I Am Not The One

Please do get this crystal clear.

I am not your FRIENDLY investment advisor.

Heck, I am not even FRIENDLY.

So please do not give me credit for stocks moving up or down. I seriously do not know any fancy card tricks that can help me and help you to move any traded stock higher or lower.

Yes, I am NOT the stock market hero that you could follow.

Oh no... Mitra moved up. Which means that whatever had been written on it before is of no use.

There I have said it.

Happy?

LOL!

Life is not fair, isn't it?

ps: Sharing is never caring all the time.

Don't believe? Uncle John simply loves Auntie Sue too little and Uncle John is so willing to share and if anyone is interested, Uncle John says they can have her!

You'll Know

Been listening to this song a lot and frankly I do not even know why. Just love this part...

• ..... Thunder only happens when it's raining
  Players only love you when they're playing
  They say, women, they will come and they will go
  When the rain washes you clean you'll know
  You'll know .......

Reply From Kokanart: Time To Highlight The Other Side Of Your Obsessive Focus

From the posting: 20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds

• kokanart said...
  
  It's time to highlight the other side of your obsessive focus:
  US small investors fleeing their mutual funds.
  
  A recent report on Bloomberg says:
  
  Record-low interest rates are stoking the biggest increase in share buybacks ever.
  
  U.S. companies have announced $258 billion in buybacks so far this year,
  compared with $52 billion in the first three quarters of 2009, according to data compiled by Birinyi. The almost fivefold increase is the largest for any January-to-September period since at least 2000, when the Westport, Conn.-based research firm started tracking the data.
  
  Corporations are using debt to pay for buybacks.
  
  Companies from Microsoft to PepsiCo and Hewlett- Packard are taking advantage of low-cost financing, purchasing their stock to boost per-share earnings.
  
  So, are the small investors the smart money this time or will it be the big insiders ( thru company buybacks ) ?
  
  Time will tell ...
  
  PS: the local market may be hot but we are discussing the US market.
  Also, as swifz pointed out, it is senseless to highlight only one side of the story.
  Do try to be more balanced.
  Mr. Soros said: I'm only rich because I know when I'm wrong.

The other side of my obsessive focus?

LOL!

Oh dear.

Such a nice message to kick off a Monday morning.

You do realise that this is a mere blog of mine and a blog is a collection of personal writings and notes.

And if you do realise this issue then you should have an open mind and realise that I owe NO ONE nothing.

I blog based on my personal preference and this blog reflects who I am. I am not going to bow to anyone to dictate what I shall blog and shall not blog.

Now I do hope you understand such a simplistic issue.

Regarding stock mutual fund redemption. That's a fact inside? 20 consecutive weeks, since 28th April, Americans have been making net redemption from their stock mutual fund holdings. And this issue is not about their stock market going up or down? ( Hmm.. are you afraid that I am the bearer of the bad news that could end this jolly good bull run? LOL! Comeon.. seriously?)

Yeah, dude, I am merely stating this fact.

Seriously, is this fact disturbing? And have I stated that the markets will crash?

Yes, is the fact that 72 billion had been withdrawn form their funds a huge worry for you?

Now I been updating this issue since it became an issue. Should I stop because some feel I am obsessive? Would I be doing justice to all those who are interested to see when the redemptions would end? Yeah, should I stop blogging on this issue and let other readers guess what has happened?

Ah... companies using debts to do share buybacks.

Is that good? If your opinion is that's is good, then I surely respect your opinion.

:-)

Oh... the other side of the coin would be the good news side, eh?

Do I need to turn this blog into one of the countless good news blog cheerleaders? Nah, I don't. I have no desire and no motivation. And if you think this is a blogging mistake, then it's a mistake. I have no problems with what you think of my blog. But if you need to read ONLY the GOOD news, then I am so sorry that this blog shall disappoint you and perhaps it should not be in your click zone!

Yeah man, live on the vitamins of good news and all other news that are potential negative issues just simply taboo and should not be mentioned. :-)

ps: the fact that insiders have been disposing their shares is NOT a worry too. ( Don't worry I did NOT state the markets will crash because of this. Just stating the facts. )

• Sep 21: Are Insiders Buying Or Selling?
• Are Insiders Buying Or Selling?

ps: That's a nice word of advice from Mr. Soros. :-)

=======================================

Apparently, I got another comment:

• kuan said...
  Moola ,I forgot to add my last line - Can millions of small investors be wrong ?
  
  Why not?
  
  They can also be right, when people like Soros are wrong.
  
  No one's perfect all the time.

LOL! LOL! 'Forgot to add my last line'?

Are you saying that you and "kokanart" is the same?

LOL! LOL! LOL!

ps: so fun to post in multiple 'names' eh?

ps/ps: next time, don't bother.

ps/ps/ps: try growing up. :-)

--------------------------

Amazing isn't it? To stress a point, does one have to go thru extremes like 'creating multiple nicks'?

ps: winning an internet argument? LOL! LOL! LOL!

ok.. ok... I lose. :-)

Reply From BullBear: Don't Waste Time On What Is Not-Knowable

Got the following comments from the posting: "More On Stock Mutual Fund Cash Outflows"

• bullbear said...
  Mr.Moolah dear... I am looking for 5 or 10 stocks, which will provide me with fantastic returns over the long term, in my portfolio.
  
  One should focus on investing in individual stock, rather than the overall market. Adopting such a philosophy and strategy allows one to ignore the flow of funds and other asset classes which one may be less knowledgeable in. Don't waste time on what is not-knowable.
  Can anyone predict where the interest rate will be next year? What about the rate of inflation? ...etc. etc.

Ah BB:

It's now Mr.Moolah dear? I am no longer a female? LOL!

Many thanks for sharing your personal strategy and your kind word of advice.

However, you should know, I have no motivation and interest to blog on my personal investment strategy because I am a flawed nobody. Yes. I am always wrong.

Now just sharing some of my thoughts.

And as you are aware, this is a blog of my writings on my free time and many of which has no bearing of what I will or will not do in the market. Is it a waste of my time blogging on what is not-knowable? Perhaps but as long as I have the time and motivation, this blog shall continue as it is. I do hope it's not a waste of your time reading.

And it appears that this series posting highlighting the fact that American have redeemed a lot of money from their equity mutual funds have caused some unease.

Yeah, our local markets is hot and certain quarters do not want to see me highlighting this fact.

I find it rather amusing, more so because I state not what the market will or will not do.

:-)

Reply From Loke: Prove To Us You Are Can Be Followed

From the posting: SAAG Wants Your Money Again!

• Loke said...
  You talk too much. To prove us you are good sifu to follow, load the screenshot of the stocks you rokemen. Ini baru CAKAP SERUPA BIKIN!! Amacam?

LOL! LOL!

• To prove us you are good sifu to follow, load the screenshot of the stocks you rokemen.

Buddy, the last thing I ever, ever want to do is be a sifu. In most kung fu movies, sifus tend to die. So do I want to be a sifu? Do I?

Sorry but no I don't.

I am just a nobody!

I maybe wrong but let me try my very best to understand what you are saying.

So you want to follow someone who is a sifu.

But I guess I shall make an ass out of me and assume that you are scared that this someone might not the real deal. Yeah, you are scared you might follow a fake sifu. Yup, follow the wrong sifu and you end up in Holland road.

Hmmmm....

Hmmmmmmmm......

Buddy... this reminds me of.... school days.

Say you get an assignment but since you only want to follow, you tell the person you want to follow, 'Hey, I want to follow your work lah.. but before I follow, could you prove to me you are good by showing me your past results?'

Well.... I have to admit... this is brilliant. :D

ps: my talk is cheap so that's why it's so much. And hey, sue me for talking too much in my own blog! :D

Hey This Blog....

Yo!

Waaaaaaaaaaaazzzzup! :)

Many thanks for your continued support. I have some words I would like to say.

This is small blog of mine doesn't focus on whether a stock will go up or down and the author have no interest in trying to pick or unearth the next gem or whateve and this blog is not a blog for me to gloat about my success or failure in the stock market. And since, I am not an investment advisor, I really have no investment advice to offer.

Sorry but this is what this blog isn't.

This blog does not bother to track what its readers does or does not do in the market.

Sorry but this has to be stated clearly or else others will have a wrong interpretation of this blog.
Hence, in all honesty, I do not encourage anyone to post what they they have done in the market to me.

Seriously?

Yes this blog is not a reporting center. :)

So please, spare me with your investing/trading details.

There's absolutely no need to post a comment saying that you had bought ABC shares at XYZ dollars or you sold DEF shares and made VWX profits!

And sadly, I am terrible at consoling people. Yes, so please, please don't tell me your sad stories saying how much money you have lost. Sorry, I do not have any words of comfort.

( In the future all such comments indicating purchases/disposals of shares will be rejected. )

Ok?

Hope you do not get offended.

If You Want To Lose Money, Here's A Great Tip

Ready?

Here is the tip...

if you want to lose money, just follow Goldman Sachs investment advices, because the chances are great that you would lose money.

Says who?

Well... here's the proof... it's according to them stats!

• Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who followed the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday.

Source: http://www.businessweek.com/news/2010-05-19/goldman-sachs-hands-clients-losses-in-top-trades-update1-.html

Clients who followed the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.

ps: Life is great or what....

Model Portfolios: Don't Be Fooled By The Numbers

Have you read many a portfolio posted in the web and in publications? If you do, you would have seen many instances where the published portfolio having incredible gains on a particular stock but somehow you have the doubts because you know very well the gains made aren't as good as proclaimed.

Here's a posting made way back on 12th April 2006: It's the calculations that counts.. !!

Here's what I wrote back then.

• Remember I mentioned that if an investor made an investment into Yi-Lai at a cost of 1050 back in 2003, the investor would have received 450.00 in dividends and I went on to calculate in the following manner.
  
  So from an investment outlay of 1050, the investor would have gotten a 450.00 in dividends or 43% back of their investment outlay. Which means that the investor current holding cost of Yi-Lai is 600.00.
  
  Currently Yi-Lai last traded at a share price of 1.30. Which means the investor is holding on to an investment gain of 117%!!!
  
  Which works to an annual compounded return of 29.4% for holding this investment for 3 years!!! ( from the posting of It's the business.. Part IV )

Does everyone realise that I am really cheating here???

LOL!!!!!

Ah... let me show why. The invested capital is 1050. The return in dividends is 450.

Current market price back in 2004 was 1.30.

Current market price + dividends received = 1300 + 450 = 1750.

Or a 'current' gain of 67%. (and not 117%!!!)

Which works out to a mere 18.56% compounded annual return for holding the stock for 3 years.. and not 29.4%.

See how I managed to glorified everything when I deducted the dividend received from my investment cost?

Ahh.... do you notice that Insider Asia write-ups... and do you notice how they ALSO deduct the dividends received from their investment cost?

The below is the snapshot of their portfolio published back in 2006...

See how they have their 5,000 shares of Yi-Lai 'purchased' in 2003 has an average cost of a mere 61.5 sen? And yeah, everyone else cost is above 1.00.

And so by doing deducting the dividends from the cost of investment, it just makes everything look so much nicer. Glorified.

Me? Dividends are just dividends, they should not be deducted from the cost of investment.

Some comments received back in 2006.

• hhc1977 said...
  nm,that's why i never trust this kind of calculation.
  
  when u bring forward the dividen u r had received, u r effectively ignoring the time value of money.
  
  Eg,Ex, i buy stock A at RM10 and it pays RM1 dividen per year.
  
  IF using inside asia cal,at year number 10, my cost will be RM0... So my return is INFINITY!!
  
  Where got infinity return one..... Where is the time value of money??
  
  IN mathematic
  
  ASSume
  
  Price Bot = P1
  Price Now = P2
  Dividen = D
  
  Normal return cal = (P2-P1+D)/P1
  
  Skewed return cal = (P2-(P1-D)/(P1-d) =(P2-P1+D)/(P1-D)
  
  See the big difference in the denominator......

Football Match FIxing? You Be The Judge...

Posted on my other blog: Was It Fixed? Judge Yourslf!

I Have A Brand New Blog

YES I have a new blog. It's called Meat Balls.

Well I talk balls there. LOL! Football or footie lah.

Ok.. it's that game where you get them guys running all over the place trying to kick that round thing. Oh, sometimes they end up kicking each other too!

:D

Some recent postings made (LOL! Yeah I have been busy. :P )

PS: Love United Hate Glazer :D

• Stop Rooney And You Stop Manchester United!
• End For David Beckham
• What A Forearm Smash From Steven Gerrard
• The Man United Cross Bar Challenge
• That Old Man
• Park Ji Sung: I Am Just A Football Player
• Champions League: Chelsea 0 Inter Milan 1

Astro Responds And Apologises To Aspect Ratio Foul Up!

Blogged previously: Customers Angry Over Astro's Byond Firmware!

Well Astro has responded and apologised : Aspect Ratio Settings

• Recently, Astro performed a software update download to deliver a consistent viewing experience for different aspect ratios. This is designed in conjunction with Astro’s software partners and is in accordance with international broadcast and content standards. For High-Definition content, the new software displays the image in its wide-screen format; for standard definition content, the image displays in pillar box mode (with two black bars at the sides) to retain its original proportion and resolution for optimum picture quality.
  
  Following customers' feedback after the software update download, we hear your preference and are working with our software partners to provide feasible viewing options. By the end of this week, we will replace the “Zoom” option with the “Fit to Screen” option for our customers who prefer to view Standard Definition content in full screen. To do this, customers can press the aspect ratio button on their Astro B.yond remote control. However, for the correct proportions and best resolution, Astro recommends that Standard Definition content be viewed via the pillar box mode.
  
  Astro regrets any inconvenience caused as it strives to improve its customer experience. Astro thanks its loyal customers for their continued feedback.

Thank you and thank goodness that the unhappy customers are heard!

Oh I saw this on a forum posting: http://forum.lowyat.net/topic/1352261/+240

• Sin No 1: Advertisements and commercials
  We have been sold and told that there would not be any kind of TV commercials since we are paying for the programmes we are watching. Since the launching of Astro, you will notice that more and more TV commercials have been put into our living rooms. Start counting them and your blood will boil. Is this how a cable TV is supposed to be run?
  
  Sin No 2: Astro-on-demand re-runs
  We are paying additional rates for this so called 'Watch when you like, how many times you like' programme named 'Astro-on-demand'. Fine, we get to watch first-hand episodes of Hong Kong dramas and serials. But then again, you will also notice that these same dramas and serials will be aired again over 'Wah Lai Toi' some months later. And mind you, we are also paying for this 'Wah Lai Toi' package. Think, subscribers, think. We have been milked high and dry.
  
  Sin No 3: 'Services currently not available'!
  I am sure this is the dreaded punch-line all subscribers hate to see when their favorite programmes are interrupted due to 'bad weather'. This has been Astro's problem from the start and we don't see any effort being done to overcome or improve it. But then, they can say that there are always repeats and re-runs when services are resumed.
  
  Fine, then what about the 'live telecasts' that we missed? Finals like the 'All England' where a Malaysian is playing and capable of winning after seven years? Live football matches where we are being made to pay more? Not to mention the coming World Cup where we are staying up to watch?
  
  Imagine the frustration of staying up late with some hot coffee, sitting on your couch complete with wonderful excuses for going to work late tomorrow wanting to watch your favorite teams play 'live' and all you can see is 'Services currently not available'. Just wonder whether we, as subscribers can just write in to Astro when our bills arrive and tell them 'Payment currently not available'?
  
  Sin No 4: Programme re-runs and re-re-runs
  Sure, we all know how these cable TV providers operate. I am sure we can stomach some re-runs. Have you ever experienced switching on your Astro and have the feeling that you have watched this programme before?
  
  But the real 'miracle' is that this same thing will happen to you again and again with the same programme. Then it will dawn on you that this is the same programme that they have repeated over and over again. Switch on channels like HBO, Star Movies, etc and you will know what I mean.
  
  Sin No 5: Wanton price hike
  I am sure this needs no elaboration from me. We have been put through this over the years.
  
  Sin No 6: Programme cancellation fees
  Ever notice how you are being pampered when you want to add new channels? Notice how efficient they are when you can have your new programmes channeled into your living rooms within half-an-hour with absolutely no connecting fees?
  
  Of course, when you want to cancel these same programmes, you will be at their mercy. A cancellation fee will be imposed. So they are telling us that getting in is simple and free but getting out will cost you. Wake up subscribers, if this is not daylight piracy, then Somalia must be a tourist heaven.
  
  Sin No 7: Unfair programme package
  Ever notice how packages are being grouped? We, as subscribers, are not given a free hand to choose which programme we like to see. We are being shoved programmes we don't like just because we choose certain channels and other channels are being 'thrown' in.

Customers Angry Over Astro's Byond Firmware!

Went home last night and switched on my Astro (yeah, I am one of the subscribers for Astro Byond) to watch American Idol results show. Horrors! The whole picture was utterly distorted on my TV.

Horrors!

Now previously, I have set the screen disply, in the TV settings in my Byond box, to STRETCH view mode.

Last night, Randy's head was chopped off the very minute I switched on Astro!

Upon some simple investigations, I found out that I no longer have this STRETCH view mode option. All I have now is PILLAR BOX and ZOOM view mode. Which is totally unacceptable if I were to watch NON-HD channels on Astro. Now given that Astro only offers 5 channels viewing on HD, watching Astro became such a turn off. What a massive disappointment! Arghhhhh!!!!!

What are you folks in Astro thinking about?

You make new software firmwares to improve viewing and not to downgrade viewing!!!

And I am not alone, mind you.

On Malaysiainsider, A ‘black pillar’ surprise hits Astro B.yond customers

• By Lee Wei Lian
  
  KUALA LUMPUR, March 12 — Customers of satellite TV provider Astro’s high definition (HD) package, Astro Beyond, woke up today to an unwanted surprise when they found that the visuals in the non-HD or standard definition channels (SD) were squeezed between two “black pillars.”
  
  The problem is due to an overnight software update downloaded into Astro set top boxes that does not take into consideration the different aspect ratios used by HD and SD.
  
  “They did not inform customers ahead of time,” said KC Lau, an irate Astro B.yond customer who initially thought it was a problem with his LCD TV. “I am amazed they are so arrogant not to be prepared for the inundation of complaints. Typical of our country.”
  
  To compound problems, Astro’s B.yond subscribers will also have to manually reset the aspect ratios every time they change channels.
  
  When contacted, Astro said that the issue is due to a software update that was performed for the service to be in line with international broadcast and content standards.
  
  It said that customers can opt to use the “Zoom” button on the decoder if they want to view the SD channels in full screen.
  
  The company did not, however, point out that when subscribers view SD channels in full-screen mode, the top and bottom part of the picture is cut off.
  
  Astro also explained that all flat panel/high definition televisions and HD content are transmitted on 16:9 aspect ratio while SD channels are transmitted on 4:3 aspect ratio which results in the SD channels images viewed on a flat panel television/ high definition television in the correct native ratio to be “pillar-boxed”.
  
  Ahmad Mustaza Ismail, Director of Customer Service said that in the meantime, Astro will look into the feasibility of providing more options for its customers. “The process will take time as we have to work with our programme guide software suppliers while ensuring that we comply to international broadcast standards,” he said in an e-mail response to The Malaysian Insider.

Yes, the ZOOM while allowing the viewer to view the SD channels in full screen, but the picture quality using this view mode is poor and the top and bottom of the picture is cut off!

Is this acceptable?

Surely not.

And neither is Ahmad Mustaza Ismail's explanation.

Come on surely some thinking is required when you do an update yes? And surely one would imagine that Astro would have taken the time to do some simple testing before they launch this software, yes? Why is so difficult for them to test out if it works or not before making this new firmware update? Test it out. Is that so difficult?

TV shows is all about sound quality and visual quality, yes?

If you make an upgrade which downgrades the visual quality of the shows being broad casted, surely your customers would be extremely pissed, yes? I know I am and if one surf through Astro's facebook, one could read the countless complaints on this issue. ( Click her http://www.facebook.com/Astro?filter=3 )

And Ahmad Mustaza Ismail's statement "Astro will look into the feasibility of providing more options for its customers. “The process will take time as we have to work with our programme guide software suppliers while ensuring that we comply to international broadcast standards,” simply does not make any sense either.

Why talk about international broadcast standards? Has he watch the end result of this firmware upgrade? Yeah, I believe he should switch on his TV and see for himself and ask himself a very honest question, "Is such picture quality acceptable"? and the point is simple, if it's not acceptable, why talk about international broadcast standards? It is irrelevant here.

The point is simple. Astro software programmers screwed up by taking out the 'stretch' view mode option. How difficult is it to rollback the firmware upgrade and allow back the users to choose between PILLAR BOX, ZOOM and STRETCH.

Hey, adding back this STRETCH view mode is not that difficult is it?

Comeon Astro, think about it!

Can Investing Based On Low PER Fail?

Everyone loves to talk about what works in investing.

Investing based on low price earnings (PE) multiples and investing based on dividend yields.

For some, this is the holy grail in investing. You cannot say anything negative about such strategies.

Ask me, I know. I was asked for my opinion twice recently. I posted Investing In A Stock For Its Dividend Yields and Some Opinions. And needless to say, no thanks to the mind less open, things became pointless as such simple investing chat became an issue of English Lessons or should I say Hokkien lessons! LOL! Exactly! Hokkien!

Look for sure many could point out that investing in a stock for its dividend yield could work, as illustrated by myself on the postings Investing In A Stock For Its Dividend Yields II and Investing In A Stock For Its Dividend Yields III. Investing for the dividend DOES work handsomely! However, as mentioned in the original posting, Investing In A Stock For Its Dividend Yields, I have showed a very simple example where such an investing failed big time.

So why is such a big issue?

Come on, this is not a posting of whose is bigger or longer. Nah, it's not about my one is better than your one.

So what am I saying here? One minute cannot and the next minute cannot! Why so complicated?

My point again? LOL! Pardon my lazy bones but do allow my fingers to do another paste job.

• Simple. I am not saying such an investing would not work and I am pretty sure many could provide me with full data where investing a stock for its dividends are proven successful. However, all I am saying is the investor should be careful. There are many incidents where such an investing can fail! The sustainability of the company's earnings is just as important. The reasoning is simple, without sustained earnings for the company, how could the company afford to continue paying so much dividends?

And needless to say the bad mouth will come and harp on the broken tape recorder being played over and over again. Some will even resort to name callings too, yes? Utterly no class.

Hey, last I remembered this is a blog.

Anyway, let's talk low PE.

Utter silence. Huh? Are you sure? Aren't you afraid of the countless and pointless comments you have been receiving lately. Nah. Why should I?

All I did was highlight several cases. Do I advocate which method to use and what not to use? All I said was to be careful. And this is exactly what I will say too for low PE investing.

Yes, needless to say, it's ideal to invest in a stock that is trading in a price which is low in comparison to its earnings. This is what low PE investing is all about.

But hang on a minute. The stock in question has to be the right stock and needless to say, the E in the PE equation is never a constant too. Think about it.

Buy the wrong stock and the investing could also fail. Buy the right stock but if the earnings is cyclical and the earnings fall, the investing could also fail.

All talk no example?

I do have plenty but I will just share one. Back on 20th October 2005, I wrote the following Megan. Pardon my lazy fingers once again while it do a paste job.

• For those that know me would realise that I am extremely prejudiced against Megan Media for as I view it as an unreal potential investment trap. Why an investment trap? Yes, Megan reported earnings does looks interesting given its current traded share price (rm 1.04) but there are just simply too many faults within the company’s fundamentals.

Here is a snapshot of a RHB article written back in Sept 2005.

And my fingers doing some paste job from that report.

• Megan’s low single-digit prospective PERs (or fully diluted PERs of 3-5x on effect of ESOS) are in line with its global peers and reflected the operational risks (associated with Megan’s small market share globally and its high borrowings). Hence, we are maintaining our MARKET PERFORM rating on Megan.
  Indicative fair value is pegged at RM1.38/share, based on 4x FY2006 EPS.

Fully diluted PER of only 3-5x!

How? Could an investment based purely on low PER work?

Yeah, we all know the answer. Megan Media turned out to be one of the biggest : Accounting Fraud in our market and investors buying Megan based on a low PER would have crashed and burned!

How?

Again, I am not saying investing based on low PER would not work. I am sure many will be proud to show me where it works like a charm too! :D

All I am saying is there are cases where it could fail. That's all. And this is based on past facts.

Investing In A Stock For Its Dividend Yields III

• Raymond said...
  Want reliable dividend yield? Look for companies that sell consumer staples with strong brand names, quality earnings, strong pricing power, transparent management, or put in simply, wide economic moat. Names that fit in are such as Nestle,Dutch Lady, F&N, Ajinomoto etc.
  
  Or buy into utilities with recurring incomes and steady cashflow, such as YTL Power and Plus.

It seems this topic seem to have caught interest.

Does investing in a stock for a dividend yields work?

Well all I have shown in one stock example Uchi and in the postings Investing In A Stock For Its Dividend Yields and Investing In A Stock For Its Dividend Yields II. I have shown incidents where investing in a stock for its dividend yields worked and failed. My point? Let me paste again.

• Of course, these are 2 examples where investing a stock for its dividends failed. My point? Simple. I am not saying such an investing would not work and I am pretty sure many could provide me with full data where investing a stock for its dividends are proven successful. However, all I am saying is the investor should be careful. There are many incidents where such an investing can fail! The sustainability of the company's earnings is just as important. The reasoning is simple, without sustained earnings for the company, how could the company afford to continue paying so much dividends?

Anyway, let me just pick one stock from those stocks you had chosen.

I choose PLUS Expressways.

Now here is a clip of one of the older report I have on Plus. It's dated 2005. It's that fair enough?

Most important, I have the actual traded stock price. PLUS then was traded at 3.08. Let's see how investing in a stock for its dividend yield fared since then.

Alright then?

Let's start ... investment of 10,000 shares at 3.08 on 25 November 2005.. Cost of investment 30800.

PLUS in 2005 paid its Interim Dividend on Sep 2005. So this is a missed dividend.

• April 2006 Final Dividend - 5 sen tax exempt
• August 2006 Interim Dividend - 5 sen tax exempt.
• November 2006 Second interim dividend - 5 sen tax exempt

Dividends collected = 10 x 150 = 1500

• April 2007 Final Dividend - 2.5 sen tax exempt
• August 2007 Interim Dividend - 6 sen tax exempt

Dividends collected = 10 x 85 = 850.

Total dividends collected = 1500 + 850 = 2350

• May 2008 Final Dividend - 8 sen tax exempt
• Aug 2008 Interim Dividend - 6.5 sen tax exempt

Dividends collected = 10 x 145 = 1450.

Total dividends collected = 2350 + 1450 = 3800

• May 2009 Final Dividend - 9.5 sen tax exempt
• Aug 2009 Interim Dividend - 6.5 sen tax exempt

Dividends collected = 10 x 160 = 1600

Total dividends collected = 3800 + 1600 = 5400

So we have total dividends collected = 5400. Cost of investment = 30800.

PLUS last traded 3.37. So shares now worth 33700 or a paper profit of 2900.

Which means that currently from an investment outlay of 30800, one is sitting on a profit of 5400 (I shall assume that the dividends received are not re-invested at all and do not generate any interest for simplicity sake) + 2900 = 8300.

And this works out to a CAGR of 6.15% over 4 years.

Which is a pretty decent investment, yes?

How?

Could I say that investing in a stock for its dividend yield did NOT work here? Could I?

:D

English Lessons

Time for some English lessons I guess.

• SS said...
  hey momo,you said "........an impressive PER means nothing. Really. It's either a High PE or low PE."
  then you said "....I am not saying such an investing would not work ......
  This is what Hokkien call " LanPhar = PharLan" means "talk cock" in simple English
  Seriously, you have written some good article in the past. But if you have nothing to write dun need to squeeze your brain lah.
  

Let's see. My comments ""........an impressive PER means nothing. Really. It's either a High PE or low PE." was from the posting Some Opinions.

English lesson number one.

I guess I need English lesson to understand the meaning of impressive PER. Right now, all I understand is a high PE or maybe low PE.

English lesson number two.

Or is it hokkien lesson! LOL! Really.

So where and where did I use the word "I am not saying such an investing would not work" It was used in the posting Investing In A Stock For Its Dividend Yields and Investing In A Stock For Its Dividend Yields II.

I really need lesson on hokkien, eh? One minute it is IMPRESSIVE PER, next it is such an investing would not work.

Which is which? I have no idea. How to answer such creative mindset?

Oooops!

Better stop, else I would be randomly reprimanded for losing my sanity!

LOL!

Yeah and such a waste of webspace too. :p4

Oh, many thanks for giving credit too.

:D

Investing In A Stock For Its Dividend Yields II

I guess some people refuse to read or they cannot or they read only what they want to read or they lack the intelligence to understand simple English.

• SS said...
  You duk main tepi-tepi lubang everyday, so PER cannot use, Div Yield also cannot pakai, so how

In the posting Investing In A Stock For Its Dividend Yields

In my exact words again.

• Of course, these are 2 examples where investing a stock for its dividends failed. My point? Simple. I am not saying such an investing would not work and I am pretty sure many could provide me with full data where investing a stock for its dividends are proven successful. However, all I am saying is the investor should be careful. There are many incidents where such an investing can fail! The sustainability of the company's earnings is just as important. The reasoning is simple, without sustained earnings for the company, how could the company afford to continue paying so much dividends?

Perhaps I need to put in bold yet again: "I am not saying such an investing would not work and I am pretty sure many could provide me with full data where investing a stock for its dividends are proven successful. "

Perhaps some are mind less open and they simply refuse to want to see.

LOL!

So rather pathetic, yes?

Anyway, let's not waste time on such small ones.

In that blog posting, I made 2 assumptions. Yeah, ass-u-me is ass-u-me is assume. Let paste it here again "Firstly, a buyer for Uchi its dividends in 2007 will be in between Jan to April 2007. Lowest traded price of Uchi then was 2.98. I would use simply use 2.98 as a reference point. With a past dividend yield of 20 sen, at 2.98 one would be looking at a yield of 6.7%. The second assumption is a purchase price 2.40 based on the lowest price for 2007. That would be a yield of 8.3%."

Two reference points were used. 2.98 and 2.40. Both of them, yielded extremely poor results if an investor purchased Uchi solely for its dividends.

The end result is there for all to see. Investing in a stock for its dividend yields can fail and I have provided a clear example with actual facts.

And again, I am not saying investing for dividends will NOT work. It's just this strategy is NOT a 100% sure win thingy.

But many could also provide me with examples where it will work!

And we do not have to look for. We also can use Uchi as the very sample where dividends do pay!

No joke!

Let me show an example where investing for a company's dividends can work!

For its IPO, Uchi was sold to public at a price of rm 4.80. So let's assume INVESTOR DY has the hindsight to buys 10,000 shares of UCHI after its IPO was listed at 5.50. ( Do allow me to use a higher number at 5.50 and not the IPO price of 4.80)

Cost of investment 55,000. Number of shares 10,000

ps: do verify each data with link provided. Uchi's dividends are tax exempts

• 2001 : 18 sen + 12 sen Special Dividend + Final Dividend

Dividends collected: 300 x 10 = 3000.00

• 2001 : 1 for 10 bonus issue Bonus Issue

Number of shares after bonus: 10,000 x 11/10 = 11,000

• 2001 : 6 sen + 6 sen Interim Dividend + Special Dividend

Dividends collected: 120 x 11 = 1320. Total dividends collected = 4320.00. Number of shares = 11,000. Cost of investment = 55,000. Yield = 7.8%.

• 2002 : 2 for 5 bonus issue Bonus Issue

Number of shares after bonus now = 11,000 x 7/5 = 15,400.

• 2002 : 6 sen + 4 sen + 15 sen Final Dividend + Special Dividend + Special Dividend

Dividends collected: 15.4 x 250 = 3850.

Total dividends collected = 3850 + 4320 = 8170.00

• 2002 : 16 sen + 6 sen Special Dividend + Interim Dividend (The interim is not tax exempt, so div = 4.32)

Dividends collected: 15.4 x 203.2 = 3129.38.

Total dividends collected = 8170 + 3129.38 = 11,299.38.

Cost of investment = 55,000. Current yield = 11299.38/55000 = 20.5%!!

• 2003: 22 sen Final Dividend

Dividends collected = 15.4 x 220 = 3388.

Total dividends collected = 3388 + 11,299.38 = 14687.38

• 2003: 1 for 10 bonus. Bonus Issue

Number of shares held now = 15.4 x 11/10 = 16,940

• 2003: 6 sen + 23 sen Interim Dividend + Entitlement - Others (Interim after less tax = 4.32 sen)

Dividends collected = 16.94 x 273.2 = 4628.

Total dividends collected = 4628 + 14687.38 = 19315.38

• 2004: 5 for 1 stock split Entitlement - Others

Number of shares now held = 16,940 x 5 = 84,700

• 2004: 2 sen + 5 sen Final Dividend + Entitlement - Others (Final dividend after less tax = 1.44)

Dividends collected = 84.7 x 64.4 = 5454.68.

Total dividends collected = 5454.68 + 19315.38 = 24770.06.

• 2004: 6 sen + 4 sen + 3 sen Interim Dividend + Entitlement - Others + Entitlement - Others (The 4 sen is not exempt, so after tax = 2.88)

Dividends collected = 84.7 x 118.80 = 10,062.36.

Total dividends collected = 10,062.36 + 24770.06 = 34832.42

• 2005: 6 sen + 4 sen + 3 sen Final Dividend + Entitlement - Others + Entitlement - Others ( The 4 sen again is not tax exempt, so after tax = 2.88)

Dividends collected = 84.7 x 118.80 = 10,062.36.

Total dividends collected = 10,062.36 + 34832.42 = 44894.78.

• 2005: 6 sen + 2 sen + 2 sen Interim Dividend + Interim Dividend + Interim Dividend (the second 2 sen is not tax exempt, so after tax = 1.44)

Dividends collected = 84.7 x 94.40 = 7995.68.

Total dividends collected = 7995.68 + 44898.78 = 52890.46.

• 2006: 6 sen + 1 sen + 3 sen Final Dividend + Special Dividend + Special Dividend (The 1 sen is not tax exempt, so after tax = 0.72.)

Dividends collected = 84.7 x 97.20 = 8232.84.

Total dividends collected = 8232.84 + 52890.46 = 61123.30.

* Cough * It's only 2006 and the total dividends received is already more than the investment outlay of 55000!

• 2006: 6 sen + 3 sen + 1 sen Interim Dividend + Interim Dividend + Interim Dividend (The 1 sen is not tax exempt, so after tax = 0.72.)

Dividends collected = 84.7 x 97.20 = 8232.84.

Total dividends collected = 8232.84 + 61123.30 = 69356.14.

• 2007: 6 sen + 2 sen + 9 sen Final Dividend + Special Dividend + Special Dividend (The 2 sen is not tax exempt, after tax of 27% = 1.46)

Dividends collected = 84.7 x 164.60 = 13941.62.

Total dividends collected = 13941.62 + 69356.14 = 83297.76

• 2007: 6 sen + 4 sen Interim Dividend + Special Dividend

Another bumper year!

Total dividends collected = 84.7 x 100 = 8470.

Total dividends collected = 8470 + 83297.76 = 91767.76

• 2008: 4 sen + 6 sen Special Dividend + Final Dividend

Total dividends collected = 84.7 x 100 = 8470.

Total dividends collected = 8470 + 91767.76 = 100237.76.

• 2008: 6 sen Interim Dividend

Total dividends collected = 84.7 x 60 = 5082.

Total dividends collected = 5082 + 100237.76 = 105319.76.

• 2009: 6 sen Final Dividend
• 2009: 3 sen Interim Dividend

Total dividends collected = 84.70 x 90 = 7623.

Total dividends collected = 7623 + 105319.76 = 112942.76.

How? Yes, you need to verify my data and my counting, for I could always make a mistake.

Now if numbers are correct, what do we have?

One had made an investment outlay of buying 10,000 shares in Uchi back in 2001 at a cost price of 5.50. Cost of investment = 55000. Total dividends since then is a whopping 112,942.76!

And from the bonus and splits since buying in 2001, the investor would now hold 84,700 shares. Uchi last traded at 1.26 yesterday. Meaning these shares are now worth 106722.00. Meaning the shares are sitting on a paper profit of 56722.00!

How?

Well, if one had bought in 2001 at a price of 5.50, how could I say that investing in a stock for its dividends would not work????

Confused?

This very same stock, in the posting Investing In A Stock For Its Dividend Yields, yielded a terrible investing result.

How?

My point?

Well... let me repeat again... "However, all I am saying is the investor should be careful. There are many incidents where such an investing can fail! "

And in this stock, Uchi, I have showed that dividend investing yielded two very contrasting end results!

So next time, someone whispers to you, that Ah Bang Bang Company, is a super stock, and if one had invested in the stock since listing, one would be super duper rich and because it had such a wonderful track record, one should invest in it NOW for its dividends too.

Yeah, it could work. There's always a possibility it could work but do bear in mind, it could always fail too.

Just like Uchi, it could also fail. Despite its track record, investing in Uchi in 2007 for its dividends yielded a poor result unlike investing in 2001.

Having Deep Pockets

In the posting: Investing In A Stock For Its Dividend Yields

• Kris said...
  Buy and hold looks nice on people like Warren Buffet who has deep pockets.

The deep pockets issue is so rather risky.

In my flawed opinion, having a deep pocket does not guarantee one success in the stock market. One can buy and buy and buy and buy and buy as much as they want because they have a deep pocket.

But what is one really doing in reality?

Well for me, in my flawed opinion, they are only buying and buying and buying and buying more of the same stuff.

It has no relationship to whether the decision to buy the stock is correct or not in the first place.

Same with holding the stocks just because one have deep pockets. What's one doing? Me? I only see one holding a stock just because they have money. That's all. Again, it does not even say if their reasoning to buy and to hold the stock is correct.

And I am sure you know that if a stock selection is really bad, holding on to it for as long as possible or buying more, usually does not correct the initial mistake to buy the stock!

How Lousy Was That Lousies Cut And Paste Posting?

Jan 6th I posted the following posting: Lousiest Cut And Paste Posting Of The World.

Now the reason for making that blog posting was the arrogant comments made to the posting made on 30th December 2009, Eric Sprott Reckons SP 500 Could Plunge. Now here is a guy, Eric Sprott, has a track record has been pretty darn fantastic, gives his opinion why he reckons the market could plunge. Without even looking and understanding the reasons mentioned, the typical mind less open just brushed the posting by declaring it as the lousiest cut and paste posting of the world.

Look at the global markets now.

I do wonder if that posting remains the Lousiest Cut And Paste Posting Of The World??

Sometimes it is so freaking sad that folks simply can't understand that opinion always differ. And as mentioned before, this is rather so shallow and tasteless, if you ask me, is the need to bad mouth the opposing views.

Isn't it so true?

Lousiest Cut And Paste Posting Of The World

From the posting: Eric Sprott Reckons SP 500 Could Plunge

• badmouth said...
  
  See how the markets worldwide opened beginning of the year 2010.
  
  This must be the lousiest cut and paste posting of the world
  
  HAHA

--------------------------

• solomon said...
  First few days do not reflect full year. Too early to pass judgement now.
  
  I have my red chips on the plunge after Q2.

I actually do not understand why the need to pass judgement.

Folks like Eric Sprott (mind you, his track record is pretty darn fantastic) had given a very detailed reasoning why he reckons that the SP 500 could plunge back to previous year lows and if one follows his newsletters, perhaps there are really strong justifications in his reasoning.

Now are we judging someone based on what the market is currently doing? Or perhaps one should look at WHY they are making such arguements?

Well, if one based purely on market movements, then isn't one saying that the market is always correct all the time. Isn't it? Could it be correct all the time?

Well sadly, as we all can see, LOL!, some mouth is simply bad and obviously A Mind Less Open...!

As stated in that posting:

• Hmm... nice to know that you would like everyone to know that your mouth is bad.
  
  That's ok with me. It's your mouth and it's your rights.
  
  Last I know, there are always two sides to a coin. It still has, no?
  
  And there's always an alternative point of view. Views always differ.
  
  Should we pretend that the opposite view just does not exist?

Perhaps folks like these simply can't understand that opinion always differ. Rather shallow, if you ask me, is the need to bad mouth the opposing views.

Isn't it so true?

Rather delusional isn't it?

Now obviously, their chips are bet on the markets should move higher and since their bet is on that the markets should move higher, they are so paranoid and agitated to read any suggestion that perhaps their views could be wrong and that the markets could fall. Now obviously, they cannot have this, no? What could they do? Simple, blast anything that might have an impact on their bet.

LOL!

Sad but true.

The shallow mindset.

-------------------------------------

• badmouth said...
  
  If you check your few previous pessimistic postings and my comments a few months ago, it showed that you are dead wrong and you could have missed one of the sweestest reward when the bottom recovering from bottom...
  
  Mooo... sour cow... Haha

ROLFMAO!

Ah... so this is a personal issue eh? And what agitates you is that you are not sure if I am IN or NOT the market.

Why is it so important what I do?

If I said I made tons of money, you reckon you have any share? Doh!

If I said I lost tons of money, can claim from you? Doh!

Exactly. Those would have been two of the lousiest and silliest questions ever! So why is it so important what do I do?

Do I need to gloat my success to you???

You do really need to grow up.

And I do wonder. I wonder if this blog had not highlighted any posting which suggests one should buy. Perhaps you should check this posting and the date of it: Anthony Bolton : Why Now's The Time To Buy!

Would You Buy This Hidden Gem?

Have you ever come across the hidden gem articles suggesting to you that you should invest in a stock?

I have. :)

I have always asked myself that if ever there's this hidden gem in the market or if ever there's this EXTREMELY undervalue stock in the market, why is the person sharing such an info PUBLICLY to everyone. For the minute, they advertise the stock, surely the stock would go up and the hidden gem won't be hidden no more and the EXTREMELY undervalued stock would most likely not stay undervalued any more.

This morning I would like to examine on what happens if one buys a so-called hidden gem and I do actually have one real live example.

What do I mean by real live? Well back in Jan 2008 I made a posting highlighting a news article publishing a hidden gem.

The stock was trading at 8.30. It went up a cool 50 sen after the article was published. LOL!

See how profitable it is to share and publish your hidden gems to others! Let them chase the stock!

Let me call the stock xyz and let me reproduce the chart of the stock when I highlighted the hidden gem stock back in Jan 2008.

What was incredible was the news article called the stock a laggard in its sector but based on the chart above, I was so dumbfounded to read that the stock was branded as a laggard.

Let's fast forward to November 2008.

Could you guess what happens next if a reader decides to take a plunge in this hidden gem?

LOL!

Yeah, me bad. Bad me. Yeah, it does not take much a genius to guess that what comes out of me isn't really a tip and most probably this stock probably tanked since Jan 2008. LOL! Guilty as charged! :P

Some would highlight the recent crash as a reason for the stock dismal performance.

Spot on. :D

By Nov 2008, the stock traded as low as 4.45.

How?

If one had purchased the stock at 8.30 in January 2008, as suggested by the news article, one was at staring at 4.45 for their hidden gem!

How?

Buy more?

Would you buy more?

Yeah, some say that as long as one's reasoning is correct, one should not be afraid to hold for the long term.

That's so true.

But what if one's reasoning is flawed?

Not possible?

Not remotely possible?

And of course the cynic would be extremely quick to point out the bare fact that by using 'hold for the longer term' strategy back in November 2008, one is merely finding an excuse to justify their wrong reason to purchase. Hey, didn't one NOT buy the stock, just because it was tauted a hidden gem? Not true? And didn't one buy the stock despite the fact the stock was already soaring sky high? (I believe some call this as chasing the stock!)

How?

It's now December 2009.

How do you think the stock perform since then?

The stock closed yesterday at 7.40.

Yes, like most stocks, this stock has recovered since its plunge last year.

But it's still below where the stock was taunted as a hidden gem.

Oh.. silly me. I have forgotten to mention the stock name. LOL!

Here's the screenshot of the news article.


And this was my posting dated January 2008: Hidden Gem In The Plantation Sector. ( Link to Star Business article: Chin Teck a hidden gem among plantation stocks)

The following point stood out rather sorely.

• A brokerage in a report said Chin Teck’s operating efficiency was on par with some of its larger peers and it enjoyed one of the highest profit margins in the sector.

As mentioned in the posting, I said back in Jan 2008. "I wonder... who is the brokerage? And when was the report dated? ( Sometimes, I seriously wonder why our business articles cannot quote or name their sources directly. Why?)"

So who was this brokerage that recommended the stock back then?

Seriously hor.

Think about it for a moment.

If this brokerage is of some 'quality' and if this brokerage had decent reputation, surely the brokerage would have absolutely no problems to state their claim on such a recommendation!

Yeah, if they dared to taunt the stock as such a 'hidden gem', why the need for them to remain hidden also.

Clearly, Chin Teck, the stock had flew sky high, back in January 2008 but yet this unknown brokerage called Chin Teck a hidden gem.

Look at the consequences of such a recommendation.

How?

Now... I seriously wonder... who is the brokerage? And when was the report dated?

So the next hidden gem article that you read, would you just buy because they said it was a 'hidden gem'?

Or would you do your own research and see if the recommendation is justifiable or not?

--------------

ps: do understand that this is not a tipsy! I have no idea if Chin Teck is a gem. So it's best that you stop assuming that this is a stock tipsy from me to you. But if insist to ass-u-me, it's your ass not mine. (LOL! Yeah, I do know that such a disclaimer does not sound too nice. :p3 )