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3: Malaysia REITs - Looking For My 2nd Durian Runtuh
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Head to the watch list on the above tab to see my what's on my radar and foreseeable future postings =)

Decided to make adjustments on the way I blog & share due to time constraints and other commitments. In the coming weeks you should see them. Short updates but more frequent & concise.

Thursday, April 28, 2016

May Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

This is the 10th time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :) My total savings for 2015 is: RM 50.75 and YTD: RM 1.75.

April 2016
Although the DOHA talks failed in producing a deal to freeze some oil output, Russia and Saudi has agreed to put oil production levels at January's level which will boost price. In more recent developments, America's oil inventories are coming down. Oil hits 2016 high ahead of U.S. inventory report (see link)

MYR continues to receive support from foreign investors though the level of inflows has moderated in April. MYR struggled when 1MDB defaulted payment
IPIC fails to make bond payment, but 1MDB says default limited (see link) and traded sideways in anticipation of Zeti's replacement. However the appointment has concluded and Ibrahim will get the top job which will be positive for the Ringgit. Ringgit stronger on new Bank Negara Governor (see link).

Some asked why did the price of crude oil drop in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.
- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.

Aboi's May'16 Prediction Analysis

RM/L between Mar and Apr is quite similar: 1.41 vs 1.40. Average oil price increased slightly from $41 to $42.71 (4.2%) but this compensated by stronger MYR (4.08 -> 3.90) a gain of 4.4%. The verdict is clear, I will predict that fuel price to be maintained @ current price of RM1.70 for RON95. Also with the Sarawak state election incoming in May price will only stay or go down slightly (but I don't see a reason why they would reduce it since BN winning Sarawak is a shoo in anyway).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 50.75. As for YTD: RM 1.75.

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**

Thursday, April 14, 2016

Aboi: Defining Risk Rating Methodology

I am planning to revamp my Portfolio and Watchlist into a single page for ease of maintaining it. Furthermore I will remove all monetary values for personal & security reasons. This time I will likely only show [1] Total Returns [2] Holding Period [3] TWRR. In addition, I will introduce a revised risk rating ranking. In the past it was just Fixed Income -> Mixed Assets -> Equities.

Here's the new definition:-
Riskiness of asset from a scale of 0 to 10. 0 being lowest risk to 10 being highest risk. The risk level is relative to each other. E.g. Asset A has a risk rating of [4] while Asset B has an [8]. Using relative terms, this means Asset B is riskier than Asset A it DOES NOT mean that Asset B is twice as risky.

Also remember the correlation between Risk & Return:

Rating 0 (Lowest Risk)
Fixed deposit instruments, money market funds or cash management instruments.

Rating 1
Malaysian bonds (RM-denominated) with very little foreign currency exposure.

Rating 2
Non-Malaysian bonds invested in govt bonds from a diversified no.of developed nations with low credit risk.

Rating 3
Non-Malaysian bonds mainly focusing in Asian region or Emerging markets.

Rating 4
Non-Malaysian bond funds invested in sub investment grade corporate bonds. Also known as equity exposed bonds.

Rating 5
Balanced funds (mixture of equity and fixed income instruments), a larger percentage of bond holdings would mean lower risk level.

Rating 6
Balanced funds (mixture of equity and fixed income instruments), a larger percentage of equity holdings would mean higher risk level.

Rating 7
Globally diversified equity funds. This means it has exposure across several major regions E.g. Americas, Europe, Asia and Japan.

Rating 8
Equity funds focusing in a major region e.g. Asia Pacific ex Japan. Malaysian equities/local funds/MREITs (although they are single-country focused) as investors are not exposed towards exchange rate changes.

Rating 9
Equity funds invested in riskier emerging markets e.g. Latin America, Russia and etc with foreign exchange risk. Equities that are heavily specialized in certain sector e.g. Technology (where companies usually fails if they are slow to adapt). Non-Malaysian REITs. Real estate/Property.

Rating 10 (Highest Risk)
Commodities for their fair value is very hard to evaluate. Forex. Alternative investments like collectibles E.g. Lego (because I have to hold them physically, store them properly for years), further more not all sets can be profitable.

**I might introduce new asset classes in future, my goal is NOT to move existing ones**

Wednesday, April 13, 2016

Alternative: Lego 75099 Rey's Speeder

I've started to sell off my old sets that I have kept since 2011. 8 sets (avg 170 pcs/set) this year and they are largely 2011/2012 sets with a cool profit margin of 57.66%. With those proceeds I picked up two of Rey's Speeder recently (and immediately once I saw it). I could have bought more if not for both Lego shop and Toy R US having only one of each remaining.

Star Wars The Force Awaken Lego have various sets as depicted below but why I did choose Rey's Speeder?

- Set selling fast so I am lucky to find the last ones. Rey is popular with kids.
- Set with Rey for $20, the other set with her will run you $150!
- Though Rey is not unique, she looks fantastic and her dust cover will probably be just a one time deal so just the minifig alone is worth it.
- Nice dark red slopes and good little pieces in the set makes it look very detailed.
- On a USD price per brick basis this set is considered the cheapest of all TFA Lego sets.

- Tools stuck on the side don't match with what we see in the movie. But a simple modification will do it (many people have done so just google it).
- Hate the stickers, it's a lot for a relatively small set.
- Not very much a playset, it is for display purpose.

In comparison to an older set: 8092 Luke's Speeder back in 2010 has a retail price of $25. It is now commanding a selling value of $42.40, roughly a CAGR of 9.1%. If you’ve seen the trailer, Rey's speeder was the first vehicle we got to see, so it’s the one that was just stamped into our brains. It's truly iconic that isn't clearly based on Original Trilogy vehicles and could certainly fetch a similar return.

Aboi Says: The set and this version of Rey with the dust cover will NOT likely be remade. With its current popularity (can't find this set in Penang anymore) and potential uniqueness & rarity once it is no longer in production makes it a good deal.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.