2007 has been truly a wonderful year for me.
I would like to take this Saturday to reflect back what I had blogged on this year.
Jan 3rd 2007. Insane Money Yet Again addresses the issue of CEO compensation getting out of whack. There was a wonderful interview with Mr.Charlie Munger on this issue.
- * How did CEO compensation get so out of whack?
Some of the worst sinners are compensation consultants. I have always said that prostitution would be a step up for these people. "Whose bread I eat, whose song I sing."
It isn't that the CEOs are such terrible people. It's that the system, with its envy-driven compensation mania, has developed to a place where it brings out the absolute worst in good people. ( Here is another great posting on Charlie: What about Charlie? )
- Buffett's Wisdom (Of Permanent Value) Part I
- Buffett's Wisdom (Of Permanent Value) Part II
- Buffett's Wisdom (Of Permanent Value) Part III
- Buffett's Wisdom (Of Permanent Value) Part IV
- Secret of Warren Buffet's Success
- Warren Buffett Articles I
- Warren Buffett Articles II
- Warren Buffett Articles III
- Warren Buffett Articles IV
- Warren Buffett Articles V
- Warren Buffett Articles VI
- Warren Buffett Articles IX
- Warren Buffett Articles: X
- Buffett Time!
Talking about missed opportunities. As mentioned by Warren Buffettm is it a sin to missed an opportunity? It's almost 2 years ago, Jan 2006, I remember wondering the investing case for Gamuda. Was it or was it not an opportunity back then? This made me to blog Looking Back: Gamuda back in Jan 2007.
- On the 19th Jan 2006, Gamuda reached an intraday low of 3.04.
Was there a valid investment case for Gamuda?
Yes, valuation at this price does not seem expensive but that's what one had been saying all this while, as far back as in Sept 2004. Valuation based on current earnings has always been cheap during this massive downtrend. And if one buy based just on the earnings as far back as in Sept 2004, would have seen their investment getting whacked the living daylights. Anyway, should one invest now?
On 23rd March 2006, Gamuda Q2 earnings showed more decline. Its quarterly earnings is not only 40.027 million. Its trailing earnings totalled only 213 million, which indicated a serious decline in its earnings momentum. And perhaps due to seriousness in the decline, one should probably be well aware that on an annualised basis of earnings around 40+ million, Gamuda fiscal earnings for 2006 could be as low as in the 160+ million region.
This time around, the stock had rallied instead. Gamuda last traded on the 23rd at 3.78. The next day, after reporting the poor earnings, the stock closed down 10 sen and held on steadily.
And another incredible thing happened. Based on the current prices and current earnings, Gamuda was suddenly trading at a higher earnings multiple of 15.8x and based on an annualised basis, it was trading at an even higher pe multiple of 18x. WOW!
Perhaps it was a good time in January 2006 when Gamuda was trading at 10.1x current earnings multiple. Perhaps it was for the stock rallied to as high was 4.24 on 10th May 2006. Incredibly the stock then tumbled.... (do read the rest... Looking Back: Gamuda ) (My conclusion last Jan: For me, I could not find the window of opportunity to invest in this stock. Too bad. - yeah, too bad dude! You simply cannot win it all!)
Gurus like Marc Faber became rather prominent. Jan 2007, Dr. Faber was mentioned in the following posting: Global Markets Face `Severe Correction,' Faber Says
- ``The price of gold will continue to go up and probably very substantially,'' Faber said. ``In the long run, it's very clear that central banks are basically increasing the supply of money and the supply of gold is obviously very limited.''
More Dr.Faber stuff.
- Some commentary from Dr.Faber
- Dr.Marc Faber: A Modern History of Investment Booms
- Beware the driving forces behind surging asset prices
- What do you think are some common mistakes investors make while taking an ‘exit’ or ‘sell’ decision
- Gloom or Doom for Global Markets?
- Gloom or Doom for Global Markets? II
- Another Interview with Dr.Marc Faber
Then came Feb 27th 2007. The day Dow tumbled some 417 points. The next day, I asked, Is this the Perfect Storm?
- On Valentine's day, I posted the following posting: US Market Soars ... but....
Which highlights the issue about the insane going on in China. Now this blog posting is not too boost my ego and neither is a I-told-you-so posting but for those interested, I thought it would be good if I brought up the points mentioned again.
I am and has been extremely wearly about the extremely stong turbulance beneath it all. Can a strong market simply mask all the woes underneath?
Note two issues mentioned in this Is this the Perfect Storm?
- It will literally unfold all around us with a Housing Crisis – Check!, a Banking Crisis – Check!, and ultimately, a Currency Crisis – Check!. Check, Check, Check!
- Mortgage giant Freddie Mac said Tuesday it will no longer buy high-risk home mortgages that it deems to be highly vulnerable to foreclosure.
The warning signs were there, yes?
And more postings were made mentioning subprime. How Now Brown Cow?
- And if you are on cautious side and you want to read more about the risks involved in the current market, do read the following articles, The big bet that could melt Wall St. , Subprime woes: How far, how wide? , The risk in subprime. ( See this blog posting too: How Now Brown Cow? )
This posting simply says it all: Do you reckon that the worst is over? (Should not be missed as it simply describes how things got so bad )
And not forgetting the incredible AsiaEP story. See Update on AsiaEP.
Ms. Teh Hooi Ling, writer of the Show Me The Money column on Singapore Business Times, do pens great investing articles. Here are some: Great Article: Short-term versus long-term investing, It's Bubble Everywhere, Born to Be Good?
How could I leave out Megan Media. My first (? - yeah, make that a huge question mark, for I would later publish tons of postings on Megan in 2007!) posting in 2007 on Megan was posted on March 2007: What about Megan?. Megan had announced its earnings but I stressed that investing is not based just on numbers and I questioned the godzilla sized debts in Megan!
Here are more postings on Megan
From that posting:
- There is this old blog posting I have made before. It's called Price Versus Value.
I believe everyone understands that the current stock market is rather hot. Some would go for the hot stocks, while some were search the market for the low PE stocks - the laggards. But do understand there is risk involved in such a strategy. And since as mentioned, this advice was given to you, perhaps you might want to consider a second opinion on the advice itself. What if such an advice based on such a strategy could be faulty? Do not get me misunderstood here at all. I am not saying that all low PE stocks are bad and neither am I against this strategy at all.
But I believe there is risk involved here. And if not reasoned out carefully, such advice could turn deadly. This is because of the tendency of folks to be focused solely on the price of the stock. And sometimes they focus solely on the earnings, without giving a second thought about what is the driving factor behind the earnings. And by doing so, they simply focus on the price of the stock being traded on the market and they simply failed to understand the value of the company.
Simply put, a stock selling on a cheap PE does not equate that one is investing on a quality company. Sometimes, these stocks are selling at a cheap PE has a simple reason. They are cheap because the markets simply do not rate the stock at all due to all the inherent risk involved in the company. In simpler and cruder terms, they simply know that the company is lousy.
So what's so wrong with Megan?
And PSCI turned out to be one huge winner although I made no entry into the stock: Regarding PSCi. But it was significant event for me, for during this period, I created a blog based on trading, Cows Don't Trade, and one of the posting was focused on PSCI: Is there a possible trading entry now for PSCi?
With the collapse in Megan, attention was finally focused on cash flow. Yes, cash flow is an important issue not to be discounted in investing. Would a company deemed as a wonderful business if it does not have a solid cash flow? (See Regarding Cash Flow ) And also not to be forgotten was the posting on Financial Shenanigans and Spotting Them LOSERS!
And do you think that Research Reports Good For Stocks??
- Here is my opinion.
Charging rm30,000 simply is too much. It's insane. Think about it.
From the owner's perspective. Would you pay so much money for coverage?
From the analyst's perspective. Would you not tend to be a bit generous on your viewpoints?
From the investor perspective. With so much money involved, would the investor get an un-biased report?
On the other hand, let's look at the positives if Bursa was to foot the bill.
1. From Bursa 's perspective, this CBRS is part of a program to generate interest and awareness in their own business. More awareness equals to more business. Yes?
2. At this moment, coverage is still lacking. So many companies aren't being covered. Is the rm30,000 the reason? So without being forced to pay, we, the investors could see more coverage on more companies, right?
3. Without the rm30,000 price tag, the analyst has more freedom. Perhaps, we could avoid cases where analysts are being way too generous in their write-up. Meaning we avoid incidents where analysts give way too optimistic target prices and recommendations.
And then Genting share split caused utter havoc! Genting's confusing Share Split , More confusion on Genting split issues, Update on More confusion on Genting split issues and Genting Share Split Gets Highlighted!!
And the Karensoft saga, it ended! MOVED over who? The FINAL Saga!
One of my favourite posting was of course: Systems and Old Mistakes
I did gave some second opinion on some stocks: Regarding Keck Seng , Kencana, PCCS , PCCS II , Ornasteel , Review on OrnaSteel Again, KPJ Healthcare, NextNation, NextNation II , NextNation III, Cymao, Cymao II , Cymao IV, Ye Chiu Metal, YLI Holdings, Update on YLI Holdings, A Mammoth Issue, BCT, BCT Part II, BCT III, EPIC, Gadang Holdings , Pintaras Jaya, Pintaras Jaya II, Notion Vtec, Notion Special Issues of Shares, Notion Vtec II, Mieco Chipboard: VII, S&P has a Strong Buy on Mieco Chipbaord! , Review on Yi-Lai, Review Of Uchi Again, Uchi and its ESOS, Englotechs Trade Receivables, EcoFirst (Kumpulan Emas), Them OnG Stocks! Crest Builder 2007 , Timber and Tekala, Random Musing on the Timber Sector and Is PriceWorth really Worth Investing? and Reply to comment on PriceWorth and Is PriceWorth really Worth Investing? II
Call warrants, of course, was simply a sizzling hot trading item in 2007. The Profitable Call Warrants II. For me, these simply were trading stocks.
- And as can seen from the above charts, I do not dispute that there existed the window of opportunity for the smart trader to make money from these two call warrants but as seen from the exercising of warrants, if one buys these call warrants in hope of profiting from the exercise price, then this example would show clearly how risky these venture are.
And then Maxis it got privatized! Quick update on Maxis, Maxis Implication? , How Much For Maxis? , Maxis Again , Oh Maxis, 20% VGO premium for Maxis? , Windfall for Maxis? and Aseambankers Advisory on Maxis
- I really see so much more pain before anything else!
Given current situation, I would sincerely reckon that acknowledge this investing mistake and move along is probably the wisest thing to do. There is still time now!
By not doing so, one is stubbornly hanging on and refusing to admit one is clearly wrong on a poor stock selection!
And to make matters worse, Look Who HAS Sold Their Shares in Megan Media!!!
And the rest were history!
- Were There Warning Signs For Megan?
- Strong Sell on Megan Media
- Answers to Questions On Megan
- Strike Two For Megan
- Strike 3 for Megan
- Megan, do you think that it's so scandalous?
- What's Left of Megan?
- Cooking And More Cooking!!
- Megan Media posts RM1.14b net loss in 4Q
- The Naked Truth in Megan
- Megan's Other Bossie
- Megan: The Naked Truth Part II
- Suit Filed Against 2 Megan Officials
Then came the Transmile episode:
- Transmile Receivables,
- How about TransMile?,
- More on TransMile,
- 50 Million Adjustment for TransMile?
- The Full audit Statement on Transmile!
- Reviewing the events at TransMile
- Cooking And More Cooking!!
And of course, Bumi Armada plans to be lised again was rather disgusting: Bumi Armada Sailing Again???
And of course, in a hot market, them sources were simply everywhere. It had Ranhill striking oil! According to Sources: Ranhill Strikes Oil!!!!!!!!. Which raised the following issue yet again: Do you think that Bursa should take action against misleading reporting?. Which received some interesting feedbacks: Do you think that Bursa should take action against misleading reporting? Part II
See example: Tamco: Misleading Article? and Misleading Article: Tamco Part II or what the power of the source in Bandar Raya thingee: Bandar Raya To Be Privatized? and The Power of the Source In Bandar Raya Alleged Privatzation!
Of course the incredible thing was Do you Trust What You Read?
Of course, PSCI was a messy stock. Some simply took my blog posting for granted: Regarding PSCI issue again.
Which prompted the following posting: Disclaimer & Closure & Some Random Musings.
- See, I never thought this issue of disclaimer was important, for I thought it was redundant since I do not make any stock recommendation or advice on this blog. Second opinions, yes. A couple many times I have made open second opinions on stock. However, I have always leave my commentary open to the readers' own interpretation.
Anyway do remember this:
Now I do believe that you realise that I am a mere blogger and I am not an investment advisor or any sort.
Meaning to say, I offer no one any guarantee card here. There is no 'pink borang to isi' if and when anyone decides to buys or sells any shares based on what I had blogged on.
So this is to say, I do not owe anyone anything and neither does the reader owe me anything.
And not to be forgotten, in that blog posting, I mentioned the following:
- This for me is so strange. We are talking about the stock market here and ultimately opinions and market strategies will differ. Should we go on hating someone because their opinion differs from ours? Or should we hate someone because they posted criticisms against the stocks we hold? Sadly, I seen this happening quite often.
And then OSK did a wonderful job warning on Mems. Yes, OSK did warn about Mems! OSK comments on Mems and then the rest was indeed histoy for Mems net earnings were reduced from 21.47 million to just 13.45 million!
- So what more can I say about MP Tech?
Got listed via RTO of Kelanamas in 2004. Insolvent by Jan 2007. To be delisted on Dec 2007!
Now value destruction or what!!
And oh yeah, Team www.Sahamas.net finished 2nd in BursaPursuit
Well, as mentioned, 2007 has been a truly wonderful year for me. The market has been truly kind to me. I do really hope it has been kind to you too.
And last but not least, many thanks for reading and I would like to wish all a grand 2008!