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?

Beginner's Guide to Investing Silver

1. Why Invest in Silver?

There are many reasons as to why one should consider making silver a major investment in his/her portfolio. The primary reason is to fight inflation, caused by the out of control money printing. Inflation is explained as the price of goods becoming more expensive. But a better way to describe inflation would be the price of good becoming expensive due to the continuous devaluation of currency. As you might understand from economics 101, the market is governed by the law of supply and demand. 
When there's more paper money (supply has increased), it will cause a decrease in its purchasing value. So, your money basically becomes toilet paper!




One might ask, so if I want to beat inflation, why not I invest in the stock market? While investing the stock market might be a good idea, the case of rapid inflation or hyperinflation would cause your money to be worthless. The stock market might go up, as the result of more money printed, but your purchasing value could have been wiped out completely. Thus a RM1.00 stock going up to RM100 due to hyperinflation might result in you being a millionaire, but a million could perhaps only get you a loaf of bread. While owning Silver or the physical precious metal, could help you pay for more than a loaf of bread. Also, bear in mind that the current shaky condition of many banks should serve as a reminder that your paper assets might not be safe! You could hold millions of ringgits worth of stocks, but if your brokerage goes bust.... 

Thus, above are the arguments for owning the REAL STUFF...the metal. Anyhow, more sophisticated investors can hold both the paper asset, investing in Exchange Traded Funds or SLVs, and also hold the physical metal itself in a safe.

#ETF (Exchange Traded Fund) such as the SLVs invest in Silver Mining or Silver-related companies, that together create basket of investments. It's like buying a mutual fund, but with the specific exposure in mind: to capture the gains in the upward movement of Silver prices. 




So, all talk but nothing else should be boring up till now... I highly regard these videos as a MUST WATCH:

Watch in order: 

a. http://www.youtube.com/watch?v=E5VNAEmmBQM
b. http://www.youtube.com/watch?v=tj2s6vzErqY


Why should I listen to him? What are his credentials?
Because he saw it coming. Below video should summarize it up

http://www.youtube.com/watch?v=PAQmXaJEc7k
 
Here are some further respected people of the community that you should check out, if you are interested in further educating yourself:

David Morgan http://www.silver-investor.com/
Gerald Celente Trends Journal
Peter Schiff

You can Youtube them all... and listen to their views about where the market is going as a whole.
Additionally you can checkout TV programmes on Youtube, such as #Capital Account 


2. I'm sort of Half-Convinced. So what now?

You might want to consider taking action now, while silver prices are still low. I bought at $27/oz (ounce) region, and am still buying. It's not too late to buy into Silver, and as always, you can wait for a lower price, but in the meantime, stack up some first! By using the averaging technique, you could over a period of time lower your investment cost! Personally, as long as Silver is below $50, I still consider it cheap! And unless there's a significant change in government policy of unscrupulous money printing, I will continue buying more. So, you can buy Silver in primarily 2 forms:

a. PHYSICAL BULLION OR COINS :::Comes commonly in a bar or coin form, weighing 1oz or 31g. It also comes in 2oz, 5oz, 10oz or more, depending on mints:::

Feel free to checkout the sellers, but don't take it as a recommendation from me. I have bought from some, and you can check them out too.

SilverforMalaysia.com
Merlip.lot.my
Nubex.com.my

So far these 3 sellers are selling at less cut-throat prices. Bear in mind that Physical bullions do carry a certain amount of premium above spot price. 

#Spot price = Price that is quoted live on the boards, such as Kitco.com. Btw, Kitco does have this live app you can download onto your computer.
Also checkout Netdania for apps for your android or apple phones. 


When you browse through the products, please bear in mind that bars are always cheaper than coins due to import tax. Some mints are going to charge more than others, so if you are in purely for investment purpose, please get only the bars such as Morgans, Scottsdale, OPMs etc. Products such as the American Eagle would also make a good investment if you dont mind paying more. Some of the benefits of owning the American Eagle would be ease of recognition. In a post apocalypse world, people would readily accept it. Also, some countries have laws on importing precious metals. In some countries, the American Eagle is looked upon as purely money, and thus you would have no problem bringing in 500oz of silver, as it only represent a face value of US$500. While silver bars which represent 500oz, might get you in abit of trouble!


American Eagle

Some might even love collecting numismatic coins, which are often priced a lot more above the spot price of silver. The prices differ and are usually attributed to amount minted, year minted, rarity, condition, etc. Investing in numis require much more study, but could pay off really well...such as those who held on to Chinese Pandas. It can be your side thing, but the best bet is still investing and buying coins or bars as cheap or as near as possible to the spot price. 


Chinese Panda

b. PAPER SILVER :::Is like owning a stock; you don't hold the physical metal:::

You can also opt to invest in paper Silver, though I highly not recommend due to my earlier fears of "counter-party" risks. However, I still must educate you on how to do it. As of my knowledge now, only Maybank offers Silver Accounts. You can easily google this up or drop by the Maybank branch to enquire about this. They are selling the investments on per gram basis. 

If you are more of a trader type of person, or simply just wanna try your hands on trading, I highly recommend FXCM. 
Easy to register, and easy to deposit using even your debit card. 

Link: http://www.forexmicrolot.com/

Note of caution: Please beware that your investment can be easily wiped out due to volatility. Make sure your account is well funded, as per pip can cost a minimum of US$0.50. That said, I recommend you checking it out only, and not trading it.

3. Final thoughts

A good price to enter would be between $26.50/oz to $35/oz
But who's to say anything about the best price? An investor should enter precious metals with the first thought in mind: to preserve his/her wealth
But, silver does have the ability to not only preserve, but multiply wealth. Even so, do invest with a certain amount of awareness. Perhaps a good way to comfort yourself is that Silver and Gold is highly manipulated, due to unlimited printing of the US Dollar. One should not be worried too much about the price, but rather maintain the mindset that you are protecting your wealth. Do it before it's too late!

Solving money problems with higher pay?

Most of us have the understanding that higher pay would solve almost any money problems we have. My readers would have to come to a rude awakening! 

First off, let's see how much of your basic salary goes to taxes and inflation. 

Inflation 5% per year (Official figures are around 2%)

Consumption tax 6%

Service tax 10%

Income tax 7-24%

Total tax per year: MINIMUM 28%

Staggering isn't it? ONE THIRD YOUR INCOME GONE~ POOF! 

So, the problem isn't with earning more, as you can understand, earning more puts you at a significant disadvantage as well...MORE TAXES! 

How then to reduce your expenses? Firstly, cut down your expenses in fancy eat-outs and even in franchise chains. that should cut your consumption tax and service tax expenditure. 

To fight inflation, you have to start protecting your income. No, not by saving your money. You should own PRECIOUS METALS. If inflation is 5% per year on a good year, your money in the bank (after returning 2% a year in interest) is reducing at a rate of 3% per year. In about 30 or so years, you money is gone..POOF~! Mind you, that's on a good year. 

You do your own maths: Eating out has been becoming more and more expensive! Even if the price doesn't change, the portion does! Now, what happens in the scenario that our subsidies are no longer sustainable? I bet inflation would soar wildly! We often forget that in Malaysia the subsidies are a blessing in disguise that actually keep our inflation level LOW! As oil prices SOAR thanks to global unrest, and unlimited money printing, inflation of 10 to 20% per year is just around the corner. Imagine your hard-earned savings gone...in just 5 years! 

So, dear friends...please be prepared!

Inflation in Malaysia

Inflation seems to be creeping, and catching with our daily expenses here in Malaysia.
Perhaps it ain't that bad since the Government is subsidizing most of our basic consumption like gasoline, and basic food necessities. But don't for a second think this might go on forever. The continuous printing of money by the U.S. Federal Reserve would only continue to lower the value of our currency back here in Malaysia.

Time to start protecting ourselves.

Malaysia Airlines (MAS)

MAS at the current price appears to be a good buy. Price has been sustainable at the RM1.00 level, with heavy collection spotted. Better financial results on the horizon perhaps?

Either way they should be set for take-off, as MAS has secured financing to purchase more aircraft with the help of the MOF. Comparing MAS versus AirAsia, I should say that MAS is still the better bet, as it has the official government "stamp of approval" and has little impediments when it comes to raising debt. Pension funds happily subscribed to its bonds, while I highly doubt that the Malaysian Government would bail-out AirAsia if it were to run into any troubles.

Reality is, airlines are a money-losing business. Profits? Sure! Just a mere shuffling around of numbers and figures. This business carries heavy debt, and thus the business is highly leveraged. You don't need me to tell you of the ill effects of high leverage in this type of business environment don't you?

Either way, my money's on MAS.

Property Market in Malaysia (1)

IMO Malaysian Property Mart is overvalued especially in around Klang valley. When you look at the median income vs property prices, many agree this is not sustainable. Further more, please have in mind that the high prices are only sustainable as long as financing is available for such high valued properties, and are dependent very much on buyers being able to service their loans. So, when you see an average property around Klang valley being priced around RM500,000 at least, and with an average median income of RM2,500, In my humble opinion, it is not sustainable. Even if you have to pay RM1,000 every month (RM12,000 a yr), 50 years of repayment is more like it if you take into account interests. Not surprised that banks are beginning to offer multi-generational loans that allow the son to take on payment after his parents pass on. Property prices have to come down at least half to make it even feasible for purchase. The question that you should ask is when will people start losing their jobs and not being able to service their loans? People spending the way they do today on cars, and houses, and even on entertainment, it is no surprise that they are living from paycheck to paycheck. Also not to forget, properties though many are freehold, if you dont keep up the payment to the bank, you're toasted.

Big companies are hiring lesser and lesser and if not for government spending into megabillion-ringgit projects, I highly doubt all these are sustainable. Bear in mind as well, that all these borrowing and spending on big projects would eventually come down upon the rakyat in terms of higher taxes in years to come.How long more can our natural resources sustain our spending binge?