VirtualPot Folio As At 7th July 2011

The Stock Performance Guide book will be arriving in two weeks time and I will be back to analyzing companies. Portfolio gains remains roughly the same @ 17.7% from the previous month's 17.6%. This time I see general weakening across all counters with JOBST having to lift the slump out from the rest. Phew....

I have already injected a few grands into conservative SIF and the coming month I will put some capital into FREIGHT if it is less than RM1.10. With market being saturated, I had no choice but to put more focus on building the conservative portfolio which already consists of SIF, endowment, REIT. My target is a reasonable 15% with a stretch goal of 20%. It is easier to project my returns by counter basis, I will go with this route. Seeing that the older counters of FREIGHT, ICAP and JOBST which are already more than 1 year old are well above the goal. BSDREIT is a special case, it is a dividend play hence I should probably exclude it in the next portfolio or add a new part for a conservative section. This leaves GENTING which I am looking forward for year's end and SUPERMX will need a mid reassessment.

Yes I know. Boring..boring..well to be frank there is nothing much to buy @ a discount right now. I don't just go blazing my guns, instead am just hording cash and crossing my fingers not to spend it. Going forward for the rest of the year it would be more of a survey analysis rather than a buy/sell call for the companies I am going into. I will also be needing to do a reevaluation on the smart pickings (when the book arrives of course).

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.

Let's Talk About Economics

When it comes to economy, people often think about supply and demand. To a certain extend this is true but these are not the fundamentals of an economy. I will use several examples from selective countries but the main focus is on the U.S, China and Malaysia as I have been in those countries. A countries supply (productive output whether it is goods or services) hinges on a few factors. I'm not touching on demand simply because the world is big enough for any country. Humans grow to want more than just necessities so there is nothing to worry.

1. Population: the source of future workers but it is not to say that a bigger country will be more economically powerful . E.g. China is bigger than the US in population but it's economy is only 1/3 of the US. It is the combination of population + productivity (how much workers earn) that determines economic growth. In ideal case, you need both in to grow efficiently. Note that population growth can come from immigration as well. The next two factors determine how productivity is determined.

2. Investments: in order words you need capital which means putting good use of the nation's wealth. By building more infrastructure, investing in land or equipment. Spending capital has a downside, it can only do that much. With 10 workers, you can add 10 trucks but adding another one more truck will not improve productivity as much unless it is being used.

3. Ideas: innovative and creative thoughts bring forth new inventions that enables us to overcome the investment downside. These come in the form of better processes or newer products. I like this phrase "Economic growth springs from better recipes, not just from more cooking". 

Lan Houng (Vietnamese model)

Having said so, it is crucial to have a honest and trustworthy government because it encourages investors & innovators to take on more risk for greater rewards. And not forgetting, investment in education is important to ensure that we can take advantage of the latest trends/ideas and also for future generations.

France: One of the most productive countries in the world with most people working in a 4 day work week and about 7 hours of work/day. Yet is Europe's darling next to Germany. Fertile country and not short of investments and ideas, it is an economic powerhouse.

Singapore: This is more interesting. Without Malaysia, it is a dead country so love your country also la. Population growth came primarily from Malaysian migrants. This is later coupled with sound investments and a more open economy, an up-to-date education system that gave birth to ideas that pushed it up to the high-income status it is enjoying right now.

Indonesia: Population is not a problem. Due to rampant corruption until now, the country lacks investments and ideas. It is slowing emerging from its long slump.

China: Population is a sort of a paradox. They need to grow yet they cannot grow too fast. This could be a problem in the end as this might be a case where the country "grows old before it gets to be rich". Investments and ideas are not lacking. In fact, teachers are the highest paid workers in China. Can you imagine how much they invest in infrastructure and education in the last decade!

United States: Population growth is one of the highest in the advanced economies. Not short of investment but prioritizes are not set properly. What is beginning to lack is an overhaul of the education system. The details are shabby but I can see there is much talk on this issue.

And we have Malaysia:

• Population growth is not a problem BUT we are attracting low skilled workers e.g. constructions estate/odd-job workers from very economically weak countries! Plus we have this problem of a major exodus of skilled Malaysian to other countries. Double whammy!
• We put too much investment into infrastructures that are either not being utilized, not required and not properly maintain. Private sector is doing a better job indeed but when you look at most of the GLCs...you get a big sigh in the end.
• Ideas. Lacking in short. We are not investing properly into education nor are we even trying to fix the fundamentals. When you add the migrants, you are fast losing good talents. When it reaches a point of equilibrium where you lose as much as you get and it continues, we will have a generation knowledge gap. This is bad because instead of going up the value chain, we go back to the basic of agriculture/manufacturing based economy.

These are the 3 most basic elements in any growing free market economy in the modern world. If we could compare countries around the world, you will see that Malaysia is in a gloomy state indeed. So whatever is bring preached outside that Malaysia's future is good, think again. Think again before buying an overpriced automobile or a house hoping to earn some money fast, our economy is on the route of bubbling out/collapsing and its a matter of time before we would experience some sort of hyperinflation (the tell tale signs are there already). "Roti up, fuel up, electricity up, astro up, sugar up...everything up la except our god-damn salary."

Inflation woes~!

You are better ought saving your money and invest in your children's future. Just like ICAP, I think it is wise that you slowly move your investment assets (Bursa) out of the country this decade or minimize the risk by choosing a local company with a global presence (you should already know that I do that with my choices).

Want To Be A Better Runner?

It looks like running is infectious =) Since joining RunKeeper: http://runkeeper.com early this year, my street team has expanded to 8 members, all pure Malaysian! Certainly I would like to expand it further once I get closer to people over in this side of the globe. Some have been running longer than me (I only have about 1 year since I become more serious with it), some just started. Unlike other recreational physical sports, marathon is relatively inexpensive and easily accessible. It is also the one of the single most physically and mentally challenging activity (childbirth should be harder) that is if you run a full or ultra-marathon event. Want to be a better runner? Here's some tips based on my experience so far. All of these are important in no particular order.

1. Start from scratch. You must condition your muscles and skeletal system to be able to withstand the strains of running. You must be able to jog continuously for 30 minutes. The distance does not matter.

2. Drink 4 cups of water an hour before running and the same after running. One hour of jog will lose you 1 liter. For me, coffee works (subject to individuals).

3. Of all the gear, do not be a cheapskate when it comes to buying a good running shoe. You can use this online profile to understand more of your feet: http://www.myprecisionfit.com. A good shoe will cost between RM350-RM550. I really need to stress this point. A pair of shoes will last you 500miles (800km).

4. Supplements. A multivitamin sup with glucosamine is ideal. Can pick a MLM product (not all are scams) or go to a pharmacy and ask for recommendations. You will lose sodium so take those energy drinks too.

5. Don't be sleep deprived! I need 6-7 hours of sleep for an effective run.

6. You can be excited but start slow for first few minutes or miles. Do start at conversational pace but not too slow till you can even sing.

7. Warm up. This is also very important. Calf, quadriceps, hamstrings, front of lower leg (all those are for your legs), low back (for posture), neck and shoulder (if you run long distances, these two will be tired first before your legs so you need to ensure they are stretched properly).

8. Pace yourself. Once you can jog for 30mins. Try a moderate 5km run and time it. That will be your reference.

Training/running marathons can lose you weight but it will more or less be the same as your muscle builds. Runners for marathon train on level higher than those who want to lose weight (fat burning zone). For fat burning activity, you strive for consistency combined with long duration and slow pace (you cannot do it quick as it will cause injury to your knees because of the weight bearing down). 

The below chart will show you my full marathon training schedule targeted for those who wants to complete it (focus is on distance NOT speed/time). All expressed in miles (1.6*km). Long runs on weekend and rest days sandwiched between it. So it is usually a Tues, Wed, Fri, Sun run for me. Training for speed is a lot different so out of this posting.

Some basic tips and prep talk for you. If you really want to learn more I suggest getting this extremely good book: http://www.amazon.com/Non-Runners-Marathon-Trainer-David-Whitsett/dp/1570281823 Might be difficult to source in Malaysia, let me know if you need my help to get it. Another thing to note, run to finish it not run for a time (unless you are a pro). If someone demotivates you for running slow, dare them to run and finish it, if not STFU! You'll know how satisfying it is to cross the finish line. I'll leave a my favourite quote before signing off.

The challenge in running is not to aim at doing the things no one else has done, but to keep doing things anyone could do—but most never will. ~RW