it is trending up since some time back. It also shows that it is paying dividend every quarter, (the blue bell sign on the chart shows the ex-date of each dividend)

The second Daibochi chart shows that it has been consolidating for a while and around September 2016 it started to move up again. The last 2 days saw renewed interest with a spike in price after the announcement of 3rd quarter financial results on 10th November, declaring a 3rd interim dividend of 1.32 sen single tier which is payable on 22nd December 2016.

The last traded price on 11 November 2016 is RM2.31. With 273.245 million shares issued it has a market capitalisation of about RM631.197 million.

Money flow for Daibochi for the duration of the past 1 year, past 1 month and past 1 week has been all positive. The positive money flow indicates either there is no selling pressure despite market uncertainty or accumulation is still on going even at RM2.31

Daibochi has an active and well-managed share buyback programme as it has in the past able to sell some of the treasury shares to long-term investors, making some decent profits for the company.

Export sales increase to 55% from 52%. Export to Australia and New Zealand is about 30% and the remaining 70% is exported to the southeast Asian countries.

52-week price range is RM1.79 - RM2.44. So at RM2.31 is near to the upper limit of the trading range.

Production line in Australia started in 3QFY16 and a second production line will start in the 4th quarter 2016. With the production line located near to the clients it will result in some transport cost saving and hopefully increase its profit margin. In fact according to the latest quarterly financial report margin has stabilised.

This is not a recommendation to buy or sell but a record of my own observations so that I can refer to this when I need it.

Binary options are a scam

I just read an interesting article  at the link below:

http://www.thestar.com.my/business/business-news/2016/06/18/binary-options-are-a-scam/

I think all investors must not be tricked into something which is too good to be true.
Even if you are a speculator and knowing that the odds are against you, you should read the article and understand why the majority of speculators lose money eventually.



"A scam is a dishonest representation, meant to trick someone. What makes binary options a scam is that it presents itself as an investment method, while it is nothing short of gambling with bad odds.

The simplicity of binary options is part of its attraction. 

Binary means “two” and refers to the fact that you only have to make a single decision about one of two outcomes. You decide on whether you think a certain asset will rise or fall in the future. 

he size of the movement does not matter. If you are wrong, you lose the money you have “invested”.

 If you are right, you will get a pay out of between 65%-85% of the “invested amount”. Note this is already unfair as you stand to lose 100%, but you can never win 100%. 

Some brokers will give you a small percentage – 5% to 15% – back, in case you lose, but they compensate this by giving you less when you win.

You can bet on almost any asset: stocks (for example Shell), indexes (for example the Dow Jones), commodities (for example gold, oil), or currency pairs (for example Ringgit and Dollar).

Here is the tricky part: the duration of the binary option is extremely short. It typically ranges from 60 seconds to 24 hours. 

For such short time periods, assets move in essentially random directions and cannot be predicted. The short duration makes any investment technique worthless. 

Binary option brokers will tell you “the trend is your friend”, but to call movements of a few second or minutes ‘trends’ is a grave misuse of the term. If you do spot a trend, it is only because the human mind is trained to see patterns and trends, even if they aren’t really there. 

Similar to how people see “trends” at the roulette table, while it is completely random what happens: roulette balls have no memory and don’t care what happened the previous roll. 

This means you are not investing, but gambling. It is just that you have worse payout ratios than if you were to go to the casino and gamble red or black on the roulette table.

Predicting what the stock is going to do in the next ten minutes is impossible, even for companies about which an abundance of information is available, such as Apple or Facebook. 

Random, unrelated events, such as interest announcements, large buyers / sellers, bad weather, a terrorist attack or a flash-crash could temporarily influence the stock price. 

But more often, there is no attributable reason at all for short term stock movements. This makes binary options gambling with unfair chances. The broker will always win at the end, just like at the casino.

As short-term fluctuations in stock prices are random and irrational, you have 50% chance of being right. Let’s say you “invest” RM100 and are wrong, you lose RM100. If you “invest” RM 100 and are right, you will get RM75 (a payout percentage of 75% is common). 

This means on average you will lose RM12.5 per trade: (lose RM100 + win RM75) / 2 trades. Betting red or black on the roulette table is a better deal (through you will still lose on average), as the payout is 100% and the chance that you win is 18/38= 47% (due to the occurrence of the 0 and 00).

As you have to accept the 75% payout, it means you would need to be right in 57% of your gambles, instead of 50%, in order to break even. In order to win money, you need to be right even more often! This is because 57% x RM 75 (you win) – 43% x RM 100 (you lose) equals zero Ringgit. 

But there is no knowledge that can help you to improve your win rate to 57%. After multiple gambles, you will always gravitate toward the 50% average and lose money.

It is easy to see how all the human weaknesses – greed, jealousy, overconfidence in your own trading ability and knowledge plus the underestimation of risk – come into play when you see the unwanted ads for binary options pop up on your screen. 

They scream at you: “no knowledge required!”, “Make money from your own home”, “Start earning thousands of ringgits in a few hours”. Then, the fake testimonies from paid actors start to play. It’s the latest ‘get rich quick’ scheme. It’s too good to be true, literally.

You don’t need to be Einstein to realise this is a scam. If it would work as advertised, everybody would do it. Regrettably, it is always the financially illiterate people that end up being the victim and become even poorer as a result, while the brokers are the only ones who profit.

No serious investor, such as Warren Buffet, would ever consider binary options. No financial investor worth his or her salt would advise it. 

Short term stock movements are “noise” that can only be filtered out by holding a stock for an extended period of time – not even months, but years. 

As Warren Buffet said in his Chairman letter of 1988: “Our favorite holding period is forever.”

FELDA Global Ventures

PROFILE

Felda Global Ventures Holdings Berhad, an investment holding company, is primarily engaged in agri-business worldwide. The company's Plantation segment cultivates, harvests, produces, and processes fresh fruit bunches; and sells crude palm oil (CPO) and palm kernel (PK). Its Downstream segment refines CPO; fractionates refined bleached deodorized palm oil and palm olein; crushes PK; processes and sells biodiesel products; and produces oleo chemicals, such as fatty acid and glycerin, as well as produces consumer end products. The company's Sugar segment refines sugar; and markets refined sugar and molasses. Its Manufacturing, Logistics & Others segment provides bulking and transportation facilities and services, engineering, information technology, security, and travel services; and sells planting materials. This segment is also engaged in the production and processing of rubber and fertilizers; and research and development activities. The company is also involved in the operation of residential real estate properties; provision of shared, lorry transportation, and treasury services; processing canola seed and soybean and its related by-products; operation, management, and maintenance of a railroad service; production of rubber cup-lumps; commodity trading; management of plantation estates and other biological assets; and processing of latex concrete. In addition, it produces, manufactures, markets, sells, and trades carbon nanotubes and grapheme; acts as general insurance agency, and travel and tour agent; produces and sells cocoa, rat poison, and fertilizers, as well as provides agricultural research services; provides computer services and sells computer software and equipment; sells industrial equipment; offers security and jetty services; manufactures biomass fuel; and provides storing, handling, and transportation services, as well as offers bulking installation services. The company was incorporated in 2007 and is headquartered in Kuala Lumpur, Malaysia.

http://www.sarawakreport.org/2016/03/felda-global-ventures-floundering-more-looting-of-malaysias-public-funds/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+SarawakReport+%28Sarawak+Report%29

The link above for this company will alert the investors of the risk it faces due to some extraordinary issues.

Big Bear coming our way?

The bull has been around for a very long time (since 2009) and it is already 6 years.
Several so-called experts in the market think that the big bear has arrived.
According to Dennis Gartmen, Dow will be correcting 10 to 15% and the bear will stay healthy for 6 months to 1 year.

Investment ; Bye-bye 2015 and hello 2016

To many investors 2015 can be regarded as a  very difficult year. Even in a difficult year like 2015 there are investors who are able to grow their wealth investing just in Bursamalaysia. Mr. Koon Yew Yin is one the shrewd and experienced investors able do just that. Below is his ideas on how to approach the local stockmarket to stay on the safe side. Hope that the readers here will find the piece below helpful.

==============================================

How can investors make money in 2016? Koon Yew Yin

Author: Koon Yew Yin   |   Publish date: Sat, 26 Dec 2015, 09:06 AM 

Many people have asked me this question. In the last 2 festive days, many people told me how I have changed their lives through my charity work and my writing on Malaysian politics and share investment.

One commentator of my recent article said that 99% of the readers like my writing and only 1% do not like. As a writer, I expect some critics and I expect them to do it in a polite manner and not like illiterates or idiots.    

Here are some of holdings which still comply with my share selection golden rule even after their prices have gone up quite rapidly.  My golden rule is that I must be sure that the company can make more profit this year than last year and the projected P/E ratio is not more than 10.

I advise you to check all the shares you are holding to see that they can comply with my golden rule. Otherwise, you must cut loss and utilize the proceeds to buy better shares.  

Can One: It is the largest tin cans and jerry cans manufacturer. It started more than 40 years ago and continues to improve its operation. It bought 146.1 million or 32.9% of Kian Joo shares at Rm 1.65 per share in 2012. The current price of Kian Joo is about Rm 3.30 per share. EPF is one of the 2 parties who have made an offer to buy up Kian Joo. Can One is waiting patiently.

Its 3 quarter EPS ending Sept 2015 was 39 sen and I can safely project its full year EPS to be about 55 because some of its products are sold in US$. Its last closing price was Rm 4.50. It will announce its full year result before end of February 2016.

Chin Well: It is among the largest manufacturers of screws, nuts and bolts in the world. 76% of its products are exported in foreign currencies. After it has acquired the 40% shares from its Vietnamese partners, its latest quarter EPS jumped to 6.07 sen from 4.41 sen. Its last closing price was Rm 1.92 per share.

Thong Guan: It is one of the largest plastic stretch film and bags, raffia stings, drinking straws and paper serviette manufacturers in the Asians region. It started business in 1942.

Its 1^st, 2^nd and 3^rd quarter EPS are 4.4, 6.75 and 10.7 sen respectively. It about 2 months it will have to announce its 4^th quarter result. In view of the depressed fossil fuel price, its raw plastic materiel is getting cheaper.  What will be its share price when its annual result is announced before end of Feb 2016?     

I am also holding VS, Latitude, Lii Hen, Focus Lumber and Ge Shen because they still comply with my golden rule although their share prices have gone up quite rapidly. 

I am not asking you to buy any of the shares I mentioned above. But if you buy, you are doing it at your own risk.

Above is re-posted from the link below:-

http://klse.i3investor.com/blogs/koonyewyinblog/

5 Must-Have Metrics For Value Investors

To cultivate lifelong learning is just a habit. We read and learn from the work of others, Today I read the article written by Jonas Elmerraji and would like to share with all the value investors out there.

By Jonas Elmerraji

If you're a value investor, there's no "right way" to analyze a stock. Even so, any successful investor will tell you that focusing on certain fundamental metrics is the path to cashing in gains. That's why you need to keep your eye on the metrics that matter.

As a value investor, you already know that when it comes to a company's health, the fundamentals are king. Fundamentals, which include a company's financial and operational data, are preferred by some of the most successful investors in history, including the likes of George Soros and Warren Buffett. That's no surprise, as knowing the ins and outs of a company's financial numbers - like earnings per share and sales growth - can help an in-the-know investor weed out the stocks that are trading for less than they're worth.

ADVERTISING

But that doesn't mean that all metrics are created equal – some deserve more of your attention than others. Here's a look at the five must-have fundamentals for your value portfolio.

1. Price-to-Earnings RatioWhile the price-to-earnings ratio (also known as the P/E ratio or earnings multiple) is likely one of the best-known fundamental ratios, it's also one of the most valuable. The P/E ratio divides a stock's share price by its earnings per share to come up with a value that represents how much investors are willing to shell out for each dollar of a company's earnings.

The P/E ratio is important because it provides a measuring stick to compare valuations across companies. A stock with a lower P/E ratio costs less per share for the same level of financial performance than one with a higher P/E. What that essentially means is that low P/E is the way to go.

But one place where the P/E ratio isn't as valuable is when you're comparing companies across different industries. While it's completely reasonable to see a telecom stock with a P/E in the low teens, a P/E closer to 40 isn't out of the line for a high-tech stock. As long as you're comparing apples to apples, though, the P/E ratio can give you an excellent glimpse at a stock's valuation. (Learn more about the P/E ratio in our Investment Valuation Ratios Tutorial.)

2. Price-to-Book RatioIf the P/E ratio is a good indicator of what investors are paying for each dollar of a company's earnings, the price-to-book ratio (or P/B ratio) is an equally good indication of what investors are willing to shell out for each dollar of a company's assets. The P/B ratio divides a stock's share price by its net assets, less any intangibles such as goodwill.

Taking out intangibles is an important element of the price-to-book ratio. It means that the P/B ratio indicates what investors are paying for real-world tangible assets, not the harder-to-value intangibles. As such, the P/B is a relatively conservative metric.

That's not to say that the P/B ratio isn't without its limitations; for companies that have significant intangibles, the price-to-book ratio can be misleadingly high. For most stocks, however, shooting for a P/B of 1.5 or less is a good path to solid value. (See Digging Into Book Value to learn how book value per share is normally calculated.)

3. Debt-Equity

Knowing how a company finances its assets is essential for any investor – especially if you're on the prowl for the next big value stock. That's where the debt/equity ratio comes in. As with the P/E ratio, this ratio, which indicates what proportion of financing a company has received from debt (like loans or bonds) and equity (like the issuance of shares of stock), can vary from industry to industry.

Beware of above-industry debt/equity numbers, especially when an industry is facing tough times – it could be one of your first signs that a company is getting over its head in debt.

4. Free Cash FlowWhile many investors don't actually know it, a company's earnings almost never equal the amount of cash it brings in. That's because companies report their financials using GAAP or IFRS accounting principles, not the balance of the corporate checking account. So while a company could be reporting a huge profit for its latest quarter, the corporate coffers could be bare.

Free cash flow solves this problem. It tells an investor how much actual cash a company is left with after any capital investments. Generally speaking, it's a good idea to shoot for positive free cash flow. As with the debt-equity ratio, this metric is all the more significant when times are tough. (Watch out for accounting trickery when looking at free cash flow, see Free Cash Flow: Free, But Not Always Easy to learn more)

5. PEG RatioThe price/earnings to growth ratio (or PEG Ratio), is a modified version of the P/E ratio that also takes earnings growth into account. Looking for stocks based on their PEG ratios can be a good way to find companies that are undervalued but growing, and could gain attention in upcoming quarters. Like the P/E ratio, this metric varies from industry to industry. (For further reading, check out Move Over P/E, Make Way For The PEG.)

Going Beyond the NumbersWhen it comes to investing, the numbers aren't everything. There are times when low valuations are justified, and there are qualitative metrics – like management quality – that also factor into a company's valuation. Just because a stock seems cheap doesn't mean that it deserves to increase in value.

Ultimately, the only way to improve your fundamental analysis skills is to put them into practice. With these five must-have fundamentals under your belt, you're well on your way to finding the most undervalued stocks on the market.

Maybulk

The Baltic Dry Index and what it is telling us is sobering

From an historical perspective, shipping has often been considered one of the most accurate means of measuring present day and future global trade. The most commonly used measure of seaborne (non-liquid) international trade is the Baltic Dry index. What it telling us is sobering. Over the past 12-month period, the Baltic Dry (BDI) is off nearly 40%. From the yearly high to yesterday’s close, the drop off in trade, as measured by the BDI, is even more dramatic. On November 11 of 2014 the BDI closed at 1464.00. Yesterday the BDI closed at 587. The drop has been 59.9%. The Baltic Dry Index is a figure issued daily by the London-based Baltic Exchange. It takes all 23 major global shipping routes into account. A large majority of what is considered dry bulk are raw materials. The building blocks of economic growth; from coal to grains and iron-ore. The BDI is telling us that global economic growth is nearly non-existent. Slowing growth in China, anemic growth in the Euro-zone, Latin America, Japan and an unconvincing economic landscape here at home are all reflected in the BDI’s weak performance. Simply put, there is very little global demand for dry goods as measured by the BDI. That may change. For the time being however, the data we have been receiving that speaks to tepid Q1 growth here at home and sub-target economic activity globally have confirmation in the global trade data represented by the Baltic Dry index. A secondary theme that can be gleaned from the BDI price action this year is that those economies that are export dependent will have to aggressively engage in devaluing their currencies in order to gain a competitive pricing advantage in a world of weak demand. A stronger dollar is the last thing our fragile expansion needs. The counter in Bursamalaysia that is very much affected by the weakness in Baltic Dry Index is Maybulk.

The price of Maybulk is trending down for more that a year. There are two temporary buy signs (indicated by the green arrows) followed by a sell sign (indicated by the red arrow). Since there it is still below the 200day movinf average there is no sign of this counter making a reversal. Can stay out but do monitor it regularly in terms of Baltic Dry Index (DBI). I believe that the weakness of DBI is mainly due to overcapacity worldwide. This overcapacity will eventually kill off some of the less efficient operators leaving behind the more efficient and better managed companies like Maybulk. Hopefully, in some point of time Maybulk will shine again but for now it is better to saty clear of this counter and the right thing to do is just to keep monitoring the DBI and sign of price turnaround.

Correction at BursaMalaysia imminent?

With S & P 500 closing at 2,110.30 ; Dow at 18,140.44 and Nasdaq at 4,955.97 which are all near record highs many stock gurus out there are looking into their crystal balls hoping to see when the major correction is going to happen. Some say it is imminent but few say that S&P 500 still has a leg to go higher.
I am not certain who is correct but I am very certain that eventually a correction has to come.
This current super bull started sometime around March 2009. The current bull is already 6 years old and if history is to repeat itself very soon a new bear will be borne to rule supreme at least for a year or two.

As for FBMKLCI the current bull started at around 800 points and reached a high of around 1895 somewhere around July 2014. It has corrected to around 1674 in December 2014. The big question is whether this correction is good enough or more bad days a ahead. No one knows.

A good strategy maybe is to sell into strength (if any) and hold more cash so that in the event the bear comes we can do some cherry picking.

Warren Buffett's 9 rules for running a business

Warren Buffett is legendary as an investor, but he's also an incredibly successful businessperson, too—a fact that sometimes gets lost in the millions of words that have been written about his advice on how to buy a stock.

That advice can be summarized with a just a few words. Appearing on the CNBC-produced syndicated program "On the Money" last month,Buffett said, "If you own your stocks as an investment—just like you'd own an apartment, house or a farm—look at them as a business."

Using that viewpoint, you shouldn't buy a stock simply because you think it will go up in price sometime soon. Instead, you should buy a piece of a business that you think will generate profits for a long time to come.

That long-term perspective is also at the core of the business advice that Buffett has provided over the years.

Here are some examples from his annual letters to Berkshire Hathawayshareholders.

1. Keep calm in the face of volatility. Buffett writes that earnings gyrations "don't bother us in the least." After all, "Charlie and I would much rather earn a lumpy 15 percent over time than a smooth 12 percent."

2. Keep good company. Berkshire has never split its Class A shares. As a result, one share currently costs almost $214,000. That discouraged people from rapidly moving into and out of the stock, and that's exactly the way Buffett likes it. He wants shareholders who share his long-term view. All the way back in 1979, he wrote, "In large part, companies obtain the shareholder constituency that they seek and deserve. If they focus their thinking and communications on short-term results or short-term stock market consequences, they will, in large part, attract shareholders who focus on the same factors."

3. Keep your focus. In that same letter, Buffett warns that even a great company can see its "value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander." The result: a "sidetracked" leadership that "neglects its wonderful base business while purchasing other businesses that are so-so or worse." In this area, Buffett argues that "inactivity strikes us as intelligent behavior." In 1982, a year that saw a number of corporate deals, Buffett thought that in many of them, "managerial intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the pursuers to the consequences of the catch."

4. Keep costs low. In his 1996 letter, Buffett wrote that being a "low-cost operator" is directly responsible for the success of Berkshire's GEICO auto insurance subsidiary. "Low costs permit low prices, and low prices attract and retain good policyholders." And when those customers recommend GEICO to their friends, the company gets an "enormous savings in acquisition expenses, and that makes our costs still lower."

5. Keep employee incentives simple. Buffett doesn't like what he calls "lottery ticket" arrangements, such as stock options, in which the ultimate value could range from "zero to huge" and is "totally out of the control of the person whose behavior we would like to affect." Instead, goals should be "tailored to the economics" of the business, simple and measurable, and "directly related to the daily activities of plan participants."

6. Keep out of trouble. Buffett tries to "reverse engineer" the future at Berkshire. "If we can't tolerate a possible consequence, remote though it may be, we steer clear of planting its seeds." (Buffett notes that his partner Charlie Munger often says, "All I want to know is where I'm going to die so I'll never go there.")

7. Keep your undervalued stock to yourself. Buffett is especially critical of a company using its stock to make a purchase when that stock isn't being fully valued by the market. "Under such circumstances, a marvelous business purchased at a fair sales price becomes a terrible buy. For gold valued as gold cannot be purchased intelligently through the utilitization of gold—or even silver—valued as lead."

8. Keep it small. In 2006, Buffett wrote that he's skeptical "about the ability of big entities of any type to function well." In his opinion, "size seems to make many organizations slow-thinking, resistant to change and smug." That's one reason Berkshire's corporate headquarters still has only a handful of employees, with almost all the managing work left to its unit's managers. "It is a real pleasure to work with managers who enjoy coming to work each morning and, once there, instinctively and unerringly think like owners."

9. Keep your reputation. In Buffett's mind, perhaps the most important piece of advice for businesses, and for everyone else, is to maintain a sterling reputation for honesty by never doing something you wouldn't want to see reported on the front page of your local newspaper. After taking control of Salomon in the wake of a major 1991 scandal at the financial firm, he famously told a Congressional panel that he had a simple message for employees: "Lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless."

As he put it in one of his most-often quoted sayings: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."