Important lessons to understand the stock market

Emotions can adversely influence our investment decisions and lead to irrational behaviour, according to a new study by Franklin Templeton Investments.
Many a time, one's emotional response is so instantaneous that one is unaware it is even occurring. And experts say a small little part of our brain called the amygdala may play a key role in our bad decisions.
It functions as the brain's early warning system, sending out messages of fear and anxiety to raise the alert of imminent trouble. This may cause us to regard negativity and pessimism as accurate.Understanding our emotional state and putting plans in place before emotions take over can help prevent poor investment decisions. The Franklin Templeton Investments report found five common mistakes made by investors, which can be easily avoided:

Loss aversion

This refers to the deep pain investors feel upon taking a loss and the lengths to which they will go to avoid that pain.
A study by psychologists Daniel Kahneman and Amos Tversky found that between a certain loss of US$3,000 (S$3,675), and an 80 per cent chance of losing US$4,000 and 20 per cent chance of losing nothing, more than 90 per cent of investors polled picked the latter, even though statistically it was the riskier proposition.
Since the global financial crisis- led market meltdown in 2008, many investors have been reluctant to buy equities out of loss aversion. They have preferred to remain in low-yielding vehicles that may deliver a negative real return after inflation.

Holding on to the past

Stock markets reflect the tendency of investors to anchor expectations to a given price. For example, a stock will typically trade for a while within a given range, then trend up or down to a new anchor level and trade within that new range.
Investors adjust expectations to the altered price, which is why overly sharp gains or losses provoke discomfort.
The sensitivity shown to price changes may be largely the result of memory for prices paid in the past, and not at all a reflection of true preferences or level of demand.

Following the crowd

A modern example of how the herd mentality can go seriously wrong is the dot.com phenomenon of 2000.
While the significance of the Internet was real and enduring, many of the companies into which investors poured their money were neither.
So, following the crowd can be a precursor to market bubbles, as what begins as a natural inclination to join in the growth path of a company can end in losses as the euphoria of explosive price increases causes investors to lose their sense of judgment.

Availability bias

Rather than analysing all the relevant information, investors tend to rely on whatever data is most recent or emotionally charged.
This can cause them to overreact to market conditions, whether positive or negative, or invest in a stock simply because it has been heavily covered by the media.

Mental accounting

Many investors practise mental accounting when they lock in certain assets for retirement, maintaining somewhat greater liquidity for controlled wealth accumulation, or allocating a smaller sum for high risk-high reward investments.
However, this compartmentalising means investors may also take unwarranted risks with their own money, or may be overly cautious with an inheritance.

The STAR most probably will shine again.

This counter Star (stock code 6084) is currently very weak. Will it shine again? Chances are good a profit will be made if we were to buy at RM 2.60 level.( My personal opinion only)

§  From a 3-month high of RM3.26 (19 sep), STAR tumbled 21% to a low of RM2.58 (24 Dec).

§  Values are likely to resurface after recent plunge and we see limited scope for further significant selldown due to its extremely oversold positions (daily RSI at 6.6 and slow stochastic at 1.8), defensiveness, strong netcash of RM230m as at 3Q12 (or 31sen/share) and attractive net dividends (6.9%). Valuation remains undemanding at 10.7x FTY13 P/E, implying a 11.5% discount to its 5-year average of 12.1x.

§  Immediate supports are RM2.54 (daily lower Bollinger band) and RM2.46 (23.6% FR). Lower supports are RM2.30-2.35. Risk takers may start to nibble as a relief rally in the pipeline with initial upside targets at RM2.72 (100-d SMA) and RM2.83 (20-d SMA). More formidable resistances are RM2.90 (50% FR) and RM3.05 (61.8% FR). Cut loss below RM2.43.

As Warren Buffett once said, be brave when you see blood in the street. There is no blood in the street yet but this particular counter (Star) has blood all over its price. So maybe it is good to buy some at around RM2.60 and sell when there is resonable profit to be made. 

Genting Malaysia ... Update

 

This is just an update on Genting Malaysia (4715) since my last posting on 13 August 2012, and it seems that it is on track and about to enter very crucial stage.

There is a strong upthick on the last trading day Thursday ( 30th August 2012) before the market close for the National Day holiday. 

The price of Genting Malaysia is about to enter the ichimoku cloud hanging above. Once it penetrates the cloud it will face a resistance at around RM3.60. Those in the trading of shares may consider selling off at this level if he/she has bought it at around RM3.30 level as suggested in my previous posting. If this RM3.60 level is penetrated with volume then it will face a very strong resisitance at RM4.06 as indicated by the horizontal line in the chart. If one is investing in this counter, maybe it is good to hold it a while longer as it is now cum dividend of 3.8 sen less 25% tax and will only be traded ex on 22nd October 2012 which is still quite far away.

I have observed many counters listed in Bursamalaysia currently are having lack luster performance. Can this be an opportunity to bargain hunt? Well, the average PE of the market is actually not cheap right now, so it may not be wise to do serious investment by accumulating for a very long term of 3 to 5 years time frame. 13th General Election is around the corner and this GE13 is very fluid, which will definitely add one uncertainty factor to make many investors worrisome. Having said that, I will think that trading will be a better option now for us to try to make some money. I think Genting Malaysia is one of the many potential counters to buy and try to make some money right now.

   The chart above is taken from Chartnexus for Genting Malaysia. This counter has been on the downtrend since peaking at RM4.05 on 2nd February 2012. Now if you pay attention and look at it carefully it may be just coming out of the bottom at around RM3.30 (at least temporarily)
The following can be observed:-

1. The double bottom at RM3.30 serves a strong support. If this support is violated it may go lower. But it looks unlikely at least for now.

2. Parabolic SAR has given out a bullish sign or what is commonly called a reversal of trend.

3. RSI has gone below 30 and is now cutting abow 30, which is also a reversal signal.

4. MACD is showing a golden cross of blue line (faster line) cutting above the red line (slower line)

5. Similarly, stochastic is also turning up which is a bullish sign.

The horizontal lines I inserted in the chart are roughly the resistance on the way up (if any).
1st resistance is at around RM3.63 and if broken the next resistance will be roughly RM3.79, then RM3.91 and of course the strong resistance ultimately will be the last peak which is RM4.05. And if RM4.05 can be broken with huge volume it may go even higher.

Therefore, it maybe profitable to buy some now and sell higher later for a profit.

** This observation of mine is not to induce you to trade as there is alway risk involved. If you do use my information for whatever purpose the risk is yours. If you  cannot take risk always stay away from stock market **

BJToto.. positive development

BJtoto: It is setting up a trust to house its NFO in Malaysia, in a deal that will deliver a bumper dividend and distribution of free units in the trust. Its proposal is to transfer its entire equity interest in Sports Toto Malaysia Sdn Bhd (STM), which holds the lottery license, to a Singapore based business trust to be known as STM Trust.

The proposal will value BJtoto’s Malaysian NFO business at rm6 billion. The rm6 billion consideration for the transfer will be satisfied chiefly by the issuance of 4.43 billion new units of STM Trust. With the STM units in hand, BJtoto will control about 90.59% in the trust before the IPO in Singapore. The balance consideration of about rm528 million will then be satisfied by way of a promissory note in favor of BJtoto.

After the asset transfer, BJtoto will seek to list up to 4.89 billion units of STM Trust on the Main Board of SGX. This is possibly the first trust that is based on NFO assets to list in Singapore.

BJtoto is expected to pocket rm668 million cash from the sale of 540 million units in the listing exercise, based on an offer price of S$0.50 each. The amount could be bigger should the IPO fetch a higher valuation in Singapore.

Under the proposal, BJtoto said it might also consider distributing all or substantial portion of STM Trust to its existing shareholders. In addition it will propose to distribute the net proceeds from the asset restructuring exercise as a special dividend.

Market Commentaries & Technical Analysis as at 21 May 2012

State Of Global Economic Cycle (May 2012)

Recession – Recovery – Growth/Expansion – Boom – Burst

Investment Strategy (May 2012): Defensive Neutral Aggressive (Domestic News-Flow From May 2012 onwards and Election Theme Play Amid Uncertainties Ahead – Europe’s Sovereign Debt Crisis, High Oil Prices & Inflationary Pressure, Slow US Growth Momentum While China Grapples With Inflationary Pressures and Slow Growth – Have Given Rise To Fears That Global Economy May Stall.

Sectors/Theme To Focus On (21 May – 25 May 2012): News Flow Related and Political Linked Companies.

Stock Market Leading Performance Indicator (21 May 2012 – 25 May 2012)

4 (0-3-Bearish 4-6-Neutral 7-10-Bullish)

The Risks

1.      The Global Economic Recovery Is Precarious (Vulnerable To The Risk Of More Financial Shocks);

2.      Divergent Growth Path of The Two Regions - A Slowdown In Advanced Economies And The Robust Growth In Emerging Markets – Is Posing A Dilemma For Macroeconomic Policymakers In Asia;

3.      Threats Of Asset Bubbles In Asia (Huge Foreign Capital Inflow Of Liquidity);

4.      Volatile Foreign Exchange Market (Currency War) – Competitive Devaluations & US Dollar/Yen Carry Trade (Destabilizing The Global Financial System & Trading Relationships);

5.      Rising Commodities Prices & Threats Of Commodity Inflation;

6.      Inflation Threat In Emerging Ex-Japan Economies;

7.      Fear Of Double-Dip Recession In The US & Eurozone Economies;

8.      Deflation & Stagflation Threat In Developed Economies;

9.      Fear Of A US Dollar Crisis;

10.  Unwinding Of US Dollar/Yen Carry Trade When US Starts To Normalise Rates (Destabilizing The Global Financial System & The Global Economy);

11.  Global Imbalances, Threat Of Trade & Currency War and Protectionism (Destabilizing The Global Economy);

12.  Contagion Effects Of Eurozone Debts Crisis on Other European Sovereign Debt;

13.  US & Europe Debt Crisis: Further Downgrade Of Credit Rating By Rating Agencies

Black Swan Events Or (Unpredictable) Risks/Surprises

1.      Terrorist Attack -

2.      Oil Supply Disruptions -

3.      A Pandemic Disease -

4.      Geomagnetic Storms -

5.      Major Social And Geopolitical Upheaval

6.      Financial Shock – Eurozone Debt Crisis & Disintegrwtion Of EU Bloc Countries

Market Commentaries

It is external factors now (May 2012) driving the market down. Compared to our regional peers, the FBM KLCI has been holding well until recently. So this drop is actually expected, just that Malaysia has a delayed reaction.

Shares on Bursa Malaysia are likely to dip further amid persistent worries over the global economy. Also expect more local bearishness on the weakening ringgit and commodities.

However ample local liquidity and positive local themes such as the upcoming mega flotation exercises like Felda Global Ventures Bhd and impending project news flow such as RM15 billion North Malay Basin will cushion market decline in the near term.

Greece is set to hold fresh elections on June 17, 2012 after voters rejected austerity measures imposed on it by the EU and the IMF, stirring fears that the country would not stick to the austerity measures earlier agreed upon with the European Central Bank and the IMF. The country has put in place a caretaker government but concerns that it will exit the eurozone. Opinion polls show that anti-bailout parties will perform strongly in a new vote next month.

The 13^th GE is another dampener on the Malaysian stocks and does not think the market has priced in (May 2012) a negative outcome for the ruling coalition BN.

Meanwhile the easing of interest rates trend will continue in 2012. In an environment of slowing global growth and easing inflationary pressure, emerging markets tend to revert their attention to stimulating economic growth. Governments will also need to formulate appropriate policies to generate employment and address income inequality.

In this slightly uncertain environment, expects Malaysia to under perform even as macroeconomic risks diminish. Thus, the Malaysian stock market may lag its regional peers due to perceived heightened political risks from the imminent general election.

The bearish sentiment was also attributed to growing fears over the eurozone breakup, following the new European politics with anti-austerity parties forming post-election governments.

In US equities market, normally a big decline would set up Wall Street for a technical rebound. But that may not be the case this coming week, even after the market posted its worst weekly loss for the year and the S&P fell for six straight sessions.

With the corporate earnings season drawing to an end and recent U.S. economic data raising doubts about the pace of growth, the S&P 500, which is down 7.3 percent so far in till 18 May 2012, could decline further coming week as concerns about the financial health of Europe persist.

Weighing on sentiment is a growing sense among investors that the euro zone debt crisis is nearing new heights, fueled by fears of the potential for a Greek euro exit and the deteriorating health of the Spanish banking system.

Solid corporate earnings and upbeat U.S. economic indicators had fueled the rally in U.S. stocks, offsetting jitters over Europe. But with earnings almost out of the way and data starting to disappoint, investors have shifted their focus back to headlines out of Europe.

Chartist said that the market is extremely oversold now (18 May 2012). Nonetheless, all major indicators of US market remain on sell signals.

The market remains uncertain on concern that Europe's debt crisis was deepening with the European Central Bank's (ECB) decision to halt lending to Greece banks and Spain following Moody's ratings downgrade of 16 Spanish banks.

With Greece set to run out of money as early as June 2012 and no new government in place to negotiate the next aid installment, investors have begun betting that a chaotic Greek default and euro exit will happen sooner rather than later.

Investors remained fearful that a Greek exit from the euro will increase contagion across the continent's financial system.

However Global central banks stand ready to launch a monetary stimulus package if conditions warrant it as well as further intervention by the ECB to calm markets. Any news by the ECB to engage in direct and large-scale quantitative easing to stem the euro crisis is likely to push the market higher.

Already the ECB had warned Greece that it will not receive any more financial aid if ot does not stick to the agreed bailout deal. The ECB had also gave no indication of intervening in the bond market again any time soon, but it said it was still too early to withdraw the bank’s emergency support measures. The ECB has hardly use of its bond purchase programme since Nov 2011.

Europe remains a key risk factor in influencing global trade amid the danger of a deeper-than-expected recession and the spillover effects to the rest of the world.

European politics will also be ontinued to command the spotlight with more elections looming in several countries. This would result in new leadership changes just as the European continent continue to struggle to resolve the sovereign debt crisis.

Germany’s next federal election is expected to take place between Sept 2013 and Oct 2013. A decline in the eurozone’s fortunes would not augur well for US president Barack Obama’s administration either given the impact it could have on the US economy and US banks holding European debt papers. Obama who is also up for re election for a second and final term as president come Nov 2012, could also win points if his administration helps create more jobs.

The question is how the eurozone debt crisis is going to be and how this would impact Asia especially when the US economy still faces an uncertain recovery.

For US the April 2012 employment report came in weaker than expected, showing that only 115,000 jobs were created during the month. Investors are worried about a repeat of the last two years (2010 – 2011) when stocks peaked in the spring.

The unemployment rate ticked down to 8.1%, but that was because prospective workers dropped out of the job hunt, not because meaningful job growth put people back to work. The April 2012 report marks the third consecutive month of declining job growth. The sad reality is that the jobs market is in for a longer recovery, because the cycle of getting more people employed will be pushed out further until the United States can reach the ideal level of structural unemployment.

And it has more to do with the Fed and the notion that things get bad and Bernanke has said the Fed will be more accommodative. The Fed may come in with the June 2012 meeting maybe and offer the market more accommodation.

Meanwhile investors have been pouting over a U.S. economy that is “not hot enough for a sustained recovery and not cold enough to prompt Bernanke to institute a [third round of quantitative easing].

Amidst the climate of economic uncertainty, there is hope that Asia's emerging markets would escape the worst of the fallout from the troubles affecting Europe and perhaps even the choppy US economic recovery despite recent data showing some improvement.

The hope is that domestic demand driven by a combination of private consumption and fiscal pump-priming by governments would help avert a bumpier ride this year or until the pressures emanating from the end-markets in the developed economies ease off.

Technical Analysis

Bursa Malaysias consolidation process changed for the worse the past week, as external uncertainty came back to haunt investors. In the wake of liquidation, the FBM KLCI dived to a low of 1,526.60 during intra-day session last Friday, resulting in all the gains posted year-to-date being wiped out.

Meanwhile, the selloff had dragged the key index below the 100-day simple moving average (SMA), the first time since mid-December 2011, and also brought about the third dead cross on the chart.

Combined with the growing signs of instability among Spanish banks, the political turmoil in Greece, heightening concerns about a slowdown in China and the latest weak US data adding to the list of risk factors and denting sentiment, it really does not bode well for the market in the immediate term.

Going forward, the 200-day SMA of 1,510 is in great danger. A slip below the 1,500-point psychological level would further damage the mid-term landscape of the local bourse.

Lower support floors are anticipated at 1,480 points, followed by the 1,448 to 1,450-point band and the next, at 1,420-1,424 points range.

Technically, most of the indicators are frail, implying range-bound pattern at best. This may also mean that any rebound is likely to be short-lived, at least for now.

Initial resistance is seen at 1,560 points. The next upper hurdle is resting at the 1,591-point level.

 

Sell in May and go away

Last year, the S&P 500 peaked on May 2 at 1,370.58.

By early August, it had dropped nearly 20% and was testing support at 1,100...

It took the S&P until last February 2012 to get back to that 1,370 peak.

In 2010, the S&P 500 hit an intra-day high of 1,219.80 on April 26.

By early July, the index hit an intra-day low of 1,010.91. That was a 17% decline — and it took until November for stocks to regain their April highs.

Yes, since the stock market bottomed on March 9, 2009, the simple “sell in May” strategy has been pretty darned effective.

Semiconductor sector remains lackluster

Cautiously Optimistic

§  Worldwide sales remain lackluster: recorded seventh consecutive yoy growth contraction with -8.8% reaching USD23.18bn (3 months moving averages) in January 2012.

§  Slightly optimistic outlook: WSTS foresees the market to grow only at 2.6% and 5.8% in 2012 and 2013 respectively, vis-à-vis to the double-digit growth experienced in 2007 and 2009.

§  Highly correlated: MPI and Unisem’s 2012 and 2013 revenue growth will be dictated by the underlying worldwide semiconductor growth trend.

§  Electronics demand: subdued demand in IT/PC markets due to depressed consumer confident as the result of European debt crisis will be offset by better outlook in both telecommunication and automotive industries.

§  Telco market: main catalyst to the recovery of the industry as cellcos leapfrog into 4G/LTE standard and proliferation of smartphones (especially low-cost models) and tablets.

§  Auto market: Higher production of hybrid and electric cars will spur the industry as more IC components are required.

§  We believe that Moore’s Law will continue to spur growth coupled with potential growth in the electronics market. Hence, we expect Malaysian semiconductor packagers to experience moderate growth in 2012.

§  However, the growth would be dwarfed by intense competition from Taiwanese peers, higher input costs and appreciation of MYR against USD along with challenging economic outlook which will eventually hampers consumer confident.

§  While the sector is not expected to revisit the glory days of double-digit growth as in 2007 and 2009, we initiate coverage on the sector with a Neutral rating:

MPI (Hold; TP: RM3.57)

Unisem (Hold; TP: RM1.48)

By HLIB Research 28 March 2012

Harrison in trouble?

Long term trend is up

There was a spike down on 22/2/2012. This is caused by the litigation matter with regards to the letter of demand dated 15 February 2012 from Kastam DiRaja Malaysia demanding payment of the sum of RM91,750,418.99. Harrison is seeking legal advice on the demand and will make a further announcement on this matter after obtaining legal advice. At this point of time, there is no way to tell how this issue is played out but the damage to the price is already done. 

Ok, the outcome of the litigation is still very far off and no one , even the directors, will be able to say much except to express confidence that the judgement will be to the favour of the Company. As such I would like to leave this issue aside for the time being and let me look at both the technical and fundamental aspects of this counter.

Technically, Harrison is at the crucial crossroad. Since it is rising on the long term uptrend and yesterday's spike down caused it to sit on the long term support, two things can happen. If this support stays as support (meaning that it is not violated) the uptrend will continue. However, if the price were to go significantly below the long term support (be prepared to be wipsawed) then the reversal of trend has taken root and down trend has begun. 

Fundamentally, Harrison may be able to support the uptrend provided the Company is able to fight off the litigation. I made this qualifying statement because the fundamentals which I provide below is without the litigation.

For the year ending  31.12.2010, eps is 54.37 sen per share and for YE 2011 (first 3 quarters) eps is 37.38 sen. If say the 4th quarter eps is 12 sen the the full year eps for YE 2011 will be 49.38 sen. Announcement for the 4th quarter is due before 29 April 2012.  As such the price before the spike down (closing price
before the spike down is RM3.70) looks like fairly valued. 
Dividend has been paid without a break since 2003. For the YE 2011 it has paid a special dividend 50 sen less 25% tax on 13.10.2011.


Conclusion:- It is now at a very crucial crossroad and deserve the attention of investors.Technically it is uncertain and fundamentally it is Ok without the latest demand from Kastam DiRaja Malaysia.

.

How to beat the market and become a super investor - Koon Yew Yin

Risks in doing business:
It is important to stress that all businesses involve risk; hence the selection of shares is also a risky business.  This is not the same order of risk as may be involved in going to the casino or betting on the four digits which in 90-99 % or even more of the cases, results in the patron losing his money, if not his pants.
Picking winning stocks means that we pick the companies that can meet the constant challenges of competition, supply and demand, change of fashion and style design, obsolete stocks write off, etc. There are also unforeseen factors such as variation in interest rates, import and export restriction, foreign exchange variation, change in Government regulations, etc. Inclement weather such as flooding affects production as we have seen in Bangkok so that even the most well run of companies such as Toyata and Honda cannot escape it.
Best form of investment
In my view, stocks are the best form of investment.  They are tax free, have no management problem, and you can reduce or liquidate all your holdings at any time. There is a classical saying in the market - “You can buy the winning horse after the race”. This means that you can still buy a good share after the company has announced its profit.    This does not mean that stocks are entirely risk-free
Fundamentals of Stock Selection
The basic fundamentals for share selection are P/E ratio, NTA, Revenue, cash flow etc. How important are these factors?
The most important criterion is profit growth prospect. Never buy any share if the company cannot make increasing profits. You must buy shares that Fund managers are interested. They are the movers and shakers. Do not buy too much of illiquid shares because it is cheap. It is cheap for some reasons which may keep it at basement prices.
The main reasons why share prices go up include the following:
a. Exceptionally good profit growth prospect
b. Fund managers must be interested, liquidity, publicity etc.
c. Dividends are an important catalyst for moving share prices up
d. Unexpected good news of profit, bonus issues etc. will push up share prices.
When to Sell
When to sell? Do not worry about the daily share price fluctuation if you have a target price. Quite often the share you hold can move up rapidly and continues to go up. You must remember that no share can go up indefinitely for whatever reason. Sell when you are not willing to buy at the price or the reason to buy is no longer valid. Remember you must sell so that you can have funds to buy back during correction. If the fundamentals have not changed, the share price will go up again.
What to Buy
After having seen so many unexpected surprises in the stock market, I consider the safest shares to invest are undervalued oil palm shares. The reasons are:-
a. The production cost for CPO is about Rm 1,300 per ton and the average selling price has been more than double the production cost in the last 10 years or more. The average CPO price for 2011 is more than Rm 3,000 per ton. Which business can offer such big profit margins?
b. The demand and profit are sustainable due to population increase. Moreover, both China and India who are our buyers have been improving their economy. The financial problem in Eurozone and US has little or no effect on our palm oil market.
c. A palm tree will start fruiting after 3 years. It will continue to bear more fruits until it is about 16 years old after that age it will begin to bear less fruits. Only after about 22 years a palm tree needs replanting.
d. The land always appreciates in value.
e. There is good profit growth prospect and sustainable profit
I am obliged to tell you that plantation shares form the major part of my investment portfolio. If you decide to buy, I am not responsible for your profit or your loss.
How to become a super investor?
I started serious investing in public listed shares when I retired from executive work at 50 years old. I was not an accountant nor have I a MBA degree. I was just a civil engineer and I hardly knew how to read a balance sheet at that time.
I started by reading to understand the basic fundamental principles of share selection as practiced by Warren Buffet, Peter Lynch and other great investment gurus. These are the key traits to being a super investor that I picked up.
Trait 1: Be a contrarian investor, that is, the ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China declared that they wanted to take back Hong Kong, the people were selling as if there was no tomorrow because the Communists were coming. The Hang Seng Index plunged to about 700. Currently it is around 18,500.
In such a situation at that time, would you buy Hong Kong shares? I did.
Trait 2:  Obsession in playing the game and wanting to win. Winning investors don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching. They are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.
They are obsessed in enhancing the value of their holdings. I am that way.
Trait 3: The willingness to learn from past mistakes. Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.” But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career.
Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are often ‘a buy’ recommendation. It is very seldom they recommend ‘a sell’ because they would lose the business from the company he has recommended ‘a sell’. You must always take any analyst report with a pinch of salt.
I believe the greatest risk control is common sense which is not so common sometimes.
Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never got into the dot-com mania though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble bust.
Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads.
Trait 7: And finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do. When the market makes a severe correction, most people dare not buy more shares to average down or to put any money into stocks at all when the market is plunging. They would begin to doubt their own judgement.
Wishing you a season of happy and profitable investing!
Koon Yew Yoon is a prominent civil society leader and one of the founders of IJM Corp. He also reads Malaysia Chronicle.

Benalec (RM1.34 - Accumulate): Time to reposition for a breakout above the downtrend line channel

·         Short term technical outlook is on the mend after holding well above the 50-d SMA (now at RM1.31), 50% FR (RM1.30) and lower Bollinger band (RM1.28) support levels, underpinned by improving technical readings of its slow stochastic and MACD while RSI is still consolidating.

·         We expect Benalec to retest the 200-d SMA at RM1.36 and upper Bollinger band near RM1.38 resistances soon. A breakout above RM1.38 will spur prices higher towards downtrend line channel near RM1.42 and RM1.47 (23.6%FR), followed by RM1.59 (77 Jul 11 pivot high). Immediate supports are RM1.28-1.31. Cut loss below RM1.26.
 


       
       

Paramount Corporation

Paramount Corporation Berhad (stock code 1724) is
 listed on the main board of Bursa Malaysia Securities Berhad.

It operates in 3 core areas, namely property development &
investment, construction and educational services.

In June 2011, it has gone through a major corporate exercise as follows:

1. bonus 2 for 5
2. subdivision of RM1  par to 2 x RM0.50 after bonus.

A shareholder owning 100 (RM1 par) shares before the exercise will now own 280 shares (RM0.50 par)

There was good trading interest before the exercise and now after the exercise trading interest has take a back seat. With decreasing trading volume its share price has declined to a level worth taking a closer look both from investment objective and trading plan (if any).

Looking at the chart above I see a downtrend channel and it is hitting the upper line

now (31/10/2011).

Two things may happen. The price may rise above the upper line. If this happen, price will rise further. However, if it fails to go above the upper line it may just head down again. If it goes to the support level of 1.54, I may buy some. Watch the price movement closely after that. Should it go lower then I will buy more when it reaches the lower line of the channel. I will then lock up all the shares up for investment to receive dividend.

Just to share my thoughts for Paramount Corporation today. 
 =====================================================================
I re-look at Paramount today (4th July 2012) and insert the chart captured from Chartnexus..

 I inserted 3 horizontal lines in the chart with a time span of about 2 years. Horizontal line at 1.475 is a very strong support. Horizontal line at 1.76 is the current resistance. Horizontal line at 2.04 is the resistance over this 2 years period. MACD is about to turn down and RSI is at the overbought region. (RSI > 70). Very likely there is at least a temporary weakness for it to consolidate the recent gain before it moves down or up.

Glomac maybe good for a trading buy now.

The chart above is for Glomac on 13 th May 2011 using Chartnexus.
RSI is below 30 and is curling up. Similarly, Stochastic is below 20% and curling up too.
I have inserted the linear regression lines (3 blue parallel lines overlapping the price plots). It shows an uptrend and more importantly the price is now resting on the lower regression line. There is a high probability for the price to move higher from here.
Buyback of Glomac shares is done almost daily since 11th February 2011. This buyback programme provides some support if the price weaken. As at 13th May 2011 it has a total of 2,923,300 treasury shares (0.98% of shares issued). There is mandate for it to buy up to 10% of the issued shares, so there is still  plenty of room for it to buyback more.
Currently,PE is about 13, which is fair, and dividend yield is about 5%.
Maybe can buy at around 1.72 or 1.73 and sell when it goes above 2.
Stop loss is suggested to be 1.63
This is my suggestion only and if you use my suggestion to trade the risk is yours. If you make money you can always buy me coffee.

Petronas Chemical ====> just off the starting block

The chart above is for Petronas Chemical, which is just listed in BursaMalayisa on 26th November 2010.
This counter attracts institutional investors and has so far displayed great resilience when it is traded above the institutional IPO price of RM5.20. The weaker institutional investors would have sold off at least part of their holding and the resilience may be due to the stronger institutional investors still willing to accumulate on weakness. This counter is very liquid as it has eight (8) billion shares issued. coupled with the recent IPO there is ample free floating shares ready to find stronger hands.
From the chart above there is a possibility of a temporary double top at RM6.39 and a support at RM 5.93.
Also to be noted is that it is trading within an uptrend channel. Since it is now near the lower side of the uptrend channel and near to the support of RM5.93 it maybe good and possible to buy at below RM 6 so that a profit can be made if it goes up and away from the lower channel.It may move up to challenge the double top at RM6.39. If it fails to break through RM6.39 then it should be sold, otherwise if RM6.39 is successfully penetrated it can go higher and the wisdom is to let the profit run.

Another possibility is that it may go below the support line. If this happens a stop out will have to be executed say at RM5.80
The above is just my guess.

For those who had viewed the previous chart and read my comment may like an update. It looks very much like the double-top may be challenged soon as the price is pulling away from the lower channel support line.

Boustead a good dividend paymaster

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National Geographic
Boustead is a good dividend paymaster. It pays dividend quarterly and the last dividend of 12 cents tax free was paid on 30th December 2010. I expect Boustead to pay another dividend in March 2011.The price has appreciated quite a lot and currently it has gone into a consolidation stage. Currently it is trading at about RM5.50 which may be an opportunity if the consolidation is about to end. If we look at the support line it is now sitting at the immediate support line and if this support is broken down on further consolidation it may drop to a level near to RM4.92. My opinion is that at RM4.92 it has good value and I will buy it for investment.

    The above Boustead chart is added to highlight a crucial moment. Crucial because today (8th Feb 2011) it close at RM6,03 which barely broke through the resistance, with good volume. Tomorrow will be even more crucial because if the strength of Boustead maintain its upward momentum and close even higher than RM6.03 (with volume) then RM6 will be the new support level and the price will go higher from here otherwise if the closing price on 9th February 2011 is below RM6.03 then it is a failed breakthrough. So open your eyes wide tomorrow.

Keck Seng may be worth looking at now

In August 2010 Keck Seng accepted the general offer of Parkway shares and made some RM260 million gain.
On 30th November 2010 Keck Seng proposed a one (1) bonus share for two (2) shares held.
Upon announcement share price gap up and eventually hit the upper limit at RM7 of the uptrend channel.
Thereafter, its price went into consolidation which I think is partly due to the sale of 134,100 treasury shares in the open market from 13th January 2011 to 19th January 2011. Will there be any further sale? Your guess is as good as mine because Keck Seng still has 1,840,300 treasury shares. If the sale were to continue there will be further weakness. The weakness may be a blessing in disguise because this may give opportunity for me to accumulate some so that I can hold them to enjoy the bonus issue which is to be completed by first quarter of 2011.The current price is RM6.42 and a good entry may be RM6.30 and if this cannot hold RM6 will be a better entry.
Keck Seng is a well managed company and holds some valuable assets like 4.9 million shares in PPB Group and 2.8 million shares in Chin Teck Plantations

Th  The above Keck Seng Chart is just added (8th February 2011) to view how the consolidation as I mentioned above has panned out. The consolidation, according to my opinion, has taken its course and has thus formed a base for the next upward move. RM6.34 is now the immediate support should the upward move fail to take off.  I just bought at RM6.62 for a long to medium term ride otherwise if I am proven wrong I intend to stop out at RM6.34 for a 4.5% potential loss.. If the ride up is in my favour I will watch for the RSI to hit above 70 before contemplating to take profit.

Can Maybank scale new heights?

Malayan Banking Bhd (Maybank) is acquiring a 44.63% controlling stake in Singapore-listed stockbroking firm Kim Eng Holdings Ltd in an all cash deal worth S$798.44 million (RM1.9 billion) ..This has brought Maybank to the attention of more investors and has since came out the consolidation at RM8.50 level.

Maybank chart above shows that it is following the uptrend channel and after a good spike it is in consolidation mood right now. My guess is to watch out for the price to weaken a little further, say below RM8.80 level to accumulate and sell it if the price hit the upper channel into the future

Kuala Lumpur Kepong (KLK) deserves a hard look, now

Crude palm oil (CPO) price is rising in tandem with Crude Oil price. Arising from there, KLK has a good revaluation by investors recently. KLK is well managed and is at the moment in the right sector of rubber and CPO, which both enjoy buoyant commodity prices currently.
From the chart above, the initial climb is more gradual following the long term support line of S1S2.
Recently, it went over-drive to form a steeper uptrend channel C1C2, with a small hook down now.
With this chart formation, it will be an opportunity to enter a buy order around RM21.90, shown by the horizontal support line. Batu Kawan is a cheaper proxy to KLK. In terms dividend yield Batu Kawan is superior but it has lower market liquidity. (you may refer to an earlier posting on Batu Kawan on 26th December 2010)

PPB Group. Time for it to undo the overdone?

PPB Group was beaten down partly due to the poor performance of Wilmar. PPB Group owns 18.4% of Wilmar which is listed in Singapore and now it is trading at a depressed price of about  S$5.51 from the recent peak of S$7.14. The latest significant drop in Wilmar's profit will no doubt adversely affect PPB Group bottomline but I believe that PPB Group will still enjoy a very profitable year.. Anyway, without the problem of reduced Wilmar's contribution, PPB Group will not be trading at a discount to the recent peak of RM19.58 (refer to chart above)

Next, we need to look at the second chart for any sign that this counter is about to turn up.
There is a golden cross formation at MACD few days back (28 December 2010)
Both RSI and Stochastic are hooking up, which suggest that this counter is about to move up at least temporarily. The 50% Fibonacci retracement is at RM18.10, which is the immediate resistance and once penetrated it will probably move up to the 38.2% retracement which is at RM18.45
It should be an opportunity to buy at least some when you see weakness say around RM17.30 or even RM17.40

Bursa Malaysia looks like about to turn up

Bursa Malaysia Chart on 30th December 2011 

The chart shows that Bursa has a good chance to at least turn up in the short term fom here.

This counter is co-related to the volume of the market. As the market is having good volume lately there is a good chance for this counter to turn up at least for the short term.

The three (3) arrows shown in the MACD, RSI and Stochastic chart seem to confirm that what I observe is true. MACD is about to form the golden cross and both RSI and Stochastic are in the lower area.

So it will be a good strategy to buy on weakness from now and sell it off when it hit the resistance shown by the upper parallel line.

This Bursa chart is added on 19.1.2010. It is a holiday to commemorate Thaipusam, so I am free to look at the chart I posted on 30th December 2010.

The price of Bursa has so far performed well from the day I suggested and now has started to turn down.

In fact it pierced through the upper resistance line then only it started to consolidate.

From now on, will there be a buying opportunity? To find the answer let us look at the Fibonacci retracement.

Right now it has retraced 78.6% (@RM8.72). The next retracement is at 50% (@RM8.32) and if this break down it may retrace to 38.2% (@RM8.16)

So, my suggestion is for those who has higher risk tolerance level can start to accumulate at around RM8.32 (50% retracement) and those with lower risk tolerance level can accumulate at RM8.16 (38.2%)

This opportunity will only presents itself if the retracement reaches these levels.

Anyway, stock market is fraught with uncertainties and without uncertainty stock market will not be so complex.and challenging.

Batu Kawan is a cheaper proxy to Kuala Kepong

 

Between 15th October 2010 (Friday) and 18th October 2010 (Monday) Batu Kawan formed a  gap up from 15 to 15.30 with a relatively large volume which is shown in the chart above. This is partly because on 14th October 2010 CIMB Investment Bank published a very rosy picture of Batu Kawan as a potential privatisation candidate and attach a value of 18.02 to Batu Kawan.

There on, this counter has a fair bit of fluctuations and went on to form a bear divergence. with both MACD and RSI. This bear divergence push it to a mild correction (which suggest strength) on smaller volume. 

At the moment it is traded cum dividend. The 50 sen single tier dividend will only go ex on 22nd February 2011. So there is ample opportunity to accumulate Batu Kawan now. Not only the investor will enjoy a handsome dividend but also can ride on the strength of an up trend  journey.

Another important point is, Batu Kawan holds 45.65% of issued shares of Kuala Lumpur Kepong (KLK). KLK's closing price on 24th December 2010 is 21.78. On a very conservation estimate of just taking the worth of 45.65% of KLK at 21.78, Batu Kawan is worth more than 24. 

So if anyone is thinking of investing in KLK, Batu Kawan is much cheaper proxy to investing in KLK.. 

AEON on consolidation path

I posted AEON chart on 23 December 2010, suggesting that it is about to have short term weakness . True enough, on 24 December there was a spike down from the previous close of 6.24 to 5.82 with a small volume.. It closed at 6.10 for a 19 sen loss which is equivalent to 2.9% decrease. I think that the correction of AEON is not over yet and those who wish to invest in AEON should wait for a while longer.
For those who have invested at lower level should sell on strength as you have a good chance to buy back lower.

As usual, if you use what is written above to buy or sell the risks and rewadrs are entirely yours as only the opinion is mine.  Best of luck from me.

Take profit on AEON

AEON is at the top of  an uptrend channel.
My guess is to take profit now and buy back later.
There is a bearish divergence, which is a confirmation that it has a short term weakness.

Daiboci at turning point

Daibochi chart as at 23rd December 2010.
Currently the price is 2.55
Daibochi is at a turning point. which may presents an opportunity for traders who wish to trade short term
It has broke through the S1S2 support line and is on downtrend following D1D2.
It is about to touch D1D2 and traders can buy now to ride the correction for it to reach the upper parallel line of  D1D2.
If you are lucky to buy at this price you can look forward to sell higher for a profit.
Ultimately it should move up to slightly above RM3 level.

Boustead has value for investors and has excitement for traders

The Boustead chart above is captured on 2nd December 2010.
Current price is about 5.50
Even at this price I think, it is still a good long term buy for investors who fancy stocks that pay attractive dividend on a regular basis. It has just declared a single tier 12 sen dividend which will go ex on 14th December 2010. This is the third dividend declared in as many quarters. First and second quarter dividends are 5 sen (single tier) and 10 sen (single tier) respectively making a total of 27 sen dividend so far. I expect Boustead will declare a final dividend in 3 months time.
Chartwise it has climbed from about 4.29 level (24 Sept 2010) to a recent peak of 6.05 (26 Oct 2010)
On 24 th November 2010 it had retraced slightly more than 50% to 5.08.
Currently it resumes its uptrend move . It should be able to go higher from here and if the 6.05 level of resistance is broken it may climb even higher

The above opinion is mine and if ever you use the info for investment or trading you need to take you own risk..