Wednesday, December 24, 2008

FREE GIFT : Suggest a new URL for this blog !

I have been writting this blog for a few months now.  I think this blog has enough content in it to deserve a URL at its own.  So whoever read this please suggest a URL name by leaving a comment.  If I pick your URL I will be sending you a book "Top Money Tips for Malaysian" for FREE if your receiving address is in Malaysia, else I will be sharing some of the great ebooks I have with you.  If you already have kclau's book, then I will try my best to come up with another great book for you.  You can leave as many comments as you want.  Some reasoning with your suggested URL is greatly appreciate too !

These are what I have done trying to find a good URL but without success yet. - too long, first time visitors have to type too long. typo etc.

then I tried some myMoney etc but all these domains are no longer available.  To see if your suggested domain is still available, you can use

then I was hoping to try with some branding like, so I was thinking to start with some pronounciation that will not be ambigous.  So I listed down all the possible pronounciation and found out that most of them would still lead to miss-intrepretation like B is like P, D is like T.  Very soon, I was left with only C, F, H and Y.  So add 5 vowels to these 4 letters I have 20 options.  However, quite a lot of these 20s are also ambigous like YE is like YI, YU is like U etc.  So the best matches I can come up with this exercise is, alike.  Most of them are also not available and doesn't really sound good anyway.
So now you can see that I really need your help, its not just a year end give away thing ... please please please ask your friends to come suggest too !

I have tried my best to provide useful content for the past few months, I hope it has been benefitial to some of you.

2008 was an interesting year for me considering the downfall and how I dealt with it ... Merry Christmas to you all and may 2009 be a better year for us all !

Traffic of this blog is shown in below graph : top 90 visitors / day, average 38, recently drops to 20s due to my trips away.

It will need a permanent URL before bringing it to its next height.  I am counting on you ....

just in case above FREE gift does not excite you, there are a few hundred stuff that I trade ... you may also pick from that list once I select your suggestion.  

Wednesday, December 17, 2008

Red Indian Winter Stock Market

It was autumn, and the Red Indians asked their new Chief if the winter
was going to be cold or mild. Since he is young and being a Red Indian chief in a

modern society, he couldn't tell what the weather was going to be.

Nevertheless, to be on the safe side, he replied to his Tribe that the yes

winter was indeed going to be cold and that the members of the village
should collect wood to be prepared.

But also being a practical leader, after several days he got an idea.
He went to the phone booth, called the National Weather Service and
asked 'Is the coming winter going to be cold?'

'It looks like this winter is going to be quite cold indeed,'
the weather man Responded.

So the Chief went back to his people and told them to collect even
more wood. A week later, he called the National Weather Service again.
'Is it going to be a very cold winter?'

'Yes,' the man at National Wea ther Service again replied, 'It seems it is
definitely going to be a very cold winter.'

The Chief again went back to his people and ordered them to collect
every scrap of wood they could find. Two weeks later, he called the
National Weather Service again. 'Are you absolutely sure that the
winter is going to be very cold?'

'Absolutely,' The Man replied. 'It's going to be one of the
coldest winters ever.'

'How can you be so sure?' the Chief asked.

The weatherman replied, 'The Red Indians are collecting wood like Crazy.'

This is basically how Stock Markets work ! and how we have so many half-past-six gurus.

Sunday, December 14, 2008

Book : Top Money Tips for Malaysians by

I am one of the lucky ones who started finance planning even when I was a teenager.  Ofcourse when I put my money into mutual funds at that time, I didn't really know what I was doing.  However, starting early does give me a strong advantage 10-20 years down the road.  I was able to choose the jobs that suits my long term plan;  I was able to change job duties within a multi national company; I was able to change job at my own pase and finally I was able to start my business without too much worry of losing monthly salary income.

However, the curse for this kind of 'smooth path' people is that we tends to stay in the 'well plan' zone too long until we get carry away.  We 'thought' we are all ok and therefore we got relax and start to make some fatal mistake in our personal finance plans.

That is the good thing about reading habit.  I realize my pitfall when I read kclau latest book "Top Money Tips for Malaysians".  There are so many tips in there that I once know but forgot to practise them ...

You can view more details at kclau's blog or buy a copy from me at this link.

Friday, December 12, 2008

western 2009 prediction

Some predictions are made in this link, summary as follow

1. Yahoo! will trade higher in 2009 

2. Sirius XM won't file for bankruptcy 
Losing 95% of its price this year, writer think it will still go on.
3. Tech will lead the market recovery 
writer thinks Apple and Google will make a big Come Back.
4. Chinese stocks will outperform stateside equities 
writer recommends NASDQA:BIDU a google equivalent search engine in China called Baidu

Danger of Technical Analysis

If you know charts, then you probably should know there is a X and Y axis.

In technical charting, X axis is usually Time.  The Time can be month, week, day or even minutes.

Understanding the reasons behind technical chart is tough, but using it is very simple.

For example, chart below has 3 graphs in it.

1.  the top graph show the price info, its called candle stick ( don't worry, will be shared more later )
2.  The below 2 graphs are analysis telling you when to buy and when to sell
3.  when the red line cross above, BUY.  when the red line cross below, SELL.

Now back to the danger part.  Below chart is shown in a 5 minutes X axis.  Both signals are asking you to BUY

However, below is another chart showing exactly the same stock but in 1 minute duration.  In this chart, the signal is telling you to SELL !

Although this may be confusing but even the best Technical Analyst in the market sometimes make mistake forgeting to counter check the X axis and recommend wrongly.

Thursday, December 11, 2008

Technical Analysis vs Fundamentals

I have shared some methods to invest before ...
Those are within the category of fundamental analysis.  Basically you are trying to understand what a business is doing and how it 'may' perform in future.  Fundamentalist is trying to differentiate the big and important factors from the smaller factors or rumors ...
Sometimes even though the fundamental of a business is strong but its stock price may still go down if the demand is suddenly drop while the supply remains the same.  So even a totally rediculous rumor can affect stock price seriously in a particular time, as long as the demand believes it.  As the description of this blog mention, 90% of the people will take silly rumors as truth.

Fundamental also include effect of news.  If a company announces good year end result, its stock price may most probably go up.  However, you may observe that the stock price actually go up even before the announcement is made - its called react before the news.

As you may see now, fundamental analysis is great for long term wealth accumulation from time A to time B.  However, there may be a lot of ups and downs in between.  If you are able to catch the ups and downs in between you may be able to gain more, like wise if you 'guess' wrong, then you may lose more than what long term gain can get you.
You may NOT be able go guess right the lowest and the top points EVERY times, but there is a SYSTEMATIC / Statistical way to identify (1) end of the lowest point and (2) the end of the highest peak.

In other words, you may use Technical Analysis to catch the
(1) after lowest point and
(2) after the peak

The idea is this ... no matter if it is rumor or insider news, it will be reflected on the actual buy and sell price.  That's why Technical Analysis can NEVER catch or predict the actual bottom or peak, but it can usually catch the after effect.

If all these are TRUE, this is what you can do to lower your risk while maintaining your reward.
1.  use fundamental to filter out which stock to buy ( can keep long term )
2.  use technical analysis to 'further' narrowing the 'in' and 'out' timing.

... stay tune ... you are able to reach the 'sure win' arena ...

Tuesday, December 9, 2008

Wiki : Usury

Usury (pronounced /ˈjuːʒəri/, comes from the Medieval Latin usuria, "interest" or "excessive interest", from the Latin usura "interest") originally meant the charging of interest onloans. This would have included charging a fee for the use of money, such as at a bureau de change. After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate. In common usage today, the word means the charging of unreasonable or relatively high rates of interest. As such, the term is largely derived from Abrahamic religious principles; Riba is the corresponding Islamic term.

I have posted many storiesabout how money turns evil ...

many people may says that capitalism is not good because the rich gets richer ... actually its not the capitalism, its just the way the money is defined.

Again ... its all about a large population of under educated public being abused by a small group of smarter people.

This problem has been known LONG ago and well documented almost in ALL kind of religions ...

Monday, December 8, 2008

Fund Managers Are Lousy !

I attended one pursuing session urging us to take their classes on technical stock assesment.  Half way through the following conversation took place :

speaker : You know who uses our services ? ( Technical Chart )
( pause a bit, no one answer, then speaker continue )
speaker : Profesionals ! ... You know who are the pros ?
( then he continued )
speaker : Fund Managers !
student : but .... its hard to say isn't it ?
student : all those mutual funds drop like hell so they are not any better than us.  How to say they are pros ?

The speaker didn't answer well and almost no one signed up with their offers.

Basically its a matter of size.

I used to sell lemonade when I was a boy.  I made about 100-200% profit a day.  Then when I grow up I built a factory to sell lemonade, I would be happy if I can earn 10-15% a year.

Selling lemonade from my garage required $100 capital while a facotry took up $1 million.  

Things get complicated
when size grows !

It is very hard for a $100,000 guy to understand how to handle $2 billions.

BIG guys like mutual fund managers do have some 'limitations' because they are BIG !
1) They cann't simply buy or sell too much funds by law, coz they may 'manipulate' the market at ease
2) They promised investors to keep '80%' of the fund in the market to qualify as 'quity' fund etc.

Sunday, December 7, 2008

emphasize on Automated Saving again

Some of you who has been reading my blog may have seen this picture below many times.

Basically this diagram is almost all about what I preach about in personal finance.

The first thing to do is not to buy insurance nor any investment plans.  The first thing to do is to transfer money from your income into a "Money earn Money" (MeM) acount.

It should have a few unique qualifying features:
1.  It always have a positive interest, no matter how low it gets.
2.  has limited convinience to withdraw money out from this MeM acount.

So it could even be just a normal saving account with low interest.

The 'flow' from Income to MeM should be Automated.  Once setup, you should forget about this MeM account too.  That way this MeM is really passive, definitely accumulating and safe from weak EQ withdrawal.

Friday, December 5, 2008

Another version of Money Crisis theory

OMG, after I posted up how Money Turns Evil ( Part 1 Part 2Part 3 ) , more and more people mentioned it too.  Below video is another version of it - speaking in Chinese.

Famous Successful Business man talk about Finance Crisis using his own theories.

The way he talks may be a bit bore but he actually suggested how to solve today's crisis !!

by having a modern day barter system !! One of the post I drafted but haven't posted up yet.

Money As Debt Video

I have told a long story how Money Turns Evil in the past.  ( Part 1 Part 2 Part 3 )  The last part was actually more like a basic tutorial to forex trading as a matter of fact.

Anyway, I read from Meshio blog about an interesting video - Money As Debt.  The story line may have some similarity to my story but this video is 10 times better !!

A 47-minute animated short by Paul Grignon (via BB) explaining how the monetary system used to be, and how the existing mo
netary system works


Have FUN watching !!

Thursday, December 4, 2008

Book : Get Your FIRST car FREE !!

I mentioned before the biggest personal finance challenge in Malaysia is to buy car due to its rediculous high taxation (read this old blog here).

However recently I received a book from my sifu's sifu titled "TOP Money TIPS for Malaysians".

Written by KC Lau, one of the pioneers in Malaysia Personal Finance Blogging world !!

... guess what !

This books shows you HOW you can get your FIRST car FOR FREE !!!

It is totally mind blowing !

How could I have NOT thought of it myself !!  I regret so much that by now I already have had own 3 cars.

Why didn't I read this book earlier !  Argh !!!!

Don't make the same mistake I did.  You should go get this book now !  ( Click here to read more about it and BUY IT ! )

One more thing, this FREE CAR tip is only 3 pages out of the whole 208 pages !!  Imagine all the other tips that can help you Save More, Make More and Protect your Money !

Different types of Incomes

One of the famous income categorization is the one by Rich Dad, Poor Dad:

E is when you get paid when you do your job, usually within a fix amount of time or a pre-determined achievement list.  The good thing is your income is relatively consistent.  If you are the 9-5 type worker, even if you go to work and surf the net the whole day, you still get paid that day !!

S is when you think you are doing a business but actually you are not.  Basically you are still selling your time and effort in a linear way.  At the moment you cut down your time or your effort, your income drops accordingly.  The good thing is if you are a very hard working person, you are mostly likely to earn a lot.

B is when you have an idea and you get other people to make that happen.  You are Managing it but you are NOT Doing it.  Significant differences between S and B is that B is operated within a well established "system" while in S, you are the system itself.

I is when you keep your money in FD and every month your money increases.

The problem of Robert's first book 
is that he didn't say 
this Quadrant is a concept, 
NOT a finite categorization.
May be he did but not emphasized enough.

For example, a worker who goes to work everyday, just do whatever asked to do and waiting for month end paycheck falls under E.

However, if another worker is expanding his personal network during his career in order to move up the rank and also join better bigger companies could be considered as S.  He could be treating his employers as his customers, whom he pleases the customers in order to get paid higher and higher.

E worker works from 9 to 5, selling time for money.  S worker may not appear in office all the time but his mind is definitely 24 hours online thinking how to expand his 'business'.  Most CEOs operate their jobs like a Self Employed business.

Beggar who beg 9 to 5 can be considered doing a 'job' as E.  Beggar who analysed what places to be at what time to maximize his 'income' could be a S.  Beggar who gather other beggars to learn his begging strategy while he no longer go out to beg but share a commision of what other beggars have beg could be a B.

So wherever you are whatever you are doing now, you can do it the E way, the S way or B and I ways.  Its a matter of HOW you earn your income, NOT what you do.

One more heads up ... I also think Robert miss out one very important category.  There are a total of 5 income category types, not just 4.

Sunday, November 30, 2008

Save $2400 get back $800 = 33% return ?

Someone asked this in a forum ...
Save RM200 a month for 21 years with 'Guarantee' RM 800 interest a year, payable every 3 years at RM 2,400.  
It sounds like saving RM 2,400 a year can get back RM 800 return GUARANTEE - that is 33% rate  !!  Is it a really a good deal ?
I always see this kind of question being asked, the answer is quite simply ... you have to plug in the number and run the analysis.  ( read about that here )

For above example, if you also take back all your saving of RM 50,400 then add together with your RM 2,400 x 21 / 3 = RM 16, 800.  You are getting a total return of RM 67,200 21 years later.

If you assume a FD interest of 2.65%, you will get back MORE THAN the mentioned return above !!!  

And it is not 33% return but only less than 2.65% return !!

Guess what ?  Today's FD rate is at 3% and most likely to rise for the next few years.

Take this rule of thumb with you ...

any kind of insurance guarantee return policy will provide you slightly less than FD return at that point of time !!

Treat Pocket Money as an Income in PFP

P F P - Personal Finance Planning

Above shows the whole Personal Finance idea I promote since the very beginning of this blog.  ( old blog link )

First you must have some sort of income.  Income can be obtained from business or employment or freely available.  

For example money received by house wife from her husband should be treated as some sort of her income.  A lot of time, 'smart' husband earning income may seems great and all but 80% of such husbands will face a trendmendous down fall in his life.  Employed managers may lose their jobs for 3-5 years during their 30s and 40s.  Self employ business men may lost everything they have and couldn't get back up for 5-10 years during their 40s and 50s.  Its almost a rule of thumb nowadays ...

Only a small fraction of them are able to get back on their feet on half of the time the others do.  Guess what their differences are ?

They have wives who treated their monthly merits as income and perform good finance planning on it.

And when their husband is no longer generating handsome income, basically they come to the rescue.  Instead of tons of hand bags, the smart wife only bought 1 LV etc.

There are many versions ... most of them actually just lend the money out and the husband was able to cross over the tough time and continue to earn the income with more cautious mind.  Some actually take over husband role to earn income.  Some also left their husbands and create a new world of their own.  

They are able to do it because they treated their pocket money as income and perform good finance planning on it.

Tuesday, November 25, 2008

Currency Turns Evil - part 3

Money was created to ease up buy sell transactions, you no longer have to take in 100 chickens just because you want to sell your diamond ring.

Since each country has its own system and seldom cross borders in the past, each of their money is different in unit called currency.

Then, country needs to do business with another country. They have to sychronize the value of their currency, they use gold for that purpose.

Slowly some smart 'finance' guy realizes that the 'impression of Gold' is as good as the real gold to increase value of their currency.  ( actually the impression is much better and easier to acquire than the real gold )

If the value of currency is just like the value of any traded goods - govern by supply and demand, why don't we trade the currency like the way we buy sell stocks ?

F O R E X is borned !

Before I proceed further, let me set the record straight that Forex is one of the most liquidated market which has Total Freedom.  Something I always pursue all finance institutions to go for.  So there are many good things about Forex.  However, there is one aspect that is evil, very evil indeed - and that is the part I am going to talk about here - its room for an unlimited speculative nature.

To Buy or Not To Buy ? JUST SAY IT  ...

So in Forex you buy sell currency like you buy sell anything.  And the item for sale is in the form of currency pair like this GBP/USD  (buying Pound with USD).  Says someone is selling 10 units at USD1.5125 each and you buy all 10 units.  Then the next seller is selling 5 units at USD 1.5200 and you buy all 5 units too, then the next seller is selling 1 unit at USD 1.5205.  So GBP value has just rised from USD 1.5125 to USD 1.5205 because you have bought the 15 units of GBP/USD.

correction :  You said you want to buy those 15 units but you actually don't.

like wise, the seller who said selling you the currency ... guess what ?  He doesn't have any Pound Steering neither !  He just said he want to sell you !

There is no real money involved !  What happened is the seller and the buyer have committed into a contract for the above transaction.  The contract stated a future date for the actual buy sell transaction.  So before the contracted date, you can resell what you have bought but haven't paid yet.

Remember just now you said you want to buy 15 units of 'goods' ?  If you sell them out at your purchased price before the contract expiry date, you will earn and lose Nothing - Zero !  But throughout the process, you have increased the value of GBP at that particular time.

Buy A Million with A Dollar

Another unique thing in Forex is what forex guys normally called it 'leverage'.  Basically you can say you want to buy 3 million of GBP with only USD 1,000 capital.  

Since there is no real currency involved and it is all about what the seller and buyer said, the real profit and lost is the difference of the movement.  For example, changes from USD 1.52 to USD 1.53 is only 1 cent difference.  So you don't have to have USD 1.52 to buy anything.  As long as you have 1 cent, you can say you want to buy the thing but as soon as you make a lost of 1 cent, the system automatically sell your contract out and deduct your 1 cent.

Lastly ...

Sorry if this write up is a bit boring.  This is a topic that cannot easily get agreement and I am trying my very best to express this in my laymen view ...

So by now you can see how you can use a minimum capital to speculate the value of a country's currency at ease - just say it !

Says you are an USA international trader.  You are buying 10,000 phone booths from England.

England quoted you GBP 1,000 each.

Currency Exchange at that time is 1 GBP = 1.50 USD

So your total payment is USD 15 millions

If you know forex very well, you can speculate sell GBP at lower price or buy USD at higher price until 1 GBP = 1.40 USD

If you managed to do that, you have just saved USD 1 million !!  

And your seller has just lost an equivalent amount !! 

This is actually happening every day !  A lot of 3rd world international wholesale businesses do not use forex in their finance management, their business profit range at 5-15%.  And their business contracts are usually renewable in 3 and 6 months and mostly in 1 to 2 years.  Everytime when the currency exchange flutuate more than 15-20%, they will lost all their profit ... no matter how smart they sell, no matter how much they mark up the selling price, no matter how much cost saving they did .... a cunning business counterpart can easily overturn all their effort just by Saying It !!

Guess what ?  There is no such thing as MYR pair in Forex trading.  MYR is so small that one single investor like George Soro can brankup a whole country simply by trading currency.

So the next time you are trading currency ... you are most probably NOT trading to bring up the value of your own country's value.  Instead you are most probably just helping USA and Britain ...

You can earn a lot in Forex no doubt ... but beware at what cost.

Part 1 Part 2 Part 3

Safe less EPF, pay more TAX, You are now still poor and has no saving !

Full article on

Da Mook: Let' assume your monthly basic salary is RM4,000.

If your monthly EPF contribution is 11% (RM440), then your taxable income = RM3560, and income tax payable = RM77.

If your monthly EPF contribution is 8% (RM320), then your taxable income = RM3, 680, and income tax payable = RM109.

Conclusion? If you choose to contribute 8%, you will end up paying more income tax to the government which will make the government richer.

Finance Minister Najib Abdul Razak said this measure was meant to boost the slowed down market, but from this example we see that the money does not go into the market.

Instead the money goes directly into the government's pocket through the greater amount of income tax that we will have to pay.

Obviously this measure does not help the market at all. Do we still want t...

Sunday, November 23, 2008

Currency Turns Evil - part 2

At first money is invented to facilitate buy-sell transactions which is the best invention of all time.  Then value of money is tighted to gold as a standard (what I called Big Bang in Finance World).  

But very soon "WAR" becomes a very costly way to acquire gold to print more money.

( but its not costly to launch war against petroleum - another story)

But very soon some smart people figure out that they don't have to follow the standard of gold-money-value.  Afterall, that is just a standard set for more stupid people to follow.  In reality, like everything else, the value of an item is driven by Supply and Demand.

So USA quickly set ONE standard - use US Dollar in inter-country transactions.

Whenever USA take over a country, they set USD as the standard global currency before they leave.  When USA lends money to a country, they set USD as standard there.  Whenever you want to buy and sell with USA, you HAVE to use USD.  These are all fine ... because afterall, its their right to request so.

The sad thing is everyone else followed blindly.

Says country A and B deal with USA using USD which are perfectly fine.  However, because the banking systems in A and B were greatly influenced by USA, all the transactions are FIX (hard coded) to USD.  

Hence when A and B are doing businesses, they use USD as standard even though it is NOT their home currencies.

Imagine you are sending money from Malaysia to China, you cann't use MYR ( or RM ) and you cannot use CNY ( or RMB ), you will have to buy USD using your MYR in order to send the money over.

So whoever you are, wherever you are, if you are transacting globally, you will have to BUY USD.  As mentioned before, when demand rise, value rise.

The increase of this Demand alone allows USA to continously print more money almost forever without the need of gold at all.  Because there is no sign of over hauling our global banking system at all.

Some people are still wondering if World War 3 will occur one day.  What they didn't know is WW3 is way over and USA has conquered world economy many years ago simply by implementing one global standard in currency.

The only smarter people who were able to protect their own territory is Britain.  And some better light shed among all these is the creation of Euro - where the smaller players group together 'trying' to break away with the permanent damage cause by this currency standard WW3 domination.

Up until here, its still history, although recent history.  We cann't blame USA for playing this trick because who wouldn't want to print more money, especially when all I need to do is just to ask the other party to use my standard ?  My standard is better than no standard isn't it ?  

Most of the 3rd world countries were in deep shit that time.  Imagine we didn't even have enough food to eat, how could we be smart enough to say NO to a non-intrusive USD standard ?

The next part is the last part.  Like before we didn't eat enough food, today we don't really get fed enough neither spiritually.  Which is also the part when currency really turns evil .... stay tune ...

Part 1 Part 2 Part 3

Most Cost Effective Insurance in Malaysia

If you are buying insurance for the first time or considering topping up protection to your life, there are some facts you should know :

1. each product ( insurance, FD, Mutual Fund) has its own strength ( see this post )
2. a hybrid product may give the best of both worlds
  2a. some hybrid products are called "Link" products  ( read here for varies type of insurance )
  2b. if you build your own hybrid, its called Buy Term Invest The Rest 

Not by conincident, 2a is usually offered by insurnace companies while 2b is usually offered by mutual fund companies.  Its just a matter of approaching the same purpose from 2 different angles.

If you are in Malaysia, I would like to share with you A number : 328 !!

You can 'buy' a life insurance of MYR 328 with MYR 1 only !!

Therefore a MYR 50,000 Life insurance would cost about MYR 150 / year !!

So whatever extra cost you are paying for your insurance, you should expect them to provide you extra services and / or provide a good investment return.  Else you will need to relook into your portfolio because you are paying too much for your own ignorance.

note : 328 is the number for group term life and TPD protection only, its the most fundamental and simplest element I can find in local insurance industry here.

Stock fee is cheaper than mutual fund

Quite frequently I heard that many people do not buy mutual fund because its 5.5% fee is too high comparing to stock investment where each transaction is charged at 0.42%.

It is no doubt a valid concern. When buying stock, there is only one broker who is earning your commission. While there is a huge team working in your mutual fund, hence cost much more.

However, there is a catch to that concept.

There is a minimum fee charged to each stock buy-sell transaction. Lets say its $40. And you have just purchased a low price stock of a total of $400. You have just paid 10% commission fee for that investment, not 0.42% !!

In order to really enjoy the low fee, you will need to have a larger capital. For example, if the minimum fee is $40 and the normal fee is 0.42%, then each of your buy-sell transaction should be more than $9,524 or else you are paying more than 0.42% charges.

So no matter if you are buying
a 1 cent stock or
a $100 stock,
your minimum buying price
shoud be at least $10,000 !!

So unless you are already transacting stocks above 10K in each transaction, you should still go back to your mutual funds ....

Wednesday, November 12, 2008

Currency turns evil - part 1

I shared before money is tighted to gold in an old post.  That was the good side of money, here comes the later part ...

... soon earth is seperated politically into countries.  Some countries grows stronger, 2 particular ones are E and U.  They used their strength to conquer other lands and take possess of the gold there.  More gold means they can print more money.  

However in reality you cann't simply conquer other people's land and take away the gold for no reason.  For example, U claims that country I is violating human's right and therefore U is acting as world police to take over country I in order to instill 'fair' human right policies there.  With that as official reason, U can slowly take over the golds they found behind the curtains.  However, it is still Not Easy to move the gold from I to U because the world is watching.  So instead of taking the gold out from I into U, U hide the gold in I but declare that U has more gold and start printing more money in U currency without devaluation.

So does U really "OWN" the gold to justify the extra currency they printed ?  Yes if they still own the land in I.  But when stories like U's gold in I has been stolen etc. would have cause U currency to drop.  When U finally leave I, U would have claimed that they have already 'transfer' the gold back to the land of U, but ofcourse I would claim that the gold is still in the land of I because I wanted to print more currency too.  As you may guess, the same gold has been used twice to justify printing more money.  While no one actually have seen the actual 'gold' ....  

Hence the value of money is NO Longer tighted to real existence of gold but the impression of having gold ...

.... this is only the history because the world No longer welcome war and would not accept the excuse of world police ... part 2 will show how U become even smarter to print more money without gold at all ...

Part 1 Part 2 Part 3

Low Risk High Return ?

Seems like still quite a number of people do not agree that Risk is dealing with something you don't know (read the post about risk here).

So I would like to repeat that yes while Low Risk Low Return and High Return High Risk are TRUE but if you think it that way, you may just settle for "whatever it is, it is !"

For example, you may think you are not a risk taker, therefore you will never get a high return !!

My 'additional' point made to above truth is that, you should still make effort to learn the next risk in your portfolio so that the more you know, the better you can manage that risk until it becomes insignificant compare to its potential return.

Property as an investment

Just a reminder that Car Loan interest rate is about 1.9X more than the House Loan.  Meaning a 3% car loan is almost as high as a 6% house loan.  Think again if you think car loan has a lower interest rate.  (click here to read more).

The fundamental of investing in property is not much different than buying a business to earn you passive income.  However, the nature of brick and mortal business is an Active Income generator, not a passive one.


So you would need to be extra careful when using property as your finance tool to gain "Passive Income".

In simplest term, you HAVE TO make sure
  1. you can rent your property out to fully pay for the monthly loan repayment
  2. you budget in the fee you pay for professional to maintain your property including
Real Estate agents
Interior Design if needed etc.
Without these 2, you cann't start property investment at all.  With this, there is no guarantee you can win big yet but at least you would at least pay less to learn the lessons.

The right way to lower down price

Generally it is a BAD idea in economy sense for a goverment to influence hypermarket to lower their price ( more on that here ).

Because the ultimate great thing that can happen in our market is FREEDOM to trade.  Whoever smarter will think of better ways to save cost and therefore lowering their sale price, those who are not will not survive.  Eventually all the creative ones remains and we will have 'smart' business men in our society.

Hypermarket doesn't really care about slashing prices.  Because it doesn't hurt them at all.  Its their suppliers who are affected.  First of all hypermarkets don't pay suppliers cash.  Second, hypermarkets don't pay suppliers in full.  Third hypermarkets don't hold responsible for lost and damage goods.  

Imagine a supplier barely survive getting pay check 3 months after the goods are sold and now due to price slashes, the supplier receive only part of the payment.  So at the end, the remaining ones are the ones who did not give discount ?  Or those who already monopoly the market remains stronger ...

However, out of all these smoke screen ... some lights do shed.  Air Asia slashing their fuel surcharge mainly to counter MAS recent 'Net Price' advertisement, not so much of  because minister said so.  Like wise, BAT who started cigarette price war are purely business competition oriented.  These 2 are great price reduction examples, compare to the terrible hypermarket price reduce.

Has your daily lunch price reduced yet ?

Stock selection - management

I have shared before how to calculate how much a stock is worth and therefore knowing when to buy at what price.

However, that is just one of the methods.  The one shared above is a quantification method using calculation.

In real world, when you buy a business that is NOT run by you, the ultimate Single Main Factor is

Who Is Running The Business ?

The company may did great or terrible in the past, what really matter is who is running the business now and what he or she is going to do about it.  So the more and closer you know about the management of the company you are buying, the better position you are in.

I have seen many times stock buyers simply buy in blue chips because the company was doing great.  Without realizing the successful CEO has left replaced by a half empty manager.  Needless to say, all things go downward since then.

So when you are ready to buy a particular stock, spend a little bit more time to find out who is running the company.  Check and see if there are any hanky panky stories came out from google.

If possible, try writting them a letter or email and see if you get any reply.  Try to meet and talk to them.  Usually the really great successful CEOs are friendly while those blood sucker CEOs will just slamp door on your nose.

With a Good management, 
a bad company has a chance 
to be great again !

Without one, 
the best company 
will eventually sink indefinitely ...

Sunday, November 9, 2008

tiny Personal Finance Survey Result

A personal finance survey was conducted on for about a month.  People who participated range from 19 - 46 years old, with mostly under 30 years old.

They were asked where they put their money in right now and what worry them most in their future.

See below pie chart that most people keep money in bank which is quite common.  Follows by insurance, mutual fund and stock market.  This is quite consistent with general public risk profile.  So this is a good allocation.

(click the chart to view larger picture)

In the question of "what do you worry most" is actually prioritizing one's personal finance need.  Where priority 1 is the most important ( most worry ) and 5 is the least.

See below 3D chart for the result.  It shows that Most People want to Get Richer ( Wealth ) and the least concern is Live Too Long.

Most said : "I'll be happy if I live 'too' long ...  "

This result is consistent with human psychology where people are mostly thinking about 'Current Needs' and tends to under estimate 'Future Needs'.

(click the chart to view larger picture)

Friday, November 7, 2008

Derivative - Options

Just to emphasize, this is not the FULL picture yet ... so dont make impulse decision that you want to go trade options straight away ... it will require quite long a study ...

source from