Silver Buy Call!

I'm continuing my Silver buy call!

Also, I hope you guys have profited from my calls in Handal, and Kossan and many more.

Of course no one person can generate all perfect calls. As long as you have holding power, it shouldn't be a problem. In my humble opinion, TM is a company that is severely undervalued. It is the internet backbone provider, and should be taken more seriously in this day and age. Step aside Maxis and Digi!

My target for near term should be above RM6.00

Gold and Silver prices slammed, yet again!

Those who think they are late to the game, time to get in before it's too late! Once the big players clear their massive shorts, the prices are going to skyrocket!

TM berhad

A company to watch out for. Is severely undervalued for such a big company. With only over 3 billion shares traded, the company is currently valued below RM20 billion. I optimistically value the company at RM35 billion, which values each share at RM10.00 at the very least. Remember, this company owns and operates the country's backbone internet infrastructure, with substantial holdings by foreign Telco companies as well. 

Internet + Cable TV = Maxis + Astro 

Just do the Math. With plenty of room for growth in the Internet and Data business, as well as plenty of room for Cable TV growth, I don't see why the share price should remain low forever. 

In an uncertain world economy, this company pays steady dividends, and operates in an almost inelastic demand business environment (would you be able to live without internet?), TM presents a good buying opportunity, and we can already see the funds collecting. 

Nikkei Slide continues to impede on KLCI's advancement

Nikkei Index

KLCI Trading Activity 27th May 2013

The Kuala Lumpur Stock Exchange continues to be impeded by Nikkei's fall this morning. Stocks in focus still encompasses the Oil and Gas sector. It has been a while now since Telecoms are in play. 

and....Nikkei plunges, hits circuit breaker

Nikkei Plunges 7.3%

Has the great crash begun? Stay tuned...

Bitcoin : Time to re-enter?

After peaking off at around USD260 per Bitcoin, it fell to USD60-ish. Now trading at USD120 region, it is almost half of its value during its peak. Is it time to consider re-entry into Bitcoins? Recent trading volume has shown significant decline, but I see more and more reported acceptance of Bitcoins by retailers. While it might remain a novelty idea for sometime, this might be the defining moment for Bitcoin. With less trading volume, it could mean more stability for the cryptocurrency, a much sought after characteristic that business owners want. A stable currency is a good foundation to work towards being the de-facto alternative method to buy and sell online without big brother snooping around.  

Bitcoin Chart; Uptrend Momentum?

That said, a great entry price would be around USD80 if anyone can get it. Perhaps Bitcoin is not so much of a fad after all! 

Silver Crashing , as Predicted

Silver Crash 20/5/2013, Charts from FXCM

Support Line indication at $17-$18/ounce

Prior to this, I did mention not to go all-in to buy silver just yet. Hopefully some readers followed my call. This morning, silver was slammed by as much as $2 !!! It was reported over the weekend that HKMEx was to cease trading and settlement to be made in cash. 
Could this had been the reason? After all, the world's markets are rigged, just like any big soccer match. 

Anyhow, prices are recovering as we speak. But, keep a keen eye on the mentioned support line.  

Gold and Silver slammed: Another End Game Scenario?

Silver Price

Gold Price

Looks like Silver is heading back to $22, and Gold is probably heading back to $1350 range.

I should advise on collection for Silver now, while Gold is a wait and see. Even so, only invest half of your intended amount, as the other half should be used incase if Gold and Silver broke previous lows. Be mindful that stocks for both precious metals could be limited, and don't take my advise as if. Do your own research.

On the other hand, the KLCI failed to break 1800, and as of today, is trading at 1770, down 12 points from open. There are some major profit taking, which is normal. I believe that the real condition of the economy : no real profits, lackluster demand; will begin to set in, and take its toll on unreasonably high valuation for some companies. 

Upwards momentum in KLCI forged with high trading volume

KLCI chart

At closing, trading volume of the KLSE stood at 2.8 billion units! That's right!
Crazy times indeed! The chart also shows potential upward momentum, with blue chip index stocks recording handsome gains. Second liners such as MRCB, DRBHICOM, E&O, DIALOG also made substantial gains, as well as related warrants. 

Also, a little update on the US market. At Friday's market close for the US market, rumors floated on about the Fed considering tapering off their Quantitative Easing. Could this be the end of the road right here? 

Over the weekend, it was reported that a SARS-related strain of virus killed 2 in Saudi. There were also two such cases in France. While the avian flu seemed to have not recorded new cases in China thus far, it seems that global population is facing an uphill battle against deadly influenza. Keep a keen eye. For now, I am still recommending a collection of Supermax Berhad shares. 

Handal Resources Berhad (Stock Code: 7253)

Hope you guys managed to capture  gains from DIALOG, GAMUDA, MRCB, E&O, SUPERMAX and all my other recommendations. Of course, no one's perfect but my thorough background analysis should have helped to limit your losses. 

Of course, in an upwards market anyone can claim to be a genius. So, in this latest write-up, I will cover a company that I've been following for sometime. Though I have not bought any shares in it, since I'm in such a good mood today, I've decided to share it with you guys out there!

Handal Resources Berhad (Stock Code 7253) have been trading very lightly since beginning of the year, peaking at RM0.45. Today it closed at RM0.395
With all the buzz that similar companies have received lately, such as the likes of TH HEAVY, and ALAM MARITIM, I thought it might be time for us all to have a look at Handal.

Handal Resources Berhad (HANDAL: Stock Code 7253)

For one, I like the name: Handal means "Smart" or "Skillful" in Malay. At the risk of sounding shallow in my analysis, its profit margins are quite similar as compared to THHEAVY and ALAM MARITIM. Also, I like the current price in which it is trading at, which presents a good bottom, and entry price. 

At only 160 million shares being issued, and a market capitalization of RM63.2 million, this presents a really good opportunity and upside potential for speculators. Even THHEAVY is valued at RM500 million. Besides, Handal is trading well below its Net Tangible Assets Per Share of RM0.63

That said, with plenty of projects expected to be coming in, as higher oil prices will definitely drive more exploration for oil by the region's oil companies. Projects that are not economical when oil prices were low, are now worth the risk. Handal will be servicing these companies. 

Anyway, more information here: http://www.handalresources.com/

Dow sustains above 15,000

Dow index is currently hovering above 15,000! On Monday, KLCI broke 1800!
Could this be the beginning of the unprecedented bull run ushered in by unlimited money printing, coupled with lowering of interest rates? 

Possible KLCI Downtrend ?

Currently trading (by lunch break 8th May 2013) at 1775.00, the index has to at least break above 1800.00 psychology level to prove a sustained rally. 

If that happens, sticking to namely index pegged stocks should be a good play. Late comers can choose from stocks that have not went up yet; YTL, YTL POWER, PPB.  
Speculators can take a look at related stock warrants. 

Ready your chips, and roll the dice!

Aftermath of Malaysia's 13th General Elections

After GE13: KLCI Climbs to All Time High

While the incumbent Barisan Nasional won this elections, they did it with a reduced majority. If the trend continues, by the next election, the Opposition might be able to prevent the incumbent from attaining a simple majority.

Nevertheless, the markets zoomed upwards to all time highs, by leaping upwards almost a 130 points on news that the incumbent, known to be pro-business had won. The market stabilized at +50 points at lunch break. 

Most counters were up very significantly, that included mainly the banks: CIMB, Maybank.
As for Supermax, news of its owner supporting the Opposition party, drove down its prices another 5 cents to RM1.95

Though Supermax is purely export business, speculators continue to dump its shares on fear of potential blowback. In my opinion, this presents a good collection opportunity for the avian flu play. Not all is lost. This counter is severely undervalued. 

CSL also had a mild rebound, as expected. 

Keep Calm and Collected This Weekend

Like any democratic nation, Malaysia too has to vote. Keep calm and do your thing. 
While it has taken nearly 60 years for the opposition parties to come together and be a major contending force against the incumbent, Malaysians are not nearly as mature as many would think, yet. 

Perhaps it will take another 10 to 20 years for Malaysians to actively engage each other "maturely" in political talk. By maturity, I mean being able to accept criticisms and not support a certain political affiliation blindly. To me, policies that can benefit the people, can come from either side of the political divide. Support constructive policies, and not the political branding alone. Support the candidate, and not the political party alone. 

As for money politics, live with it. Malaysia's not the worst. Boy would it be fantastic to reduce political inclinations to spend money. But it requires a certain maturity in the peoples' mindset. Not when they readily ask for "benefits" every time they cast a vote. Vote for a person who might preserve your freedom.

As in the words of Ben Franklin: He who sacrifices freedom for security deserves neither

Speculating Psychology

"Any tips on companies that I can buy?" is the question often asked to me. 
I would often reply and give a few names, being lazy to further explain that it is not the right mindset to have. Infact, we might probably all agree that it is better to teach a man to fish, than to give him fishes. 

Well... 
Speculating is a life-long journey, and one must always be hungry to learn, to understand new disruptions in life. For example, who would have thought that is was possible to print your own art (physically), or your own magazine (for a rifle) using a 3D printer? It is the invigorating sense of you are not perfect, thus you must be better mantra that fuels every speculator's desire.

When I first started speculating in the stock market, I often ran out of ideas of what companies to buy. Nowadays, I have so many ideas that I almost never run out. So, how does one arrive on that ability?

There are many sources which I obtain my ideas from, business news being the last, these days. I highly recommend the broad understand of trends, before doing anything. This means, one should pursue the understanding of how the world works, and how it might work in a week, or few months from now. That includes the understanding of a little economics, business climate, and overall public sentiments. 

Then you can slowly narrow down the types of businesses you might be in if you were an entrepreneur. Of course, having an understanding and ability to read technical charts, and candlesticks helps a lot in day to day trading ideas as well. I particularly love to browse around the "most active counters", and "top losers". When significant moves happen, it tends to signal to the market that something is "coming". Perhaps a buying opportunity, or a sell signal. One can then look for related news. That, in my opinion is how news should work to one's advantage. As for analysts reports, they only work to serve their masters, and most often favorable reports are only issued after a significant "unexpected" price movement or positive news developments.

A smart speculator must find out these things before it happens. Of course, if you have information from your "sources" then all these are probably irrelevant.

Just a thought. 

Gold Price Rebounding

Gold Price Rebounding : Live Charts from FXCM

So much for wanting to collect Gold at a much lower price! I've been recommending friends and family to collect at below USD1400, but looks like it is heading to USD1500 soon! Expect more volatility before it heads vertical!

The smarter strategy is to buy half of your investment amount now, and another half later. There might be a possibility of collecting at a much lower price, some estimates put it at USD1100. It is wise to bear in mind that most gold producers have a production price of around USD1200 to USD1300, and at current prices they are barely scraping a profit. 
When prices are so low, they have to close shop and stop producing!!! 

So, when shortages happen.....BOOM! Prices go VERTICAL. Make your own conclusions. 

Malaysia Decides 5th May 2013, Money Printing to Continue Regardless

Flags, Banners, Flyers are abound in the days leading to Malaysia's 13th General Elections. 
While I don't particularly have a preference in any of the political parties, I would say that the focus would be on "Corruption Issues", followed by Economic Prospects. Whoever's able to address the issues, in my opinion will be able to fish the most votes.

Regardless, the printing press will continue to crank up more money to pay for unsustainable promises of state welfare, as well as other benefits. Don't worry, let the youngsters who are working pay for them, while the seniors enjoy for years to come. GE 13's results will be decided by mostly first-time voters. So, by forgetting to handout goodies to the mostly new voters, could the incumbent have made a grave miscalculation?

Start protecting yourself from uncertainties. Own global companies, with diversified operations and customer base. It's not a secret that I love Glove makers lately, not only for its defensive characteristics, but due to the "avian flu" outbreak. All signs are pointing towards an epidemic. Buy precious metals, buy good companies, and buy masks & rubber gloves. 

Election Jitters, and My Prediction

Well, in case you didn't already realize, the retailer market in Bursa is just pathetic. 
Since people already expected a "bad" market since last year February, they have already left the market more or less.
A lot more lost money in Genneva Gold as well. Now that Gold prices have tanked, I wonder what they have to say for themselves.

Thus, the idea of investors selling off before elections, are quite "low in likeliness" as the funds have been supporting the market. 
Foreign and local, all are buying and pushing the markets higher, as Malaysian stocks are considered "safe haven" historically speaking.
And our blue chip counters pay good dividends. 

The search for yield highlights Malaysian companies' ability to stand tall during crisis. 

Election jitters aside, even if incumbent loses majority, the market might still go up. 
Why? The parties related to the new power will push it up, to show "the people's support"
If incumbent retains majority, the market will go up even more to also show "the people's support" 

That said, you should be looking at worldwide situation where corporate profits are shrinking, and think to yourself, where else can funds search for yield? 

Answer is "emerging markets" like Malaysia. Stay away from Airlines, and Property developers for now. Time to move in to more "defensive" stocks.

But definitely, own rubber glove counters.

Supermax Berhad & Other Glove Counters

Since beginning a buy coverage on the primary glove counters in Bursa Malaysia, the prices have skyrocketed and fell back down.

Nevertheless, there's no signs that the avian flu H7N9 have subsided. Infact, number of infections and deaths have steadily climbed. Also, what caught my eye is EPF's (Employee Provident Fund of Malaysia) action of continuous selling of (Supermax Berhad) shares into the market.

Perhaps its just election jitters, something big is coming. Either way, investment banks are starting to upgrade Supermax's target price to at least 50% more than its current trading price. Also, the continual depression of latex prices, and lower than average fuel prices can only prove to benefit glove makers, helping to bump up its profit margins.

Today's post should also serve as a reminder that if this outbreak extends into an epidemic, stock markets will be expected to fall. Could this be the straw that breaks the camel's back? The world is already seeing falling factory productions and consumption. Some economists believe we are already in a depression. A severe epidemic like the avian flu will only serve to amplify the effects of the slowing economy. 

Either way, Supermax Berhad, in my opinion will serve as a good hedge on the underperforming economy, potentially falling stock market, and avian flu outbreak. 

If anything, BUY! 

Gold & Silver Prices Rebound, Rubber Glove Counters rise

After the historic waterfall tumble in Gold & Silver prices, it seems to have stabilized. Gold is again challenging the $1400 per ounce range, while Silver the $24 range. More news to come from Gold producers going broke. At such a low price, it is simply challenging to make a decent profit to pay for operations. Thus, logically this presents a good buying opportunity, as supply decreases in the market.

Also, recent increased reports of bird flu infections and deaths is not UNEXPECTED, when I made my buy call. TopGlove and Supermax made significant gains since my call. Further upside? Let's wait for it to fully play out. Now's just the beginning...

Supermax Berhad

TopGlove Berhad

While precious metals bombed, so did Boston

The single-day biggest drop for Gold in 30 years? Boston bombed? Coincidence? Distraction? False flag?

One can certainly make a killing in the market, or lose his/her pants. I'm going to be holding on to my Glove counters, as talks of the avian flu going epidemic! My heart goes out to the victims of today's incidents. 

Silver/Gold Prices & Recession

Massive Waterfall in Silver Price

As Asian markets opened this morning, news of China and Japan's economy weakening drove prices lower than when US markets closed for the weekend. Gold should prove to be a superb entry between $1300 and $1400, while Silver should prove to be a superb entry between $21 and $25. Prices are just becoming too out of wack! Own physical!

Brent Crude Price

Oil price failed to breakout upwards, but instead is falling. Shortage of demand in many previously big consumer markets, could mark impending weakening market, paving the way to indicate that recession is already in place for many countries, and will kick-in for many more countries. However, it is worth noting that prices might still stay higher than 2008 levels due to increasing difficulty in petroleum extraction. The same is true for Gold & Silver mining. Ore qualities are diminishing fast, and coupled with higher oil prices, cost of production will stay high. Thus, low prices for both Gold, and Silver will not stay forever.

Gold and Silver prices slammed down!

Gold Price Chart

A definite must-not-miss opportunity to really get into Gold and Silver investing. As of this weekend, Silver closed at USD25.85/oz and Gold at USD1477/oz

I previously mentioned that there could be a potential that Silver could hit a low before shooting upwards, in a short squeeze scenario. However, even at current prices, Gold and Silver has hit the support lines, and are at 2010 lows. Collection should be done now, but one should only invest up to half the amount they had in mind, and leave the remaining to collect at prices lower, should it  go lower. Silver at any price below USD35 is a good buy, and Gold at any price below USD1800 is a good buy. 

Predictions however put Silver at USD21 and Gold at USD1200-1300 range, should the support line be broken.

Silver Price Chart

My personal prediction is that Silver will be pushed just a little below USD25, to wipe out the paper contracts taking a long position, before the price heads upwards. Good buying opportunities for Gold & Silver in between the two support lines. 

Bitcoin Hits $200!

Meanwhile, in other news...Bitcoin has hit a high of $200!!!

For KLSE, watch out for:

1. WTK Berhad -Trading above its lows, but still way below previous highs. With fibreboard companies heading for highs (Heveaboard Bhd), WTK could prove to have further upside, trading at slightly over RM1.00

2. Supermax and TopGlove- With avian flu spreading like wild fire in China, it could prove to be a good bet, considering that today, prices fluctuated downwards, which presents a good collection opportunity. The last time the avian flu epidemic happened, prices of both Supermax and TopGlove rose multiple times. A sector to watch!

Update Thursday 11th Apr 2013

1. Bitcoins began to crash to below $100!!! At BTC-e it's trading at $60. So is it a ponzi scheme like many opponents have mentioned? One thing's for sure, I started out in Bitcoins just to speculate. Thus I didn't lose much. It's just play money. 

2. Stay safe, and stick to REAL assets: precious metals

Star Publications Berhad (STAR)

Looks like a good buy now that it has hit an all time low. Price has been quite stable on the low side. Buying activities are seen. Perhaps an election play coming? After all, it is linked to the Barisan Nasional component party, MCA. 

Earnings from the previous financial sheet has projected upon me that earnings are improving. Moreover, Star is actively promoting their new jobs site. They are introducing a revolutionary new way for job seekers to gain attention of employers, via Visume (Video Resume). Job seekers can upload their pitches to improve their standing in landing a job.

So far so good.Additionally, the reduction in number of newspaper copies sold, is balanced well with The Star's online news presence, being one of the top sites that Malaysians visit daily. I also like this company due to it being held by strong hands (MCA, Big funds in Singapore). I expect some upside for this company's share price. 

Have a happy weekend! 

Malaysian General Elections

So it's official! 

Parliament is being dissolved, and some parties say that elections will be within a week or two! 

The KLSE dropped 2 percent today, but managed to close green. Possible intervention by major institutions. After all, retailers have long since left the market. Any major selling or buying should be done by the big boys.

Now's the time to do some shopping. I would personally stay away from Telcos. Expected squeeze in earnings.

On the bright side, Litecoins have since risen from USD0.55 to over USD5.00 since the time I mentioned it.

Litecoin

Since I've written about Litecoin, its price has rose from a mere USD0.55 to over USD1 in a period less than a week.

A lot of people are expecting it to reach at least 1/10th of Bitcoin's market capitalization of a Billion dollars. 

It is probably still not too late to purchase Litecoins. You can also exchange your Bitcoins for Litecoins to expose your money to further upside. For Bitcoin to double in value from USD90, should take more time, than for Litecoin to double from USD1 to USD2. Thus, Litecoins might be a better bet.

Again, this is not investment advice. Only play with money you have. 

Malaysian Airlines

Of late, MAS's stock price has been rising steadily, from bottoming at around 68 sen.

Trading volume has increased but it seems like market is still not confident. After all, the share issuance has not been done yet. I do think that the market expects the share price to fall further after the issuance of additional shares. 

However, it is important to bear in mind that the main shareholder Khazanah, will most likely hold on tight to their shares. Thus, selling should be only by retailers.

So, taking a little punt on MAS may not be such a bad idea. 

We should also not discount the possibility of privatization of MAS.

Why?

MAS has subsidiaries that could potentially be gold mine (Firefly, Freight Business, Aircraft Maintenance). With some reorganization, and re-listing  its businesses, it can potentially bring in more money than to keep MAS listed. Debt can be reorganized, and proceeds from listing of its profitable businesses, can help uplift is financial condition. 

Airline business is very much dependent on debt, debt, debt, and the need to continuously grow revenue and profits. If profits cannot stay ahead of repayments, then the company is screwed. 

MAS could potentially be operated as a smaller entity, after having spun-off its other more profitable businesses. Operating MAS as a lean machine can potentially help revive the brand, and keep costs in check, while maximizing profits. 

So, who's taking it private? Anyone?

Guide to punting on Warrants

So, say you want to get rich or die tryin'. Someone suggested you start buying warrants. 
How do you get started?

The best method is to just buy, and lose money. Then you'll find out why.. kidding! :) 

In this Guide, I'll outline the basic principles and information to look out for when you buy warrants.

Warrant Lifespan
Be mindful that there are 2 types of warrants- company issued, and bank issued. Both have expiry dates, and usually the bank issued warrants have a lifespan of about 12 months of trading, while company issued warrants can vary from 2 to 10 years.

Settlement Method
Company issued warrants upon expiry is usually converted into shares, meaning you might have to pay a fee to convert your warrants to "mother" shares, while bank issued warrants are usually cash settled. If your warrants are "in-the-money", you are paid, and if your warrants are "out-of-the-money", your warrants expire worthless.

Is it a Call or Put warrant?
A Call is a warrant that bets that the price of the Mother share will go up, and a Put is a warrant that bets that the price of the Mother share will go down. Please read the warrant information carefully before executing your trade. 


Only Buy Warrants with the following qualification:

1- Companies that are known
Typically, you should only punt on warrants that are linked to index stocks, or solid blue chip companies. Why? These companies and warrants get more attention than little known companies, and odds of you making money when the market is active is much higher. Thus, even though you share price has not reached your warrant's exercise price, with a little market exuberance, warrants tend to move a lot. That's when you can sell. It's usually a small time window. 

2- Negative Premium
Most stock trading platform has the calculation ready (unless it has just recently being listed) for the warrant's premium. A negative premium warrants indicates that the warrant is trading way below it's actual price. This price inconsistency versus the Mother share usually happens when the warrant is about to expire, or when the market is not so sure about Mother share's potential price movement. There's risk involved, so do your homework first. Always assume the market is typically quite efficient, so any bargain deals could be there for a reason. People just do not want to own it given the amount of risk involved. 

3- Close to Exercise Price
Owning a warrant that is close to its exercise price could be a good play as well. Though usually at a slight premium, any significant move upwards on the price of your call warrant should give you a tidy profit. The market tend to pay a premium for warrants with a lot of trading days left, and have hit its exercise price. 

4- Company share price has upside potential
Buying a warrant that's company has reached say, a recent high might not be such a good idea. It could backfire on you, as investors sell off the share leaving you to hold on to potentially big losses. That said, be sure to always check your charts. 



In the following example, I will demonstrate how to utilize charts, and calculate the "potential profit" for your warrant. 

Exhibit 1: Click to Enlarge

From the exhibit above, it is clear that there's a potential upside possibility for this stock.
Buying warrants of this company can be a potentially good bet. 

Let's say the company stock price is currently trading at RM6.08, and you decided to buy a a warrant that has an exercise price of RM6.20, that has a 3 to 1 conversion, and expires in 70 days. 

Say the warrant is selling at 3.5 sen. You want to find out if it's a good buy, and worthwhile to punt.

I would first see RM6.50 as the immediate target for the share price. But to be on the safe side, I would take a much lower target of say RM6.40. If that is achieved, I would profit 20 sen (RM6.40-RM6.20). 

Since the conversion is 3 to 1, it means that 20 sen should be divided by 3. 
That should value each warrant at 6.5 sen to 7 sen. 


Conclusion: By risking 3.5 sen to gain 7 sen, it could be a potentially good bet. But be mindful that you only have 70 days. You should be reminded that some warrants cease trading in the final few days, and so you might want to think it over. Of course, being able to acquire your warrants at a much lower price than 3.5 sen brings you much more advantage. You should also factor in your "cut-loss" strategy should the warrant be reduced from 3.5 sen to 2 sen if the Mother share price falls. That should mean at least a 50% paper loss. Play intelligently! 

Banks Gambling Bigger to Make More Profits

This came off Reuters:
_________________________________________________________
(Reuters) - Citigroup Inc (C.N) is considering cutting its cash on hand by about $35 billion, which should help the bank buy higher yielding assets or redeem expensive debt to boost earnings.
_________________________________________________________


In periods of mounting distrust for the banking establishment, is it really wise to resort to such a move? Holding more cash should be a better move, but perhaps as investors/speculators are scrutinizing corporate profits closely, they might have little or no choice.


As explained in my previous post, corporate profits should be expected to dwindle in coming quarters, as falling demand as a result of unemployment kicks in. Question is, how long can corporate profits stay high enough to keep stock prices high? Perhaps the elite have already cashed out knowing that the music is about to stop; leaving the fools to play musical chairs.


Personally, I think the prediction that there will be a major shift of wealth from service providers to producers of real goods, will come true. Time to de-leverage your lifestyle, and save up in real assets.

A Brief Review of My Calls

The other day, I made a call to short the EURO/USD pair. If you did, you probably laughed your way to the bank.

I also made a call to buy MRCB. If you bought at RM1.32, and sold at RM1.50 and above, you would have made some quick returns as well. However, there's no harm in holding this share if you entered a little late. Since the share swap deal should be completed in July or earlier, and is done at the price of RM1.55


Moving forward, we all must be weary of the global situation. Companies are be scrutinized for not earning enough profits, and this trend is expected to continue with unemployment skyrocketing in major European and North American economies. If there is no job, there would be no income, and consequently less spending on goods that Asian economies produce.

It is wise to keep a close watch, and only bet on sectors that are intricately linked to basic needs of the population: Energy, Food/Water, Housing
For now, I wouldn't recommend Telecommunications just yet. It is going through a consolidation phase, and trends are worrying especially when Apple Inc is reducing the amount if Iphones being manufactured. 

Potential buys for KLSE can include:

YTL Power 
Puncak
MRCB
Gamuda
E&O 
DRB Hicom

I will keep my call for LONG on SILVER (currently trading at USD28.76), and certainly be on the look out for potentially lower prices. 

So much talk about Bitcoin. What about Litecoin?

Lately Bitcoin has got a lot of coverage from news outlets. It went from trading at USD14 (when I first took notice, but didn't buy) to USD75! So is it a ponzi scheme? Is it a pump and dump scheme? One thing's for sure, there's not much use to it as a currency just yet. Once the acceptance widens, it could be that even at USD75 (US Dollars) it is genuinely undervalued, considering the limited amount of coins circulating in the market. 

I'm not a sucker for investments not backed by any real assets, but pure market trust.

However, what caught my eyes was its competitor (Litecoin) who claims to aim to be the Silver Standard, should Bitcoin be considered the Gold Standard. Currently trading at USD0.56, it is far cry from USD75 ! 

In Malaysia, it ain't that easy to acquire Bitcoins nevertheless! Thus for newbie investors who might want to try and dabble a litte, here are my recommendations.

1.Remember, to first download your bitcoin wallet from Bitcoin.Org. Make sure it is fully synced.  

2.a. Register at MtGox (https://mtgox.com/). You can proceed to fund your account by doing a wire transfer. (Standard wire transfer should cost you RM25 on top of the amount you might want to deposit). Buying and selling Bitcoins can be done at MtGox. 

Screenshot of MtGox.com : Click to Enlarge

OR

2.b. Buy from DgtMkt (https://dgtmkt.com/). It costs a bit more, but is worth it if you just want to buy 1 or 2 coins.

i. Copy your bitcoin wallet address, and remember to use it for your transaction. 

ii. Wait for confirmation, and remember to sync your bitcoin wallet (100%) so that you can see your account balance. 

3. For those more adventurous to capitalize on the undervalued Litecoin, you can proceed to download the wallet from Litecoin.Org

4. Register an account with https://btc-e.com

Screenshot of Btc-e.com: Click to Enlarge 

5. You can proceed to transfer your Bitcoin to your account, and trade in the exchange to get your Litecoins.  (Note that transfer of Bitcoins does involve a small fee. i.e. 1 Bitcoin will cost you 0.0005 Bitcoin. The higher fee you contribute, the faster your approval process)

OPTIONAL

6. Once you get your Litecoins, you could proceed to Google around for exchanges that trade in stocks, bonds, or funds that use Litecoins, OR you could hold on to your Litecoins and hope that it will appreciate in value.

If you should decide to sell your Litecoin, have it converted back to Bitcoin, and offer to sell it back. There is not existing market in Malaysia, so you might want to ask around (DGTMKT does buy back), or have it converted to USD in your MtGox account. I wouldn't worry too much because as this becomes more mainstream, there will be a bigger market. Remember, you are getting in earlier than most people. 

When to pump and when to dump?

So why after major price spikes and crashes happen to companies such as DPS Resources Berhad, Harvest Court Berhad, Asia Media Berhad, and many many more, the latest being Patimas Computers Berhad, do still investors in Malaysia still flock to speculate?

Perhaps its the possible lure of big returns, quick profits and sheer excitement of quick price movements. It used to be that KLSE "those days" traded in volumes much more than today's KLSE. Sometimes even more than NYSE's volume. So if I might take a stab, it could be that investors sometimes feel really bored and are in it for some excitement.

So the question right now is what should you do, when you encounter such exciting prospects? Say at 9.00am on a weekday morning, you suddenly see huge volume for a certain stock, and it suddenly pushes up a few points. Should you join the pump? If so, when do you dump?

My recommendation is of course to limit your speculative bets to what you can afford, and cut it in half. Say you can afford to lose RM5,000 since you had a good month betting on a certain stock, cut your speculative bet to half of that, and make it RM2,500. Also, be sure to enter "early" to such events. If you are too late, when the price has went up far too many points from the previous day's closing price, then you should opt not to participate. If however, you are tempted to, then by all means. 


Once you get in, stay put and watch it closely. You should now choose from the following 2 actions:-

1. Hold it, and wait for it to go up. Since you do not know how high it will go, and what will play out, just hold it, and set the stop loss at your acceptable loss level which should be between 25% and 50%. i.e. Cut loss once your RM0.10 stock goes to RM0.05

OR

2. Hold it and wait for it to go up. Do not cut loss. Only take profit when you feel comfortable or when you think it has all been played out. 


One word of wisdom though, use the price action as your guide. Since news release might come a few days after, your best source of information is the movement of the share price. If you feel uncomfortable, sell it all, and exit. Also, be reminded that the winner will always be the "ones" behind the play. Whether or not you play the fool, is your decision. 

No Light at the End of the Tunnel Seen

Sometimes, no....most of the times, people just put too much faith in their government to sort things out.
As in the case of the Cyprus bank bailout........it shows that often times the people in charge just do not know what to do! While for the past few years there have been a long standing "tradition" of bail-outs, this time they decided to conduct a "bail-in" by taking depositors' money. Now even New Zealand is talking about resorting to the same actions if they would to encounter the same situation. Even the Fed Chairman, Ben Bernanke signalled that if things got out of hand, they wouldn't discount a bail-in.

Anyhow, here are a possible few trades you might be able to do:

1. Buy Precious Metals: Gold and Silver (As I write, Silver has broken through the USD29 level). Let's see if it holds.

2. Shorting the EUR/USD pair might be a good bet, but do so cautiously. 

3. Consider BITCOIN. It has had a spectacular run from when I noticed it at USD14 to USD69 now.
Do more homework about it, find out if it is right for you.


Finally, I would recommend that instead of taking a passive stand in managing your finances, and your assets, take an action stance. Not believing in everything your government does makes you an active, and more responsible citizen. That does not mean you are anti-government. Infact, if I'm the government, I would see you as less of a threat. That's right...being independent minded does not mean you are an anarchist.

Let me describe a situation:

Let's say suddenly there's a bank run situation. Being an active citizen, you might have already withdrawn enough of cash, and might even have some gold or silver. You wouldn't be one of the many trying to to withdraw their money off ATMs, and certainly wouldn't be a security threat to the government. You also might have probably stored enough of supplies, and wouldn't join the mob to the supermart.


Time for change of mindset. Be independent and think for yourself! Don't wait for shit to happen and react.

Deposit Insurance, Is your money really secure?

Have you ever put a thought to your money in the bank? Have you even tuned to the news lately, as Cypriot depositors rush to remove money from their banks, after a call to impose levy on their savings? While one might argue this will not happen in Malaysia, I say let us look at the facts. I'm not implying anything. Just look at the facts.

Extract from PIDM Annual Report 2011
(Link at http://www.pidm.gov.my/downloads/2011/ar2011eng/AR2011Sec5.pdf)

In a brief view, Total Funds available are around about RM500 million.
Assuming maximum coverage is RM250,000 for each account that would only supply enough money for 2,000 accounts. Bank deposits (consumer and corporate) goes into tens of billions for most banks.

Now, tell me whether it is enough? There's no other way except for PIDM to raise more funds through borrowing, meaning government assistance, or possible bail-out. Are you prepared to roll the dice? Will government bail you out when your bank collapses? If you asked me, I would think that this deposit insurance seems underfunded even with "Government Guarantee" as advertised. Similar with the case of many countries. Perhaps the government should do something about this. After all, money is the blood of the economy. This is not a scare article, merely to inform.

Potentially Top Bets (KAF, KENANGA, THHEAVY, MAS, ECOFIRS, MRCB, E&O, DIALOG)

1. KAF could be a good buy, currently valued at almost RM200 million versus Kenanga which is valued at RM406 million. Foreign banks aiming to gain ground on the Malaysian market might aim to acquire a stake in KAF. Currently trading at RM1.65

2. Kenanga could also be a good speculative buy, at only RM0.55, it has ran up and then down. Likely due to election jitters and European/Cyprus woes.

3. More stable buys could include Dialog, E&O, while more adventurous buyers could look at acquiring THHeavy. While MAS could be a speculative bet, considering it is currently trading at cheap, and is open to potential privatization.

4. I also really love ECOFIRS for its potential exposure to Johor real-estate, stable income stream, and also its lucrative venture in Iron Ore mining. This could be a bet for the long term. Again, should be on the lookout for coming financials.

5. As I write, MRCB has fallen to RM1.32, and could present a good buying opportunity. One should watch out its price action carefully, and be reminded that the deal with Gapurna would only be completed in July 2013. Nevertheless it's always better to be 3 months earlier, than 5 minutes too late.

Cyprus Bank Run

So now, bank run in Cyprus? It isn't surprising as if they don't withdraw their money, Cypriots will end up getting taxed for even doing the right thing not many are doing right now.... SAVING.

Will this happen to Malaysia? Can our banks sustain a potential bank run? I have high regard for our Bank Negara nevertheless. Still, as age old advice goes....diversify diversify diversify your assets.

Never assume things won't happen, as panic spreads fast, like fire. Perhaps even faster nowadays.

Potentially Good Buys (Silver, MRCB)

Apologies for not constantly updating.

Right to business

1. Silver is trading below $29/oz. This represents a good buying opportunity. There's a potential that it might fall to $25 as this market is highly volatile and manipulated. Keep some capital to buy lower, but put some to work right now.

2. MRCB could represent a good buy for the next 1 year. But enter at your own risk. Malaysian general elections jitters could drive it lower.

On the high note, Dow is trading at all time high. This market could be heading for a collapse or a boom, thanks to unlimited money printing.

Petron Malaysia (Ticker: PETRONM)

                                                Picture courtesy of Paultan.org

Despite being bought over by Petron, the then renamed ESSO entity is currently trading below purchase price. The then ESSO was traded as high as double current price of RM2.90 due to speculation of better buy-out price. Despite such news, ultimately the buyout offer price was only RM3.50. Even so, trading at RM2.90 presents a deep discount that one should simply not overlook.

There are a few factors:

1. Low P/E compared to Petronas Dagangan.
-Trades at P/E of 5, while Pet Dag trades at P/E of 26

2. Similar business compared to Petronas Dagangan
-Petron Malaysia has similar business activities as compared to Petronas Dagangan, even operating over 500 gas stations all over Malaysia. They also own a refinery in Port Dickson, and are planning to ramp up refinery capacity.
-Produces and markets various petroleum related products for car engines etc

3. Major deals being done
-Existing deal with Malaysia Airlines to supply gas for their Airbus A380
-Could potentially be a supplier for the coming Malindo Airlines

4. Good earnings, with swings just similar to Shell Malaysia.
- Despite having good earnings, it has been quite a volatile earner, but no reason why it should underperform Shell's share prices. Shell Malaysi trades at RM 8.35, despite suffering losses.
- Q3 2012, Petron Malaysia produced over RM110 million in profits
- Cumulatively, RM124 mil vs RM165 mil in profits (2012 vs 2011)
- Supposedly for Q4 it repeats at least a RM100 mil in profits, that should make its profits top RM200+ mil
- Predicted EPS should hit RM0.74 if that comes true.
- EPS Petron Malaysia vs EPS Petronas Dagangan should be very competitive should that prediction come true.

5. Price per Share trading at below Net Assets Per Share
-RM2.86 (as at 9th Jan 2013) vs RM3.50

6. Pays consistent dividends
- Between RM0.12 and RM0.14 per year

So, Why shouldn't you not buy it?