APPLE-C1 Call Warrant (CW)

OSK Investment Bank really knows how to pick the stock especially when comes to list call warrants (CW) of American stocks. After listed Google Inc.’s (Nasdaq: GOOG) CW (GOOGLE-C1) recently, on 11th December, it listed Apple Inc.’s (Nasdaq: AAPL) CW as APPLE-C1 (stock-code 0528C1) on the Bursa Malaysia.



Apple-C1 has the following characteristics which you should know:

• Conversion / Exercise Price = USD171.50
• Conversion / Exercise Ratio = 1200
• Expiry Date = 3rd July 2008
• IPO Price = RM0.11

You should notice the variable or the unknown fluctuation from the above items namely the exercise price that is denominated in US dollars. The US dollars had weaken since the last interest rate cut and if Ben Bernanke continues to cut the interest rate in the foreseeable future, you can expect the Malaysia Ringgit to strengthen further.

The exchange rate for USD to Ringgit was 1 USD to RM3.3120 as of Dec 13. This means the following:

• Conversion / Exercise Price: USD171.50 x 3.3120 = RM568.01
• Apple-C1 trading price as of 13th Dec 2007 (midday closing) = RM 0.115
• Let’s exercise the CW: RM0.115 x 1200 = RM138
• Add it to the Exercise Price: RM568.01 + RM138 = RM706.01

Now, let’s see the last stock price of Apple Inc. traded at Nasdaq on Dec 12. The share closed at USD190.86 per share which will translate into RM632.13 ($190.86 x 3.312). So you’re paying a premium of 11.69 percent or RM73.88 for the time value until 3rd July 2008. Now, let’s assume the premium of 11.69 percent and currency exchange rate will stay the same until the expiry date, although it’s very unlikely. It’s for computation sake.

If Apple Inc. climbs to USD200.86 (USD10 gain) you’ll have the following:

• In Ringgit: USD200.86 x 3.312 = RM665.25
  
• The total exercise price and ratio= RM743.02 (11.69% premium)
• The un-exercise 1200 CWs: RM743.02 – RM568.01 = RM175.01
• Each CW: RM175.01 / 1200 = RM0.146 (round to RM0.145 since you can only trade at 0.005 spread)
  

So, when the Apple Inc. stock jumps US$10 a share, your gain in CW is RM0.03 (around 26% gain). The underlying mother share of Apple Inc. only gain at around 5.24% (From USD190.86 to USD200.86). Of course the above illustration is based on the assumption that the premium and currency exchange rate remains static at the above figures.

Surely, one could probably make more money trading Call or Put Options directly from the U.S. stock markets mainly due to the volatility and one-to-one relationship between the stock and the options, i.e. no huge conversion ratio and exchange rate risk.

Also worth mentioning here, U.S. call and put options are automatically priced using Black-Scholes-Merton model, whereas the price of local structured CW like Apple-C1 are based on demand and supply of the CW.

*Adapted from Stocktube with some minor updates.

More Books...

Finally, the exam is over. At the mean time, i wish to at least finish reading some of the books that have been long overdue. Some of them are:

1) The Black Swan by Nassim Nicholas Taleb
2) The Age of Turbulence by Alan Greenspan
3) Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
4) The World Is Flat by Thomas L. Friedman
5) Anna Karenina by Leo Tolstoy

amongst others.

Brian Tracy - 21 Ways to Double Your Productivity

1. Make a decision today and get started -- To do something or stop doing something. Self-discipline is the ability to make yourself do what you should do when you should do it whether you feel like it or not.

2. Develop CLEAR goals and objectives -- You can get everything you want but you must pay the price in full and in advance. Write down your goals and set a deadline. Make a list of everything you can think of to achieve your goals. Organize the list into a plan and take action towards your plan. Do something every single day that move you in the direction of your goals.

3. Plan everyday in advance -- 6P(Prior proper planning prevent poor performance). Make a list. From master list to monthly list to daily list. Always work from your list.

4. Use the ABCDE method to set priority -- Never do a B item when there is A item left undone. D(Delegate to others) E(Eliminate).

5. Separate the urgent from the important -- Urgent and important, important but not urgent (like seeking knowledge), urgent but not important, not urgent not important (useless activity).

6. Use The Law of Force Efficiency -- What is the most valuable use of my time right now?

7. Apply the 80/20 Rule -- Identify the top 20% of your tasks.

8. Work at your energy peak -- Proper eating, proper exercise and proper rest.

9. Practice single-handling of key task.

10. Eat live frog -- First thing to do in the morning.

11. Organize your workplace -- Keep your desk clean. T.R.A.F. (Toss/Refer/Action/File).

12. Use travel time productively -- During car journey and flight.

13. Get better at your key task -- Determine the one skill that will help you the most in your life and your income.

14. Work in real time -- Bias for action. Need for speed.

15. Re-engineer your work -- Reduce 30% of the steps needed in your work initially. Use your creativity. Streamlining.

16. Reinvent yourself each year.

17. Practice zero-base thinking continuously -- What you won't do knowing what you now know you won't get into again if you have to do it over.

18. Set clear posteriority - Discontinue something that you are now doing that are no longer as valuable as they were when you first started on them.

19. Keep your life in balance -- Happy relationship with people.

20. Plan every project carefully.

21. Be intensely action-oriented -- Constant motion.

Ricky Martin - Maria

(Yeppa! Sexy sexy Maria!)

Un, dos, tres
Un pasito pa'delante, Maria
Un, dos, tres
Un pasito pa'atras
Un, dos, tres
Un, dos, tres

Search Unplugged - Rozana

Rozana...
Kau Gadis idamanku
Dua hati menjadi satu
Bila kita bertemu
Oh Rozana...

Search Unplugged - Isabella

Dia Isabella
Lambang cinta yang lara
Terpisah kerana
Adat yang berbeza
Cinta gugur bersama
Daun daun kekeringan...

Haluan hidupku
Terpisah dengan Isabella
Tapi aku terpaksa
Demi cintaku Isabella
Moga dibukakan
Pintu hatimu untukku
Akan terbentang jalan
Andainya kau setia
Oh! Isabella....

Minimum Brokerage Fees

I hope I'm wrong about this. Even though the 2008 Budget has been announced long ago, i came to notice the changes of the brokerage fee structure that government wanted to implement only today. With effect from 1 Jan 2008, all stock transaction will have a minimum brokerage fee of Rm40 instead of current fee of Rm12 -- this will definitely put small investors like me into a very difficult situation. This means that almost all stock transaction will be at least Rm8000 each to be at least breakeven at the brokerage level. If not, you will need to pay the minimum charge of Rm40. Compare to previous level, i only need to breakeven at Rm2449 (using 0.49% rate) per transaction.

From economics perspective, i think it's better for the government to leave this brokerage fees to the market force. The demand and supply as well as the competition among brokerage houses will determine the right level to charge. This will bring the effective use of resource as we all who have studied economics will know that floor and ceiling prices will lead to ineffective use of resource. This is called DEADWEIGHT LOSS, dudes! I think our government have much better things to do than this.

Sometimes, the government always said one thing and did another thing in my opinion. They said they want to encourage retail participation in our equity market but then they came out with this stupid idea of minimum brokerage fee of Rm40.

Let the market force decide. Mind your own business. Take care of our country ever rising inflation level -- everything has risen in price level these days. This still have not counted in the expected petrol price increase yet. If the crude oil price still hovering around USD100 per barrel, i envisage our petrol price will be around Rm3 per litre starting next year.

BN = BARANG NAIK!

Metallica - The Unforgiven

周杰伦 - 牛仔很忙

Jay Chou's new song. A bit of country touch here.

Jolin 蔡依林 - 爱无赦

Great MV! Great song! Great dance choreography!



黑暗中牵着手
我在搜索谁还躲的偷偷摸摸
你的爱要自由
只要换容能被感受便已足够
老掉牙的枷锁
幸福不是循规蹈矩就能拥有
今晚的爱无赦
就别在罗里罗嗦
唯唯诺诺畏畏缩缩

Go Go Sister
Go Go Brother
爱情打动天下围攻
Go Go Lover
Bravo Lover
酸甜苦辣这爱无赦
You Are My Lover

太阳下亲吻我
我要把我旧里势头都会感动
不必对谁负责
你的执着要比他们都还承受
世界飞速转动
是对是错不过只是一个念头
赶上我的节奏
在我的王国你的感觉
可以大声嘶吼

Chicken Wings @ Jalan Alor & Roti Bakar Telur Cheese

Getting few days off during these Hari Raya festive holidays. Went to the Pavilion last Saturday and i was amazed by the crowds there. Most probably everybody is flocking to this newly opened shopping haven and try to get a hang on it. But then again, i wondered -- how many of those people were actually spending on those items that were on displayed? Not many.

With one exception. Restaurants were doing really well as far as i can see. People had to queue for donuts @ J.Co Donuts and Coffee. Since the queue's long, maybe i could give these donuts a try next time i go to the Pavilion.

Another outlet that needs to be mentioned was The Loaf. This bistro or cafe, whatever you call it sells variety of wonderful looking breads and was the brainchild of our ex-PM, Dr Mahathir. The original outlet is in Pulau Langkawi and i guess this could be their first outlet outside Pulau Langkawi. If i'm not mistaken, they planned to open similar outlets in New York, London, Paris, etc. Their box packaging looks really nice for takeaways.

Later that evening, we went to try Wong Ah Wah grilled chicken wings that was so famous @ Jalan Alor. Business there was also fantastic. The guy who served us said he never expect such a crowd that day. According to boo_licious, the chicken wings are so famous that Zak Pelaccio who used to work at Seri Melayu restaurant in Jalan Conlay had recreated this item in his famous restaurant, Fatty Crab in New York. Known simply as Jalan Alor Chicken Wings on his menu.


Wong Ah Wah Chicken Wings


Few times i went to Spicy Kitchen at Bandar Menjalara with friends to yumcha but i never come across a food item called "Roti Bakar Telur Cheese". So after reading a post from boo_licious, i decided to go and try their famous Roti Bakar Telur Cheese this morning. Hehe.


Roti Bakar Telur Cheese

(All the photos above are taken from boo_licious's blog.)

Rugby World Cup Final - England vs South Africa

Well, who would think of England versus South Africa in the Rugby World Cup final this year? Certainly not me judging from the group match result of England versus South Africa earlier where England had been convincingly demolished by the Springboks.

New Zealand had again showed the world why they were labeled chokers in big tournament. Everything looked pretty in control after the first half against the host nation France in the quarter-final match and suddenly in the second half, they were rattled by the more disciplined and organized France.

Defending champion England have been improving ever since. Their plays are built around the solid defence. Ask France, and they will concur with me. At the ending stage during the semis, it seemed to me France were going to get a try but somehow England managed to weather the storm and get away unscratched. This proved how strong the mentality and group spirit within the England camp. Maybe the initial poor showings were the smokescreen from the England camp to deceit their opponents?

No comments on the Springboks but i hope they can bring the Rugby World Cup back to South Africa this time without any controversy like those surrounding their win in 1995. Hope this time they can win it fair and square. Period. And of course, restore the pride of Southern Hemisphere rugby nations.

You can't always get what you want - The Rolling Stones

Mick Jagger rocks...


You can't always get what you want
But if you try sometimes
Well you just might find
You get what you need

Rugby World Cup - England versus South Africa

After almost one week of competition, we can finally look forward to some evenly contested fixtures, at least on paper it certainly appears to be so -- England versus South Africa (Springboks). Wow! Surely can't give this match a miss, no?

One is the defending champion in England, the other one is the traditional rugby powerhouse in Springboks. I watched England played USA days before. Their performance were not impressed at all. Although i missed the Springboks opening game, i still reckon both teams had reserved their energy and strength for this match.

So far, New Zealand All Blacks and Australia Wallabies had undoubtedly come out of the blocks pretty strongly with their all-conquering and all-round displays in their respective opening games. Personally, i would like to see New Zealand All Blacks winning this year Rugby World Cup.

Chicken Dishes All Over China

Dedicated to those who like to eat chicken.

江蘇 Jiangsu

• 蝦子二泉醉雞：Drunken chicken; simmer together with rice wine and shrimp roe
• 叫化童雞：Beggar's chick; you could be forgiven to see this in someplace else, after all, there's beggar everywhere
• 油雞：Oily hen; boiled hen top with sizzling hot oily soy sauce
  
• 清炖狼山雞：Double-boiled free range chicken
• 竹葉蒸雞：Steamed chicken with bamboo leaves from Yangzhou

遼寧 Liaoning

• 溝幫子燻雞：Smoked cockerel; first boil with herbal soup, then briefly smoke with sugar

吉林 Jilin

• 人參雞湯：Ginseng chicken soup; boil with what regarded as the King of all Chinese traditional herbal medicines: Jilin renshen (or ginseng in English)

浙江 Zhejiang

• 清湯越雞：Double-boiled cock: Shaoxing wine is used in the stock
• 糟雞：Wine-lees braised chicken; boiled chicken marinated with lees from the kegs of Shaoxing wine
• 醉雞：Drunken chicken; Shaoxing wine is used, again

甘肅 Gansu

• 百歲雞：Hundred-years-old chicken, or roasted chicken; so named because the creator wanted to have his store last one hundred years

安徽 Anhui

• 曹操雞：Cao Cao chick: honey the chick first, deep-fry it and then simmer with herbs for total tenderness

江西 Jiangxi

• 三杯雞："Three-cups" chick; a cup of rice wine, sesame oil and soy sauce each. The Taiwanese are very good with this chicken recipe too
• 瓷泥煨雞：Clay-baked chicken of Jingdezhen; the clay used is the same for the delicate porcelain wares produced here

山東 Shandong

• 德州扒雞：5-flavored boneless chicken; boned chicken hard-press, glaze with syrup and simmer with five different spices for over 6 hours
• 手撕雞：Hand-tore pullet; swiftness is the key in tearing the flesh otherwise the chicken will get all cold by the time it gets to the table
• 芝麻香雞：Poached chicken sporting sesame sauce
• 濟南肴雞：Boiled cock with spices and lacquered with red koji
  

河北 Hebei

• 蘆花雞："Reed flowers" hen; deep-fried hen garnished with Chinese ham, minced ginger and spring onions -- it's got nothing to do with reed flower by itself

內蒙古 Inner Mongolia

• 卓資山燻雞：Zhuozishan smoked hen; hen boil to half done, then smoke with woods and syrup

河南 Henan

• 桶子雞："Bucket" chick; soyed chick press to shape of bucket
  
• 道口燒雞：Daoko roast chick; honeyed chick fry till golden, simmer with spices and thick broth until dry
  

湖南 Hunan

• 東安雞：Dongan pullet; braise with vinegary and spicy sauce
• 麻辣子雞：Numbing, spicy chick; similar style can be found in Sichuanese cuisine too, but the latter chop into dices and buried under a sea of chili peppers
• 左宗棠雞：Zuo Zongtong chicken; one of the most famous 'overseas' Chinese dishes; the real deal in Hunan is a whole lot hotter

廣東 Guangdong

• 普寧豆醬雞：Puning bean sauce braised chicken; Puning is famed for her excellent bean sauce
• 白切雞：Poached chicken from Chingyuen
• 鹽焗雞：Salt-baked cock from Dongjiang
• 鮮奶雞：Milk-boiled hen from Chiuchow
• 檸檬雞：Lemon chicken nuggets; stir-fry and toss in lemon sauce
• 霸王雞："Tyrant" chicken; boiled chicken covered heavily with ginger & shallots dressing
• 太爺雞："Great-great grandfather" hen; soyed hen boil in hot oil and then smoke with tea leaves
• 五味雞：Five﹣flavored pullet; braise with five kinds of sauce
• 炸子雞：Crispy chick; a process called "skin-up" is done first in which the chick is masked by maltose syrup and vinegars, then the chick is fried twice -- first time in slow heat and second time rapidly for a crusty skin
• 風沙雞："Wind & Sand" chicken; similar to the crispy chick recipe but this one is marinated with fermented tofu sauce first and deep fry later, and served alike the style of "typhoon shelter" crab
• 糯米雞："Sticky rice" chicken; oh no, not the sticky rice in lotus leaf staple dim sum found in the teahouse, we're talking about a whole chicken with stir-fried sticky rice stuffed inside

雲南 Yunnan

• 汽鍋雞：Steam-pressed chicken
• 蟲草閹母雞：Double-boiled castrated pullet with vegetable caterpillar from the Wuding county. You may have heard of capon, this is the female version. They say the meat is more tender and juicer after the surgery -- a surreal specialty that can only be found in Yunnan

廣西 Guangxi

• 紙包雞：Paper-wrapped chicken; stew with the chicken sporting a paper wrap
  

海南 Hainan

• 文昌雞：Steamed chicken from Wenchang, so called the grand daddy of Hainan chicken
• 椰奶雞：Coconut juice-boiled chicken
• 椰蓉雞：Chicken baked with minced coconut

四川 Sichuan

• 辣子雞：Spicy chick from Chongqing
• 宮保雞：Kung Pao chicken dices
• 怪味雞：Spooky-flavored chicken; got its name because you can find all kinds of flavor in the chicken (a good one for inexperienced chefs)
• 棒棒雞："Bangbang" chicken -- chicken cooked and battered by drumsticks to puff
• 麻油雞：Sesame oil stewed chicken
• 口水雞：Spicy-sauced or, literally, "drooling" chicken; not the chicken but you who slobbers, or else we'd have the bird flu scare all over...
• 泉水雞：Chicken braised with spring water
• 白果燒雞：Braised pullet with ginkgo nuts in claypot, said to be invented by a well-known Taoist priest
• 大千雞：Daqian chicken nuggets invented by famous painter Zhang Daqian; stir-fried with chili soy beans sauce

陝西 Shaanxi

• 貴妃雞：Guifei or "Concubine" hen; so called because it's a recipe beloved by Yang Guifei
  
• 葫蘆雞：Calabash hen from Xi'an; hen bond to the shape of bottle gourd, steam for 2 hours and deep fry before serving

貴州 Guizhou

• 罐罐雞："Can-can" chicken, steam inside a claycan with heavy dosage of herbs

福建 Fujian

• 豉油雞：Soy-sauced chicken

Culinary Blogs

Hey,

I believe when it comes to food, there are always some recommendations you tend to get from friends. Word of mouth easily spread the great news of the great food in town. If you guys are looking for a place to eat, to drink or to celebrate a friend's birthday, check it out at some of the links that i have added.

“世界上什麼問題最大? 吃的問題最大!” ~毛澤東 "What is the biggest problem in this world? Eating is!" ~Mao Zedong

2007 Rugby World Cup

An old saying goes like this -- Football is a gentlemen's game played by hooligans; rugby is a hooligan's game played by gentlemen.

Looking back, i have little doubts about it. Though rugby may appear violent to some people, rugby actually is the most disciplined team sport in the world as far as i know. Team consists of 15 players, far more than football. Every players must play his role in the team. You attack and defend in unison. Unlike football, in which normally you attack with the forwards and defend with the defenders. Thus, making football a little less than a team game. Furthermore, i never heard of rugby is played by women as yet. This reaffirms the statement of gentlemen's game in a sense since football is also played by women now. But not rugby, not yet.


Still remember 2003 Rugby World Cup when England won the William Webb Ellis Cup (the Rugby World Cup). Jonny Wilkinson, the England flyhalf, was certainly the MVP of that year tournament. His ever accurate drop goals had scored so many points and certainly won the Rugby World Cup for England -- thank to his drop goal in the last minute of extra time against Australia in the final.

Of course, this year tournament will be held in France comes this September. Northern Hemisphere nations can certainly look forward to it. Though i still think Southern Hemisphere nations will win -- either New Zealand (All Blacks), Australia (Wallabies) or South Africa (Springboks).

Ole! Ole! Ole!

Movies

Watched a few movies recently.

1. The Illusionist (Meet Edward Norton.)
2. The Prestige (Chirstian Bale is impeccable here, recommended.)
3. Casino Royale (The reboot of entire 007 series. James Bond had just earned his licence to kill. Prepare to be dazzled.)
4. The Devil Wears Prada (Adapted from Lauren Weisberger's novel of the same name. How to say...superb! Just love it.)
5. Blood Diamond (Of Sierra Leone illegal diamond trades. Leonardo DiCaprio, huh?)

Mr Bear is Knockin'

Hey hey hey,

Mr Bear is finally comin', no? After some previous false alarms, this time Mr Bear had come for real. This time, he really made a big entry. Rest assured, he will stay for a while. I think the Bull had overstayed his welcome. It's time for him to leave and take a sabbatical rest. Although my flirtin' with the Bull was brief, it was still the best time of my life. Miss you. See you around when you are back next time, kay? So long. Don't over do yourself. Take good care. I would like to see a great healthy Bull that last longer distance ya.

When you go shopping with Mr Bear, people give you huge discount since his reputation precedes him. No questions asked. They just want to get rid of the stocks in their hands as quickly as possible. But the point is are we seeing the rock bottom price cut yet? I don't think so. For those whose investment horizon is short, better take profit or cut loss now.

Please welcome Mr Bear! Kinda miss you too. Hope to do some nice shopping with you.

國慶廣告短片帶來的啟示

最近，配合國家慶祝獨立50周年，國油推出2007年默迪卡廣告短片。這支看似平平無奇的短片，畫面下卻真真實實、毫不避諱地道出我國在建國50年來的最大困境。

鏡頭下的老人就如馬來西亞，已走到知天命之年一般，開始感到力不從心。老人的好友哈芝為了讓老人清還所欠下的債務，便提供種種材料、資源和便利給老人，希望老人能夠幫他打造一艘新船，來替代所要償還的債務。

然而，老人卻投機取巧地將破舊、廢棄船只的船身重新組裝，掩蓋破舊船身的腐蝕漏洞並重新上漆。一艘新船很快地就完成了，老人也順利讓船只首次出航。

可是，哈芝過後卻不再需要老人幫他打造的船。他將船只送給老人並豁免其債務。他希望老人能夠藉著出租船只賺錢維生，在經濟上獨立自主而不再仰賴他人的幫助。

鏡頭一轉，當老人走向其之前完成的船只時，卻發現那艘粗製濫造的船只開始在沉沒……

這支短片的故事讓人感到似曾相識。那位哈芝就好比我國獨立之前的殖民地政府，留下了種種資源、技術和發展給這片土地的主人，寄望接下來的領導人能夠好好地利用各種資源和優勢發展本身的經濟脈絡，不再依靠他國援助或被人支配。

在風雨中成長的馬來西亞，在建國初期確實取得穩定發展。然而，經歷50年來種種導致國家政局動蕩不安、經濟體系嚴重受創、行政體制弊病重重、種族藩籬日益加深等問題，馬來西亞這艘承載2600萬人口的船只如今亦然百孔千瘡。

結果，建國初期的社會契約面對嚴峻挑戰，各族人民之間相互猜疑程度日益嚴重，就連原本受到聯邦憲法所保障的宗教自由亦面對種種衝擊。究竟這艘觸了礁的船只還能航行多久、多遠？

掌舵人在導航國家的未來前途時迷失了方向。國家金融體系一蹶不振、經濟蛋糕分配不均、國家財庫近乎空蕩，種種問題顯示我國經濟正面臨高度危機。

掌舵人在發展經濟方面裹足不前，施展政策卻又舉棋不定，讓原本作為我國經濟發展火車頭的東方硅谷（Silicon Valley）─檳城，如今卻淪為北馬經濟發展走廊（NCER）的“西邊”，這是何等的諷刺！

故事中的船隻出現腐蝕漏洞，我國現今的硬體建設又何嘗不是如此？從今年4月迄今，我國公共交付系統出現各種紕漏：布城的聯邦政府部門建築出現水管爆裂、天 花板墜落醜聞；耗資2億7000萬令吉建竣的新法庭大廈出現裂縫；耗資1億令吉重新裝修的國會下議院會議廳發生漏水事件。

這尚未包括大大小小的豆腐渣工程！若將老人所打造的船只直接比喻為我國的公共交通系統，政府掌舵人在交通規劃方面的短視心態更是叫人不敢恭維。

對一個國家而言，50年歲月說短不短、說長不長。鄰國新加坡這個彈丸小國能在42年內迅速崛起成為區域金融中心，馬來西亞又怎樣呢？正當我們還在為擁有全球最高三甲建築物之一的國油雙峰塔自豪時，我們是否正被全球化的發展洪流所淘汰？

再過兩週，全民就要歡慶國家獨立50周年，但是馬來西亞究竟還能走多遙遠？我們今天所打造的船只，能否帶領我們航向明天的明天？ （星洲日報/6日譚•作者：林芮光•政治工作者•言論不代表本站立場‧2007.08.13）

Of Life and Investment - A Metaphor

Frustration set in when you realize your investment is not doing well. Much more so if the subject is your most fancied holding. What would you do in such a case?

Buying more or cutting loss? Well, i guess it depends greatly on the subject, no?

If the fundamentals remain unchanged, and you still have time and faith in it, why not holding on? This might turn out to be your tenbagger (*) in life.


(*) A term coined by Peter Lynch, a stock that gives you a return of ten folds.

Of Schumacher, Alonso, and Hamilton

The rivalry between Fernando Alonso and Lewis Hamilton had somehow turned into public row last weekend during Hungarian GP. Alonso was accused of delaying Hamilton at the "pit-gate" that denied Hamilton a final chance to make a flying lap at the dying seconds of qualifying round. The rest is the history. Alonso had been punished by FIA, started from few places back instead of pole position. McLaren team was rattled by this intense rivalry or shall i said, the in-fighting between their drivers.

I still remember when JK asked my opinion before the new F1 season starts. I said Hamilton is the driver to watch. Not because of what. Just because he reminds me of Tiger Woods. I see some resemblance between the two. They both started young at their games, achieving fame at early age too. So far, Hamilton had not let me down a single bit. Ain't a surprise if Hamilton wins this year F1 championship.

But the odds are against Hamilton. Because Alonso is the first driver in McLaren team. The team order clearly favored him very much. Driver to driver, i still see Alonso comes at the top between the two. At least, Alonso still has the fire and tricks that make him double world champion. The tricks i mean are all those little and dirty maneuvers that once made Michael Schumacher so famous of. Alonso will do whatever within his capabilities to win this year championship. Alonso is a wounded tiger at this moment. Ron Dennis, the McLaren boss also admitted both of them did not see eyes to eyes at this moment.

So far, Ferrari team had not displayed any competitiveness as yet. Hopefully, they will come into the picture later this season. If not, it will be a two-horse race between Alonso and Hamilton.

Petronas Ad - Merdeka 50 Tahun

Our nation is celebrating its 50 years of independence comes this 31 August. This year, Petronas ad on commemorating this big occasion is to portray an old sampan builder called Man who wanted to quit his job and become a security guard to repay Tuan Haji, another guy in the ad. Instead of letting Man quit his job, Tuan Haji asked Man to build a new sampan for him in lieu of the debt.

Man accepted the offer and started to build the sampan day in and day out, even in a rainy day. Finally, when he about to deliver his finished product, Tuan Haji brought an engine and mentioned to Man that the new sampan is a gift from him. Tuan Haji foresees the water transport will be in great demand in that area, so the new sampan will be a boon to Man.

Just when Man about to take his sampan to the water, he discovered that the sampan had already submerged in the water. Then, the Petronas tag line reads "Can what we build today take us into tomorrow?" Good question, isn't it?

The analogy is so simple. Just imagine Malaysia is that little sampan that Man had built. It had already submerged in the water! Way to go Petronas! At least you've got the guts to show us the real picture of Malaysia in the future.

Why Singles Aren't Getting Married?

Dr. Tom and Dr. Beverly Rodgers in the book titled The Singlehood Phenomenon identify what they called "top ten brutally honest reasons people aren't getting married".

1. Skepticism about love and marriage
2. Lack of faith in God's provision
3. Unresolved issues from the past
4. Confusion about the rules (of dating/courtship)
5. A poor understanding of the purpose of marriage
6. Fear of getting hurt
7. Wanting the perfect mate
8. Not dealing with prior heartbreak
9. An unbalanced emphasis on career (wanting to get established before getting married)
10. Concern that their marriage will fail

Worthy Mate

Karen Kingsbury in A Time to Dance

"Female eagles like to test their male counterpart. When the female knows a male is interested, she leads him on a chase through the skies, swooping and diving and soaring high above the hills. When the chase is nearly over, she flies as high as she can and flips onto her back, free-falling toward the ground. It is the male’s job to place his body over hers and grasp her talons, flapping his wings with all his might to keep her from certain death. Moments before they hit the ground, the female pulls out of the dive and circles the male. Because he had been willing to stay even unto death, he will have proven himself as a mate. The eagles are joined for life from that point on."

Sector Picks

Empirical research shows that stock returns depend as much as 50% on sector selection(theme), 30% on market trend, and only 20% on individual counters. As such, selecting a right sector to invest at the right time will decide your stock returns eventually. Undoubtedly, oil and gas, construction and property sectors are in the limelight at the moment.

Oil & gas sector - Eastern Corridor Economic Region, to be announced soon.

Construction & property sector - Northern Corridor Economic Region, to be announced by Prime Minister this coming Monday.


(AmResearch : Riding on Petro Dollar Boom)

Investment highlights as appeared in the www.theedgedaily.com - 19 July 2007

We are retaining our bullish stance on the sector. Admittedly, share prices have rallied and valuations have expanded but we see ample room for sustained price movement.

First, momentum of contract awards will get stronger over the next six months. Expect an estimated RM13b (1H2007 : RM5 billion, 1H2006 : RM2.6 billion) worth of contracts from the Kimanis project, installation of pipeline contract, deepwater fields development and award of multiple overseas projects.

Second, while offshore activities have gained traction, we have seen a resurgence of onshore oil & gas (O&G) projects. Nevertheless, no physical work has started so far, and we remain skeptical on some private initiated projects which is a tad too ambitious. The potential unveiling of Eastern Corridor development by Petronas will however, strengthen the flow of downstream projects.

All in, demand from both offshore and onshore projects will further harness the deep values of O&G asset owners, specifically those with fabrication yards. Fabricators and EPCC contractors stand to benefit the most as the splurge in onshore projects has further intensified demand for their services.

Third, we have seen nascent signs of mergers and acquisitions (M&A) activities which should gain traction as capacity shortfall, strong demand and rising rates prod companies to acquire. Companies with O&G assets and experienced personnel will be prime targets, as witnessed in Seadrill's acquisition into SapuraCrest. To be sure, Brooke Dockyard's 20-acre yard is also of interest to O&G players.

UMW is our top sector pick, trading at an implied O&G PE of 10x for its fast growing O&G earnings, we believe the market has not fully appreciated its O&G business.

We initiate coverage on Kencana and Dialog Group with a "buy" call given re-acceleration in their earnings cycle.

Besides strong operational performance, we believe Coastal Contract and Alam Maritim are next in line to unfold strategic propostions. Wah Seong is working on plant expansions to meet upcoming surge in pipe-coating projects.

We continue to like KNM for its strong earnings CAGR of 47% and impressive deliverance track record. We are also issuing a "buy" call on Petronas Gas. We have, however, downgraded Ramunia from buy to hold given uncertainties following its recent cost dispute with Carigali PTTEPI.

In our O&G sector report released in March 2007, we highlighted that contract flow momentum for the industry will get stronger over the next 12 to 18 months, with contract size getting larger as O&G fields progress to the capex-heavy development stages.

This will accelerate demand for O&G assets and reaffirms our opinion that the prime beneficiaries of this upcycle will be O&G assets owners, given that supply available remains tight.

We also believe that mergers & acquisitions may be unfolding prodded by 1) the need to acquire assets, capacity and extend market presence and 2) undercapitalised balance sheets.

Share prices have rallied
In the last three months, share prices of O&G companies have rallied on the back of contract awards and positive macro news flow. The rally was supported by contracts secured, expectations of sizeable upcoming projects and most importantly, solid earnings deliverance.

Listed O&G companies' 1QFY07 results registered solid sequential earnings growth. During the recent reporting season, we saw numerous upward revision in earnings forecasts and target prices. Thus far, earnings expansion have kept pace with the rise in share prices, leaving valuations still attractive.

The O&G companies are also making headways overseas, further underpinning our bullish conviction on the sector. Over the last three years, local O&G companies had actively embarked on the acquisition of businesses and technology and formed strategic alliances to upgrade and enlarge their products and services offerings.

Hence, we are now beginning to witness higher overseas earnings and rising bids for overseas projects.

RM5 billion worth of jobs in 1H2007
Contracts worth about RM1.8 billion were awarded over the last four months bringing the total to RM5 billion in 1H2007, almost double (92% higher) the RM2.6 billion worth awarded in 1H2006.

Offshore O&G activities were indeed very active. But, there were also several significant announcements of major onshore O&G projects by both Petronas and non-Petronas backed companies. The aggregate value is estimated to be RM28 billion although some of these projects may not take off.

These include:
1. Petroleum products storage facility off Tanjung Bin (PTB), estimated at RM1.4 billion,
2. Trans-Peninsula pipeline project across Kedah to Kelantan, estimated at US$7billion or RM24billion. This is an ambitious project which we believe would be difficult to execute;
3. Dialog and Transfigura's onshore tank terminal and centralised tankage facility in Port Tanjung Langsat (PTL), estimated to cost at least RM0.72billion; and
4. Storage facility by Perstine Oil (M) Sdn Bhd, estimated at RM1.8 billion.

Petronas may be unveiling development plans for the Eastern Corridor which will likely include O&G projects. This is because this corridor is located near rich hydrocarbon reserves and is currently a base for gas processing and petrochemical plants.

Our conversation with industry sources also revealed that a new refinery off Kedah could potentially be constructed by SKS Development. While the slew of macro announcements have indeed stirred interest on the sector, it remains to be seen whether these massive projects will materialise.

Early signs of mergers &acquisitions
We also saw nascent signs of M&A taking place:
1. Seadrill Ltd's substantial stake of 12% in SapuraCrest Petroleum (SapCrest). This is in line with our view that companies with O&G assets are good candidates for acquisition in the current O&G run and tight supply situation; and
2. Naim Cendera's acquisition of a 45% equity stake in Dayang Enterprise Group. Dayang currently owns two marine vessels and one support vessel. Besides O&G assets, Dayang is also a Petronas licence holder and would provide the Naim group a foothold to bid for Sabah-Sarawak O&G assets.

Strengthening balance sheet for growth
In the last three months, we saw O&G companies proposing capital raising exercises: 1) to fund expansion plans, 2) to strengthen balance sheet to take on larger jobs and 3) to address high gearing.

The capital raising exercises include:
1. Issuance of RM600m Islamic securities by Alam Maritim;
2. Private placements by Alam Maritim (45 million ordinary shares), Wah Seong (54 million), Ramunia (45 million) and Coastal Contract (34 million). All in, capital to be raised could amount to RM350 million to RM400 million; Restricted issue of 68m shares at indicative issue price of RM1 per share by Ramunia; and
3. Petra Perdana's proposed spin-off listing of Petra Energy, its integrated brownfield services unit. Planned issue of approximately 46m Petra Energy shares would raise an estimated RM115 million.
Kencana Petroleum and Dialog Group, in our view, would be next in line to embark on capital raising exercises.

Kencana, possibly in preparation of huge contract flows coming onboard, especially with plans to fabricate drilling rigs, while Dialog would require funding for contruction of centralised tankage facility and tank terminal in PTL, Johor.

Driver over the next 12 months
Contract awards are expected to swell over the next 12 months, underpinned by an estimated RM13 billion worth of contracts expected to be dished out. These include the Kimanis project, installation of pipeline contracts, contracts from development of deepwater fields (RM3.5 billion to RM5.5 billion per O&G field) and award of multiple overseas projects bid by local O&G companies Size of these contracts are at least twice the size of contract awards totalling RM5 billion over the last six months.

Kimanis, Sabah gas terminal project
The Kimanis, Sabah gas terminal project had some headstart over the last three months. About 15-20 companies have formed consortiums to bid for the project. So for, only pre-qualification bids have been submitted by the consortiums comprising of both local and international companies.

We understand tender for construction of the gas terminal in Kimanis has been issued whilst tender for supply, construction and laying the 500km onshore pipelines would be issued some time in the coming two months.

According to industry sources, the contract value for construction and commissioning of the terminal is estimated at RM1 billion while the 500km pipeline from Sabah to Bintulu, Sarawak is estimated to cost about RM2 billion to RM2.5 billion.

The entire project is estimated to cost about RM5 billion (including pipelines or transportation of O&G from offshore Sabah). We estimate that about RM1.5 billion to RM2 billion per annum would flow through the sector from 2008 to the first half of 2010.

Pipelaying contract for offshore Malaysia
Contract for installation of pipelines (pipelaying) from Petronas, Shell and ExxonMobil is likely to be announced in 3Q2007. Contract size would be at least RM3 billion according to industry sources. The previous contract worth RM2.0 billion expired at end-2006.

We expect overseas contract newsflow in the coming months to further sustain buying interest in the sector :
1. Wah Seong Corporation's ("Wah Seong") potential bid for pipe-coating project in Europe and China;
2. Ramunia Holdings Bhd ("Ramunia") recently entered into a collaboration with Punj Lloyd to bid for projects (potentially worth up to US$1 billion or RM3.45 billion) in Mumbai High North Development, India. A maiden bid has been submitted for the development. The group's aggregate contract bids todate amounted to RM9 billion and more than half are international jobs;
3. Alam Maritim has submitted bids for offshore vessel chartering services contracts with Saudi Aramco. The group is awaiting the results currently; and
4. SapuraCrest is forecasting overseas revenue to hit about 30% of group turnover in FY08F versus 15%-20% in FY07. The group will be more active in bidding for international jobs once Sapura 3000 and the Derrick lay barge are commissioned in 2008. Onshore projects to lift sentiment and earnings

Besides burgeoning orders and contracts from exploration, development and production activities offshore, Malaysia O&G companies especially engineering, procurement, construction & commissioning ("EPCC") contractors and process equipment fabricators are receiving further boost from the recent emergence of onshore oil, gas and petrochemical projects in Johor and Northern Corridor and potentially the Eastern Corridor Development.

O&G asset owners are still the best leverage to the upcycle
We are more convinced that O&G asset owners are best leverage to the current upcycle. This is especially so for fabricators which owns fabrication yards.

Fabricators, yard owners and EPCC contractors
Rising demand for offshore platforms, floating production units, floating production storage and offloading (FPSO), drilling rigs, offshore marine vessels, process equipment coupled with the recent resurgence of onshore oil, gas and petrochemical facilities locally (storage facility, terminal, centralised tankage facility and refineries) have and are building demand for fabricators and fabrication yard

Fabricators with proven delivery track record are poised to register burgeoning order book and earnings.

EPCC contractors with both offshore and onshore capability are in an even better position such as Kencana Petroleum.

Strategic alliances would spur stronger growth. Listed O&G companies with strong strategic alliancessuch as Dialog, KNM and to a certain extend Kencana and Ramunia, we believe, would be in a stronger position to outperform and strengthen penetration overseas.

M&As in the making
In our opinion, M&As among O&G companies would emerge more strongly over the next two years. Corporate developments such as Seadrill's shareholding stake in SapCrest and Naim's acquisition of Dayang todate we believe, is only the tip of a huge iceberg.

From our talks with industry players, we conclude that O&G companies with assets and experienced O&G personnel will be prime targets, a case in point is Seadrill's recent move.

To further prove our point, we hear that Brooke Dockyard's 20-acre fabrication yard is currently of interest to a local O&G company and a potential acquisition is said to be forthcoming.

The industry is likely to witness more foreign companies taking strategic stakes in local oil & gas companies, we understand that numerous proposals have been made to local O&G companies. Coastal, Alam Maritim, Kencana and Ramunia are among the few that have received proposals over the last months for various joint collaborative efforts and for strategic stakes.

We strongly believe Coastal and Alam Maritim would unfold corporate developments over the next 12 months and could potentially involve a foreign company taking a strategic stake. This would alleviate Coastal and Alam Maritim's valuation and prospects.

Diversification

One of the major issues in constructing a winning stock portfolio is diversification. At first glance, we tend to see diversification as in selecting different kind of stocks in our stock portfolio to hedge against unsystematic risk. This is not entirely the case.

We should treat diversification at a more profound level as in diversifying our investment over different time horizon -- meaning to invest at different time even it's the same stock that we had previously put our money in. Say, you have 10k to invest, and you really like to invest into a particular counter that promises bright future prospect. Even the counter looks cheap now, you should not put all 10k into that counter at the same time. Just make a partial investment. If the counter rises some more, good. Your previous investment is making money now. Buy some more. If the counter drops, even better. You get a cheap sale for that counter.

So the conclusion is that we should diversify not only in different counters, sectors, or financial instruments. But also at different time even for the same counters, sectors, or financial instruments.

Walnut Chocolate Chips Brownies

Ingredients:

1. 280g dark chocolate

2. 110g unsalted butter

3. 1 tbsp cocoa powder

4. 100g brown sugar

5. 2 eggs

6. 70g plain flour (sieved)

7. ½ tsp vanilla extract

8. 150g walnut (chopped)

9. 50g chocolate chips

Steps:

Lightly grease a 20cm x 20cm baking tin and line with baking paper, hanging over two sides. Melt dark chocolate and butter over a simmering water using double boiler. Set aside to cool. Lightly beats the eggs with vanilla extract. Mix all dry ingredients using a bowl. Pour eggs mixture into the chocolate and butter mixture. Add in all the dry ingredients including walnut and chocolate chips and mix lightly. DO NOT OVER MIX. Pour into the baking tin. Bake at 180 degree Celsius for 25 minutes. It’s better to under-bake. Yummy!

14000 points - Dow Jones Industrial Average

Wow! Dow Jones Industrial Average (DJIA) had surpassed the record 14,000 mark briefly on Tuesday. With the global capital markets looking for fresh indicators, DJIA record certainly provides the timely boost to regional markets like in Malaysia, Singapore and Hong Kong.

Currently in the midst of restructuring my stock portfolio. One of the bitter lesson that I learned was not to invest in stocks that have very little liquidity (extremely low volume, wide bid-ask spreads) no matter how good the fundamentals of the company are. Since market condition is random at most time, it will be extremely hard to cash out an under-performing stock at favourable price when it has low liquidity; thus the liquidity risk.

Kopitiam Prank

So far the best Kopitiam prank in Hokkien dialect. Produced by the guys who brought us the infamous RK House prank.

Can Justine Henin Win Her First Wimbledon?

I still believe Justine Henin can win her first Wimbledon this year. She is almost perfect on the tennis court this year minus the Australian Open because she pulled out of the tournament due to her family problem. She is one of the best female tennis players that I like to watch playing besides Maria Sharapova (for her good-looking plus her fighting spirit of course).

Watching Justine Henin plays is pure enjoyment just like watching Roger Federer and Rafael Nadal in men tennis. On the contrary, watching Maria Sharapova plays makes your mind wandering. Hehe. Too bad, Maria Sharapova failed to get passed Venus Williams this year. With Maria Sharapova, Amelie Mauresmo, Serena Williams (lost to Justine), Jelena Jankovic out already, the remaining challenge will come from Venus Williams, whom I think had played brilliantly so far.

Go Justine! Allez!

Structured Warrants (SW)

These days, more and more structured warrants are issued by third party financial institutions and gained listing at Bursa Malaysia. Recently, there is a new breed of structured warrants with their underlying assets (mostly Chinese stocks) that are listed in Hong Kong Stock Exchange (HKEX) came out. This provides some alternatives for local investors to participate in the booming economy of mainland China. Investors should be careful when investing in this kind of foreign SW though. Most of this SW are cash-settled on maturity if in-the-money.

A Few Good Policemen Still Left in PDRM

This is one of the best examples demonstrated by a traffic police. Every other police in this country should learn from him. I "tabib" you tuan! Btw, next time if you get caught, make sure you say "Saya ada enam belas saja".

Wedding Song

I attended a wedding dinner last Sunday at Palace of the Golden Horses. There was a live band performing various songs on stage. I particularly like this song called "Valentine" sung by Martina McBride. Share it with you all.

Google Makes its Way into Mainstream Dictionaries

Who had ever thought that Google, the internet search engine company formed by Sergey Brin and Larry Page, and the hottest stock in U.S. right now had its trademark name "Google" officially added to the Oxford English Dictionary (OED) on June 15, 2006, and to the 11th edition of the Merriam-Webster Collegiate Dictionary in July 2006 due to its popular usage. I was wondering why Yahoo! never reach this kind of pinnacle and popularity among netizens.

For instance, consider usage like this: -

Please Google (search) for me the stock price as well as the company information of Google Inc.

or

Please Yahoo! (???) for me the stock price as well as the company information of Google Inc.

Hehe...

Which one sounds nicer?

Google was last traded at Nasdaq at USD525.01 as of 28 June 2007.


(www.m-w.com)

Main Entry: goo·gle
Pronunciation: 'gü-g&l
Function: transitive verb
Inflected Form(s): goo·gled; goo·gling /-g(&-) li[ng]/
Usage: often capitalized
Etymology: Google, trademark for a search engine
: to use the Google search engine to obtain information about (as a person) on the World Wide Web

FBM30etf - A New Milestone for Financial Market in Malaysia

(www.theedgedaily.com, 27 June 2007)

Local investors will soon have the option to invest in a new type of instrument — Equity Exchange Traded Fund (ETF). The FBM30etf will be the first ETF, introduced by AmInvestment Bank Group, to be listed on the Bursa Malaysia next Monday.

What is an ETF?
An ETF is very similar to open-ended unit trusts. It's an instrument representing a basket of stocks that is most commonly designed to track the performance of all kinds of indices. For example, there could be an ETF to track the KLCI, the Second Board Index; a sector index, like the Property Index; or in this case, the FTSE Bursa Malaysia Large 30 Index. More innovative ETFs can track commodities like oil futures and gold.

Why invest in ETF?
ETFs, like unit trusts, offer investors the benefits of diversification. For instance, an investor buying the FBM30etf will gain exposure to the 30 largest companies by market capitalisation, all in one. In other words, they don't have to fork out a lump sum of money to buy each and every one of the 30 stocks — just the minimal one board lot (or 100 units) of the FBM30etf.

Better yet, ETFs usually has lower expense ratio than comparable unit trusts. Annual management fee for unit trusts usually range between 1% and 2%. By comparison, the annual administrative fees for FBM30etf are estimated to total around 0.65%.

The lower fees and expenses are, primarily, because ETFs are passively managed funds. That means the underlying portfolio of stocks and weightings simply mirror the indices they're tracking. In short, investors do not get the benefit of fund managers stock picking or timing the market. Having said that, it remains arguable whether actively managed funds do perform better over the longer term.

Unit trusts also have higher sales charge, typically 5% or higher, whereas the transaction costs for ETFs are similar to those for normal shares trading including brokerage commission (0.3% to 0.6%), stamp duty and clearing fees.

How to buy and sell ETFs?
Trading in ETFs is also a simpler and more convenient process — it's just like stock trading. Investors can buy or sell the ETF by calling their remisiers at any time during trading hours and using the same trading/CDS accounts. This allows investors to be more responsive to market changes. Transactions are settled in the usual way as stocks are, on T+3.

The price of an ETF is determined by demand and supply but shouldn't stray too far from the market value of its underlying portfolio. ETFs also normally have a dividend policy. The FBM30etf expects to distribute any dividends and interest income it receives semi-annually, after netting expenses.

In a nutshell...
ETFs offer investors a relatively low cost, passive way of investing in the market. Returns will more or less mirror the future performance of the underlying index. Under prevailing trading conditions, we suspect that the FBM30etf will do fairly well.

While sentiment for the broader market has been somewhat ambivalent of late, share prices for key blue chips have been inching higher. The FBM30 Index has risen some 47% since its creation just over a year ago, while cumulative gains year-to-date stand at roughly 25%.

Vietnam Excursion (23/12/07-05/01/08)

Finally, i have booked the air ticket to Ho Chi Minh City (HCMC) from Singapore, using the service of budget airline Tiger Airways. This is almost one month after i booked the return ticket from Hanoi to Kuala Lumpur. After comparing the fares of two Singapore budget airlines Jetstar Asia and Tiger Airways, i decided to go with Tiger Airways because of its lower airfare and more convenient departure time.

My tentative itinerary would be visiting HCMC, Mekong Delta, Dalat, Danang, Hue and Hanoi. Main mode of transportation between major cities would be using Reunification Express train.

HCMC - Notre Dame Cathedral, Reunification Palace, etc.
Mekong Delta - Mytho, Vinh Long, Cantho, the floating market.
Dalat - Cool mountain retreat.
Danang / Hoi An - China Beach.
Hue - Citadel (UNESCO World Heritage Site).
Hanoi - Old Quarter, Halong Bay, etc.

I attended a travelogue held in Kuala Lumpur a couple of years back about visiting Vietnam. The presenter of the travelogue opined that one should at least watch two movies before visiting Vietnam; these two movies titled Apocalypse Now and The Lover.

Apocalypse Now was directed by Francis Ford Coppola, starring Martin Sheen and Marlon Brando. It's set during Vietnam War. It tells the story of Army Captain Benjamin L. Willard (Martin Sheen) who is sent into the jungle to assassinate United States Army Special Forces Colonel Walter E. Kurtz (Marlon Brando), who is said to have gone insane. The film has been viewed as a journey into the darkness of the human psyche.

As for The Lover, it was a movie adapted from an autobiographical French novel L'Amant by Marguerite Duras. The movie version was directed by Jean-Jacques Annaud, starring Jane March and Tony Leung Ka-Fai. It's set against the backdrop of French colonial Vietnam during 1920's. The Lover reveals the intimacies and intricacies of a romance between a pubescent girl (Jane March), from a financially strapped French family and an older, wealthy Chinese man (Tony Leung Ka-Fai). This movie was one of the sexiest movie i have ever watched. Believe me.

One of the signature cuisine in Vietnam is of course the pho, a kind of clear soup noodle with beef or chicken variation. The other dish would be Vietnamese spring rolls. Would also like to taste their famous Vietnamese coffee.

Bonjour Vietnam!

Rule #1: An Investment Methodology

This investment book is written by Phil Town. It is essentially based on value investing and fundamental analysis with some modifications from the author.

The Excerpt

4M – Meaning, Moat, Management, Margin of Safety.

i) Meaning – Passion, Talent, Money.

View equity investment like buying into a company as if we depend on it for the next 100 years, not as just buying a share.

ii) Moat – The Big Five Numbers (Return on Investment Capital Growth Rate, Equity Growth Rate, EPS Growth Rate, Revenue Growth Rate, Free Cash Flow Growth Rate). Growth rate must be at least 10% per annum. Compare the growth rates for the last 10 years, 5 years and 1 year to see whether they are deteriorating. Lastly, debt must be within manageable level.

iii) Management – Read the previous year annual reports to see whether the CEO of the company has delivered what he had promised. Preferably a Level 5 (a term coined by Jim Collins) CEO.

iv) Margin of Safety – At least 50% discount to the sticker price.

Calculate the Sticker Price (Intrinsic value) & Margin of Safety (MOS)

After passing the 4M examination, we must determine the right price to buy. These steps are basically the essence of the entire book.

a) Get the current EPS.

b) Determine the Equity Growth Rate – either from historical data or from industry estimation, whichever is lower.

c) Determine the future P/E ratio – 2 x Equity Growth Rate of (b) or from historical data, whichever is lower.

d) Determine the minimum rate of return – 15%.

e) Determine the Sticker Price – ¼ of (future P/E ratio x current EPS).

f) Determine the MOS – 50% off the Sticker Price. Buy if it is less than 50%.

The 3 Tools (Technical Analysis)

i) Stochastic

ii) Moving Average – 10 days.

iii) MACD – Standard is 12-26-9, preferred is 8-17-9 version.

Even though the share price is at 50% off the sticker price now, individual investors should wait for the right moment. This means waiting for these 3 indicators to show positive signals. These indicators are used by institutional players to determine the right time to buy or to sell a stock. Individual investors should use these indicators to see whether the institutional players are buying or selling their holdings and thus making their own buy and sell decisions accordingly and timely.

Sell only when the share price has reached the sticker price (annually adjusted, roughly up 100% from MOS price). Or, when all the 3 indicators show negative signals. Buy back only when the price has dropped more than 20% from the selling price PROVIDED all the fundamentals are still the same and you had bought at 50% MOS price INITIALLY. Of course, don't forget the 3 indicators.

The author also ruled out the significance of dividend payment. He said it is better for the money to be retained in the company to grow the business than returning the profit as a way of dividend to you because this will save you from the headache of finding another company to reinvest the dividend received.

Although I must admit the author's way of calculating the intrinsic value is great (not many investment books teach you how to do this), it is always difficult to find a stock that is showing all the characteristics of Rule #1 investing. The journey of investing never stop. Seek and ye shall find.

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything

This is a book by University of Chicago economist Steven D. Levitt and New York Times journalist Stephen J. Dubner published in 2005.

The Excerpt

Morality represents the way people would like the world to work—whereas economics represents how it actually does work. Economists use data as a tool to determine the effect of any one factor, or even the whole effect.

The book based on a few fundamental ideas:

1. Incentives are the cornerstone of modern life – Cheating among school teachers and sumo wrestlers.

2. The conventional wisdom is often wrong – Ask the right question, you might find some interesting answers.

3. Dramatic effects often have distant, subtle causes – Legalized abortion in 1970s causes substantially drop in crime rate in 1990s.

4. Experts like real-estate agents use their informational advantage to serve their own agenda – Internet brings balance to information asymmetry.

5. Knowing what to measure and how to measure it makes a complicated world much less so – If you learn how to look at data in the right way, you can explain riddles that otherwise might have seemed impossible.

Regression analysis – By applying constant every variable except the two he wishes to focus on, and showing how those two correlated. Correlation indicates whether two variables move together, positively or negatively. Cold and snowing outside is positively correlated; but we are not sure whether the cold causes the snow or the snow causes the cold.

Parenting – It does matter who the parents are, not what the parents do in order to have positive influence on the children.

Two Bookstores - MPH and Borders

Used to patronize MPH bookstores but now I found out that Borders bookstores actually provide much better deal. MPH has been issuing MRC privilege cards to their loyal customers in order for them to accumulate points when purchasing. But the problem is the MRC card only valid for 2 years and the points accumulated doesn't worth the gift voucher (the rebate) they reward you. The rebate term and condition is really dreadful. Readers may refer these at the bottom. You also need to renew the MRC membership with RM100 purchase within 12 months from expiry date or pay with RM10.

Better is Borders. They straight away give 20% off to some of the latest and bestselling titles in town. After comparing both, I discovered that Borders saves me more money than the MPH reward program. Furthermore, the Borders 20% discount or even the selected 3 for 2 deal (choose three selected books and the cheapest one is free) provide instant gratification compare to those of MPH where you only get the gift voucher at later date. And, I don't even need a loyalty card for that.

Of course, MPH does have advantages over Borders. Their MRC cards can be used to shop online at http://www.mph.com.my and they also publish the periodic Quill magazine for their members. Frankly, I only received one issue of Quill magazine sent to my house in almost 2 years now.

As for me, my last few purchases were all done at Borders and still constantly looking for great books. Happy reading folks!

* Rebate

1. For every RM1 spent, members will be awarded 1 MRC point.
2. There are two point accumulation periods in a year - January to June and July to December.
3. At least 300 points must be accumulated in each of these periods to qualify for the rebate.
4. A 5% rebate will be awarded to MRC members who spend RM300 to RM999.99 and a 10% rebate will be awarded to those who spend RM1000 or more in each period.
5. Qualifying periods are independent of each other and points from one qualifying period cannot be carried forward into the next period. FOR EVERY NEW PERIOD, POINT ACCUMULATION WILL BEGIN FROM NIL.
6. Members are advised to keep all receipts for at least 6 months of each qualifying period in the event of discrepancies in the accumulated points.

Football - The Stake is High

Kinda miss some real football actions since European Cup final. Spanish La Liga is entering the final round of game. We could still see Real Madrid crowning champion if they beat Real Mallorca at home. Just like the case of Manchester United in English Premier League, I still feel some of the matches were fixed in order to allow Real Madrid to win the La Liga this year. Barcelona have been impressive with Lionel Messi coming out from injury. If Barcelona fail to win this season, we may see more of Messi's real talent and capability next season.

Anyway, football fans could still be treated with Copa America come end of June. Years in and years out, Argentina is still my favourite South American team. Not Brazil dudes. And I still think Argentina played the most spectacular and beautiful football during last year World Cup in Germany until they lost to host Germany in quarter final due to some questionable substitutions from the coach. Could that be another conspiracy behind the curtain? The stake is high in football these days. Don't rule out any possibilities. Not caught doesn't mean not there.

A Series of Unfortunate Events

I have been experiencing a spate of bad lucks recently. Last Saturday, a fish bone was stuck in my throat. Though not actually choking and life-threatening, it was kinda bad experience you won't really wanna try it at home. You feel something really annoying inside your esophagus.

Then yesterday, my ADSL modem, wireless router, desktop PC and Astro decoder were all fried and rest in peace because of a bolt of lightning that struck at the right (or wrong) moment. This definitely blows a hole in my pocket already. Hopefully, this consecutive run of bad lucks won't continue anymore.

Not to say superstitious, maybe this year my good luck astrological star is not shining bright enough. Or is this so-called divine intervention? Did I do something wrong recently???

Transmile - The Importance of Cash Flow Statement

Transmile Group Berhad's manipulation of its account receivables might have come as a big surprise to anyone who follows the news. It was reported that a huge chunk of its invoices issued could not be substantiated. Being one of the flagship companies of Malaysia richest man Tan Sri Robert Kuok, nobody had expected this to be happened. If the big boss has been screwed and deceived indeed, what else can you expect from the small investors? Can Security Commission (SC) do something to protect small investors? Or should we rely on ourselves when making investment decision?

My choice would be the latter. Instead of relying SC to protect us, we should better equip and protect ourselves from the bogus accounting practice. Most of the public companies can easily and legally manipulate their Income Statements but find it extremely difficult to manipulate the Cash Flow Statement. This is because the bank balance in a company account cannot lie. So, it would be advisable to look at the Cash Flow from Operating Activities section first in the Cash Flow Statement next time before looking at the profit figure in the Income Statement.


(Let's look at an article discussing this issue.)

Cash flow indicates company’s health

Smart investors look at the cash flow statement of companies first instead of the income statement to understand the actual financial health, says US-based fund manager Jay Taparia.

There were always cases of companies manipulating their accounts to make their figures “a bit rosier”, said Taparia, who is the principal of Sanskar Investments, a fund management company in Chicago.

He said on Aug 2 such manipulation was abetted by loopholes in accounting standards. The Generally Accepted Accounting Principles (GAAP) were more open for manipulation compared to simple cash accounting, he said.

“Small business accounting has always been on a cash basis and it is much harder to manipulate,” Taparia said at a luncheon talk in Kuala Lumpur on “Identifying Potential Financial Reporting Abuses”.

He said income statements are prone to manipulation, as there are multiple ways to account for every line item on income statements.

As for revenue, he cautioned that it could be recognised under three different scenarios – when cash came in the door, when contract signed but no cash received and when probability that contract will be signed is high.

For instance, revenue overstatement could occur via “channel stuffing” where companies place inventory on client sites and booked them as revenue even though the cash was not received, he added.

“Honestly, as an investor and money manager, I do not use the income statement anymore and I do not care about earnings per share or price-to-earnings ratios,” he added.

Taparia said he preferred to use the cash flow statement as it was relatively the same each time as the corporate cheque book had to be reconciled to cash.

“The bottomline is – if you see revenue and net income increase and cash flow from operations decrease, be suspicious about tomfoolery. Cold hard cash never lies,” he said.

He said that investors wanted ethical and motivated management whose main objective was to maximise cash flow and thus shareholder value alongside with their own.

“Shareholder-friendliness and management who care about how their employees are treated have always paid well to shareholders,” he said.

Companies under pressure to manipulate financials are:

• High growth (expectation) industries – companies under heavy pressure from competitors and shareholders – high-risk industries (for example technology and biotechnology companies;
• Management under fire to short-term results (for example, first net profit, turnaround, new management team, post acquisition);
• Managements that stand to gain short-term personal windfalls for “results”, i.e. share options;
• Companies inordinately dependent on high share price to support continuing operations (ability to get loans, acquisitions); and
• In a market of “irrational exuberance” – any company afraid of being left behind.
  

French Open - Roger Federer or Rafael Nadal?

In men's tennis these days, this is the only question that will be invariably asked by the fans. Roger Federer or Rafael Nadal? Well, I reckon both players have a good chance of winning the French Open this year in Roland Garros with Rafael Nadal slightly edges ahead considering their head-to-head records and Nadal's almost perfect results on clay courts recently.

The unique characteristics of the clay courts, notably the French Open had over the years prevent some great players like Pete Sampras and Roger Federer from crowning champion. The tennis balls tend to be bounced slower than other court surfaces like grass and Rebound Ace. Players must have patience. Normally they exchange shots at the baseline before going in for a kill.

Overall, Roger Federer is a complete player in terms of skills, footworks, service, composure and his ability to read the game so well. Rafael Nadal on the other hand has a great physique - his sheer brute force of forehand topspin is his best weapon in addition to his great court coverage. Of course, like many Spain and Latin American players, Nadal was groomed and trained on clay courts since young. This is shown from the nationality of previous champions for the past ten years in French Open were from Spain and Latin America with the exception of Andre Agassi.

So, Rafael Nadal is still the one to beat in this year French Open. But don't rule out Roger Federer. His win over Rafael Nadal in Hamburg Masters recently on clay court should serve as a timely reminder.

Your Money is Losing Value Faster than What the Government Told You

Consumer Price Index (CPI) is used to gauge the inflation rate of a country. As we all know, inflation rate determines how fast our money is losing its purchasing power over time. Just because of this reason alone, the government of a country is tend to report a lower inflation rate based on a new methodology to calculate the CPI. That's why an annual increment of just 5% for our salaries is not a good deal after all considering this fact. This goes to our investments as well. Perhaps, next time when you put your money into an investment that offers less than 10% per annum, think again.

(Let's look at an article by Fred Kaifosh, B.Sc, M.Sc(Biochemistry), M.B.A. to illustrate this.)

From an investor's perspective, the CPI, as a proxy for inflation, is a critical input that can be used to estimate the total return, on a nominal basis, required for an investor to meet his or her financial goals.

For several years, there has been controversy about whether the CPI overstates or understates inflation, how it is measured and whether it is an appropriate proxy for inflation. Read on to learn more about this controversy and how its implications affect investors.

The Controversy
Originally, the CPI was determined by comparing the price, in two different periods, of a fixed basket of goods and services. Determined as such, the CPI was a cost of goods index (COGI). However, over time, the U.S. Congress embraced the view that the CPI should reflect changes in the cost to maintain a constant standard of living. Consequently, the CPI has been moving toward becoming a cost of living index (COLI).

Over the years, the methodology used to calculate the CPI has also undergone numerous revisions. According to the U.S. Department of Labor's Bureau of Labor Statistics (BLS), the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI focus as a purposeful manipulation that allows the U.S. government to report a lower CPI.

John Williams, a U.S. economist, described his view of this manipulation when he was interviewed in early 2006. Williams prefers a CPI, or inflation measure, calculated using the original methodology based on a basket of goods having quantities and qualities fixed.

David Ranson, another U.S. economist, also questions the official CPI's viability as an indicator of inflation. Unlike Williams, Ranson doesn't espouse the viewpoint that the CPI is being manipulated. Instead, his view is that the CPI is a lagging indicator of inflation and is not a good indicator of current inflation. According to Ranson, increases in the price of commodities are a better indicator of current inflation because inflation initially affects commodity prices and it may take several years for this commodity inflation to work its way through an economy and be reflected in the CPI. Ranson’s preferred inflation measure is based on a commodity basket of precious metals.

What is immediately apparent is that three different definitions of the CPI are being used. Since these definitions are not operationally equivalent, each method of measuring inflation would lead to different results.

Different CPI or Inflation Levels
It does appear that the differing means of measuring inflation produce disparate indications of inflation for the same period. The November 2006 Consumer Price Index Summary, which is published by the BLS, stated that "During the first 11 months of 2006, the CPI-U rose at a 2.2% seasonally adjusted annual rate (SAAR)". Williams' estimate of CPI for the same period was 5.3%, while Ranson's reported an 8.2% estimate.

The differences between the BLS CPI and the figures attained by Williams and Ranson would be of sufficient magnitude, that if the CPI is being manipulated downward, the outcome of an investment plan could be less than effective. Therefore, a prudent investor may wish to obtain more insight and a better understanding of these disparate views of CPI and inflation measures and the effects they may have on their investment decisions.

Implications for the GDP
The GDP, as an indicator of economic growth and the strength of an economy, is an important input for investors. The CPI plays a role in the determination of the real GDP; therefore, manipulation of the CPI could imply manipulation of the GDP because the CPI is used to deflate some of the nominal GDP components for the effects of inflation. CPI and GDP have an inverse relationship, so a lower CPI - and its inverse effect on GDP - could suggest to investors that the economy is stronger and healthier than it really is.

Looking Deeper
Governments also use the CPI to set future expenditure. Many government expenses are based on the CPI and, therefore, any lowering of the CPI would have a significant effect on future government expenditures.

A lower CPI provides at least two major benefits to the government:

1. Many government payments, such as Social Security and the returns from TIPS, are linked to the level of the CPI; therefore, a lower CPI translates into lower payments - and lower government expenditures.

2. The CPI deflates some components used to calculate the real GDP - a lower inflation rate makes the economy look better than it really is.

In other words, if the true rate of inflation is higher than the CPI as the government calculates it, then an investor's real rate of return will be less than originally expected, as the unplanned amount of inflation eats away at gains.

Factors Contributing to the Controversy
Many of the factors contributing to the CPI controversy are shrouded in complexities related to statistical methodology. Other major contributors to the controversy hinge on the definition of inflation and the fact that inflation must be measured by proxy.

The BLS describes the CPI as a measure of the average change in price over time of goods and services purchased by households on an average day-to-day basis. The BLS uses a cost of living framework to guide its decisions regarding the statistical procedures used to determine the CPI. This means that the inflation rate indicated by the CPI reflects the changes in the cost of living or the cost of maintaining a fixed standard of living. In other words, it is a cost-of-living index (COLI).

CPI and Consumer Behavior
To illustrate a simplified example on the effect of consumer behavior and different calculation methodologies on the CPI, assume the following scenario where substitution occurs at the item level within a category, in keeping with the BLS methodology.

Suppose that the only consumer good is beef. There are only two different cuts available; filet mignon (FM) and t-bone steak (TS). In the prior period, when prices and consumption were last measured, only FM was purchased and the price of TS was 10% less than the price of FM. When next measured, prices had increased 10%. A set of prices have been constructed to reflect this scenario and are presented in the table below.

Product	Price Per Pound Before Increase	Price Per Pound After Increase	Price Increase
Filet Mignon	$9.90	$10.89	10%
T-Bone Steak	$9.00	$9.90	10%

The CPI, or inflation, for this contrived scenario is calculated as the increase in the cost of a constant quantity and quality of beef, or a fixed basket of goods. The inflation rate is 10%. This is essentially the way the CPI was originally calculated by the BLS. It is the methodology used by Williams. This method is unaffected by whether consumers change their buying habits in response to a price increase.

The current BLS methodology of calculating CPI takes into account changes in consumer purchasing preferences. In the simplified example presented, if there is no change in consumer behavior, then the calculated CPI would be 10%. This result is identical to that obtained with the fixed basket method used by Williams. However, if consumers change their purchasing behavior and fully substitute TS for FM, the CPI will be 0%. If consumer reduce their purchases of FM by 50% and purchase TS instead, the BLS calculated CPI will be 5%.

The previous calculations showed that the CPI methodology used by the BLS, given the scenario and consumer behaviors as described above, result in a CPI that depends on consumer behavior. Furthermore, an inflation level that is lower than an observed price increase can be measured. Although this example is contrived, similar effects in the real world are definitely within the realm of possibility.

What Should Investors Do?
Investors could use the official CPI numbers, accepting the government reported figures at face value. Alternatively, investors are faced with choosing either Williams' or Ranson's measure of inflation, implicitly accepting the argument that the officially reported figures are bogus. Therefore, it is up to investors to become informed on the topic and take their own stance in the issue.

Different CPI levels, for a single price increase, depending upon consumer behavior, can be calculated using the BLS methodology, and it is not implausible that, depending upon consumption patterns, different rates of inflation may be experienced by a consumer. Therefore, the answer may be investor specific.