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.

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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.

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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."

Wisdom of Warren Buffett to be shared especially with regards to 2015

Warren Buffett is such an investing powerhouse, it’s hard to list his credentials without making him sound like Dos Equis’ Most Interesting Man in the World:

• He made his first stock purchase when he was 11 and 99 percent of his $63 billion fortune after his 50th birthday.
• He was the lone insurance policy for Pepsi’s Billion Dollar Sweepstakes.
• People stand in line to get a photo with his wallet.

The Oracle of Omaha is one of the most influential businessmen in the world — and, arguably, the most frugal, a billionaire that once complained “most toys are just a pain in the neck.”

As often as he’s on CNBC’s “Squawk Box” talking about holding company Berkshire Hathaway’s per-share book value, he’s urging students to stay out of credit card debt and increase their savings.

With the year winding down, we combed through all the advice Buffett has given us in 2014, from the sublime (“Price is what you pay, value is what you get”) to the ridiculous (“A bull market is like sex. It feels best just before it ends”).

The net result? Six things you should be doing with your money in 2015, from the master’s mouth.

Warren Buffett’s Best Advice for 2015

1. Put Your Estate in Index Funds

In his 2014 letter to Berkshire Hathaway shareholders, Buffett revealed his estate plan, reminding readers to keep their investments safe, low-cost and long-term.

Turns out, he’s planning on leaving all of the cash for his wife in a product that’s as old, stodgy and lucrative as himself.

“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”

2. Stay Away From Bitcoin

Given Buffett’s almost wholesale aversion to tech, this one isn’t a surprise; the Oracle refuses to invest in what he doesn’t know, and he doesn’t know the technology sector, IBM notwithstanding.

But Buffett’s problem with Bitcoin isn’t that it’s a tech investment — it’s that it’s not any kind of investment at all, because it doesn’t have value, as he explained in a March interview with CNBC.

“Stay away from it. It’s a mirage, basically. … It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope Bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view.”

3. Learn How to Read Financial Statements

Buffett gave this advice to Tre Grinner, a 17-year-old with Hodgkin’s Lymphoma who recently secured a Goldman Sachs internship with the help of the Make-a-Wish Foundation.

Buffett surprised the intern with a call while he was being interviewed by CNBC in August, offering him this advice:

“Take all the accounting courses that you can find. Accounting is the language of business. … It’ll make it so much easier for years and years to come for reading financial statements, to get comfortable with it, because it is a language all of its own. Getting comfortable in a foreign language takes a little experience, a little study early on, but it pays off big later on.”

4. Focus on Saving, Not Getting Rich Quick

Ironically, Buffett dropped this tip when promoting his basically unwinnable billion dollar bracket challenge on the Dan Patrick Show.

The sweepstakes, backed by Buffett and Quicken Loans, would award $1 billion to anyone who devised a perfect NCAA March Madness bracket. (The odds of winning were about 1 in 9.2 quintillion — you were 53 billion times more likely to win the Powerball.) Still, the Oracle’s advice was solid:

“Well, I think the biggest mistake is not learning the habits of saving properly early. Because saving is a habit. And then, trying to get rich quick. It’s pretty easy to get well-to-do slowly. But it’s not easy to get rich quick.”

5. When Stock Prices Drop, Buy — Don’t Sell

It was a volatile year for the market and Buffett’s wealth; the investor lost about $2 billion in the course of several days in October when Coke and IBM took a hit after their quarterly earnings reports. Buffett kept calm, though, giving several interviews in which he explained why he was a fan of bear markets.

Granted, when you’ve got $63 billion to your name, this kind of a hit is lunch money. But, as the Oracle explained to CNBC, investors with itchy trigger fingers rarely succeed.

“I like buying it as it goes down, and the more it goes down, the more I like to buy. … If you told me that the market was going to go down 500 points next week, I would have bought those same businesses and stocks yesterday. I don’t know how to tell what the market’s going to do. I do know how to pick out reasonable businesses to own over a long period of time.”

6. Stop Pretending to Be an Expert

“If you don’t invest in things you know, you’re just gambling,” Buffett told CNBC earlier this year. It’s advice he’s rarely strayed from, and the reason why tech, gold and airlines will never get his money (or, in the case of airlines, get his money again). As he wrote in his 2014 shareholders letter:

“You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick ‘no.'

Read more: http://www.gobankingrates.com/personal-finance/6-things-warren-buffett-says-should-money-2015/#ixzz3MvFvkgL8

Lesson on Carry Trade by Mike Larson

“Carry Trades” are dominating market action. Not just here. Not just in stocks. In virtually every asset class around the world.

But now, some troubling tremors are starting to emerge – and that could change the game!

So let’s address your first question right up front: What the heck is a carry trade?

Think of it like banking. A bank’s goal is to raise money cheaply from depositors like us, then take that money and loan it out at a higher yield to someone else. Paying out 1 percent on a CD, and loaning it out at 5 percent to a small business is basically a way for the bank to earn “positive carry” of 4 percent.

Things are more complicated in the global markets. It’s not just banks with a seat at the table, and it’s not just CDs or business loans. It’s investors of all sizes – all trying to borrow cheap money from a wide variety of sources, and investing that money in a wide variety of higher-yielding assets.

The strategies involved can be incredibly complex. But lately, some of the biggest carry trades have been those taking advantage of cheap yen and cheap euros. That’s because the Bank of Japan and European Central Bank have been doling out free money like Halloween candy.

So as part of this common carry trade, global investors will …

    1. Borrow cheap yen and euros (and to a lesser extent, borrow in many other currencies) …

    2. Sell those currencies and convert their funds into dollars …

    3. Then buy dollar-based assets that yield more, largely because the U.S. Federal Reserve has been talking tougher than its overseas counterparts.

That process has helped drive U.S. stock prices higher and higher in recent weeks. There has also been a negative side effect on commodities. Commodities often trade as “contra-dollar assets” – meaning they fall in value when the dollar rises. With the dollar surging, it’s been a bloodbath in gold, silver, copper, crude oil and other resources markets.

So what’s the problem? Can’t we all just sit back, buy U.S. stocks, short the yen and euro, dump energy and gold, and retire as millionaires?

Maybe for a while. But eventually, the rubber band gets stretched too far. Everyone and his sister will put the same trades on, and you get to the point where assets are ridiculously mispriced. When that happens, even the smallest bit of contrary news can lead to furious counter-trend rallies.

“The Bank of Japan and European Central Bank have been doling out free money like Halloween candy.”

I’ve seen it happen before many times in my career, and my antennae have been up recently, especially in the currency markets. As much as I think Japan and Europe have major problems, and the U.S. is in better economic shape, the yen and euro have gotten wildly oversold and the dollar has gotten severely overbought.

That means you have the preconditions for a sharp adjustment in place. Then overnight, China’s Shanghai Composite Index reversed sharply and dumped more than 5 percent on record-high trading volume of $128 billion. That was the worst one-day market rout in a half decade for a market that had been rising and rising despite weak, underlying economic fundamentals.

Other frontier and far-flung emerging markets sold off in sympathy, and the Japanese yen launched a sharp rally. As a matter of fact, the yen earlier staged the biggest rally since the spring. Gold and silver have also been seeing a “stealth” rally, and so have agricultural commodities.

Maybe this is a short-term thing. Maybe it’s just a small correction, and nothing more. But it’s worth watching whether this turns into something bigger. Because carry trades are great … until the moves get so large that the markets can’t carry their own weight anymore!

So let me know your thoughts. Have you heard of carry trades before, and does the potential reversal of those trades worry you? What do you think about the yen, the euro, and the dollar? Have we gone too far too fast, leaving us open to a big correction? Or do you think those moves have further to go? Finally, do stock market sectors like energy and gold look attractive to you after the beating they’ve taken in the past several months

ROUBINI: This Mother Of All Asset Bubbles Will Burst In 2016

In February 2013, NYU professor Nouriel Roubini made the call that US markets had entered the “mother of all asset bubbles.”

Nouriel Roubini

With the rally in stocks that we’ve seen this year and a surge in high-yield debt issuance, Roubini said we’re now at the midpoint of the bubble, in an interview with Yahoo Finance.

Next year may see more gains across markets, but the bubble, bigger than the one before the 2008 recession, will pop in 2016. 

Because there is low growth, and low inflation in much of the world, there is liquidity that’s leading to asset inflation, Roubini said:

“I think that this frothiness that we have seen in financial markets is likely to continue, from equities to credit to housing, and in a couple of years, most likely, this asset inflation is going to become asset frothiness and eventually an asset and a credit bubble and eventually any bubble ends up in a bust and a crash. I would say that valuations in many markets, whether it’s government bonds or credit, or real estate, or some equity markets, are already stretched. And they’re going to become more stretched as the real economy justifies the slow exit, and all this liquidity is going to go into more asset inflation. So two years down the line, we could have this shakeout … 2016 I would say.“

His advice for investors is to be underweight US equities next year as stock valuations increase, particularly in the biotech, technology and social media sectors. Emerging markets that are heavy oil importers and will benefit from lower oil prices are attractive.

Over reaction in a bearish cycle?

In Malaysia FBMKLCI on 21st November 2014  is currently at 1809.13 which is below the 200 DMA (200-day moving average). This indicates a bear market or what we call a downtrend. Normally, the bear trend has to run its course and eventually a bottom will be formed and a change of trend will take hold. No one is able to predict with certainty the bottom of the downtrend and so no one is able to sell all his stock portfolio to ride out the bear. Very often opportunities will surface even in a bear market because not all stocks peak or ebb at the same time. Valuation is the key while we cannot ignore momentum of the individual stocks that create trading opportunities.

As on 21st November 2014, the wholesale dumping of oil stocks is out of control. Solid companies have dropped 30% to 50% in 6 weeks.

But there's no need to panic. As Warren Buffett says: "You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple."

As surely as night follows day, energy stocks will rebound quickly from this massive sell-off. Join us as we seize the moment and snap up bargain buys BEFORE the market comes to its senses. Profit upsides range from 30% to 74%.

If there is an over reaction due to weak crude oil price it may have created the opportunity to eye on the fundamentally strong stocks for accumulation so that when things turn normal we may stand to gain.

IOI Properties Group Bhd

http://www.theedgemarkets.com/my/article/ioi-properties-maybe-key-beneficiary-mrt

IOI Properties Group Bhd
(Oct 31, RM2.75)
Maintain “buy” with target price (TP) of RM3.38: IOI Properties Group (IOI Properties) remains our top pick for big-cap property stocks. Since the proposed stops for the mass rapid transit (MRT) Line 2 are still not firmed up — given that the railway will end at Putrajaya — IOI Properties has emerged as a potential key beneficiary of the project.

It has more than 500 acres (202.34ha) of land bank there, and the IOI City Mall will likely be a valuable asset.

With this MRT line, the gross development value (GDV) for its land bank in Putrajaya will likely rise further.

We believe the market may have overlooked the potential value of IOI Properties’ land bank and property assets.

With the latest green light from the government to go ahead with the MRT Line 2 project, IOI Properties emerges a potential key beneficiary.

According to the information provided by Gamuda Bhd ( Financial Dashboard), Line 2 will run from the Sungai Buloh depot to Putrajaya, and the proposed stops include Kepong, Sentul, KLCC, Cheras Sentral, Serdang,Universiti Tenaga Nasional (Uniten) and Precinct 14, Putrajaya.

IOI Properties owns over 500 acres of land in Putrajaya, called IOI Resort City.

Currently, the existing property assets there include 1 & 2 IOI Square, Putrajaya Marriott Hotel and Palm Garden Hotel. Another IOI Resort hotel is currently under construction.

The IOI City Mall, with a net lettable area (NLA) of 1.4 million sq ft, will have its soft opening in November. About 90% of the retail space has already been leased out and key anchor tenants include Parkson, Tesco Premium, HomePro and Index Living by Aeon.

Our checks reveal that phase 2 of the mall — which will be constructed at a later stage — will have a NLA of 900,000 sq ft.

As phase 2 will be in close proximity to Uniten, the proposed Uniten MRT station could potentially be located there. If this materialises, the IOI City Mall will likely see long-term value appreciation, which would spur IOI Properties’ revised net asset value (RNAV) rerating.

Note that IOI Properties currently already has strategic land bank in Puchong fronting the four light rapid transit (LRT) stations currently under construction.

IOI Properties’ second condominium project in Putrajaya, after Puteri Palm in 2011, has achieved a 70% take-up since its launch in August.

The Clio Residences has an estimated GDV of RM180 million, at an average selling price of RM650 per sq ft.

We expect the future GDV, currently at RM3.1 billion, of the remaining Putrajaya land to expand, given the boost from this latest infrastructure development.

We maintain our “buy” rating and RM3.38 TP at a 30% discount to RNAV. — RHB Research Institute, Oct 31

Mark Mobius: Pick stocks on dividend yield

Mark Mobius, Chairman of  Franklin Templeton has some insight into investing in Bursamalaysia. I am pasting his comments below for my reference and freely share others:-

"Investing in stocks that pay good dividends is the best strategy for investors in the short term as the FBM KLCI is overvalued in price-earnings ratio (PER) terms compared with other Asian indices, said Templeton Emerging Markets group executive chairman Dr Mark Mobius.

Yesterday, the KLCI closed at 1,803.14 points, with a PER of 16.38 times. On the other hand, Singapore’s Straits Times Index ended the day with a PER of 13.27 times while the Hang Seng Index closed with a PER of 10.05 times.

“It’s not a good idea to make short-term decisions in the market. Look at individual stocks in Malaysia to determine what the growth rates are going to be and what the valuations are now. At this stage, there are a number of stocks that you can buy, but I wouldn’t rush in.

“You have to look for cheaper stocks, those that have good growth but a relatively low PER and [good] yields. At this stage there are a number of very attractive high-yielding stocks, where the yields range from 5% to 7%,” Mobius told reporters after a luncheon talk yesterday.

He said stocks such as British American Tobacco (M) Bhd ( Financial Dashboard), Guinness Anchor Bhd (Financial Dashboard), Carlsberg Brewery (M) Bhd ( Financial Dashboard) and banking stocks are of particular interest, as those traditionally reward shareholders well.

“I’m very interested in banks, in particular. Because they reflect the growth of the country they are in. They [are] more diversified and less volatile as a result, and you get a nice dividend yield,” Mobius said.

He is also interested in the pharmaceutical and medical care industries as they are “high-growth industries”, while he considers the property sector in  Malaysia as one of the best markets for foreign investment.

“Property companies here look quite interesting, particularly those that are in a diversified portfolio,” Mobius said.

In his presentation earlier, Mobius said while property prices in Malaysia are rising, the number of non-performing loans and mortgages is declining, demonstrating the buying ability of Malaysians compared with other countries in the region.

“Thailand, Indonesia and [the] Philippines have a higher rate of non-performing loans. So from that point of view, it’s (Malaysian property) clearly affordable and if you look at house prices in relation to income, Malaysia is right there at the bottom,” he said.

On Malaysia as an investment destination, Mobius said tax rates for investors and predictability are the determining factors for foreign direct investments (FDIs).

“One of the things that hurt Malaysia a lot during the Asian financial crisis was when it stopped money going out. That created a lot of angst among foreign investors. It is very important to create a sense of confidence that there will be some predictability in the rule of law,” he said.

However, Mobius said factors like the undervalued ringgit, high-yielding stocks, the government’s programme to open up the market and efforts to integrate with other Asean markets also contribute to attracting FDIs.

On how the KLCI would end the year, he said the index should close higher — barring major crises — but did not specify a target.

“The trend is definitely moving upwards despite the valuations because there is room to accommodate high PER since the interest rates are so low,” he added."

This article first appeared in The Edge Financial Daily, on October 21, 2014.

Six reasons why stock markets are tumbling

What has caused share prices to fall 10 per cent in a month?

More than £46 billion was wiped off the stock market on Wednesday as fears over the health of the global economy caused the biggest dip in share prices for almost a year and a half.

In a blow to savers, the FTSE 100 fell 181 points, 2.8 per cent, to just 6212 - its lowest since the summer of 2013. Financial markets around the world experienced a similar plight. The market recovered slightly on Thursday morning, but is still almost 10 per cent down on its 6880 peak in early September.

Here, in no particular order, are some of the reasons...

1 Greece

There are fears over the stability of the Greek government and its bail-out plans. David Madden, an analyst at IG, said: "It looks like we are entering another phase of the eurozone debt crisis." Greek share prices on Wednesday fell to their lowest level in 2014 as the country headed for an early election. A radical left opposition to the Greek government appears to be gaining momentum, opinion polls suggest.

2 America

The world's biggest economy looks weaker than it did a few months ago. Poor retail figures and a slowdown in manufacturing have put it on the back foot. US retail sales declined 0.3 per cent in September, marking the first fall in seven months.

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The Federal Reserve, America's central bank, may now have to wait longer to raise interest rates. The outlook for America, China and Germany tends to set the pace for global share prices, which have become closely aligned due to globalisation.

3 Ebola

Crises make investors nervous. And nervousness leads to selling shares. Ebola has killed about 4,500 people so far, mostly in Liberia, Guinea and Sierra Leone. This week, it was revealed that a second American nurse has contracted the virus. The disease is spreading, experts said. Anthony Banbury of the UN said: "It is running faster than us, and it is winning the race."

4 Europe

The eurozone could feasibly slip back into recession, analysts have said. And it's not just Greece where there are concerns. Germany, the eurozone's biggest economy, has reported a fall in exports and slashed growth forecasts. Prospects across the Continent had "gone from bad to worse", according to City analysts Capital Economics, which downgraded its growth prediction for the year from 1 per cent to 0.7 per cent.

5 General nervousness

Jitters, they call it. Panic "gripped the market", according to one commentator in the Financial Times. Worries are often caused by global threats to health and security. One example is Ebola, but there are many around at the moment – for example, the geopolitical tensions in Syria, Iraq, Hong Kong and Ukraine. As these situations remain unresolved, traders anticipate difficulties for global companies that rely on exports and imports, as trade is disrupted. Jim Reid of Deutsche Bank said: “We’ve had a steady increase in bad news over the last month and it’s got to a point now where the market is nervous enough that incremental bad news is the straw that breaks the camel’s back.”

6 Deflation threat

Deflation is bad news, generally speaking, for economic growth and so investors are watching with apprehension. Inflation figures have fallen in many parts of the world. In the UK for instance, consumer prices index (CPI) inflation is now just 1.2 per cent – a five-year low.

What is meant by deflation? Essentially, it means that the buyers of goods and services don't trust the price in the shop window; they expect it to be lower next week. For example, someone might put off buying a car for £10,000 thinking that next week it will be £9,900. When the next week arrives, the person delays the purchase again, thinking the price will fall to £9,800 in a few days. And so on.

Ben Yearsley of stockbrokers Charles Stanley said: "The global economy does appear to be under threat, particularly from deflation in Europe, where prices have started to fall, and this could be contagious for the UK."