The Next Big Crash - Are You Prepared?

(13-06-2013, 10:26 PM)TheMillennium Wrote:

(13-06-2013, 10:17 PM)freedom Wrote:

(13-06-2013, 09:58 PM)felixleong Wrote: haha I dunno when is the best time to buy
if I value the stock at $1 and it now sells for 70 cents I'll buy some
if it sells for 50 cents I buy more and run out of cash
it hits 30 cents i can't buy anymore but its fine, I'm human anyway... i can't always get the bottom but I can make a good return on my capital ^^

a more important question to ask is when the $1 is going to be realized.

If you bought at 70 cents or even 50 cents, the $1 is only realized 10 years later. are you wining or losing?

there are more value traps in local market. just be careful. 70 cents can stay 70 cents for longer than you expected.

But Freedom, do you agree with felixleong that if it remains at 70cents for 10years, but gives a high dividend yield of 7-10%, is it ok?

Just want to know the different views.

Thanks!

it also depends. Where does this dividend come from? from its earning? and how much is the payout ratio? does this dividend reduce the value of the company in the longer term?

a lot of companies pay out dividends from their hoarded cash/assets. it greatly reduce the value of the company.

(13-06-2013, 10:24 PM)TheMillennium Wrote: Bibi, just to check, there are other companies besides bluechips that give consistent good returns at higher yields right? So does it make more sense to buy these companies? Just for one example, LKH. As long as fundamentals are good, that's the most impt?

I am thinking from a newbie point of view who is not good at identifying good mid-cap or penny shares. Pennies if chose wrongly at wrong valuation might not recover back to their high levels. At least with blue chips, there is a higher chance of recovering back the original purchase price. Also, pennies have a tendency to delist themselves when valuations are cheap.

MayBank Kim Eng report from remisiers.org,

Ebbs & Flows

Equity flows continue to exit emerging markets

 For the week ended 5 June 2013, global fund flows continued to exit the equities market with outflows totalling USD6.2b against previous week outflow of USD2.8b. ETF and non-ETF investors contributed to outflows of USD2.1b and USD4.1b, respectively. Developed markets (US, Europe and Japan) were generally range bound for the week as investors grappled with the impact of the Fed’s implicit intent to taper its USD85b per month bond purchasing program.

 In Asia ex-Japan, funds outflow spiked to USD1.8b with the Financials sector contributing to 45% of total outflows – making it the single worst week of outflows since August 2011. North Asian markets contributed significantly to the exit, in particular China and Hong Kong, which recorded outflows by USD825m and USD414m, respectively.

 Lacklustre statistics in China have painted a bleak picture that puts the sustainability of the country’s growth in question. Adding to last week’s report over differences in China PMI from two sources, this week’s trade and industrial output data growth that came in below estimates certainly does not bode well for investor sentiment. Our regional economist, PK Basu, stresses that overcapacity continue to be a striking impediment for China and that more private consumption than public investment needs to be seen before markets can get more comfort over China’s growth outlook.

 Cash ratio for the month of April (one month lag) for Asia ex Japan equities spiked 40 basis points to 2.6% indicating that investor are becoming more cautious and taking risk off their portfolios given the market’s lofty run up. For the same month, comparing EPFR’s statistics against the MSCI Asia ex Japan benchmark, institutional investors raised allocation on Singapore and Malaysia against under-allocations from Korea and Hong Kong.

 Net flows as a percentage of AUM by Asia ex-Japan geography were: inflows for Korea 1.1%, Malaysia 0.1% and Taiwan 0.1% while Philippines -5.7%, Hong Kong -5.2% Singapore -1.4%, Thailand -1.4%, China -1.3%, Indonesia -0.7%, Vietnam -0.6% and India -0.1% reported outflows.

(13-06-2013, 10:24 PM)TheMillennium Wrote: Side qn: So how come Warren Buffett focuses more on capital gains than dividends? Is it because USA has tax on dividends so focusing more on growth is better in the long run?

It is much safer to buy a good growth company cheaply or fairly. The growth will compensate the risk you are taking.

the difficulty in it is to discover a good growth company.

this is the opposite of the value trap, because nothing can trap a growth company(as its earning grows, its value grows. If not, someone will come in and buy it over. it mostly applies in US. In local context, growth companies can be trap as well, as the owners might not share the wealth the company creates).

(13-06-2013, 10:26 PM)Temperament Wrote: This what we call Pyramid Down 1,2,3,4,5,... if we are sure of the fundamentals of the company. But from financial books i read, not one author favours this. All recommended Pyramid up.
That is we buy 5,4,3,2,1; Let's assume everything being equal, then pyramid down 1,2,3,4,5, is the same as pyramid up 5,4,3,2,1, , isn't it?
Is it really the same? i don't think so. Nothing is perfect but all the professional financial book authors have very good reasons.
The most important is still we better be quite sure the fundamentals of the company we are betting is sound and strong. That it will recover healthily and stronger after its an ill wind that blows no good. i found it hard to pyramid up, because how to know the falling knife has struck. Have to try though because it is really more advantages to pyramid up.
from the base 5,4,3,2,1.

Hi Temperament,

Can you point me to a book that talk about pyramid up/down? Tried Google, but end up with Pyramid Schemes or Body Building.

Was and still is trying to figure out something in this area of thought.

Thanks in advanced.

(13-06-2013, 11:12 PM)Penguin Papa Wrote:

(13-06-2013, 10:26 PM)Temperament Wrote: This what we call Pyramid Down 1,2,3,4,5,... if we are sure of the fundamentals of the company. But from financial books i read, not one author favours this. All recommended Pyramid up.
That is we buy 5,4,3,2,1; Let's assume everything being equal, then pyramid down 1,2,3,4,5, is the same as pyramid up 5,4,3,2,1, , isn't it?
Is it really the same? i don't think so. Nothing is perfect but all the professional financial book authors have very good reasons.
The most important is still we better be quite sure the fundamentals of the company we are betting is sound and strong. That it will recover healthily and stronger after its an ill wind that blows no good. i found it hard to pyramid up, because how to know the falling knife has struck. Have to try though because it is really more advantages to pyramid up.
from the base 5,4,3,2,1.

Hi Temperament,

Can you point me to a book that talk about pyramid up/down? Tried Google, but end up with Pyramid Schemes or Body Building.

Was and still is trying to figure out something in this area of thought.

Thanks in advanced.

Title: INVESTOR’S GUIDE-- Selecting Shares that Perform (Richard Koch). From NLB. i rarely buy book as NLB is FOC. i think there are many similar from NLB. Enjoy then may be shared what you think?

(13-06-2013, 11:01 PM)freedom Wrote:

(13-06-2013, 10:26 PM)TheMillennium Wrote:

(13-06-2013, 10:17 PM)freedom Wrote:

(13-06-2013, 09:58 PM)felixleong Wrote: haha I dunno when is the best time to buy
if I value the stock at $1 and it now sells for 70 cents I'll buy some
if it sells for 50 cents I buy more and run out of cash
it hits 30 cents i can't buy anymore but its fine, I'm human anyway... i can't always get the bottom but I can make a good return on my capital ^^

a more important question to ask is when the $1 is going to be realized.

If you bought at 70 cents or even 50 cents, the $1 is only realized 10 years later. are you wining or losing?

there are more value traps in local market. just be careful. 70 cents can stay 70 cents for longer than you expected.

But Freedom, do you agree with felixleong that if it remains at 70cents for 10years, but gives a high dividend yield of 7-10%, is it ok?

Just want to know the different views.

Thanks!

it also depends. Where does this dividend come from? from its earning? and how much is the payout ratio? does this dividend reduce the value of the company in the longer term?

a lot of companies pay out dividends from their hoarded cash/assets. it greatly reduce the value of the company.

May I know if UMS is considered as a value-trap? Good dividend, had been paying their 1c per quarter since 2009, but got problem creeping above 50c. If I bought the share in beginning 2010, I would have collected 16c of dividend compared to the price of around 20c then. Or... 50c is the right value for this company?

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(13-06-2013, 11:19 PM)Temperament Wrote: .

Title: INVESTOR’S GUIDE-- Selecting Shares that Perform (Richard Koch). From NLB. i rarely buy book as NLB is FOC. i think there are many similar from NLB. Enjoy then may be shared what you think?

Thanks once more!

(13-06-2013, 10:26 PM)Temperament Wrote: This what we call Pyramid Down 1,2,3,4,5,... if we are sure of the fundamentals of the company. But from financial books i read, not one author favours this. All recommended Pyramid up.
That is we buy 5,4,3,2,1; Let's assume everything being equal, then pyramid down 1,2,3,4,5, is the same as pyramid up 5,4,3,2,1, , isn't it?
Is it really the same? i don't think so. Nothing is perfect but all the professional financial book authors have very good reasons.
The most important is still we better be quite sure the fundamentals of the company we are betting is sound and strong. That it will recover healthily and stronger after its an ill wind that blows no good. i found it hard to pyramid up, because how to know the falling knife has struck. Have to try though because it is really more advantages to pyramid up.
from the base 5,4,3,2,1.

My 2 cents..One of the books i read sugguested using technical analysis to help in pyramid up, of cos advantage is that u will be nv pyramid down too early..

Soory to sugguest TA in Value Investing forum..
My personal thinking is combination of TA and sensing on economic develpments...cos TA alone mayb too slow to catch the uptrend

(13-06-2013, 11:27 PM)Penguin Papa Wrote: May I know if UMS is considered as a value-trap? Good dividend, had been paying their 1c per quarter since 2009, but got problem creeping above 50c. If I bought the share in beginning 2010, I would have collected 16c of dividend compared to the price of around 20c then. Or... 50c is the right value for this company?

I don't consider it a trap, as the largest shareholder only owns less than 30% of the company and the company is paying good dividend showing that the board is willing to share the company's wealth to its shareholders.

However, whether it is value is up to the investor himself. The price is a big factor, so is the projection of future.

(11-06-2013, 09:28 PM)Penguin Papa Wrote:

(11-06-2013, 12:19 PM)felixleong Wrote: Reits got sold down again, whats happening man

http://www.remisiers.org/cms_images/rese...706_LT.pdf

https://secure.sgs.gov.sg/fdanet/SgsBenc...rices.aspx

If REITS yield is to follow SG 10yr bond, price of REITS should be close to Aug 2011 when the bond yield is at similar level. Are we there yet?