Bursa Tech Checkout WW36'11 (Happy Raya & Merdeka Folks!)

For those who find it hard to follow I suggest reading through my previous posting on how I am using technical indicators as a trend seeker.

1. First Attempt on Tech Analysis Part 1
2. First Attempt on Tech Analysis Part 2

Bursa KLCI

DOW Jones

Previously I said 'I'll give Bursa a 90% chance to pull up based on good but slow growing world economy., which was true to a certain extent. Yet you can see the heavy selling has been halved since then, moving on I will expect Bursa to test the 1480 as its first resistance and the 1510 as its second before heading up to another mild bull run. You see, when it crashes it goes down fast and hard and the recovery is quite often thrice as long as the downhill (which means the recovery will take us until end of November). Because it is Raya & Merdeka now, there won't be much activity among counters. Do expect Bursa to have a sharp rise after the festivities assuming the DOW is still at its 11,500 level or higher so it's a steel bargain to get some cheap counters right now =)

And a few attempts to answer some of the emails I am getting recently and some which I haven't replied for months (I apologise):

What kind of cut loss strategy can we take for miscalculated DCF?

Frankly I haven't given much thought on this at all. Well there is no hard rule for the level at which I should stop and cut my losses. I do have the idea that for a short term investor it will be a smaller % where else for a long term perspective I'll say 20% is a good choice. When I mean 20%, it does not apply during a recession as the stock might go down to half its value. Provided that the fundamentals of the company is strong I usually do not sell even during very harsh times e.g. SUPERMAX.

I am interested in your way of calculating the fair value of a company is using DCF modelling....Would you like to send me the sample spreadsheet as my reference for my own investment use?

Sure, just ask me. DCF is an extremely flexible valuation model and hence very susceptible to variations with small shift of input values. Though it has served me pretty well for the years, it could be daunting to pick up for a starter. Take time to adjust the settings and play with it to get the best balanced of risk-fair value-discount rate.


I'm using these criteria I found online to evaluate banking stocks. When you have the time, i appreciate if you could scan the coverage on banking stocks by Dynaquest. Thanks so much. How's your investment in US? Eagerly awaiting your analysis on US stocks.

For the rest of the people who may find this useful. Click on it to expand.

I'll try to find time to scan these banking stocks and thank you very much for getting those criteria. No doubt it will prove valuable for me when I do start research on banking stocks. Talking about US stocks, you could begin to understand Options Basic Tutorial in Investopedia as a start. This is an important new element beside Tech and Fundamental analysis. It is the same as in Malaysian stocks where I use 80% fundamentals and 20% tech while for the US based market, I'll tap onto their fancy financial instrument called Options.

I notice you are bearish on Intel and bullish on AMD and these are the only US based stocks you have covered so far.

I'm an electronics engineer in PG and that says a lot haha. Yes, your statement is true. When looking at companies I often look at its potential not more on what it is achieving at the moment. Because Atom is losing its steam and Intel's failure to enter the smartphone market investors do not see any big potential growth within Intel even though it has been hitting record profits for many quarters. While AMD is not that well off either, it has successfully groomed out an unique product called fusion APU that has proved to be a viable competitive lineup for the least 3 years ahead. Bullish on AMD until the end of the year, fingers crossed that it should hit between $8-$10.

Dr. Aya Nakata - A real dentist by profession from Nagoya!!

What other investment blogs or articles/websites do you follow most or contently used?

www.malaysiafinance.blogspot.com

www.btimes.com.my

www.fool.com

www.thefoolinvestor.blogspot.com

www.wikiinvest.com

www.tradingeconomics.com

It's longer than this but I can remember those that I frequent often. I'll update the list when I get back to civilization in 10 days =) Going travelling.

Can you share about your choice of HwangDBS SIF? Frankly there's a lot out there to choose from but how did you came about with it.

I will cover this in more detail in the future. Meanwhile you could read this previous post of mine first: http://aboiwealthpot.blogspot.com/2011/04/give-me-break-pb-fund-fanatics.html. I generally use the four rules as mentioned in that post as my filter for good funds. It has served me well so far having seen my initial investment of RM6000 (not deducting out the one time sales charge of 3%) has grown to RM6176.90 in just 6 months, a 3% return. If unassuming the sales charge it is a whopping 6%. This % of returns is what I have expected from my conservative portfolio.

Hitting Out @ My Own Kind

Yup, I am taking a snipe at the Chinese Malaysian's selfish mentality and behaviours. This was originally a study from Dr. Ee Lin Lee from the Western Washington University, USA who is a Malaysian born Chinese. Some of the information were taken from his China Media Research but has been added with a few flavour & observations of my own. We often hear the word "Kiasu" and immediately associating it with Singaporeans..but are we in fact the ones who are shouting that word in front of the wall and it echoes back.

As Dr. Lee puts it, a kiasu is an over-cautious person who behaves selfishly to the exclusion of others. There is no substitute for such a word in the English dictionary though it has been interpreted in many other ways and not limited to the list as below. If you can find others you could ask me to add in =)

• Afraid of losing
• Afraid to be worse than others
• If people has something we ought to have the same thing
• In more extreme cases we must be better than the other person.
• To risk as little as possible while maximizing whatever one can get
• Obtaining things that one does not deserve
• Self interests are prioritized even if it means jeopardizing others.

Before I drill down to the examples, give some thought about the next few sentences and think about this. Why do I say that Kiasu is more prevalent in Chinese Malaysians and Non-Chinese Malaysians as compared to the rest of the folks? We are an imperfect replica of the real 'Chinese culture' in China because we were exposed to the Brits of the Western values and we did not suffer the anti-intellectual Cultural Revolution of 1966 in China. Hence, we neither fit into Western-based collectivism-individualism or considered a mirror image of Confucianism. We are the by-product of our strength in the economy, the government's education policy and seeking to find our own identity. The stereotype of the selfish Chinese Malaysian comes in the form of the quest for and protection of self-interests.

Strength in Economy
The implementation of the NEP and various affirmative policies diffused many of us from out concentration of power in some sectors of the economy. Since the government's action do not favour us, we are forced to look out for ourselves. Being selfish in our hostile and over protective business environment has become so much critical for the Chinese Malaysian to survive.

Unfair & Competitive Education
Like the NEP, minorities are given extremely limited admission into public university or given grants. Given the intense competition for the limited space, we have no other option but to protect our individual academic interests at the expense of others at times to obtain decent tertiary education in Malaysia.

Seeking a New Identity
Many Chinese Malaysians view themselves as modernized Westernized Chinese and walk a fine line between traditional Chinese values. This effort to redefine themselves has lead to many to hold tight to their own ways of thinking or feeling. Most are focused on what they thought was right or what they wanted to do. Such attitude further solidifies the lack of consideration of others.

Singapore did not went through the first two and you need to consider that Chinese Malaysians make up nearly 20% of SG's population in year 2011. How can they even be given the title of the most "Kiasu" people on earth if you are look at the bigger pictures we outnumber then severely? Going back to Malaysia, here are some few good examples which are prevalent even among Non-Chinese Malaysians to some extend:

Fear of losing out to others: Pushed aside other passengers in our rush to claim our seats. We overtake vehicles whenever a chance presents itself so we can be one bumper ahead of the rest. We picked up this laughing at the poor or belittling them from Hong Kong's mass media. If you can show some wealth, people look up at you hence the quest for overpriced expensive cars. Go to KL and you can see folks with Camry's, Civics, BMWs but they live in nonequivalent house values. For What??

Prioritization of self and jeopardizing others: We go to great lengths to hide reference materials from other classmates. At work we try not share knowledge in order to guard the "rice bowl". Yet we simply justify this act by saying we are not spoon feeding you (I do agree with the spoon thing to a point) OR when I was your age I was in the same position as you BUT wait a minute...when you were my age it was a different decade. The world changes every god damn day. Is like saying when I was young I was given only a textbook to start with so my child has to do the same and not use laptops and etc. 

Maximizing whatever that one can get: Eat-all-you can buffet. If they paid RM30, they will eat at least RM30 worth of food even if it means bloating their stomach and not feeling very good while walking. This is also why these restaurants that charge people who waste only exists in Malaysia & Singapore!

If people has something we ought to have the same thing (in this case experience something): Often many try to go on a trip to do everything and see everything, packing the itinerary like a can of sardines as if the world is going to end in 2012. The justification: to save cost. WOW... if you are saving cost, why spend $250 on a ticket for Disneyland for a day's visit when you can use that for 2-3days. Does that sound like savings for you? Do you spend a day in Genting? No..but sorry I forgot to tell you that Disneyland is x10 bigger than Genting. 

And I could go on and on but it's getting late for me. So if you are a Malaysian, look at yourself, think of others and hear what others have to say with an open mind. We are blessed to have a fusion of both Western-based values and traditional Chinese values so please do not be selfish. You might learn something about yourself and change for the better good and most importantly for the sake of others!! And this applies to me too, just so happen I can see more compared to others hence why I am writing this.

*Unfortunately the context of the post is limited to the Chinese Malaysian in most cases. It was the main focus of this article and is not in any means to promote Chinese Malaysian inferiority to others. My sole objective is to hit out at my own kind but we are fundamentally still and will always be bangsa Malaysia.

VirtualPot Folio combo Bursa Tech Analysis

For those who find it hard to follow I suggest reading through my previous posting on how I am using technical indicators as a trend seeker.

1. First Attempt on Tech Analysis Part 1
2. First Attempt on Tech Analysis Part 2

I never did post this but I had a discussion with some friends during office lunch that the world just suddenly panicked for no GOOD DAMN reason. S&P rating cut of the US credit is not really what I expected but the most surprising thing is that the reason given is political debate NOT economic sense. Plus the S&P isn't really that credible going back to US housing bubble time frame. Crisis in Europe is nothing new as well. Emotions run high as usual. Bursa wasn't spared and as you can see it is clearly in bearish state but not in recession mode yet. I will explain:

First, the 40-50 support line is broken, this means we will now observe whether the failure swing will PASS or FAIL. This will determine whether we head into recession or pull up. 

Second, MACD divergence approached and went down the centerline crossover further solidifies bearish nature. 

Third, to add on to it, the 12-day EMA is now below the 26-day EMA (bearish > bullish).

 

BUT BUT we should not panic yet because the most important test is the upcoming failure swing. There is no hard rule to say what the future holds as technical indicators are pretty much lagging ones. Previously I have shared the most recent failure swing which resulted in Bursa pulling back up into another new high. See below. 

IMO this small sneeze in the world economy is just a short term effect contributed by mass paranoia, nothing more than that. I'll give Bursa a 90% chance to pull up based on good but slow growing world economy. RM->USD is now at 3. This should be another read of my previous post for your information since the debt ceiling has been passed: Taking A Look At The USD

Because JOBST (last closed @ rm2.80) is not traded yet I have to compute the portfolio gains manually. The gains are now @ 10.95% down from previous month's 17.7%. Due to the mass paranoia KLCI lost about the same % as mine. Nevertheless there was no immediate concern for me to sell anything off considering all are either under or equal to my computed DCF fair values.

Instead I have placed some reserve cash more into my GENTING holdings doubling what I have right now @ a cheaper price point compared to my first buy. Cost average puts my GENTING at RM10.26 with my just revised fair value @ RM14.05 makes GENTING the most heavily discounted counter at the moment. This is the reason why I did not choose FREIGHT as my first choice.

SUPERMX continues to disappoint and I will touch upon it on my reevaluation in the coming posts this month.

Previous month: VirtualPot Folio for July 2011