Saturday, October 31, 2009

Total US Bank Failures Is Now 115

Posted exactly a week ago, 24th Oct 2009. Should You Be Worried With All These Bank Failures

  • The tally of bank failures easily broke past the No. 100 milestone on Friday night, with regulators announcing the year's 106th closure.
A week ago, there were 106 bank failures.
Today the today is 115!

9 banks in major holding company fail

  • NEW YORK ( -- Nine subsidiaries of FBOP Corp., a multistate holding company that included California National Bank of Los Angeles, succumbed Friday to the nationwide banking crisis, bringing to 115 the number of banks closed by regulators so far this year.


    The banks, which had combined assets of $19.4 billion and deposits of $15.4 billion, will open Saturday as U.S. Bank branches.

    The nine banks are Bank USA N.A. of Phoenix, California National Bank of Los Angeles, San Diego National Bank of San Diego, Pacific National Bank of San Francisco, Park National Bank of Chicago, Community Bank of Lemont in Lemont, Ill., North Houston Bank in Houston, Madisonville State Bank in Madisonville, Texas, and Citizens National Bank of Teague, Texas.

    Together, the nine banks had 153 offices.


    This year's failures have already reduced the FDIC's insurance fund to below $10 billion from $45 billion a year ago. Friday's closure will cost the FDIC an estimated $2.5 billion.

    After factoring in expected closures, the agency says its insurance fund is in the red and will remain there through 2012.
    Over the next four years, the agency expects bank closures will cost $100 billion.

    The insurance fund also carried a negative balance during the savings in loan crisis.

On LA Times: Regulators seize California National Bank in country's fourth-largest bank failure this year

Another Default In Payment By OilCorp

Saw this announcement on Bursa website.

  • The Company had on 18 September 2009 announced that the Company has failed to meet its interest payment of RM1,643,806.85 due and payable on 17 September 2009 in respect of the Facility Agreement dated 9 September 2005 between EON Bank Berhad, CAPONE Berhad and OILCORP under a Primary Collateralised Loan Obligation (“CLO”) Transaction (“Facility”).

    The Company had on 29 October 2009 received a letter notifying a Declaration of Default under the Facility and the outstanding amount demanded under the Facility to be immediately due and payable as at 27 October 2009 are as stated in the said letter as follows:-

    Principal sum RM45,000,000.00

    Interest RM 1,951,471.23

    Default Interest RM 487,072.60

    Total RM47,438,543.83

    Should the Company fail to pay these amounts within fourteen (14) days, CAPONE Berhad may commence legal action against the Company for the recovery of the same.

    The Company is seeking legal advice on the matter.

Blogged previously: Regarding Oilcorp

And again the point to remember is that the major shareholders HAD sold down their shares ahead of 'these bad news'.

Oilcorp then (when I blogged Regarding Oilcorp) was 17.5 sen.

Oilcorp last traded at 11.5 sen.

Friday, October 30, 2009

How Do You Destroy A Market Capital Of 1 Billion!

Posted this morning: Kosmo's Directors Shocking Fine!!

Now do you know that when Kosmo was trading at a high of 8.50, Kosmo number had some 129.296 million shares.

Which meant that Kosmo was trading with a market capital of over 1 Billion Ringgit!

Now Kosmo is delisted!

Oh yeah, how do you make a stock with a market capital of 1 billion disappear?

Oh yeah, two directors were fined 257,300!!!!!!!!!!

Kosmo's Directors Shocking Fine!!

Fact 1.

Company said it made 109 thousand in its unaudited account for its fiscal year.
Company actually LOST 141 million according to its audited accounts.

Source: here
Blogged here:
Kosmo Technology Shocking Deviation Of Accounts

See also : Unaudited and Audited Accounts: UnReal or Real?

What's the major cause of the massive deviation in the accounts? According to the company's own reasoning: here, two major items were 'Impairment Loss of 55.6 million and 'Provision for doubtful debt of 75.9 million' (ps: see the importance not to discount the trade receivables issue?)

Fact 2.

Company had problems in submitting its financial statements: KOSMO TECHNOLOGY INDUSTRIAL BERHAD ("KOSMO" or "the Company") Delay in issuance of 2007 Annual Report

Fact 3.

Back in 2006, it traded as high as 8.50. See chart here.
It last traded at 1 sen

Fact 4.

Kosmo is now delisted!

On today's Edge Financial Daily:
Bursa fines Energreen, Kosmo directors over RM900,000

  • KUALA LUMPUR: Former Bursa Malaysia Securities-listed Energreen Corporation Bhd’s directors have been publicly reprimanded and fined a total of nearly RM650,000 for failure to submit its financial statements by the stipulated deadlines and failure to provide accurate information to investors.

    In a statement on Oct 29, Bursa Securities said it had found Energreen and 12 directors to be in breach of several listing requirements (LRs) while the company was listed on Bursa Securities.

    They are former chairman Datuk Seri Prof Dr Ibrahim Saad, who was fined RM2,250, former managing director Ang Sun Beng (a total of RM240,000), Choong Khoong Beng (RM4,500), Ong Wee Meng (RM4,500), Datuk Wira Jamaludin Abd Rahim (RM5,000), former audit committee chairman Badrul Hassan Mohamed Kassim (RM16,000), group managing director Datuk Abd Ghani Ali Kadir (RM274,000), Chin Kuet Lee (RM55,200), former chairman Datuk Seri Mohd Shariff Omar (RM9,050), Datuk Chee Hong Leong (RM13,300), Soh Yew Aun (RM17,000) and Dr Roslan A Ghaffar (RM8,500).

    Bursa Securities also publicly reprimanded and fined two directors of another delisted company, KOSMO TECHNOLOGY [] INDUSTRIAL [] Bhd, a total of RM257,300 for similar breaches of LRs. Bursa Securities said the breaches were also committed when the company was still listed.

A fine of a mere 257 thousand??????

Of course the deviation of Kosmo's account equated to 'failure to provide accurate information to investors' and hence it should be fined.

But then... look at the SIZE of the deviation!

It went from a profit of 109 thousand to a loss of 141 million!

A deviaton of 100 times! oO

And the company failed to submit its financial statements.

And the company is now delisted.

And the company went from 8.50 to no more! (Kosmo is now delisted!!!!)

And what do we get?

A fine of 257,300???????

Here's the full text of the announcement on Bursa website.

  • Paragraph 9.16(1)(a) of the LR requires a listed issuer to ensure that its announcement is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.
    Pursuant to paragraph 9.22(1) of the LR, a listed issuer must give Bursa Securities for public release, an interim financial report that is prepared on a quarterly basis, as soon as the figures have been approved by the board of directors of the listed issuer, and in any event not later than 2 months after the end of each quarter of a financial year.

    Paragraph 9.23 of the LR states that a listed issuer must ensure that the issuance of the annual audited accounts and annual report by a listed issuer shall be as follows :-
    (a) the annual report shall be issued to the listed issuer’s shareholders and given to Bursa Securities within a period not exceeding 6 months from the close of the financial year of the listed issuer; and
    (b) the annual audited accounts together with the auditors’ and directors’ reports shall, in any case, be given to Bursa Securities for public release, within a period not exceeding 4 months from the close of the financial year of the listed issuer unless the annual report is issued within a period of 4 months from the close of the financial year of the listed issuer.

    Paragraph 16.11(b) of the LR states that a director of a listed issuer must not permit, either knowingly or where he had reasonable means of obtaining such knowledge, a listed issuer to commit a breach of the LR.

    KOSMO had breached :-

    (a) paragraph 9.23(b) of the LR for failing to submit the Company’s annual audited accounts for the financial year ended 31 December 2007
    ("AAA 2007") on or before 30 April 2008. The AAA 2007 was only submitted on 30 June 2008;

    (b) paragraph 9.23(a) of the LR for failing to submit the Company’s annual report for the financial year ended 31 December 2007 ("AR 2007") on or before 30 June 2008. The AR 2007 was only submitted on 6 August 2008;

    (c) paragraph 9.22(1) of the LR for failing to submit the Company’s quarterly report for the financial period ended 31 March 2008 ("QR 1/2008") on or before 31 May 2008. The QR 1/2008 was only submitted on 30 June 2008;

    (d) paragraph 9.16(1)(a) of the LR for failing to ensure the Company’s announcement dated 29 February 2008 on the fourth quarterly report for the financial year ended 31 December 2007 ("QR 4/2007") took into account the adjustments as stated in the Company’s announcement dated 30 June 2008, in particular the adjustments pertaining to additional provision for doubtful debts and impairment loss for development cost.
    KOSMO had reported an unaudited profit after taxation and minority interest of RM109,000 for the financial year ended 31 December 2007 in the QR 4/2007. However, the Company had on 30 June 2008 reported an audited loss after taxation and minority interest of RM141,715,814 in the AAA 2007. The difference of RM141.824 million between the unaudited and audited results for the financial year ended 31 December 2007 represents a deviation of more than 100 times.

    Dato’ Norhamzah bin Nordin and Encik Mohamad Nassir bin Mohd Kassim who were the directors of KOSMO at the material time were found to be in breach of paragraph 16.11(b) of the LR for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the aforesaid breaches.

    They were informed of the audit concerns / issues to make provision for doubtful debt and possibility of impairment of development costs since August 2007 but have failed to demonstrate adequate efforts taken to discharge their duties to :-

    (i) address the audit issues pertaining to impairment loss of development costs to enable timely submission of the financial statements in accordance with the LR; and

    (ii) ensure that the QR 4/2007 made the necessary provision for doubtful debts and impairment loss on development cost to give a true and fair view of the state of affairs of the Company as at the financial year ended 31 December 2007 and in compliance with paragraph 9.16(1)(a) of the LR.

    The finding of breach and imposition of the above penalties on KOSMO and the directors are made pursuant to paragraph 16.17 of the LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including in relation to the directors, the roles and responsibilities of the directors in the Company particularly pertaining to the maintenance and preparation of financial statements.

Thursday, October 29, 2009

Charlie Rose Talks To Lee Kuan Yew!

Transcript of the interview:

Wednesday, October 28, 2009

MEMS Told To Correct Its Financial Statements!

On Business Times:

  • THE Securities Commission (SC) has instructed microelectronics maker MEMS Technology Bhd (MEMS), for the second time this year, to comply with the applicable financial reporting standards by adjusting its reissued financial statements dated October 7 2009.

    The regulator is giving the ACE Market-listed company 14 days to do so.

    The statements issued were for MEMS' financial years ended July 31 2007 and July 31 2008 as well as the quarterly report for the six months ended January 31 2009.

    MEMS is also required to announce to Bursa Malaysia the adjustments made, reasons for the adjustments and their detailed effects on the company's financial statements.

    The decision came after MEMS' admission in its reissued financial statements that they were not in compliance with the financial reporting standards, FRS118 "Revenue".

    In a statement issued yesterday, the SC said it viewed MEMS' non-compliance with the FRS118 "Revenue" "very seriously".

    On August 4 this year, the SC directed MEMS to rectify and reissue its accounts for the financial years ended 2007 and 2008. MEMS was also to rectify and announce to Bursa Malaysia its unaudited condensed consolidated income statements for the six months ended January 31 2009.

    MEMS was to rectify the financial statements by excluding RM49.183 million from its revenue for all the three financial statements.

    The basis of the SC's directive was that the amount was derived from transactions that never took place in the respective financial years and period.

    Investigations by the SC revealed that the group's revenue of RM53.699 million reported in the 2007 financial statement contained bogus sales of RM13.007 million,
    while the revenue of RM71.994 million reported in 2008 contained RM24.161 million sales which did not take place.

    For the six months ended January 31 2009, MEMS reported revenue of RM37.366 million,
    of which RM12.015 million sales had not been transacted.

    These sales were recorded in the financial statements of MEMS' wholly-owned subsidiary, Senzpak (M) Sdn Bhd.


This is one reason why I do not take SALES growth seriously. Sales revenue means nothing when the sales growth does not improve a company bottom line.

Anyway, I seriously believe MEMS Tech should be SANCTIONED for what they did.

By including these revenue that HAD NOT been transacted, it gave the ILLUSION that Mems tech were a HIGH GROWTH company.

And don't we all know how the stock markets love high growth.

5th April 2008, I wrote Mems Technology Again!

  • So by overstating its earnings by a mere 8 million, based on market capital, Mems managed to value itself 531 million. And if compare to the present value market value of 95 million, this overstating of earnings caused the company to be over valued by as much as 436 million!!!


    Overstate your earnings by a mere 8 millions and the stock market could reward you by valuing it an extra 436 million!!!

Mems present day 28th Oct 2009, has a market capital of a mere 42 million.


My answer is a clear YES!

Past postings on Mems: here

Tuesday, October 27, 2009

Regarding Notion Vtec

Got the following comments:

  • ronnie said...

    Dear Mr Moola,Notion has been in the news lately. It is an engineering subcontractor that enjoys profit margins that exceed 20%. The people in the company must be engineering wizards because when work is outsourced, the profit margins are usually controlled by the customers. The input and output are controlled by customers. This is a major reason for outsourcing the work in the first place. Other investors familiar with this industry may be able to shed more light on this.

    The other issue that puzzles me is why does the company buy back its shares in the millions and sell its shares aggressively?

Just for the record. Last blogged: Notion Vtec II

Issue 'then' was some decline in earnings + that 'Special Issues of Shares' issue.

Now.. present day, present time.

How now? Are you a trader or an investor?

If you are a trader, all it matters is the stock is IN the news and from the charts, it look as if there is some happening stuff. Whether it's good or it's bad, it's your own interpretation. Sorry I cannot guide you here.

But if you are an investor.

The past Special Issues of Shares tells you a lot of the company. Could you trust a company like this? It's like how could one invest or a be a business partner with parties you cannot trust? Does it make sense?

Now in regards the issues you are addressing.

  • The people in the company must be engineering wizards because when work is outsourced, the profit margins are usually controlled by the customers. The input and output are controlled by customers. This is a major reason for outsourcing the work in the first place.

You doubt the margins. If you doubt it, why bother? Why seek to be convinced for the sake of it?

  • The other issue that puzzles me is why does the company buy back its shares in the millions and sell its shares aggressively?

Again WHY?

Why is it doing stuff like this?

As an investor can you trust such a company?

If you cannot trust, why bother talking about value?


Why the interest now? Should you be an 'investor' just because the stock is hot in the news?


Sorry but I have no answers for you?

Marc Faber: US Dollar Worth Less Or Worthless?!

Marc Faber sees US dollar becoming worthless on fiscal policy 'disaster'

  • INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said the US dollar will become worthless when people eventually realise the fiscal situation in the US is a "disaster".

    Speaking today in an interview on Bloomberg TV, Faber said:
    "It will go to a value of zero eventually, but not right now".

    "I think it will take about 10 years until people realise that the fiscal situation of the US is a complete disaster," Faber added.

    The famed investor reiterated his long-held views that the Federal Reserve’s expansionist monetary policies are the causes of the financial crisis by creating a large amount of leverage in the system and creating a credit-addicted economy.

    "In my opinion, about 50% of tax revenues will be used just to cover the interest payments on the government debt. That is unsustainable. Then you'll really be forced to print money."

    The best investments right now are foreign currencies, commodities and equities, Faber said. Stocks will continue to benefit from the actions of Federal Reserve Chairman Ben Bernanke, he said.

    "As soon as the S&P drops to 900 or 800, he will print money again," Faber said.

    Referring to the Fed Chairman, Faber said: "He's a money printer. He's nothing else."

    While the dollar may rebound in the short term because it's been oversold, a rally won't last because the US will be forced to print more money to pay its debt, he said.

    Faber blames previous Fed Chairman Greenspan’s decision to hold interest rates at artificially low levels for precipitating the housing bubble and sees current Fed Chief Ben Bernanke repeating the mistake in the current crisis.

    "The Fed seems to ignore the fact that one of the causes of this crisis was the amount of leverage in the system. This is a credit-addicted economy," Faber told the European Investment Conference in Frankfurt on Thursday.

    He sees central bankers as having become hostage to inflated asset markets and questions how sustainable the next boom would be given that it was simply storing up more debt.

    Total US debt to GDP is now at 375%, without including the contingent liabilities from Medicare and Medicaid, he said.

    Faber sees this having serious implications for inflation.

    In his September issue of The The Gloom, Boom & Doom Report Faber wrote: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society."

    The years 2006 and 2007 were "the peak of prosperity" and the world economy is not likely to return soon to that level, he recently said.

    Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse".

    "The best way to deal with any economic problem is to let the market work it through."

Monday, October 26, 2009

Warren Buffet talks to Evan Davis On BBC

More Shareholders Against Bankers Bonus!


On UK Telegraph:
Shareholders attack banks in bonus row

  • Institutions want regulators to calculate the value of the state aid provided to Britain's lenders to ensure bonuses are only paid out of profits the bank has generated independently. Their demands echo angry comments made over the weekend by George Soros, the hedge fund manager, who described the industry's recent success as a "hidden gift" from the taxpayer that should not be used in payouts.

    Colin Melvin, chief executive of Hermes Equity Ownership Services, which represents about £50bn of assets, said: "From an incentivisation point of view, you want to establish the principle that bank performance based on guarantees or government support would not be part of a bonus calculation...

Now on CNBC website: Banks Taking Same Risks That Led to Crisis: ECB's Noyer

  • European Central Bank Governing Council member Christian Noyer warned that banks are taking the same risks that led to the financial crisis and said they should preserve capital rather than pay it out to bankers and investors.

    His comments came as regulators around the world mull reforms to lower the risks that large banks can pose to the financial system and rein in the type of recklessness that fueled the credit crisis.

    Noyer said impressive bank profits in recent weeks were a result of public policies to combat the crisis, and did not mean the industry had recovered its balance or that further reforms were not necessary.

    "Nothing could be further from the truth. Indeed, one major risk in the period to come is the emergence of a business as usual mentality," Noyer said in a speech at a financial conference in Singapore on Monday.

    "There are signs that parts of the financial industry have resumed risk taking practices reminiscent of those which led to the crisis," he said, pointing to bankers' pay packages that appeared out of line with performance.

Hong Leong Bank's New Personal Loans

Low monthly installment from as low as rm133.33.

But is it as cheap as it suggest?

Assume you take the rm50,000 personal loan for 2 years.

Per month pay back payment is rm2583.33.

Or 30,999.96 per year.

Or 61,999.92 for two years.

Which means this loan will cost you 11,999.92 or a cool 24%!!!

How about 50,000.00 for 5 years?

Per month pay back payment is rm1,333.33.

Or 15999.96 per year.

Or 79,999.80 for five years.

Which means this loan will cost you 29,999.80 or a cool 60%!!!!

Good to be a banker, eh?

Still wanna test drive their loan for '30 days'???


Some market comments

Not that it mattered but mentioned on Bob Pisani's posting: A Real Work of 'Art' — Cashin And Me

  • On the uncertainty of new cash entering the markets:

    "The amount of cash in the mutual funds is going down. So they're driving the car and the gas gauge is going down. Nobody's adding gas to them. Nobody's coming up and saying, here— here's new cash. So you're absolutely right. And that raises the question, how much more gas do they have to give to this rally."

Saturday, October 24, 2009

Should You Be Worried With All These Bank Failures

On CNN Money: Bank failures stack up: Now 106 for 2009

  • NEW YORK ( -- The tally of bank failures easily broke past the No. 100 milestone on Friday night, with regulators announcing the year's 106th closure.

    That's more than four times the number that were closed in 2008, and the highest total since 1992, when 181 banks failed.

    Earlier on Friday evening the dubious honor of the 100th failure went to Partners Bank, of Naples, Fla., which had $65.5 million in assets, according to the Federal Deposit Insurance Corp.

    The 101st failure was American United Bank, of Lawrenceville, Ga., which had $111 million in assets.

    The 102nd failure was another Naples, Fla., institution: Hillcrest Bank Florida, which had $83 million in assets.

    The 103rd closure was Bradenton, Fla.-based Flagship National Bank, with $190 million in assets.

    The 104th was Bank of Elmwood, based in Racine, Wis., which had $327.4 million in assets.

    The 105th failure was Riverview Community Bank of Otsego, Minn., with $108 million in assets.

    The 106th failure was First Dupage Bank in Westmont, Ill., which had $279 million in assets.

    Customers of all seven banks are protected, however. The Federal Deposit Insurance Corp., which has insured bank deposits since the Great Depression, covers customer accounts up to $250,000. This is funded through premiums paid by member banks.

Holy Cow!

Seven banking failures in one day!!!!!!!!!!!!!!!

Yeah, how optmistic can one be for an economic recovery!

Highlighted earlier this month: Georgian Bank: Yet Another Failed Bank!

  • Oct. 1 (Bloomberg) -- There was a stunning omission from the government’s latest list of “problem” banks, which ran to 416 lenders, a 15-year high, as of June 30. One outfit not on the list was Georgian Bank, the second-largest Atlanta-based bank, which supposedly had plenty of capital.

And as mentioned, it really makes one wonder. The bank was 'supposedly' have plenty of capital and it was not even on the problem banks list.

Now we have SEVEN more bank failures!

Which makes this posting Banks' Health Were Exaggerated! more relevant!

Mentioned in that posting was a CNBC article: US Officials Exaggerated Banks' Health: Watchdog

  • Senior U.S. officials deliberately created the impression last year that banks receiving huge government cash infusions were healthier than was the case, a Treasury Department watchdog's report released Monday said.

    As a result, the government and the bailout lost public credibility when the financial crisis deepened.

    Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke said at the time that their dramatic force-feeding of $125 billion into nine banks in October 2008 was a program for "healthy" institutions.

    Privately senior officials worried about the health of some of those firms, Treasury's Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, said.

    "By stating expressly that the 'healthy' institutions would be able to increase overall lending, Treasury may have created unrealistic expectations about the institutions' condition and their ability to increase lending," the report said. Paulson won approval from Congress to spend $700 billion to repair the financial system.... (read the rest
    here )

Anyway, the article on CNN then continues.

  • Why regional banks are failing. While larger financial institutions have received aid from the federal government, smaller banks have found themselves left adrift. Like their larger counterparts, many of these banks made risky loans to individuals and real estate developers during the boom years and are now facing large numbers of defaults as the recession drags on.

    Rising unemployment has made it difficult for many individuals to keep up with expenses, and businesses are feeling the crunch of consumers' reduced spending power. As a result, regional banks are left holding loans their customers can't repay.

The very last passage explains clearly why one the current so-called 'recovery' is clearly not sustainable if the unemployment problem persists.

No employment, how could these 'many individuals' keep up their expenses?

No employment, how about their housing loans (if any)?

No employment, how could they spend?

And if they do not spend, what then for America and the world? What then for the world largest consumer?

A consumer equals to a customer, no?

In a business, if customer spends less or if there is less customer, how optimistic can one be?

Remember Warren Buffett's Comments On US Economy

  • The patient really went into the emergency room and it won’t come out of the hospital entirely for a while."

That the patient is STILL in the hospital.

That the patient is likely to stay in the hospital for a while.

The CNN article then continues.

  • Problem banks list looms. The FDIC keeps a list of "problem banks," though it does not disclose the names to the general public out of fear that depositors at those institutions may prompt a "run on the bank."

    In June, the agency said
    416 banks were at risk of failure -- the highest level in 15 years.

    It's a whopping figure, to be sure. But even as the pace of failures accelerates, 2009's numbers remain far from what happened during the savings and loan crisis two decades ago. More than 1,900 financial institutions failed from 1987-1991, peaking at 534 closures in 1989.

The problem bank list has 416 banks at risk.

But... but... but... one cannot even discount the banks NOT in the list.

Why? The US Banks' Health Were Exaggerated! as per CNBC article. Look at the example of Georgian Bank!

So what if there is MORE banks at risk?

And to make the matters even more worrying.

  • Federal coffers running dry. An average of 10 banks have failed per month this year, and the federal coffer is thinning under the massive strain. The fund now stands at $7.5 billion, down significantly from $45 billion a year ago.

    When the FDIC factors in expected closures, the agency says the fund is
    in the red and will likely remain there through 2012. Bank failure costs are expected to total $100 billion over the next four years, leaving regulators strapped for cash.

    Last month, the FDIC discussed how to raise quick cash to replenish the fund. The agency proposed that banks prepay their deposit insurance premiums for the next three years.

Oops! The money is drying out really fast in FDIC!

How now?

Hmmm.. posted earlier this month: The Sustained Economic Rebound May Be Elusive!

Friday, October 23, 2009

What Do I Think Of NSTP Privatisation?

  • The Contrarian said...

    Dear Moola,would u kindly do a review on NSTP/Media prima dealing, is it right to make deals like this anymore, and do u feel the price is justifiable?? how would u value such a deal, im clearly aware how illiquid assets can be but NAV of 4.50.. definely deserve more than 2 bucks and a few warrants.... Thank you very much

I have always argued AGAINST the privatisation of a LISTED SUBSIDIARY.

End results always remain the same.

The minority shareholders are always short changed.

Think outside of the box for a minute.

Why do companies get listed? Besides getting public funding so that the company can progress into a bigger company, the bottom line is that this is a profitable exercise for the majority shareholders. Now why do companies want to be delisted? If there is NO profit to be made, would any sane company wants to be a private company?

Same with listing and delisting of subsidiary companies.

Now in Media Prima case, if there is NO profit, why should it go through all the hassle to delist its subsidiary company, NSTP?

Does Media Prima have nothing else better to do?

Now let's look from a minority shareholder or an investor point of view.

Why does any sane person wants to 'invest' in another company?

Bottom line? They want to make money.

Now as everyone knows, investing in the stock market has MASSIVE risks.

Now the first big risk is the stock selection. Buy the wrong stock and the investor is most likely to be screwed.

The company could be good and the company could have a decent business economics. But then, business economics and business fortunes do changes and these changes sometimes are unavoidable. Worse still, many companies might even go under due to unforeseen changes.

What if there is a change of management and the new management shows total no respect to its shareholders and runs the company down?

And what about stock market crashes? Look at our Malaysian stock market history. How many local stock market crashes have we seen? And if you put in a ten-year time frame, how many stock market crashes have we seen per decade?

I could go on and on.

Ah, but then bull markets do happen too. Undeniable. Bull markets can make many rich! Yes, huge fortunes can be made and I'm sure many have made this round.

Which is why many take the RISK of investing in the stock market. They take the risk because they want to make big money and they are willing to take the risk despite the many possible risks involved.

However, one thing is DEAD certain.

It would make logical sense to these investors that they get FULLY COMPENSATED for taking the risk in investing in the stock market.

But what if there is NO FULL COMPENSATION?

What if the upside potential or the potential reward is capped?

Would you want to invest in an investment which has unlimited downside risk and has a possible reward capped at 20% or 50%? Is the 50% reward even guaranteed? Is it cast in the stone that the investor could gain that much?

It wouldn't make sense for such an investment, yes?

Which applies to the stock markets.

When one invest in a stock, one would like to be given the opportunity to make unlimited profit. They want to be given a chance to be fully compensated for taking the RISK in investing a stock.

Now put this into one's investment in a listed subsidiary. The same stock market risks exists as usual but once a listed subsidiary HAS THE OPTION of delisting its subs diary, then the investor is burdened by another extreme handicap. The investor does NOT know if the compensation is fair. Yes, the investor does not know if the privatisation offer is fair and judging from past history, privatisation of listed subsidiaries had been done at extreme low prices. Worse still the investor do not know when such a privatisation would even happen.

Now take NSTP privatisation offer.

Is it fair? Or is it grossly unfair?

One could argue and argue and argue using all the valuation methods proving the offer is unfair but would it matter?

Look around us.

Does anyone really care?

Here's one suggestion I can offer. In the future, try to forgo ALL OPPORTUNITIES when it comes to stocks which are listed subsidiary. Yes avoid them at all cost because as long as no one opposes the delisting of a listed subsidiary in Bursa Malaysia, then such privatisation will always happen and ultimately, the minority shareholders would be short changed!

Steep Market Declines Are Coming

Highlighted by Jesse.

Thursday, October 22, 2009

Do You Feel Letdown By OUR Internet Services?

On today's Star: Internet services a let down

  • If they promised Internet speed at 10 megabits per second, the public should not be experiencing a slow-as-tortoise service at one or two megabits - Datuk Seri Rais Yatim


If the consumer is promised speed at 10 megabits and if the consumer is paying for such service then the consumer should get what they pay for!

Experiencing internet services 'as slow-as-tortoise' service at one or two megabits is simply unacceptable!

  • He said action must be taken against service providers who failed to meet expectations.

Fully agree too!

  • The Government wants the Malaysian Communi­cations and Multimedia Commission to find out why the cost of Internet services in the country is high.

And ditto to that!

Here's a old youtube clip!

Sesa: The Market Is Stabilizing

On Bloomberg news: Sesa to More Than Triple Ore Output on China Demand

  • By Debarati Roy

    Oct. 21 (Bloomberg) -- Sesa Goa Ltd., India’s biggest iron- ore exporter, will more than triple production because of a rebound in prices and demand from China and diversify into making steel, Managing Director P. Mukherjee said.

    Output will be increased to 50 million metric tons from the current 15 million tons in the next two to three years, P. Mukherjee said in an interview. The Goa-based company is increasing production at its existing mines and looking to acquire reserves in India and overseas, he said.

    China, the world’s biggest consumer of iron ore, may buy 20 percent more than forecast next year, the Canberra-based Australian Bureau of Agricultural and Resource Economics said on Sept. 22. China may import 637 million tons of ore in 2010, compared with a June prediction of 529 million tons.

    “The market is stabilizing,” Mukherjee said late yesterday, after the company announced a 51 percent drop in second-quarter profit. Prices, which fell to an average $50 a ton in the quarter from $95 a year ago, are improving, he said.

    Sesa shares fell as much as 8.9 percent to 316.60 rupees and traded at 329.55 rupees as of 10:05 a.m. in Mumbai. The stock has more than quadrupled this year, compared with a 78 percent gain in the benchmark Sensitive Index.

    Steel Slabs

    Sesa Goa has shortlisted some locations to set up a 1 million ton plant to produce steel slabs in the eastern state of Jharkhand, Mukherjee said, without giving investment and time details. Steel slabs are made into steel plates and strips.

    Profit declined to 1.66 billion rupees ($36 million) in the three months ended Sept. 30 from 3.37 billion rupees a year earlier, Sesa Goa said in yesterday’s statement. Revenue fell 32 percent to 6.32 billion rupees, while volume sales rose 17 percent, Mukherjee said.

    Iron-ore swaps for settlement this month traded at $85.25 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd.

    China’s steelmakers are buying more iron ore, their main raw material, as the government implements a $586 billion stimulus spending. The economy is forecast to expand 8.2 percent this year, compared with a March estimate of 7 percent, the Asian Development Bank said last month, easing concern that the nation may slow raw-material imports.

    The Baltic Dry Index, a measure of shipping costs for commodities, rose on rising shipments of iron ore to China. The index tracking transport costs on international trade routes gained 66 points, or 2.4 percent, to 2,832 points on Oct. 20, according to the Baltic Exchange. Charter rates for capesize ships, most commonly used to haul iron ore, added 5.4 percent to $44,268 a day

Yeah, as mention in the posting, Baltic Dry Index Stages Strong Rebound ( see also Baltic Dry Index May Surge More Than 80 Percent! ), BDI had been a tear lately.

Wednesday, October 21, 2009

Trading: Is success guaranteed from INSIDER NEWS/TIPS?

Ah.. highly interesting development from the Galleon saga and here is the most interesting question from the saga.

Is success guaranteed from INSIDER NEWS/TIPS?


  • Raj Rajaratnam, the authorities say, masterminded one of the biggest insider-trading schemes in a generation.

    But if Mr. Rajaratnam was trading on insider information, apparently he was not very good at it.

    A close examination of the trades that led to his arrest last week reveals a startling fact: In all, Mr. Rajaratnam lost millions from what prosecutors characterize as illegal trading.


  • One bad trade, in the shares of the chip maker Advanced Micro Devices, cost his hedge fund, the Galleon Group, $30 million. That loss more than wiped out the profits that prosecutors claim Mr. Rajaratnam and his accomplices reaped with their scheme.

    Prosecutors highlighted the winning trades in a case that they say stretched from the secretive world of hedge funds to some of the country’s biggest technology companies. They did not mention the losers.



In chats and forums, folks tend to highlight only their winning trades.

And yes, no one mention them losers!

  • Profitable or not, insider trading is insider trading. And Mr. Rajaratnam, who maintains he is innocent, might have broken the law even if he lost money on his trades.

    But the fact that some of the investments soured, and that, in all, Mr. Rajaratnam lost money, could be powerful evidence for defendants. Inside information is, by definition, information that is material to investors, and thus could cause a company’s stock to move in a direction that will be obvious in advance.

    For example, if a company’s stock is trading at $75 and someone learns that the company will be taken over for $100 a share, that information would be material. But routine corporate news — a retailer announcing new store openings, for instance — is generally not considered material.

    “The violation is trading on material nonpublic information,” said Robert A. Mintz, a former federal prosecutor who now heads the white-collar defense practice at the law firm McCarter & English. “
    There’s no requirement that that trade results in a gain to the defendant. But if it turns out to have been a money-loser, it obviously gives the defense some fodder to argue that the information was not material.”

    Utpal Bhattacharya, a professor at the Indiana University Kelley School of Business and the co-author of a study on insider trading convictions from 1995 to 2004, said that convicted defendants had profited in every one of the cases he examined.

    “A loss is likely to weaken the prosecution’s case,” Mr. Bhattacharya said. But he added that prosecutors had wiretaps in which defendants expressed concerns about their actions, which could strengthen the case.

    A spokesman for the United States attorney’s office in Manhattan said the office could not comment beyond the criminal complaint or press statement from last week.

    That statement refers in its headline to a “$20 million insider trading case” and explains that Mr. Rajaratnam and other defendants “are charged in insider trading schemes that together netted more than $20 million in illegal profits.”

    A one-page graphic released by prosecutors mentions six trades made by Mr. Rajaratnam that netted Galleon, his hedge fund, total profits of $20.6 million.

    Missing from that handout is a 2008 trade that moved badly against Mr. Rajaratnam and Danielle Chiesi, who also is charged in the fraud case. Ms. Chiesi worked at New Castle Funds, another hedge fund, and is accused of supplying insider information to both Mr. Rajaratnam and New Castle.

    From August 2008 to October 2008, Mr. Rajaratnam ordered Galleon to buy at least 16 million shares of A.M.D., a computer chip maker, according to the federal criminal complaint against him and a related complaint by the Securities and Exchange Commission.

    During the same period, New Castle bought about 2.5 million A.M.D. shares, according to another criminal complaint that focuses on Ms. Chiesi.

    Galleon and New Castle bought the shares because Mr. Rajaratnam and Ms. Chiesi received information from an I.B.M. executive in August that the government of Abu Dhabi would invest billions of dollars in A.M.D. as part of a deal for A.M.D. to spin off its manufacturing facilities, according to the complaints.

    But the possibility of a deal between A.M.D. and Abu Dhabi had been rumored before Galleon and New Castle began buying.

    “Some analysts speculate that the spinoff will require a substantial investment from the government of Abu Dhabi,” The Austin American-Statesman reported on July 18.

    Galleon spent $85 million to $90 million on the 16 million share purchases that are disclosed in the two complaints, an average of about $5.50 a share. But as global stock markets plunged in September and October, A.M.D. shares sank too. By Oct. 6, Galleon’s shares in A.M.D. were worth only about $68 million, a loss of roughly 25 percent. On Oct. 7, A.M.D. announced its deal with Abu Dhabi. Its stock closed about 8 percent higher that day, but was still significantly lower than Galleon’s purchase price.

    Galleon then held on to nearly all its A.M.D. stock after the deal was announced, and A.M.D. stock resumed its plunge during the rest of October.

    The criminal complaint acknowledges that “most of the shares, however, were held until at least later in October 2008,” at which point A.M.D. stock was trading between $3 and $4 a share and Galleon had lost about $30 million. A person close to Galleon confirmed the figure.

    The fact that Mr. Rajaratnam lost money on the trades could mean he and other defendants will receive a short sentence even if they are convicted, said Steven D. Feldman, partner in the white-collar criminal litigation practice at Herrick, Feinstein.

    “The higher the gain, the higher the recommended sentence,” he said.

    Mr. Feldman added that prosecutors might choose to remove the A.M.D. transactions if and when they formally indict the defendants.

    Mr. Rajaratnam and the other defendants were arrested last week on a complaint from prosecutors. They have not been formally indicted, a procedure that requires a grand jury’s vote.

    Mr. Feldman, who once worked as an assistant federal prosecutor in the securities fraud department in Manhattan, said the lack of an indictment, as well as the fact that there were two separate complaints, indicated that the investigation might have been chaotic at the end.

    “Traditionally, you’re going to want to bring these cases by indictment,” Mr. Feldman said. “The fact that they didn’t is evidence they were rushed.”

    This story originally appeared in the The New York Times

Warren Buffett's Comments On US Economy


  • "I am not sure about exact quarters or anything of the sort. Who knows about next week or next month? We made enormous progress since a year ago. We had a real panic. And if you didn’t panic, you didn’t understand what was going on. What happened in September and October of 2008 will particularly be remembered for a long, long time. And while the governmental authorities malign things sometimes, they fortunately did some very right things, very important things. They did them properly, and they kept us from going over the cliff. The fallout from that financial panic hit the regular economy in the fourth quarter like a ton of bricks. We are coming back from that. The patient really went into the emergency room and it won’t come out of the hospital entirely for a while."

Mohnish Pabrai: There's Only One Warren Buffett

Here's a wonderful interview on Mohnish Pabrai. Enjoy!

  • Mohnish Pabrai currently manages Pabrai Investment Funds, which he founded in 1999. The fund has around half a billion dollars in assets under management. Pabrai went to the US in 1982 to do his undergrad in computer engineering. After that, he worked with Tellabs in Chicago. In 1990, he started his own company TransTech, an IT services/system integration business and ran that for around ten years, before starting Pabrai Investment Funds. He has written a book on investing, The Dhandho Investor: The Low-Risk Value Method to High Returns. Excerpts from an interview:

    How did you get into investing business from information technology?
    Around 1994 I heard about Warren Buffett for the first time accidentally. The first couple of biographies about him had just been published a year or two before that. I read those books and I was quite blown away by some data points that were coming out about him and the industry and so on. I didn’t have any experience or even education in the investment business. But I was very intrigued by it.

    I started to invest in the public equity markets using Buffett’s model in 1994 and basically did extremely well, north of 70% a year, till about 1999. I was getting more and more interested in investment research and securities analysis and made a decision to leave my company. I brought in an outside CEO and decided that I would spend more time on investing and at the same time some friends of mine wanted me to manage their money for them. It started as a hobby in 1999 with about a million dollars from eight people. About a year later the business (TransTech) actually got sold, I wasn’t running it anyway, but I was completely cashed out. And then I thought that let’s make my hobby a real business, try to scale it up and get investors. We now manage about $500 million — ten years later.

    How did you narrow down on Warren Bufett and value investing?
    Basically in 1994, when I read about Buffett, there were two things that stood out. One was that he had compounded money at a very high rate. If you are compounding at a high rate, even if you have a small amount of money — let’s say a million dollars — in thirty years you could have a billion dollars. So the idea of compounding at a rate above the market rate is an extremely fine notion because it can lead to enormous wealth creation. That was the first thing.

    The second thing was that the way Buffett was compounding money at a rate higher than the market was based on a core wisdom which he stood for. If you are physicist, whether you believe in gravity or not, it will always impact you. Just like there are laws of physics, laws of gravity, there are laws of investing.

    I noticed in 1994 that the mutual fund business had two things: one, they did not follow the laws of investing, and two, their results were affected by the fact that they did not follow the laws of investing.

    For example, a basic law of investing is that you make very few bets, you don’t buy a hundred companies because you are not going to have an understanding of business. But if you look at mutual funds, that is not the way they operate.

    So essentially, what you are saying is that investors should make fewer bets?
    So you make few bets, you make big bets, infrequent bets and you only make bets when the odds are heavily in your favour. What I found very funny was that here is a guy (Buffett) who is telling you very much the approach to investing he follows, and this is like Newton telling you the laws of physics. The second thing is that the investment industry does not care about these laws, and their results reflect it.

    The third conclusion I came to is, I said, OK, if what I am saying is right, what it means is that a person like myself, who has no experience in this industry, could come in and apply Buffett’s rules and do better than all these managers running all these funds. So I said, well, that hypothesis means nothing until you test it out. I had an asset sale take place of a part of my business in 1994, and I had about million dollars in cash, sitting with me for which I did not have any need for.

    I decided I am going to take this million and put this on a twenty or thirty-year compounding engine. I was about 30 years old, I wanted to see if by the age of sixty I had my billion dollars. I started playing this thirty-year game in 1994, and basically I found that first of all, it was very enjoyable and second, that it’s been fifteen years now and the original hypothesis I had is absolutely correct — which is that the industry doesn’t get it, they still haven’t changed their ways, and there results reflect that.

    What are the factors you look at before deciding to invest in a company? Can you give us an example?
    The first thing you got to look at is, “I am not buying a stock, but I am buying a business.” And you only buy the business if you were willing to buy the entire business if you had money for it. So, for example, if Reliance Industries has a market cap of $100 billion and you had a $300 billion, the question you would ask yourself is, would I buy the entire business for a $100 billion?

    The first thing is that you are not buying pieces of paper, but you are buying an entire business. The second is that you ask yourself, do I understand the business? Do I truly understand how it will work, how it makes money, how will it do in the future?
    Then the third thing is, if Reliance produces $3 billion a year cash flow and it trades for $100 billion, I have no intention of buying it at 33 times cash flow. It is like I have no interest in putting money in an account that pays 3% interest.

    So I love Reliance, maybe, if the fair value of business is 15 times cash flow, which is $45 billion. And since I am cheapskate, I don’t want to buy it for more than half its fair value, so I just say to myself, that if it goes below $20 billion in value — or one-fifth the current price — then I will look at it again. In fact, that is the way to look at the Indian Sensex. You take all the Reliances, the Wipros and Infosyses of the world, chop their price by four, and that’s your entry price.

    What has been your most successful stockpick till date?
    You know that’s a very funny question. The most successful company I ever invested in is Satyam. I invested in 1995, and I was completely out by 2000. When I invested the stock was at Rs 40, and Satyam’s earnings at that time were about at Rs 12 a share, so you were buying a business for three-and-a-half times earnings. And the more interesting thing for me was that property the company had in Hyderabad exceeded the market capitalisation as it was carried at a value that was bought a long time ago.

    The only reason I knew about Satyam was because I was in the IT services space. These guys had actually visited us to see if they could do business together. And I had been pretty impressed by the way the business operated and the people I had met.

    I looked at it from my investment point of view after was amazed that such a business could trade at such a price. So I invested in Satyam. In 2000, it was trading at Rs 7,000, that is about a 150 times the price I bought it at. This was in the days before demat, and actually when I bought the stock with an account through Kotak that I had in Mumbai, I was given physical delivery of these shares that looked like tattered pieces of paper that were falling apart.

    Satyam from less than a PE of 3 to more than PE of 100. I just said I am out of it because now I owned a bubble stock even though I did not buy it at bubble price. I sold my entire position within 5% of the peak. Within six months it had dropped from Rs 7,000 to Rs 1,000, and continued on the sidelines for a while. That was the best deal that I ever made.

    I also happened to read somewhere that you wear shorts to work and do not as a matter of habit short stocks?
    Well, I am wearing shorts right now … the math for for shorting is really bad. When you are long on a stock, as it goes down in price, the position is going against you and it becomes a smaller portion of your portfolio. In shorting, it is the other way around: if the short goes against you, it is going to become a larger position of your portfolio. When you short a stock, your loss potential is infinite; the maximum you can gain is double your value. So why will you take a bet where the maximum upside is a double and the maximum downside bankruptcy?

    Also, any time you short a stock, you are hooked to a (stock price) quote machine for life support because you have to watch what is happening all the time. Many a times, when I am travelling in India, it could be several days when I don’t have a quote for any positions that I hold. So I don’t want to be a in a situation where I have an umbilical cord linked to some quote machine … and blood pressure going up and down.

    Do you have investments in emerging markets like India and China or do you stick to the stocks in the US market?
    I would say that most times a very large portion of our portfolio has a lot of exposure to the global market. I have (shares in) several companies in Canada. I own (shares in) one Chinese company and an Egyptian company, I don’t own any Indian companies right now, but I use to own Satyam. Also Pabrai Funds use to own Dr Reddy’s.

    You have said in the past that investment ideas come to you by reading a lot…
    An investor should think of himself as a gentleman of leisure. Don’t think that you are in some profession. You just think that you are a person who is focused on enjoying and living life well. If you focus on yourself as a gentleman of leisure what is going to happen is that you do not feel any compelling reason to act. It has been several months since I have bought any new stock. And that is not a problem because we went through a period in December when we bought ten stocks. The first thing is that we are in a profession were you don’t pay for activity, you get paid for being right. So there should be no compelling reason to act. Basically, the thing you do is you take out the reason to act.
    The second thing you do is you focus on acquiring worldly wisdom. I read an enormous amount of stuff and relate to what different investment managers who I respect are saying. So, at times, things become no-brainers.

    In the fourth quarter of last year, when everything was going to hell, one part of the market that went to extreme hell was commodity-related stocks. Commodity-related stocks absolutely got crushed. 95% down. 90% down. And if you simply keep in mind that you look at the growth rates of India and China, you can get an insight.

    Through our foundation Dakshina I spend a good amount of time in rural India. I can see nuances about India, that most people would not see. You can see that the pressure on the few commodities in the earth’s crust is tremendous.

    China has severe problems with fresh water and you really have big problems with agriculture with those type of water issues. When you have growth rates of 7-8%, people will want to eat the best. Generally it is proven that protein consumption climbs very high when economies do well. It is absolutely a given that 10 years from now the amount of agriculture and protein needed will be much higher from today. And getting there will not be easy.

    So the thing is there are certain businesses that serve as toll bridges in that space. For example, one toll bridge is if you look at Latin America. It has a lot of land and it is flooded with fresh water rivers. South America can basically take that land and convert it into producing corn and soybean or whatever and export the hell out of it to China. And that is exactly what will end up happening. Latin American agricultural companies with large land holdings today are not excessively priced, they are very cheap. But there is absolutely no way for India and China to satisfy the consumption demand that is coming without going to Latin America. So we will just own the toll bridges and wait.

    How much of Warren Buffett’s success can be attributed to his investment prowess and how much to the fact that he is Warren Bufett?
    Well the thing is you could have invested even after Buffett had invested and you could have made six times the money out of it.

    In fact there are a couple of professors in Ohio, who studied any stock that Warren Buffett bought, if you bought on the last day of the month, when it was public that he owned that stock, and you sold it after it was public that he had started selling it, you would have generated north of 20% annual rate of return.

    I would say that we will never see another Warren Buffett. Just like we will never see any Albert Einstein or another Mahatma Gandhi. Buffett is a very unique individual. His skillsets outside of investment are phenomenal but they get dwarfed by his investing skills. The main thing that makes Warren Buffett Warren Buffett is that he is a learning machine who has worked really hard for, let’s us say seventy years, and is continuously learning every day.

    So the thing is if you want to be like Buffett, there is no short cut. First of all, you have to be deeply interested in investing and you have to be very willing spending tens of hours, hundreds of hours, reading the minutiae. There is a very famous value investor called Seth Klarman. He is into horse racing. And his famous horse is called Read the Footnotes.

Source: here

HLG's Expectation For CPO Prices

On the FinancialEdge Daily. HLG Research expects CPO prices at RM1,900-RM2,500 per tonne

  • HLG Research expects CPO prices at RM1,900-RM2,500 per tonne
    Written by Financial Daily
    Wednesday, 21 October 2009 10:51

    KUALA LUMPUR: HLG Research expects palm oil prices to trade between RM1,900 and RM2,500 per tonne in the next couple of months due to increasing fresh fruit bunch (FFB) production as palm trees enter into peak production season, exports growth slow before picking up towards year-end due to the lack of festive season between now and year-end, and speculation in the commodities market.

    For exposure to the PLANTATION [] sector, the research house likes pure-play planters such as Genting Plantations Bhd (16 times FY10 PE, net cash of RM0.24/share) and UNITED MALACCA BHD [] (17 times FY10E PE, net cash of RM2.52/share, implied CPO of RM1,900 per tonne).

    HLG Research said the benchmark third month CPO futures rose to its highest level in two weeks on Monday.

    CPO futures were down yesterday, with the most active January contract closing RM17 lower at RM2,180 per tonne, compared to the day before. The fall is said to follow crude oil, which traded sideways after reaching a one-year high above US$80 (RM268.80) per barrel.

    Palm oil exports increased 1.8% in the first 20 days of October to 812,095 tonnes from 797,929 tonnes over the same period in September, according to independent cargo surveyor Intertek.

    This article appeared in The Edge Financial Daily, October 21, 2009.

IF i am a reader and IF i am looking for some guidance on what to expect for crude palm oil prices, then this article is simply not up to my expectations.

A price range between rm 1900.00 to rm 2500.00 for the next couple of months is simply too wide.

Some would be quick to point out that one could get a similar price range if one refers to recent months trading range.

Rather lacking, don't you think so?

Are You Listening Obama?!

On th UK Telegraph: Mervyn King: bail-outs created 'biggest moral hazard in history'

  • Mervyn King: bail-outs created 'biggest moral hazard in history'
    The Governor of the Bank of England on Tuesday night launched his fiercest attack yet on big banking

    By Edmund Conway
    Published: 9:58PM BST 20 Oct 2009

    Mr King indicated that high street banks could and should be separate from their risky investment banking wings and calling for a reconsideration of the financial system's structure.

    In comments which will be seen as a clarion call for a potential break-up of Britain's banks, the Bank of England Governor warned that the support handed out by the Government had "created possibly the biggest moral hazard in history". He said that it was insufficient to expect that in the future tighter regulations alone would be enough to prevent banks from generating financial crises.

    The warning goes against the grain of efforts by Governments on both sides of the Atlantic, which have tacitly ruled out splitting up the biggest banks and opted instead to scrutinise them more actively. Mr King, who said earlier this year that if banks are "too big to fail, then...they are too big," said that there is a risk the financial crisis comes and goes but the current system, in which big banks enjoy an effective guarantee from the state, remains.

    In a speech in Edinburgh, he said "
    It is in our collective interest to reduce the dependence of so many households and businesses on so few institutions that engage in so many risky activities. The case for a serious review of how the banking industry is structured and regulated is strong."

    He added: "The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion," adding:
    "It is hard to see how the existence of institutions that are 'too important to fail' is consistent with their being in the private sector."

    Experts have said that one lesson is that banks with large household deposits should not be allowed to practice the risky trading which, ultimately, led to their near-collapse, since this leaves the entire economy at risk. However, neither the Government's White Paper on financial regulation nor the Conservatives' plans proposed breaking up Britain's four big banks into utility style high street outlets and riskier investment banking arms.

    Although he stopped short of calling for an immediate break-up, Mr King said: "There are those who claim that such proposals are impractical. It is hard to see why."

Well at least there's another person out there that recognise the insanity of the current financial world!

Are you listening Obama?

hereis the CNBC version:

  • ..... King said the use of taxpayers' money to prop up banks had created "possibly the biggest moral hazard in history" since institutions had an incentive to take risks if they were confident they would be bailed out.

    "It is hard to see how the existence of institutions that are 'too important to fail' is consistent with their being in the private sector," King said. "Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don't, distorts the allocation of resources."

Tuesday, October 20, 2009

All Is Forgotten In A Bull Market!

Posted the other day: How Much Do You Really Care About OUR Stock Market?

On today's Star Business:
Better voting process necessary in shareholders’ meetings

  • Credit-Suisse Securities (M) Sdn Bhd head Stephen Hagger said the local corporate governance scene had improved significantly over the years, but issues such as related party transactions remained a major concern.

    “Unfortunately, the bull market is bad for corporate governance as all is forgotten in a rising market,’’ he said.

Sad but true.

Yeah, who cares about bad corporate governance??

Most important is the opportunity to make money!

Monday, October 19, 2009

Sern Kou Tells Bursa Malaysia They Are Unaware!

They don't know!

On Business Times:

  • Sern Kou replies to Bursa query

    Published: 2009/10/19

    BURSA Malaysia issued an unusual market activity query to Sern Kou Resources Bhd last Friday over the high daily volume in its share trading recently.

    In its reply, Sern Kou said enquiries had been made among its directors and major shareholders and they were not aware of any rumour or report that might have contributed to the unusual activity.

This is the chart of Sern Kou.

Now they (Sern Kou) TOLD Bursa Malaysia that "enquiries had been made among its directors and major shareholders and they were not aware of any rumour or report that might have contributed to the unusual activity".

Now the problem is there is this announcement posted on Bursa Website.

Look at that GODZILLA SIZED disposal of shares made!

So who is Quek Gim Hong@ Keh Gim Hong?


The second largest shareholder had BEEN DUMPING shares and yet the company said they are unaware of the recent unusual market activity!!!!!!!!!

How can they not be aware?

How lah Bursa?

Do you accept such reply to your UMA (unusal market activity) query?

Ps: Do you care?

Saturday, October 17, 2009

How Much Do You Really Care About OUR Stock Market?

Posted on the chatbox.

  • mydreamgetgold: Since our Securities Commission, the Star and NST are all sleeping, Malaysia Today should run a report of possible insider trading by Oilcorp Bhd directors. Recently, Oilcorp was slapped with the PN17 status and its shares tumbled. But before the announcement, its directors had been selling off their holdings relentlessly. Isn't that clear indication of insider trading? Look at the declaration published by Bursa.

Good point Dream!

Problem is... how many of Malaysian stock market 'players' (investors & traders & punters) really care?


How much do YOU really care?

And when it comes to OPPORTUNITIES to make money in the market, people tend to forget what had happened before.

Most important is NOW!

How much can I make now?

No one makes money from past history!

Most important is what the stock will do NOW and the NEXT TRADED minute.

Take iCapital. Who will remember what they did early last year? Who will remember? Who cares?

Do you care at all?