Friday, December 21, 2007
Thursday, December 20, 2007
食物漲價第二波開始
明年係美國經濟軟陸年，但全球GDP增長率不俗；歐羅價進入回落期。瑞銀建議增持科技、電訊和工業板塊。
至於對石油股睇法？供應鏈非常緊，足以抵銷OECD國家經濟放緩所帶來影響，但大體上持樂觀態度，平均油價較今年高。
對於2008年展望，基本上認為進入半周期性調整，此乃經濟上升四、五年後必然現象，調整幅度少於2010至2012年。美國經濟2010年3月至11月放緩，股市要到2012年10月才見底，主因係當年資本開支減少。
呢次經濟放緩今年第二季已開始，估計明年第一季見底，股市後市表現係點較難估計。
財政部同國家稅務總局發出聯合通知，決定今年12月20日起取消小麥、稻穀、大米、玉米、大豆等原糧及製粉出退稅，理由係今年11月中國CPI較去年同期上升6.9％，因此本月20日起上述糧食及製粉出取消退稅。若國內糧食緊張程度不變，將對出糧食進行徵稅，直至情況改變為止。睇落香港人明年要食貴米！
提高出口稅後原油、煤、銅、稀土金屬分別下降42.8％、17.6％、27.4％及24.1％，精煉銅、鉛、木片同木粒下降50％以上，鋼坯、鋼材下降13.1％。
今年8月至10月出口及外貿盈餘升幅較前七個月下降6.1％及50％，估計龐大外資盈餘明年應可大幅減少。
《金融時報》認為，食物漲價第二波已經開始，美國農業部估計全球糧食存量跌至四十七年內最低，只夠九點三個星期食用（玉米跌至三十三年內最低，只夠七點五個星期食用）。油價及肥料價格上升（例如尿素售價升86％，磷酸肥更升150％），小麥年產量六百零三百萬噸，但年銷耗量六百一十一百萬噸，已出現短缺。穀物類價格上升帶動所有食物價上升。
對高收入家庭而言，例如月入10萬元者，花食物方面只係1萬元，即使上升30％，亦只增加3000元，佔總開支3％；反而對月入1萬元家庭而言，花食物方面係5000元，上升30％係1500元，即增加開支15％。換言之，食物價格上升對低收入家庭打擊大於高收入家庭好多好多。
中國人均收入唔及美國人十分一，如中國人改變飲食習慣變到一如今天美國人（中國有十三億人口，美國只有三億），多一個地球都唔夠應付。中國因素近七年已令全球鐵礦砂、銅、鋁、鎳、石油漲價，依家輪到食物，你說怎麼辦？
至於對石油股睇法？供應鏈非常緊，足以抵銷OECD國家經濟放緩所帶來影響，但大體上持樂觀態度，平均油價較今年高。
對於2008年展望，基本上認為進入半周期性調整，此乃經濟上升四、五年後必然現象，調整幅度少於2010至2012年。美國經濟2010年3月至11月放緩，股市要到2012年10月才見底，主因係當年資本開支減少。
呢次經濟放緩今年第二季已開始，估計明年第一季見底，股市後市表現係點較難估計。
財政部同國家稅務總局發出聯合通知，決定今年12月20日起取消小麥、稻穀、大米、玉米、大豆等原糧及製粉出退稅，理由係今年11月中國CPI較去年同期上升6.9％，因此本月20日起上述糧食及製粉出取消退稅。若國內糧食緊張程度不變，將對出糧食進行徵稅，直至情況改變為止。睇落香港人明年要食貴米！
提高出口稅後原油、煤、銅、稀土金屬分別下降42.8％、17.6％、27.4％及24.1％，精煉銅、鉛、木片同木粒下降50％以上，鋼坯、鋼材下降13.1％。
今年8月至10月出口及外貿盈餘升幅較前七個月下降6.1％及50％，估計龐大外資盈餘明年應可大幅減少。
《金融時報》認為，食物漲價第二波已經開始，美國農業部估計全球糧食存量跌至四十七年內最低，只夠九點三個星期食用（玉米跌至三十三年內最低，只夠七點五個星期食用）。油價及肥料價格上升（例如尿素售價升86％，磷酸肥更升150％），小麥年產量六百零三百萬噸，但年銷耗量六百一十一百萬噸，已出現短缺。穀物類價格上升帶動所有食物價上升。
對高收入家庭而言，例如月入10萬元者，花食物方面只係1萬元，即使上升30％，亦只增加3000元，佔總開支3％；反而對月入1萬元家庭而言，花食物方面係5000元，上升30％係1500元，即增加開支15％。換言之，食物價格上升對低收入家庭打擊大於高收入家庭好多好多。
中國人均收入唔及美國人十分一，如中國人改變飲食習慣變到一如今天美國人（中國有十三億人口，美國只有三億），多一個地球都唔夠應付。中國因素近七年已令全球鐵礦砂、銅、鋁、鎳、石油漲價，依家輪到食物，你說怎麼辦？
Monday, December 17, 2007
準備迎接「1月效應」
感恩節後股市回升，我老曹一早已指出只係反彈，希望幫到各位趁反彈減持藍籌股。
近日美國銀行業面對嚴峻嘅信貸問題，令股市又再受壓；加上內房股漸染秋涼（感冒），加快令恒生指數回落。
漲潮總有落潮時，今年人行已十次提升存款準備金率、五次加息，經濟過快增長勢頭有望受壓抑。呢次只係樓市降溫而唔係地產整體休克；影響之下，香港不但內房股受壓，本港地產股亦由於在响地投資漸多而逃不了一跌命運。
雖然係咁，各位應準備「1月效應」（即12月24日至1月初股市再上升）此乃典型櫥窗裝飾。
近日股市愈係下跌，出現回升機會愈大；唔排除港股下周見底回升。
近日美國銀行業面對嚴峻嘅信貸問題，令股市又再受壓；加上內房股漸染秋涼（感冒），加快令恒生指數回落。
漲潮總有落潮時，今年人行已十次提升存款準備金率、五次加息，經濟過快增長勢頭有望受壓抑。呢次只係樓市降溫而唔係地產整體休克；影響之下，香港不但內房股受壓，本港地產股亦由於在响地投資漸多而逃不了一跌命運。
雖然係咁，各位應準備「1月效應」（即12月24日至1月初股市再上升）此乃典型櫥窗裝飾。
近日股市愈係下跌，出現回升機會愈大；唔排除港股下周見底回升。
Saturday, December 15, 2007
Fear Brings Opportunity and Digging for Value
Whitney Tilson is the founder and Managing Partner of T2 Partners, a hedge fund, as well as a mutual fund operation. He has co-founded a terrific newletter and established a semi-annual investment conference, Value Investing Congress, where he features a number of legendary investors.
As an extension of the conference, he has introduced a new blog to highlight value investment thinking. One of the recent posts is, in my opinion, quite demonstrative of the "inverse emotionalism" that is required to be a successful value investor.
Zeke Ashton of Centaur Capital describes the fear that has infected financial services stocks very aptly:
"Clearly, we’ve got fear now, and at the epicenter of that fear is the U.S. real estate market. This fear is reflected in extraordinary volatility and stock price declines for those companies seen most vulnerable to the real estate bust – most notably homebuilders, mortgage lenders, and mortgage guarantors – coupled with all-time high prices for disaster protection on these names."
If there is a single mantra for value investors, Ashton nails it here:
"But as all value investors know, fear brings opportunity. One of the axioms of fear-based selling is that everything viewed as being in proximity to the danger gets sold."
Indeed, fear brings opportunity, and panic is never discriminating.
Damage occurs at the periphery of the disaster and securities are unjustly marked down. True value investors sift through the rubble to unearth the bargains that were caught in the cross-fire.
Timing is impossible, but strict adherence to a discipline and patience will provide great long-term returns.
In a behavioral sense, it is always difficult to overcome the social pressure to conform. Being ostracized by others (especially clients who don't yet "get it") is a difficult position to maintain. No wonder closet-indexing is so prevalent; closet indexers turn out to be momentum players, just like the indices they hug!
But, doing your own thing, ignoring the noise, celebrating the fear of others is a good high probability bet if your decisions are disciplined.
As an extension of the conference, he has introduced a new blog to highlight value investment thinking. One of the recent posts is, in my opinion, quite demonstrative of the "inverse emotionalism" that is required to be a successful value investor.
Zeke Ashton of Centaur Capital describes the fear that has infected financial services stocks very aptly:
"Clearly, we’ve got fear now, and at the epicenter of that fear is the U.S. real estate market. This fear is reflected in extraordinary volatility and stock price declines for those companies seen most vulnerable to the real estate bust – most notably homebuilders, mortgage lenders, and mortgage guarantors – coupled with all-time high prices for disaster protection on these names."
If there is a single mantra for value investors, Ashton nails it here:
"But as all value investors know, fear brings opportunity. One of the axioms of fear-based selling is that everything viewed as being in proximity to the danger gets sold."
Indeed, fear brings opportunity, and panic is never discriminating.
Damage occurs at the periphery of the disaster and securities are unjustly marked down. True value investors sift through the rubble to unearth the bargains that were caught in the cross-fire.
Timing is impossible, but strict adherence to a discipline and patience will provide great long-term returns.
In a behavioral sense, it is always difficult to overcome the social pressure to conform. Being ostracized by others (especially clients who don't yet "get it") is a difficult position to maintain. No wonder closet-indexing is so prevalent; closet indexers turn out to be momentum players, just like the indices they hug!
But, doing your own thing, ignoring the noise, celebrating the fear of others is a good high probability bet if your decisions are disciplined.
Phil Town's Four Ms
Whenever we look at buying a stock, we should have Warren Buffett's main philosophy ingrained in our minds. That is....
We want the business to be
(1) one that we can understand,
(2) with favorable long-term prospects,
(3) operated by honest and competent people, and
(4) available at a very attractive price.
This core framework can be easily remembered reading Phil Town's book,
Rule #1. It refers to the four Ms.
1. Does this business have Meaning to you?
2. Does the business have a wide Moat? (duarable competitive advantage)
3. Does the business have great Management?
4. Does the business have a big Margin of Safety?
This is a great book and it reconfirms to me about Buffett's teachings.
It actually teaches you step by step how to buy companies and get a 15% compounded return.
In analyzing the company, the order of importance is
1. Return on Invested Capital (ROIC)
2. Sales growth
3. EPS growth
4. Equity growth
5. Free Cash Flow or Cash growth
With calculating intrinsic value with future EPS growth rate, I liked the idea of using the equity(book value) growth rate vs analysts EPS growth rate(whichever is lower) because what good is a business if earnings grows but you have to take money and put it back into capital expenditures and no surplus cash is generated ?
Warren Buffett says the best proxy for the growth of intrinic value is the growth of equity.
We want the business to be
(1) one that we can understand,
(2) with favorable long-term prospects,
(3) operated by honest and competent people, and
(4) available at a very attractive price.
This core framework can be easily remembered reading Phil Town's book,
Rule #1. It refers to the four Ms.
1. Does this business have Meaning to you?
2. Does the business have a wide Moat? (duarable competitive advantage)
3. Does the business have great Management?
4. Does the business have a big Margin of Safety?
This is a great book and it reconfirms to me about Buffett's teachings.
It actually teaches you step by step how to buy companies and get a 15% compounded return.
In analyzing the company, the order of importance is
1. Return on Invested Capital (ROIC)
2. Sales growth
3. EPS growth
4. Equity growth
5. Free Cash Flow or Cash growth
With calculating intrinsic value with future EPS growth rate, I liked the idea of using the equity(book value) growth rate vs analysts EPS growth rate(whichever is lower) because what good is a business if earnings grows but you have to take money and put it back into capital expenditures and no surplus cash is generated ?
Warren Buffett says the best proxy for the growth of intrinic value is the growth of equity.
Simplicity is the secret to investing
I'm reading the book, the Dhandho investor, by Mohnish Pabrai, and it states:
Simplicity is a very powerful construct.
Henry Thoreau recognized this when he said, "Our life is frittered away by detail... simplify, simplify."
Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics.
He noted that the five ascending levels of intellect were, "Smart, Intelligent, Brilliant, Genius, Simple."
For Einstein, simplicity was simply the highest level of intellect. Everything about Warren Buffett's investment style is simple.
It is the thinkers like Einstein and Buffett, who fixate on simplicity, who triumph. The genius behind E=mc squared is it's simplicity and elegance.
Simplicity is a very powerful construct.
Henry Thoreau recognized this when he said, "Our life is frittered away by detail... simplify, simplify."
Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics.
He noted that the five ascending levels of intellect were, "Smart, Intelligent, Brilliant, Genius, Simple."
For Einstein, simplicity was simply the highest level of intellect. Everything about Warren Buffett's investment style is simple.
It is the thinkers like Einstein and Buffett, who fixate on simplicity, who triumph. The genius behind E=mc squared is it's simplicity and elegance.
Warren Buffett - Preservation of capital
Preservation of capital should be your number 1 priority in stock investing. If you lose 50% of your investment portfolio, you will have to double it just to get back where you started. It will take you six years to get it back if you average 12% a year (about 4 years if average 20% a year).
The next time you plan to buy a stock, the question should not be, "how much can I make?", but "how much can I lose?".
Figure out the risk/reward factor (ie. I think this stock has 2 down but 10 points up.) Jim Cramer says if you speculate, make it only a small percentage of your portfolio...
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1" - Warren Buffett
"An investor needs to do very few things as long as he or she avoids big mistakes." - Warren Buffett
The next time you plan to buy a stock, the question should not be, "how much can I make?", but "how much can I lose?".
Figure out the risk/reward factor (ie. I think this stock has 2 down but 10 points up.) Jim Cramer says if you speculate, make it only a small percentage of your portfolio...
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1" - Warren Buffett
"An investor needs to do very few things as long as he or she avoids big mistakes." - Warren Buffett
Warren Buffett - Have infinite patience
At Berkshire Hathaway's 1998 annual meeting he told shareholders:
"We haven't found anything to speak of in equities in a good many months. As for how long we'll wait, we'll wait indefinitely.
We're not going to buy anything just to buy it. We will only buy something if we think we're getting something attractive... We have no time frame. If the money piles up, then it piles up.
And when we see something that makes sense, we're willing to act very fast and very big. But we're not going to act on anything if it doesn't check out.
You don't get paid for activity. You only get paid for betting right"
"The trick is, when there's nothing to do, do nothing" - Warren Buffett
"We haven't found anything to speak of in equities in a good many months. As for how long we'll wait, we'll wait indefinitely.
We're not going to buy anything just to buy it. We will only buy something if we think we're getting something attractive... We have no time frame. If the money piles up, then it piles up.
And when we see something that makes sense, we're willing to act very fast and very big. But we're not going to act on anything if it doesn't check out.
You don't get paid for activity. You only get paid for betting right"
"The trick is, when there's nothing to do, do nothing" - Warren Buffett
Finding the next hot stock!
By far the best stock screener on the web is Yahoo's stock screener .
I use it maybe once or twice a week and I have to say, it's a great tool to have in finding stocks that are undervalued but you have to make sure you use the Java version vs the basic HTML because it gives you a lot more criteria to work with.
You can even save these screens so you can come back and use it again without starting all over.
My Stock Screens
------------
1. Trading at 1 or below book value
2. PEG between 0 and 1.00
3. P/E under 10
4. Yields over 4%
So try using it and I'm sure, you'll find some hidden gems!
I use it maybe once or twice a week and I have to say, it's a great tool to have in finding stocks that are undervalued but you have to make sure you use the Java version vs the basic HTML because it gives you a lot more criteria to work with.
You can even save these screens so you can come back and use it again without starting all over.
My Stock Screens
------------
1. Trading at 1 or below book value
2. PEG between 0 and 1.00
3. P/E under 10
4. Yields over 4%
So try using it and I'm sure, you'll find some hidden gems!
Investing decisions are best made on weekends
When the markets are open especially when you see quotes in real time and have CNBC on, it's an adrenaline rush.
Your mind is not clear. When stocks are moving, you feel like buying and selling.
My best decisions, however, are always made after the market's close especially on weekends when you have 2 days to evaluate what you want to do.
If you can discipline yourself to make decisions on weekends, then that's only 52 decisions in a year and most of the time, you'll be content with your positions already...the lazy way to get rich.
Your mind is not clear. When stocks are moving, you feel like buying and selling.
My best decisions, however, are always made after the market's close especially on weekends when you have 2 days to evaluate what you want to do.
If you can discipline yourself to make decisions on weekends, then that's only 52 decisions in a year and most of the time, you'll be content with your positions already...the lazy way to get rich.
Lou Simpson - Warren Buffett's rumored successor
Lou Simpson, who has run the equity portfolio at Berkshire's wholly owned auto insurer, Geico, for the last 25 years.
As Buffett laid out in Berkshire's 2004 annual report, Simpson's investment record is impressive in its own right, having outpaced the S&P 500 by an average of almost 7% per year. (Simpson's average annual gain from 1980-2004 is 20.3% vs S&P 13.5% during the same period.)
Lou Simpson manages his portfolio according to five basic principles.
He outlined these timeless principles in GEICO’s 1986 annual report, and he explained them at greater length in an interview with the Washington Post the following year:
1. Think independently.
We try to be skeptical of conventional wisdom, he says, and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street. We don’t ignore unpopular companies. On the contrary, such situations often present the greatest opportunities.
2. Invest in high-return businesses that are fun for the shareholders.
Over the long run, he explains, appreciation in share prices is most directly related to the return the company earns on its shareholders’ investment. Cash flow, which is more difficult to manipulate than reported earnings, is a useful additional yardstick. We ask the following questions in evaluating management: Does management have a substantial stake in the stock of the company? Is management straightforward in dealings with the owners? Is management willing to divest unprofitable operations? Does management use excess cash to repurchase shares? The last may be the most important. Managers who run a profitable business often use excess cash to expand into less profitable endeavors. Repurchase of shares is in many cases a much more advantageous use of surplus resources.
3. Pay only a reasonable price, even for an excellent business.
We try to be disciplined in the price we pay for ownership even in a demonstrably superior business. Even the world’s greatest business is not a good investment, he concludes, if the price is too high. The ratio of price to earnings and its inverse, the earnings yield, are useful guages in valuing a company, as is the ratio of price to free cash flow. A helpful comparison is the earnings yield of a company versus the return on a risk-free long-term United States Government obilgation.
4. Invest for the long term.
Attempting to guess short-term swings in individual stocks, the stock market, or the economy, he argues, is not likely to produce consistently good results. Short-term developments are too unpredictable. On the other hand, shares of quality companies run for the shareholders stand an excellent chance of providing above-average returns to investors over the long term. Furthermore, moving in and out of stocks frequently has two major disadvantages that will substantially diminish results: transaction costs and taxes. Capital will grow more rapidly if earnings compound with as few interruptions for commissions and tax bites as possible.
5. Do not diversify excessively.
An investor is not likely to obtain superior results by buying a broad cross-section of the market, he believes. The more diversification, the more performance is likely to be average, at best. We concentrate our holdings in a few companies that meet our investment criteria. Good investment ideas--that is, companies that meet our criteria--are difficult to find. When we think we have found one, we make a large commitment. The five largest holdings at GEICO account for more than 50 percent of the stock portfolio.
Buffett, also quoted by the Washington Post, Lou has made me a lot of money. Under today’s circumstances, he is the best I know. He has done a lot better than I have done in the last few years. He has seen opportunities I have missed. We have $700 million of our own net worth of $2.4 billion invested in GEICO’s operations, and I have no say whatsoever in how Lou manages the investments. He sticks to his principles. Most people on Wall Street don’t have principles to begin with. And if they have them, they don’t stick to them.
"When you ask whether someone is a value or growth investor--they're really joined at the hip. A value investor can be a growth investor because you're buying something that has above-average growth prospects and you're buying it at a discount to the economic value of the business." - Lou Simpson
As Buffett laid out in Berkshire's 2004 annual report, Simpson's investment record is impressive in its own right, having outpaced the S&P 500 by an average of almost 7% per year. (Simpson's average annual gain from 1980-2004 is 20.3% vs S&P 13.5% during the same period.)
Lou Simpson manages his portfolio according to five basic principles.
He outlined these timeless principles in GEICO’s 1986 annual report, and he explained them at greater length in an interview with the Washington Post the following year:
1. Think independently.
We try to be skeptical of conventional wisdom, he says, and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street. We don’t ignore unpopular companies. On the contrary, such situations often present the greatest opportunities.
2. Invest in high-return businesses that are fun for the shareholders.
Over the long run, he explains, appreciation in share prices is most directly related to the return the company earns on its shareholders’ investment. Cash flow, which is more difficult to manipulate than reported earnings, is a useful additional yardstick. We ask the following questions in evaluating management: Does management have a substantial stake in the stock of the company? Is management straightforward in dealings with the owners? Is management willing to divest unprofitable operations? Does management use excess cash to repurchase shares? The last may be the most important. Managers who run a profitable business often use excess cash to expand into less profitable endeavors. Repurchase of shares is in many cases a much more advantageous use of surplus resources.
3. Pay only a reasonable price, even for an excellent business.
We try to be disciplined in the price we pay for ownership even in a demonstrably superior business. Even the world’s greatest business is not a good investment, he concludes, if the price is too high. The ratio of price to earnings and its inverse, the earnings yield, are useful guages in valuing a company, as is the ratio of price to free cash flow. A helpful comparison is the earnings yield of a company versus the return on a risk-free long-term United States Government obilgation.
4. Invest for the long term.
Attempting to guess short-term swings in individual stocks, the stock market, or the economy, he argues, is not likely to produce consistently good results. Short-term developments are too unpredictable. On the other hand, shares of quality companies run for the shareholders stand an excellent chance of providing above-average returns to investors over the long term. Furthermore, moving in and out of stocks frequently has two major disadvantages that will substantially diminish results: transaction costs and taxes. Capital will grow more rapidly if earnings compound with as few interruptions for commissions and tax bites as possible.
5. Do not diversify excessively.
An investor is not likely to obtain superior results by buying a broad cross-section of the market, he believes. The more diversification, the more performance is likely to be average, at best. We concentrate our holdings in a few companies that meet our investment criteria. Good investment ideas--that is, companies that meet our criteria--are difficult to find. When we think we have found one, we make a large commitment. The five largest holdings at GEICO account for more than 50 percent of the stock portfolio.
Buffett, also quoted by the Washington Post, Lou has made me a lot of money. Under today’s circumstances, he is the best I know. He has done a lot better than I have done in the last few years. He has seen opportunities I have missed. We have $700 million of our own net worth of $2.4 billion invested in GEICO’s operations, and I have no say whatsoever in how Lou manages the investments. He sticks to his principles. Most people on Wall Street don’t have principles to begin with. And if they have them, they don’t stick to them.
"When you ask whether someone is a value or growth investor--they're really joined at the hip. A value investor can be a growth investor because you're buying something that has above-average growth prospects and you're buying it at a discount to the economic value of the business." - Lou Simpson
Risk Management Investing
When it comes to investing in the stock market, you have to be humble.
Nobody is bigger than the market.
You can never predict a top and never predict a bottom.
Nobody’s that good.
If you’ve done your research and found the stock that you predict will give you a 20% return, there are still certain rules you need to stick to, in order to manage your portfolio correctly.
The following are five rules that I abide by. If you apply these strategies, your margin of safety and return on your money will be that much greater.
Rule #1: Invest in Market Leaders
If at all possible, try to invest in best of breed companies. Figure out who has the biggest market share in the sector, or compare each companies financials and you will know who’s the better company. In the long run, market leaders outperform the sector and command a higher P/E premium.
Rule #2: Buy in Wide Scale Stages
Never buy all at once. Like I said before, nobody is that good in predicating a top or a bottom. You need to buy in stages. With discount brokerages like TD Ameritrade and Etrade, commissions have come down so low, it shouldn’t be a costly issue.
Example: ABC stock at $20 and you plan to buy 100 shares.
Buy 25 shares at $20 and hope it goes down some more. Wait for it to go down 10-20%. Don't keep buying every time it drops 1%. Buy in wide scales and only add to your position if you believe it’s still undervalued (future prospects still look bright). Buy at $17, $14.50, and $12. Arrogance is a sin and if were to buy $20 all at once and the stock is at $12, that’s a 66% loss. By staging your buys in wide scales, you lower that % loss.
If the stock goes higher, please don’t chase. It only lowers your return and the stock might come right back down. Keep your money in cash and wait for a pullback and if it doesn’t, look for other stocks to invest elsewhere.
The stock market is like baseball. Each ball coming over the plate is the price of a stock. You don’t have to swing at every pitch that goes over the plate. Just swing at good pitches that are in the strike zone (bargain prices of good companies) and go for singles rather than home runs (buying in wide scale stages). You’ll strike out less and have a better batting average. That’s the disciplined investor.
Rule #3: Diversify or Die
You’ve probably heard the old adage “Don’t put all your eggs in one basket”. This is true when it comes to investing. Whether you have $100,000 to invest or $2000 to invest, diversification is important to protect yourself from downside risk.
The “all in one basket” portfolio example is much like gambling. It’s either lose big or win big. If the stock is down, you’re stuck in the mud waiting for it to go up. By diversifying, it allows you to stay in the game and trade the ones that are up. You can still get a stellar return with a diversified portfolio and lower the volatility. I advocate no more than 10% of your portfolio in one stock.
If you don’t have a lot of money to begin with, don’t be ashamed to buy 10 shares or even 1 share of a company. So long as you calculated a good return on investment factoring in commissions, 10 different stocks getting 20% is the same as 2 stocks getting 20% return. But you have reduced your risk.
Diversification also entails diversifying in different sectors. Usually if one sector is out of favor, another will pick up. That’s called “sector rotation”. If you were to buy all retail stocks for example, and the sector is in a slump, you’re stuck waiting for a rebound while others are handsomely profiting because their sector is moving up. Stocks tend to move in groups and if you get the sector right, normally you get the stock right too. This is why you need to invest in different industries to keep you in the game.
Rule #4: Buy, Sell a little, and Hold strategy
A big question always is when to sell. As a rule of thumb, if your stock goes up 15-20%, it’s time to ring the register and sell a little and let the rest of your position in the stock ride. You haven’t really made a profit until you sell. If it were to go back down, you missed that potential profit. But if you sold some, and it were to go down, you can buy back what you’ve sold. That’s called “trading around your core position.”
By not selling all of your position prevents you from kicking yourself if the stock doubles or triples in value. So I am not advocating a “Buy and Hold” strategy, but a more prudent approach of “Buy, Sell a little, and Hold strategy.”
Rule #5: Sell on strength, Buy on weakness
“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffet
Most traders like to buy in a bull market (market rallying higher) and sell in a bear market (market correction). But as a contrarian value investor, I do the exact opposite. However, it’s easier said then done because it takes a lot of discipline. Nobody wants to miss a huge run up and greed sets in. But believe me, when the market keeps going up, you need to build your cash reserves because at any time, the market can change in a heartbeat. When the market is up and rallying in a bull market, sell a little into the strength. When the market is irrational and feels invisible in a bull market, cash is king!
Sooner or later, the market will correct itself and you will be ready to stage your buys.
Honestly, the best time to buy is when it feels most awful.
When the market’s crashing, there’s tons of negative news, and you’re patiently picking up stocks in wide scales while others are panicking and waiting on the sidelines because they have no cash to buy.
Nobody is bigger than the market.
You can never predict a top and never predict a bottom.
Nobody’s that good.
If you’ve done your research and found the stock that you predict will give you a 20% return, there are still certain rules you need to stick to, in order to manage your portfolio correctly.
The following are five rules that I abide by. If you apply these strategies, your margin of safety and return on your money will be that much greater.
Rule #1: Invest in Market Leaders
If at all possible, try to invest in best of breed companies. Figure out who has the biggest market share in the sector, or compare each companies financials and you will know who’s the better company. In the long run, market leaders outperform the sector and command a higher P/E premium.
Rule #2: Buy in Wide Scale Stages
Never buy all at once. Like I said before, nobody is that good in predicating a top or a bottom. You need to buy in stages. With discount brokerages like TD Ameritrade and Etrade, commissions have come down so low, it shouldn’t be a costly issue.
Example: ABC stock at $20 and you plan to buy 100 shares.
Buy 25 shares at $20 and hope it goes down some more. Wait for it to go down 10-20%. Don't keep buying every time it drops 1%. Buy in wide scales and only add to your position if you believe it’s still undervalued (future prospects still look bright). Buy at $17, $14.50, and $12. Arrogance is a sin and if were to buy $20 all at once and the stock is at $12, that’s a 66% loss. By staging your buys in wide scales, you lower that % loss.
If the stock goes higher, please don’t chase. It only lowers your return and the stock might come right back down. Keep your money in cash and wait for a pullback and if it doesn’t, look for other stocks to invest elsewhere.
The stock market is like baseball. Each ball coming over the plate is the price of a stock. You don’t have to swing at every pitch that goes over the plate. Just swing at good pitches that are in the strike zone (bargain prices of good companies) and go for singles rather than home runs (buying in wide scale stages). You’ll strike out less and have a better batting average. That’s the disciplined investor.
Rule #3: Diversify or Die
You’ve probably heard the old adage “Don’t put all your eggs in one basket”. This is true when it comes to investing. Whether you have $100,000 to invest or $2000 to invest, diversification is important to protect yourself from downside risk.
The “all in one basket” portfolio example is much like gambling. It’s either lose big or win big. If the stock is down, you’re stuck in the mud waiting for it to go up. By diversifying, it allows you to stay in the game and trade the ones that are up. You can still get a stellar return with a diversified portfolio and lower the volatility. I advocate no more than 10% of your portfolio in one stock.
If you don’t have a lot of money to begin with, don’t be ashamed to buy 10 shares or even 1 share of a company. So long as you calculated a good return on investment factoring in commissions, 10 different stocks getting 20% is the same as 2 stocks getting 20% return. But you have reduced your risk.
Diversification also entails diversifying in different sectors. Usually if one sector is out of favor, another will pick up. That’s called “sector rotation”. If you were to buy all retail stocks for example, and the sector is in a slump, you’re stuck waiting for a rebound while others are handsomely profiting because their sector is moving up. Stocks tend to move in groups and if you get the sector right, normally you get the stock right too. This is why you need to invest in different industries to keep you in the game.
Rule #4: Buy, Sell a little, and Hold strategy
A big question always is when to sell. As a rule of thumb, if your stock goes up 15-20%, it’s time to ring the register and sell a little and let the rest of your position in the stock ride. You haven’t really made a profit until you sell. If it were to go back down, you missed that potential profit. But if you sold some, and it were to go down, you can buy back what you’ve sold. That’s called “trading around your core position.”
By not selling all of your position prevents you from kicking yourself if the stock doubles or triples in value. So I am not advocating a “Buy and Hold” strategy, but a more prudent approach of “Buy, Sell a little, and Hold strategy.”
Rule #5: Sell on strength, Buy on weakness
“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffet
Most traders like to buy in a bull market (market rallying higher) and sell in a bear market (market correction). But as a contrarian value investor, I do the exact opposite. However, it’s easier said then done because it takes a lot of discipline. Nobody wants to miss a huge run up and greed sets in. But believe me, when the market keeps going up, you need to build your cash reserves because at any time, the market can change in a heartbeat. When the market is up and rallying in a bull market, sell a little into the strength. When the market is irrational and feels invisible in a bull market, cash is king!
Sooner or later, the market will correct itself and you will be ready to stage your buys.
Honestly, the best time to buy is when it feels most awful.
When the market’s crashing, there’s tons of negative news, and you’re patiently picking up stocks in wide scales while others are panicking and waiting on the sidelines because they have no cash to buy.
Wednesday, December 12, 2007
Business-like investing
“Investing is most intelligent when it is most business-like” –Ben Graham.
Imagine a close friend who owns a restaurant and is thinking of opening up one in another city but requires additional capital to expand his operations. He gives you a call hoping you would join in as a silent partner. Would this be a wise investment?
Below are some questions that you may ask. Take a moment and think about what questions you would ask before looking at the list.
The questions you should ask yourself are:
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
“What do I know about the restaurant business? (Do I understand it?)”
“How well is the restaurant doing currently?”
“How well has the company done in the past? (Does it have good financials?)”
“How well should the new restaurant perform?”
“What price should I pay to receive a good return on investment? (What should be my % of ownership based on my investment?)
“What’s my time horizon for cashing out of this business?”
These are just some of the relevant questions you should be asking yourself and if you were a serious investor, I’m sure you would do a lot more research such as going to the restaurant periodically, eating the food, verifying the financials with an accountant, and visiting the competition. These are the traits of a good business analyst and if you can take that same mentality and apply it to stocks, you are on your way, to becoming a better investor. That is lesson number one.
Understanding the Business
“Invest in your circle of competence” – Warren Buffett
Your investing success will be determined by how well you understand the company. Always try to invest in easy to understand companies that have great long term future.
Newspaper stocks of are an example of a slowing business. It used to be a cash cow because of its monopoly (one or two newspapers that represent the town) and low cost (equipment doesn’t need to be updated). Now future prospects don’t look so bright because of the growing competition and ease of use of the Internet. So when studying companies, ask questions like:
“What’s the competition landscape in 5 years?”
“Will profit margins be lower because of competition?”
“Can the company raise prices?”
“Can technology or new innovations affect the company?”
Honest and Competent Management
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
Imagine if you had a hockey team and you could pick any player from any era to be the team captain. Who would it be? Wayne Gretzky? Bobby Orr? Or what if you had a basketball team and you could pick anybody you wanted. How about choosing Michael Jordan in his prime? The point is, the team leader can have a dramatic effect to the performance of your team. The same goes with stocks. The CEO (chief executive officer) plays a vital role in the company’s success.
Examples of great CEO leadership:
In 1997 Steve Jobs became Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio. Under Jobs' guidance the company increased sales significantly with the introduction of the innovative products such as iMac, iPod, & iTunes. Apple stock has continued to go higher and higher! In Oct 1, 2001, it was $8.07 (stock split adjusted), and has gone to $74.08 in Oct 2, 2006. That’s a 55.80 % compounded rate of return for 5 years!
Mark Hurd replaced Carly Fiorina who left at the advice of Hewlett Packard’s board of directors after the difficult merger with Compaq and a struggle with the HP board after reports of disappointing earnings. Under Hurd’s leadership, the company’s earnings improved dramatically through cost cutting and market share gain. The stock has performed brilliantly! In Sept 30, 2002, HPQ was $11.45 (stock split adjusted), and has gone to $37.42 in Oct 2nd, 2006. That’s a 34.45% compounded rate of return for 4 years!
Eddie Lampert was able to emerge Kmart out of bankruptcy in 2003. Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million. He sold 68 stores -- less than 5% of Kmart's real estate assets -- for about the same price that he had paid for control of ALL of Kmart's 1,500 stores and 16 distribution centers during bankruptcy proceedings! Lampert also took measures to improve Kmart's operating results and cash flow, leading to a string of profitable quarters for the resurgent retailer. It has now merged with Sears and continues to blow away quarterly earning numbers.
The management is just as important as the business itself. Whenever you mention a stock, you should immediately be able to mention the CEO or chairman who runs the company. If not, then start practicing. Now the next question is how can you figure out the management is any good? Here are some signs:
Management’s history:
What’s the track record and biography of management? If they have been with the company for a long period of time, has the stock appreciated in value during their tenure?
Conference calls:
Listen to the quarterly earning conference calls. If they made a mistake, do they openly admit to it or place the blame somewhere else? Are they candid when answering questions or dodge the bullet? Do they under promise and over deliver (UPOD) by beating earning expectations each quarter? Are they humble or arrogant?
Annual reports:
Every company gives their annual reports. In addition to the positives, do they openly express the negatives that have happened during the year? Are the reports spent with glossy and colorful designs or are they just plain black and white and stick to the facts and figures?
Ownership:
Does management have a significant ownership in the company? Are they the founders of the company?
Compensation:
Is the management pay reasonable based on past stock performance?
Every great company you discover that has honest and competent management should be a part of your stocks to track list. It will give you the opportunity to buy the stock the moment you see the price drops to an attractive value. But how do you know determine if it’s the right price to buy? Read on.
Fundamentals
So the million-dollar question is “How can I get a 20% return on my money?”. The answer can be broken down into two parts. “What stock should I buy and what’s price that I should pay?” Ultimately here some of the possible results.
Investing in:
Bad company bought at an overpaid price
= negative return.
Bad company bought at a fair price
= poor return.
Bad company bought at a bargain price
= average return.
Good company bought at an overpaid price
= poor return.
Good company bought at a fair price
= average return.
Good company bought at a bargain price
= high return. (20%+)
Figuring out what to buy and at what price is crucial to getting a high return on investment over the long term. So let’s investigate on the first part, what makes a company good.
Return on Equity (ROE)
“Time is a friend to a wonderful business” – Warren Buffett
So if you want to find a 20% return on investment, doesn’t it make sense to start by looking at companies that can return 20% consistently year after year? This is called the return on equity (ROE), defined as: the rate of investment return a company earns on stockholders' equity. Return on equity is calculated by dividing net earnings by average stockholders' equity.
Below shows Coca Cola’s financial ROE over the last 10 years.
1996 60.5%
1997 61.3%
1998 45%
1999 27.1%
2000 23.1%
2001 38.5%
2002 34.3%
2003 33.6%
2004 32.3%
2005 30.2%
Compare this with Nortel’s yearly ROE.
1996 14.4%
1997 17.4%
1998 NM
1999 NM
2000 NM
2001 NM
2002 NM
2003 7.5%
2004 NM
2005 NM
NM means it was a negative figure because it lost money that year. Which one is the better company? It’s really a no-brainer.
For Coca-Cola, is ROE expanding or contracting? If the trend is expanding, it’s a sign the company is doing well and sign of good management. If the trend is contracting, it could mean poor management, saturation, or more fierce competition.
Again, ROE is just a good starting point to finding great investment opportunities. In addition to ROE, the following are also important measures in finding a good company.
Revenue and Earnings growth:
Revenue (Sales) and earnings (net income) are consistently growing year over year.
Profit margin:
Profit margins (% of Net Income of Revenue) are better compared to the competition. It’s even better if it’s growing year over year.
Debt ratio:
Preferably I like companies with little or no debt but there’s the exception if that type of industry requires a high level of debt. It’s good if the debt is decreasing year over year?
Capital Expenditures:
How much money does it have to spend to maintain its operations? It’s a good sign if it’s growing modestly because that means earnings are going to its bottom line rather than depreciating equipment.
Book value growth:
Book value is what the company is worth if it were to go bankrupt and liquidate itself. I like to see this grow consistently because every year, the earnings retained should add to its bottom line.
Common Equity:
Is the number of shares outstanding increasing or decreasing year over year? If it’s decreasing, then the company is buying back it’s stock to increases shareholder value.
To get this information, my TD Ameritrade account offers the S&P Report that shows the companies’ ten years history. I think many other discount brokerages also offer this service so please check with your account. It is an invaluable tool and I wouldn’t invest without it. To me, finding good fundamentals is like finding the next Picasso.
Imagine a close friend who owns a restaurant and is thinking of opening up one in another city but requires additional capital to expand his operations. He gives you a call hoping you would join in as a silent partner. Would this be a wise investment?
Below are some questions that you may ask. Take a moment and think about what questions you would ask before looking at the list.
The questions you should ask yourself are:
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
“What do I know about the restaurant business? (Do I understand it?)”
“How well is the restaurant doing currently?”
“How well has the company done in the past? (Does it have good financials?)”
“How well should the new restaurant perform?”
“What price should I pay to receive a good return on investment? (What should be my % of ownership based on my investment?)
“What’s my time horizon for cashing out of this business?”
These are just some of the relevant questions you should be asking yourself and if you were a serious investor, I’m sure you would do a lot more research such as going to the restaurant periodically, eating the food, verifying the financials with an accountant, and visiting the competition. These are the traits of a good business analyst and if you can take that same mentality and apply it to stocks, you are on your way, to becoming a better investor. That is lesson number one.
Understanding the Business
“Invest in your circle of competence” – Warren Buffett
Your investing success will be determined by how well you understand the company. Always try to invest in easy to understand companies that have great long term future.
Newspaper stocks of are an example of a slowing business. It used to be a cash cow because of its monopoly (one or two newspapers that represent the town) and low cost (equipment doesn’t need to be updated). Now future prospects don’t look so bright because of the growing competition and ease of use of the Internet. So when studying companies, ask questions like:
“What’s the competition landscape in 5 years?”
“Will profit margins be lower because of competition?”
“Can the company raise prices?”
“Can technology or new innovations affect the company?”
Honest and Competent Management
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
Imagine if you had a hockey team and you could pick any player from any era to be the team captain. Who would it be? Wayne Gretzky? Bobby Orr? Or what if you had a basketball team and you could pick anybody you wanted. How about choosing Michael Jordan in his prime? The point is, the team leader can have a dramatic effect to the performance of your team. The same goes with stocks. The CEO (chief executive officer) plays a vital role in the company’s success.
Examples of great CEO leadership:
In 1997 Steve Jobs became Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio. Under Jobs' guidance the company increased sales significantly with the introduction of the innovative products such as iMac, iPod, & iTunes. Apple stock has continued to go higher and higher! In Oct 1, 2001, it was $8.07 (stock split adjusted), and has gone to $74.08 in Oct 2, 2006. That’s a 55.80 % compounded rate of return for 5 years!
Mark Hurd replaced Carly Fiorina who left at the advice of Hewlett Packard’s board of directors after the difficult merger with Compaq and a struggle with the HP board after reports of disappointing earnings. Under Hurd’s leadership, the company’s earnings improved dramatically through cost cutting and market share gain. The stock has performed brilliantly! In Sept 30, 2002, HPQ was $11.45 (stock split adjusted), and has gone to $37.42 in Oct 2nd, 2006. That’s a 34.45% compounded rate of return for 4 years!
Eddie Lampert was able to emerge Kmart out of bankruptcy in 2003. Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million. He sold 68 stores -- less than 5% of Kmart's real estate assets -- for about the same price that he had paid for control of ALL of Kmart's 1,500 stores and 16 distribution centers during bankruptcy proceedings! Lampert also took measures to improve Kmart's operating results and cash flow, leading to a string of profitable quarters for the resurgent retailer. It has now merged with Sears and continues to blow away quarterly earning numbers.
The management is just as important as the business itself. Whenever you mention a stock, you should immediately be able to mention the CEO or chairman who runs the company. If not, then start practicing. Now the next question is how can you figure out the management is any good? Here are some signs:
Management’s history:
What’s the track record and biography of management? If they have been with the company for a long period of time, has the stock appreciated in value during their tenure?
Conference calls:
Listen to the quarterly earning conference calls. If they made a mistake, do they openly admit to it or place the blame somewhere else? Are they candid when answering questions or dodge the bullet? Do they under promise and over deliver (UPOD) by beating earning expectations each quarter? Are they humble or arrogant?
Annual reports:
Every company gives their annual reports. In addition to the positives, do they openly express the negatives that have happened during the year? Are the reports spent with glossy and colorful designs or are they just plain black and white and stick to the facts and figures?
Ownership:
Does management have a significant ownership in the company? Are they the founders of the company?
Compensation:
Is the management pay reasonable based on past stock performance?
Every great company you discover that has honest and competent management should be a part of your stocks to track list. It will give you the opportunity to buy the stock the moment you see the price drops to an attractive value. But how do you know determine if it’s the right price to buy? Read on.
Fundamentals
So the million-dollar question is “How can I get a 20% return on my money?”. The answer can be broken down into two parts. “What stock should I buy and what’s price that I should pay?” Ultimately here some of the possible results.
Investing in:
Bad company bought at an overpaid price
= negative return.
Bad company bought at a fair price
= poor return.
Bad company bought at a bargain price
= average return.
Good company bought at an overpaid price
= poor return.
Good company bought at a fair price
= average return.
Good company bought at a bargain price
= high return. (20%+)
Figuring out what to buy and at what price is crucial to getting a high return on investment over the long term. So let’s investigate on the first part, what makes a company good.
Return on Equity (ROE)
“Time is a friend to a wonderful business” – Warren Buffett
So if you want to find a 20% return on investment, doesn’t it make sense to start by looking at companies that can return 20% consistently year after year? This is called the return on equity (ROE), defined as: the rate of investment return a company earns on stockholders' equity. Return on equity is calculated by dividing net earnings by average stockholders' equity.
Below shows Coca Cola’s financial ROE over the last 10 years.
1996 60.5%
1997 61.3%
1998 45%
1999 27.1%
2000 23.1%
2001 38.5%
2002 34.3%
2003 33.6%
2004 32.3%
2005 30.2%
Compare this with Nortel’s yearly ROE.
1996 14.4%
1997 17.4%
1998 NM
1999 NM
2000 NM
2001 NM
2002 NM
2003 7.5%
2004 NM
2005 NM
NM means it was a negative figure because it lost money that year. Which one is the better company? It’s really a no-brainer.
For Coca-Cola, is ROE expanding or contracting? If the trend is expanding, it’s a sign the company is doing well and sign of good management. If the trend is contracting, it could mean poor management, saturation, or more fierce competition.
Again, ROE is just a good starting point to finding great investment opportunities. In addition to ROE, the following are also important measures in finding a good company.
Revenue and Earnings growth:
Revenue (Sales) and earnings (net income) are consistently growing year over year.
Profit margin:
Profit margins (% of Net Income of Revenue) are better compared to the competition. It’s even better if it’s growing year over year.
Debt ratio:
Preferably I like companies with little or no debt but there’s the exception if that type of industry requires a high level of debt. It’s good if the debt is decreasing year over year?
Capital Expenditures:
How much money does it have to spend to maintain its operations? It’s a good sign if it’s growing modestly because that means earnings are going to its bottom line rather than depreciating equipment.
Book value growth:
Book value is what the company is worth if it were to go bankrupt and liquidate itself. I like to see this grow consistently because every year, the earnings retained should add to its bottom line.
Common Equity:
Is the number of shares outstanding increasing or decreasing year over year? If it’s decreasing, then the company is buying back it’s stock to increases shareholder value.
To get this information, my TD Ameritrade account offers the S&P Report that shows the companies’ ten years history. I think many other discount brokerages also offer this service so please check with your account. It is an invaluable tool and I wouldn’t invest without it. To me, finding good fundamentals is like finding the next Picasso.
Shelby Davis Demystified
One of my favorite investing stories is the one where Shelby Davis...... turns a paltry $50,000 into a fortune of $800 million by the end of his life. It's a story that lures ordinary folk into thinking they too can make it big in the stock market.
There a couple of problems to this story for us ordinary folk today, which indicate to me that it is highly unlikely anyone in our generation will match the performance.
First, his $50,000 start was in about 1946. Using my favorite inflation calculator, I see that $50,000 in 1946 would be equivalent to about $540,000 in 2006 money. So, Mr. Davis was hardly an ordinary working stiff who happened to know how to value insurance companies.
Second, if I remember the story correctly, the Davis family bought their house during the Great Depression for about $5,000. Assuming he bought in 1936, that means he picked his house up for about $71,000 in today's dollars. See any houses for that price you'd want to live in?
Third, buying stocks in the late 40's and early 50's was brilliant because they were starting from very low values. It was precicely these low values that led to the legendary "Davis Double Play" where the earnings rise and P/E ratios also rise due to better prospects. Picture this: a company earns $1 per share, but trades at 5X earnings. Share price = $5. A few years later, company earns $2 per share, but trades at 20X earnings. Share price = $20. 700% gain.
Put it all together, and we find our man had substantial means to begin with and almost no overhead due to buying an inexpensive house at the bottom of the market. This allowed him to use all of his earnings to buy more stock, which was severely undervalued during the first decades of his investment career.
I am not trying to demean what Mr. Davis accomplished. It is still a phenomenal record which shows the power of value investing over the long haul. It also shows that a housing crash and a prolonged bear market in stocks, combined with a bit of cash, patience, and a long-term buy and hold strategy can lead to huge wealth.
What I am saying is that with current values for houses and stocks, it will be difficult for an Average Joe to acheive the same performance as Mr. Davis over the next 50 years. Bring on the housing crash and bear market, that's what I say...
There a couple of problems to this story for us ordinary folk today, which indicate to me that it is highly unlikely anyone in our generation will match the performance.
First, his $50,000 start was in about 1946. Using my favorite inflation calculator, I see that $50,000 in 1946 would be equivalent to about $540,000 in 2006 money. So, Mr. Davis was hardly an ordinary working stiff who happened to know how to value insurance companies.
Second, if I remember the story correctly, the Davis family bought their house during the Great Depression for about $5,000. Assuming he bought in 1936, that means he picked his house up for about $71,000 in today's dollars. See any houses for that price you'd want to live in?
Third, buying stocks in the late 40's and early 50's was brilliant because they were starting from very low values. It was precicely these low values that led to the legendary "Davis Double Play" where the earnings rise and P/E ratios also rise due to better prospects. Picture this: a company earns $1 per share, but trades at 5X earnings. Share price = $5. A few years later, company earns $2 per share, but trades at 20X earnings. Share price = $20. 700% gain.
Put it all together, and we find our man had substantial means to begin with and almost no overhead due to buying an inexpensive house at the bottom of the market. This allowed him to use all of his earnings to buy more stock, which was severely undervalued during the first decades of his investment career.
I am not trying to demean what Mr. Davis accomplished. It is still a phenomenal record which shows the power of value investing over the long haul. It also shows that a housing crash and a prolonged bear market in stocks, combined with a bit of cash, patience, and a long-term buy and hold strategy can lead to huge wealth.
What I am saying is that with current values for houses and stocks, it will be difficult for an Average Joe to acheive the same performance as Mr. Davis over the next 50 years. Bring on the housing crash and bear market, that's what I say...
Tuesday, December 11, 2007
羅奇警告美國風險
外資大行多數以吹淡風為主，花旗(Citi Bank)發表研究報告表示，亞洲股市有強勁的增長前景，但以市盈率和市帳率反映股價太高，有下跌風險，預期MSCI亞洲指數將下跌 20至25%至明年中的480至510點，令估值返回合理水平，並預期明年底回升至570。
花旗認為，港股風險回報屬吸引，但內地A、B股則最為脆弱，該行並建議買入過往一直跑輸大市的大型股.
摩根士丹利亞洲區主席羅奇(Stephen Roach)警告，由美國次按危機帶起的全球商業周期轉捩點可能出現，外部依賴性非常大的中國絕對會受影響。
美國現在的問題是要迎接美國的樓市和信貸市場泡沫的破裂。
7年前的互聯網泡沫破裂已經使得商業機構的支出大規模地縮減，導致美國經濟衰退。但互聯網的資本支出僅佔美國GDP的14%，這次產生泡沫的信貸和樓市佔美國GDP的70%以上，泡沫破裂會引發美國消費的大幅收縮及經濟衰退。
羅奇認為，中國不應該被視為一個綠洲，不會受到世界經濟衰退的影響。
中國是外貿主導型的經濟體，出口佔到了整個GDP的40%，是世界上到目前為止對外依存度最大的經濟體。如果消費大國美國出現經濟衰退，中國肯定會受到影響。
陸羽仁認為，羅奇講的是宏觀分析，但美國泡沫破裂的危險的確存在，大家設計明年投資計劃時，一定要計入此一風險。
花旗認為，港股風險回報屬吸引，但內地A、B股則最為脆弱，該行並建議買入過往一直跑輸大市的大型股.
摩根士丹利亞洲區主席羅奇(Stephen Roach)警告，由美國次按危機帶起的全球商業周期轉捩點可能出現，外部依賴性非常大的中國絕對會受影響。
美國現在的問題是要迎接美國的樓市和信貸市場泡沫的破裂。
7年前的互聯網泡沫破裂已經使得商業機構的支出大規模地縮減，導致美國經濟衰退。但互聯網的資本支出僅佔美國GDP的14%，這次產生泡沫的信貸和樓市佔美國GDP的70%以上，泡沫破裂會引發美國消費的大幅收縮及經濟衰退。
羅奇認為，中國不應該被視為一個綠洲，不會受到世界經濟衰退的影響。
中國是外貿主導型的經濟體，出口佔到了整個GDP的40%，是世界上到目前為止對外依存度最大的經濟體。如果消費大國美國出現經濟衰退，中國肯定會受到影響。
陸羽仁認為，羅奇講的是宏觀分析，但美國泡沫破裂的危險的確存在，大家設計明年投資計劃時，一定要計入此一風險。
Singapore's revamped Straits Times Index to go live on January 10
The revamped Straits Times Index (STI) that will comprise the 30 biggest listed companies in terms of capitalization will go live on January 10, said bourse operator Singapore Exchange, FTSE Group and Singapore Press Holdings in a statement.
Changes made to the STI, which was announced on October 8, reflect the increasing importance of China and the diminishing significance of a once-booming technology sector.
Chinese companies -- shipbuilder Yangzijiang Shipbuilding and property developer Yanlord Land Group -- were added to the index, joining COSCO Corp Singapore, a unit of China's COSCO which operates bulk carriers, in the 30-stock index. The existing STI is made up of 48 stocks.
The three local banks, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank; property developers CapitaLand, City Developments and Keppel Land; and Singapore Telecom, Southeast Asia's biggest telecommunications company will continue to be the index heavyweights.
Chip-maker Chartered Semiconductor and electronics contract manufacturer Venture Corp were taken out of the STI and relegated to the FTSE Straits Times mid-cap index.
Changes made to the STI, which was announced on October 8, reflect the increasing importance of China and the diminishing significance of a once-booming technology sector.
Chinese companies -- shipbuilder Yangzijiang Shipbuilding and property developer Yanlord Land Group -- were added to the index, joining COSCO Corp Singapore, a unit of China's COSCO which operates bulk carriers, in the 30-stock index. The existing STI is made up of 48 stocks.
The three local banks, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank; property developers CapitaLand, City Developments and Keppel Land; and Singapore Telecom, Southeast Asia's biggest telecommunications company will continue to be the index heavyweights.
Chip-maker Chartered Semiconductor and electronics contract manufacturer Venture Corp were taken out of the STI and relegated to the FTSE Straits Times mid-cap index.
Monday, December 10, 2007
股票究竟是什麼？其價值又如何衡量？
這問題看似很複雜，但有時亦可變得佷簡單。就以一個蛋糕比喻為一間公司，股票便是各件切下來的蛋糕，而股票的價值，則根據那件蛋糕的大小來判斷。
經常買賣股票的投資者，往往不會衡量公司的整體價值。我則喜歡先替整間企業把脈，然後再細心研究它的股票。
這正好解釋我愛以市值來評核公司，市值的計算方法，是以公司發行的股票數量，乘以股價得出，代表現時市場認為它值多少。假設中移動發行了二百億股，股價一百四十元計算，市值便高達二萬八千億元。
這些天文數字，已大大超出普通人的金錢概念，一般接觸得較多的大數目，應該是百萬元計。
惟中移動的規模就是如斯龐大，○六年盈利達六百六十億元人民幣，今年估計可賺八百五十億元人民幣，因此市值逾一萬五千億元相當合理，尤其它仍能高速增長。預料○八年盈利可達到一千零五十億元人民幣；若保持這速度推進，中移動市值二萬八千億元，相信很快可獲得接受。
剛才我以市值作例，說明股票與整間公司的關係。只要能評估一間公司的價值，自然容易計算每股的價值。
公司價值幾多，對每位投資者而言未必相同，但仍有兩種清楚辦法釐定。第一種是以資產淨值，你可從資產負債表中查看，將資產減去負債後，便是資產淨值。這方法甚少用，因很多公司擁有商譽，而商譽並非一定加進資產負債表內，令公司資產淨值被低估。
中移動的商譽龐大，即使你加入最慷慨的商譽價值，仍會嚴重低估公司的價值，因此很難用資產值來評估它。
盈利推算估值
第二個方法是以盈利來評估價值，但其參差可以很大。我經常掛在口邊的市盈率，是以盈利由多少股份分配來計算。若你將中移動○七年所賺的八百五十億元人民幣，攤分給二百億股，每股盈利便是四元二角五分。以現價一百四十元計，市盈率三十二倍。
若你將市盈率倒轉，便得出回報率，讓你更方便與銀行存款息率比較。中移動的三釐一回報，比只放在銀行還要好，何況這是以人民幣計算。雖然三釐一的回報並非很吸引，但中移動持續有增長。以下是我的推算：
彼得連治在他的著作《One Up On Wall Street》中，提出以預期增幅來評估合理的市盈率，但單靠推算並非太準確，我會以歷史及預期來混合計算股票價值。中移動平均市盈率二十五倍，以此推算，○九年每股價值約一百七十四元。這推算或許存有誤差，尤其要假設盈利能夠不斷增加；雖然這公司現已十分壯大，惟用戶人數的增幅終會放緩。
經常買賣股票的投資者，往往不會衡量公司的整體價值。我則喜歡先替整間企業把脈，然後再細心研究它的股票。
這正好解釋我愛以市值來評核公司，市值的計算方法，是以公司發行的股票數量，乘以股價得出，代表現時市場認為它值多少。假設中移動發行了二百億股，股價一百四十元計算，市值便高達二萬八千億元。
這些天文數字，已大大超出普通人的金錢概念，一般接觸得較多的大數目，應該是百萬元計。
惟中移動的規模就是如斯龐大，○六年盈利達六百六十億元人民幣，今年估計可賺八百五十億元人民幣，因此市值逾一萬五千億元相當合理，尤其它仍能高速增長。預料○八年盈利可達到一千零五十億元人民幣；若保持這速度推進，中移動市值二萬八千億元，相信很快可獲得接受。
剛才我以市值作例，說明股票與整間公司的關係。只要能評估一間公司的價值，自然容易計算每股的價值。
公司價值幾多，對每位投資者而言未必相同，但仍有兩種清楚辦法釐定。第一種是以資產淨值，你可從資產負債表中查看，將資產減去負債後，便是資產淨值。這方法甚少用，因很多公司擁有商譽，而商譽並非一定加進資產負債表內，令公司資產淨值被低估。
中移動的商譽龐大，即使你加入最慷慨的商譽價值，仍會嚴重低估公司的價值，因此很難用資產值來評估它。
盈利推算估值
第二個方法是以盈利來評估價值，但其參差可以很大。我經常掛在口邊的市盈率，是以盈利由多少股份分配來計算。若你將中移動○七年所賺的八百五十億元人民幣，攤分給二百億股，每股盈利便是四元二角五分。以現價一百四十元計，市盈率三十二倍。
若你將市盈率倒轉，便得出回報率，讓你更方便與銀行存款息率比較。中移動的三釐一回報，比只放在銀行還要好，何況這是以人民幣計算。雖然三釐一的回報並非很吸引，但中移動持續有增長。以下是我的推算：
彼得連治在他的著作《One Up On Wall Street》中，提出以預期增幅來評估合理的市盈率，但單靠推算並非太準確，我會以歷史及預期來混合計算股票價值。中移動平均市盈率二十五倍，以此推算，○九年每股價值約一百七十四元。這推算或許存有誤差，尤其要假設盈利能夠不斷增加；雖然這公司現已十分壯大，惟用戶人數的增幅終會放緩。
US market will be flat over the next decade
John Mauldin, the author of the NY Times top ten best-selling investment book, “Bull’s Eye Investing” and the President of Millennium Wave Investments sets out to prove that in ten years' time the US stock market will likely be no higher than it is now, and possibly significantly lower.
The stock market's future level will be determined by
(a) earnings growth and
(b) the value the market places on those earnings (ie. P/E ratios),
so Mauldin focuses on these two elements.
First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%.
Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically.
He assembles a battery of arguments to prove his case.
Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios.
Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market.
With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.
The stock market's future level will be determined by
(a) earnings growth and
(b) the value the market places on those earnings (ie. P/E ratios),
so Mauldin focuses on these two elements.
First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%.
Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically.
He assembles a battery of arguments to prove his case.
Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios.
Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market.
With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.
努力射中牛眼
財富來自新概念（innovation）及解決難題方案（problem solution），而非勤勤力力。勤力人只可搵兩餐，但好難發達，最多成為中產階級，但地產商財富卻來自七十年代開始解決港人居住難題。
未來財富主要來自引入新概念，例如過去兩個多月港股A股化，為唔少人帶來財富，請留意邊D企業剛完成大轉身。我地已唔需要大牛市去賺錢，而係努力去射中牛眼，追求100％回報（或跌15％離場）。
Trading is hard work但值得,一份射中牛眼所帶來感覺，除金錢回報外，更帶來一份光榮感。
另一方面，要留心自己係咪過分自信，而睇唔到投資股份缺點？
又或者過分猶豫？
又或者太蠢太早減持，讓太多利潤從自己手中流走？
Trading有如《洛奇》電影中D主角，打倒別人之前，自己先被別人打到面腫！射中牛眼D感覺好比一次又一次追求、戀愛及成功贏得女性芳心。
現實生活中，人只能瘋狂地追求一次、戀愛一次，當贏得芳心後便要結婚，唔容許有第二次。股票市場卻容許一次又一次追求、甚至苦戀，而最後成功。
牛眼投資法強調揀股，較少理會指數高低（恒生指數8000點時亦有唔少股份偏高，恒生指數32000點一樣有唔少股份偏低），採用者必須係對個別股票有深入了解者而非初哥（神槍手通常只有兩粒子彈，第一粒射唔中便第二粒，再唔打中便走頭。只有新兵才使用機關槍，亂槍掃射下，希望有一粒射中）。
未來財富主要來自引入新概念，例如過去兩個多月港股A股化，為唔少人帶來財富，請留意邊D企業剛完成大轉身。我地已唔需要大牛市去賺錢，而係努力去射中牛眼，追求100％回報（或跌15％離場）。
Trading is hard work但值得,一份射中牛眼所帶來感覺，除金錢回報外，更帶來一份光榮感。
另一方面，要留心自己係咪過分自信，而睇唔到投資股份缺點？
又或者過分猶豫？
又或者太蠢太早減持，讓太多利潤從自己手中流走？
Trading有如《洛奇》電影中D主角，打倒別人之前，自己先被別人打到面腫！射中牛眼D感覺好比一次又一次追求、戀愛及成功贏得女性芳心。
現實生活中，人只能瘋狂地追求一次、戀愛一次，當贏得芳心後便要結婚，唔容許有第二次。股票市場卻容許一次又一次追求、甚至苦戀，而最後成功。
牛眼投資法強調揀股，較少理會指數高低（恒生指數8000點時亦有唔少股份偏高，恒生指數32000點一樣有唔少股份偏低），採用者必須係對個別股票有深入了解者而非初哥（神槍手通常只有兩粒子彈，第一粒射唔中便第二粒，再唔打中便走頭。只有新兵才使用機關槍，亂槍掃射下，希望有一粒射中）。
人民幣年底前或加息
12月9日，周日。周二美國減息四分一厘機會已接近百分百，但減息半厘機會只有28%，估計明年1月及3月每次再減四分一厘。
長短棍非一般散戶可用
《金融時報》今年曾推介「Santa Monica Technique」，今年回報率達十倍，的確好，但非一般散戶可運用。上述策略簡單D講就係唔理會大市升降，而利用「長短棍」方式買入睇好行業股，同時拋空睇淡行業做對沖。今年拋空對象自然係美國金融股及房地產股，買入對象係高科技股，結果兩頭贏，例如次按保險股MGIC今年5月至今回落71％，蘋果、Google等又大升。明年計劃拋空項目係軟件公司，睇好項目係製造業中高科技股。
今年另一成功策略就係「牛眼投資法」，發明者係John Mauldin，並2004年出書推介。我老曹係最先向香港讀者推介呢個方法作者，並由2004年起採用佢方法。利用牛眼投資法係每年追求「三位數字」（即100％）或以上回報。牛眼投資法第一步係「Invest like a venture capitalist」，即專攻二線股，事前做足搜集工夫，搵出邊D行業正進入起飛期或轉虧為盈期。牛眼投資法較適合散戶採用，但必須自己做足功課，千萬不可跟我老曹買，因為專家如David Webb 去年聖誕前推介股份，今年恒生指數大升40％環境下仍跌27％；世上並冇必殺技也！作為venture capitalist，就係當一間企業開始轉虧為盈時立即介入，而非等到人人叫好時才介入。Early bird catches the worms，又或者投資D引入創新意念企業，最典型例子係呢幾年蘋果引入iPod後再引入iPhone，令蘋果股價由5美元升上180美元！本港成功例子如利豐（494）及思捷環球（330），利豐引入環球性採購概念，今天已成為藍籌股；思捷環球全力拓展歐洲品牌市場，亦成就非凡。如佢地起步期時已介入，各位如今已成為小富。另一機會五年前，港人由睇唔起國企、紅籌股轉為愛上國企、紅籌股所提供投資機會，例如森池兄推介國壽（2628）今年亦發足狂奔。唔好人云亦云，訓練自己成為「Top Gun」（股市第一槍手）或小李飛刀（例不虛發）。如何利用地緣政治及宏觀角度協助自己揀股？美元由2002至07年回落，既產生危機，亦出現大量商機；油價由10美元升上100美元，亦帶來危機同商機；金價由252美元升上845美元亦帶來機會……。任何事物都有正反兩面，睇錯市唔緊要（人誰無錯？），蝕15％離場；睇市便咬住唔放，最低要求100％回報。至於大藍籌股，留番畀退休人士或已經發達人士，並非仍在追求發達人之對象。明年唔易再透過投資大藍籌股去賺取大利；反之，二線股仍有機會，包括巴西、俄羅斯、印度及中國內需股，相信純利仍以雙位數上升。金磚四國經濟正由出口導向型轉為內需推動型，內需增長估計可維持到2010年。未來推動世界經濟引擎再唔係美國、歐洲、英國同日本，而係四大金磚國。財富正由OECD國家流向新興工業國，未來財富唔再自石油股、能源股及資源股，因為佢地正面對巨大成本上升及低邊際利潤，而且油價已升至半天高；新機會來自內需股及高科技股。
高盛證券指出，三十八個佢地跟開國家中，有二十六個明年GDP增長率下降，其中下跌最快係歐洲同日本，較美國更快。因此，全球明年GDP增長率將由今年4.7％降至明年4％。世界再唔係美國打噴嚏、全球傷風，而係互相影響、互相感染。
內地11月CPI可能創新高
12月5日閉幕中央經濟工作會議對明年中國經濟發展推出新措施：
一、經濟增長由偏快轉為過熱危險性依然存在，外貿順差仍在擴大，使外大量流入而加劇流動性，工業（特別係重化工業）投資增長過快。
二、價格上漲壓力增加，10月份CPI上升6.5％，房價上升9.5％。
三、節能減排形勢依然嚴峻，落後產能淘汰太慢，污染治理仍然滯後。
四、農業發展及農民持續增收難度較大。
五、就業壓力、教育、醫療、社保、收入分配、住房保障問題仍待解決。
2008年起，實施十年穩健貨幣政策正式淡出，取而代之係從緊貨幣政策。另外通過稅收及轉移支付，調節收入差距過大狀況，改善農民和城鎮收入差距，並提高企業制退休人員基本養老金標準。中國人行今年十次上調存款準備金率，呢次一下子上調一個百分點，有D出乎市場預料；上調後存款準備金率14.5％，已超過1988年13％好多。唔單止咁，1999年11月21日將存款準備金率由6％上調至7％後，每次上調都只係0.5％，呢次一下子重手上調1％。
今年內每次存款準備金率上調，股市都低開高收；最近股市指數由11月26日起上升，宣布上調存款準備金率後又點？呢次進一步上調，將影響明年銀行收入，影響集中銀行板塊。一般人估計周二公布11月CPI可能出現新高，如11月CPI創新高，唔排除年底前人民幣加息，對依家已處於弱勢A股不利。除加息手段外，媒體披露商業銀行明年起須逐季上報信貸計劃，進一步限制信貸增長率。
從緊貨幣政策壓抑股樓
利用從緊貨幣政策，防止價格由結構性上漲變成明顯通貨膨脹，減少過剩流動性由銀行體系流向資本市場，推動股市、樓價上升。今年上海股票綜合指數由去年底2675點上升至今，升幅超過一倍；全國七十個大城市房價第三季上升8.2％、北京上升13.5％、深圳上升17.6％，寧波和杭州亦上升超過10％。貨幣政策從緊，估計可壓抑明年內地A股及樓價漲幅。
上海12月8日公布，中國2010年造船能力有望超過二千一百萬載重噸，佔全球市場四分一或以上。中國已連續十二年成為全球第三大造船國，佔全球產量五分一。家中國有造船企業三千多家，其中大、中型共四百三十一家。去年完工量一千四百五十二萬載重噸，上升20％；新接訂單四千二百五十一萬載重噸，上升150％；手上訂單六千八百七十二萬載重噸，上升73％。
2004年中國參加鐵礦石價格談判以來，國際鐵礦石連升四年，累計升幅16.5％。2008年鐵礦石價格談判又開始，大摩及麥格理估計明年鐵礦石進口價上升50％。國家發改委公布11月國內鐵礦石價，唐山產含量66％鐵礦石價每噸1304元人民幣，較去年同期上升86.3％；預期未來鐵礦石價大漲，刺激上周鋼鐵股股價全線活躍。
長短棍非一般散戶可用
《金融時報》今年曾推介「Santa Monica Technique」，今年回報率達十倍，的確好，但非一般散戶可運用。上述策略簡單D講就係唔理會大市升降，而利用「長短棍」方式買入睇好行業股，同時拋空睇淡行業做對沖。今年拋空對象自然係美國金融股及房地產股，買入對象係高科技股，結果兩頭贏，例如次按保險股MGIC今年5月至今回落71％，蘋果、Google等又大升。明年計劃拋空項目係軟件公司，睇好項目係製造業中高科技股。
今年另一成功策略就係「牛眼投資法」，發明者係John Mauldin，並2004年出書推介。我老曹係最先向香港讀者推介呢個方法作者，並由2004年起採用佢方法。利用牛眼投資法係每年追求「三位數字」（即100％）或以上回報。牛眼投資法第一步係「Invest like a venture capitalist」，即專攻二線股，事前做足搜集工夫，搵出邊D行業正進入起飛期或轉虧為盈期。牛眼投資法較適合散戶採用，但必須自己做足功課，千萬不可跟我老曹買，因為專家如David Webb 去年聖誕前推介股份，今年恒生指數大升40％環境下仍跌27％；世上並冇必殺技也！作為venture capitalist，就係當一間企業開始轉虧為盈時立即介入，而非等到人人叫好時才介入。Early bird catches the worms，又或者投資D引入創新意念企業，最典型例子係呢幾年蘋果引入iPod後再引入iPhone，令蘋果股價由5美元升上180美元！本港成功例子如利豐（494）及思捷環球（330），利豐引入環球性採購概念，今天已成為藍籌股；思捷環球全力拓展歐洲品牌市場，亦成就非凡。如佢地起步期時已介入，各位如今已成為小富。另一機會五年前，港人由睇唔起國企、紅籌股轉為愛上國企、紅籌股所提供投資機會，例如森池兄推介國壽（2628）今年亦發足狂奔。唔好人云亦云，訓練自己成為「Top Gun」（股市第一槍手）或小李飛刀（例不虛發）。如何利用地緣政治及宏觀角度協助自己揀股？美元由2002至07年回落，既產生危機，亦出現大量商機；油價由10美元升上100美元，亦帶來危機同商機；金價由252美元升上845美元亦帶來機會……。任何事物都有正反兩面，睇錯市唔緊要（人誰無錯？），蝕15％離場；睇市便咬住唔放，最低要求100％回報。至於大藍籌股，留番畀退休人士或已經發達人士，並非仍在追求發達人之對象。明年唔易再透過投資大藍籌股去賺取大利；反之，二線股仍有機會，包括巴西、俄羅斯、印度及中國內需股，相信純利仍以雙位數上升。金磚四國經濟正由出口導向型轉為內需推動型，內需增長估計可維持到2010年。未來推動世界經濟引擎再唔係美國、歐洲、英國同日本，而係四大金磚國。財富正由OECD國家流向新興工業國，未來財富唔再自石油股、能源股及資源股，因為佢地正面對巨大成本上升及低邊際利潤，而且油價已升至半天高；新機會來自內需股及高科技股。
高盛證券指出，三十八個佢地跟開國家中，有二十六個明年GDP增長率下降，其中下跌最快係歐洲同日本，較美國更快。因此，全球明年GDP增長率將由今年4.7％降至明年4％。世界再唔係美國打噴嚏、全球傷風，而係互相影響、互相感染。
內地11月CPI可能創新高
12月5日閉幕中央經濟工作會議對明年中國經濟發展推出新措施：
一、經濟增長由偏快轉為過熱危險性依然存在，外貿順差仍在擴大，使外大量流入而加劇流動性，工業（特別係重化工業）投資增長過快。
二、價格上漲壓力增加，10月份CPI上升6.5％，房價上升9.5％。
三、節能減排形勢依然嚴峻，落後產能淘汰太慢，污染治理仍然滯後。
四、農業發展及農民持續增收難度較大。
五、就業壓力、教育、醫療、社保、收入分配、住房保障問題仍待解決。
2008年起，實施十年穩健貨幣政策正式淡出，取而代之係從緊貨幣政策。另外通過稅收及轉移支付，調節收入差距過大狀況，改善農民和城鎮收入差距，並提高企業制退休人員基本養老金標準。中國人行今年十次上調存款準備金率，呢次一下子上調一個百分點，有D出乎市場預料；上調後存款準備金率14.5％，已超過1988年13％好多。唔單止咁，1999年11月21日將存款準備金率由6％上調至7％後，每次上調都只係0.5％，呢次一下子重手上調1％。
今年內每次存款準備金率上調，股市都低開高收；最近股市指數由11月26日起上升，宣布上調存款準備金率後又點？呢次進一步上調，將影響明年銀行收入，影響集中銀行板塊。一般人估計周二公布11月CPI可能出現新高，如11月CPI創新高，唔排除年底前人民幣加息，對依家已處於弱勢A股不利。除加息手段外，媒體披露商業銀行明年起須逐季上報信貸計劃，進一步限制信貸增長率。
從緊貨幣政策壓抑股樓
利用從緊貨幣政策，防止價格由結構性上漲變成明顯通貨膨脹，減少過剩流動性由銀行體系流向資本市場，推動股市、樓價上升。今年上海股票綜合指數由去年底2675點上升至今，升幅超過一倍；全國七十個大城市房價第三季上升8.2％、北京上升13.5％、深圳上升17.6％，寧波和杭州亦上升超過10％。貨幣政策從緊，估計可壓抑明年內地A股及樓價漲幅。
上海12月8日公布，中國2010年造船能力有望超過二千一百萬載重噸，佔全球市場四分一或以上。中國已連續十二年成為全球第三大造船國，佔全球產量五分一。家中國有造船企業三千多家，其中大、中型共四百三十一家。去年完工量一千四百五十二萬載重噸，上升20％；新接訂單四千二百五十一萬載重噸，上升150％；手上訂單六千八百七十二萬載重噸，上升73％。
2004年中國參加鐵礦石價格談判以來，國際鐵礦石連升四年，累計升幅16.5％。2008年鐵礦石價格談判又開始，大摩及麥格理估計明年鐵礦石進口價上升50％。國家發改委公布11月國內鐵礦石價，唐山產含量66％鐵礦石價每噸1304元人民幣，較去年同期上升86.3％；預期未來鐵礦石價大漲，刺激上周鋼鐵股股價全線活躍。
Meddling in the markets
George Bush's subprime rescue plan
George Bush’s subprime rescue plan will blunt the sharp edge of America’s housing crisis for a small group of borrowers, but it will not keep the industry’s historic slump from deepening. Nor will it prevent the economy from slowing to a crawl in 2008. What it may do, regrettably, is reassure lenders and borrowers that Washington stands ready to save them from their mistakes.
Mr Bush’s Treasury department unveiled a plan on December 6th aimed at curbing defaults by many of the 1.8m subprime borrowers whose mortgages will reset to higher interest rates in the next two years. Nearly 15% of subprime loans are already in default, destroying the value of securities backed by these loans. The prospect of a new wave of defaults and foreclosures has kept financial markets on edge for months. Credit has tightened, banks have written off more than US$50bn in mortgage-backed assets and housing has dragged the economy perilously close to a recession.
The rescue plan negotiated by the Treasury secretary, Hank Paulson, with other regulators and lenders will freeze interest rates for up to five years for some subprime borrowers. Others will be fast-tracked into new, more manageable private loans, or will be allowed to borrow from the government’s Federal Housing Administration.
Whatever else it may be, the Bush administration’s agreement is an extraordinary intrusion by the government into private mortgage contracts. It is not, however, a government bailout in the classic sense. No public money is being used to rescue borrowers or lenders, nor is the government imposing a solution on the industry. Rather, Mr Paulson has used his influence to pressure the mortgage industry into setting a national blueprint for dealing with borrowers in danger of default
Meddling in the markets
At one level, Mr Paulson’s meddling makes a certain amount of sense. He did not, after all, have to push very hard to convince lenders and mortgage servicers—those who collect monthly loan payments—to agree to a voluntary deal. Lenders, to be sure, had been counting on higher interest payments from subprime borrowers to boost their returns. Many subprime mortgages, for example, were due to rise to 11-12% in 2008 after an introductory rate of 7-9%. But when borrowers default, lenders and the investors who buy their loans get nothing. Better, then, to keep interest rates down and continue to receive a return of some kind.
From Mr Paulson’s perspective, a deal that prevents foreclosures may also help to calm financial markets, which have soared and plunged in recent months. By keeping foreclosed homes from returning to the market, a deal might also begin to stabilise the housing market, and perhaps place a floor under home prices. Although borrowers and lenders could, in theory, have negotiated individual solutions to their loan troubles—and some have done just that—the process was taking too long. Faced with a surge in subprime interest rates and a deepening housing slump, Mr Paulson thought it prudent to use his bully pulpit to force a deal.
But the agreement, in the end, will make only a modest difference. The relief will apply only to borrowers who took out loans between January 2005 and July 2007, and whose interest rates are resetting between January 2008 and July 2010. Borrowers already struggling with higher interest rates will not be helped. The agreement will also do nothing for subprime borrowers at either end of the credit spectrum—those who arguably can handle the higher interest rate, and those who clearly cannot afford a home under any circumstances. Those in the middle—with enough income to make monthly payments at the lower rates, but not enough to survive the rate spike—would benefit.
How many will be helped?
Mr Paulson says his plan may help as many as 1.2m Americans keep their homes, but the actual figure is probably closer to 250,000, based on an analysis by Barclays Capital, using a similar programme in California as a guide. For those homeowners, clearly, this agreement is good news. But how the process will work is not clear. A national blueprint may make it easier to identify those who are eligible for relief, but the process of renegotiating the loan, or applying a rate freeze, must be done individually. Lenders will need to check borrowers’ incomes, debt levels and the current value of homes before they can agree to a change in the terms of the loan. Mr Paulson, in fact, acknowledges his plan’s limitations by saying that other relief measures are under discussion.
The strains in the US housing market go well beyond subprime mortgages. The value of property owned by households soared from around US$10trn in 2000 to nearly US$20trn in 2005, amounting to one of the largest asset bubbles in history. Those excesses have been unwinding for nearly two years, and the process is far from complete. The inventory of unsold homes is at a record high; it is that surplus stock that is driving home prices down.
To be sure, the Paulson plan may help by keeping thousands of foreclosed homes from returning to the market, adding to the glut. But the Economist Intelligence Unit believes home prices, which are currently sliding at the rate of around 5%, year over year, are destined for sharper declines. By the middle of 2008, we expect prices to be falling by at least 10%.
Demand for homes will also be depressed by tightening credit conditions and still-high price-to-loan ratios. Indeed, the steady decline in home prices will keep many buyers out of the market as they wait for prices to drop even more. Nor will the Paulson deal do much to restore confidence and boost consumer spending. Most subprime borrowers are, by definition, at the lower end of the income ladder and account for only a small portion of all spending.
Mr Paulson’s plan may, over time, provide some relief for financial markets if it keeps mortgage default rates a couple of percentage points below where they otherwise would have been. But it will take months, at best, to see any appreciable relief from the new agreement. In the meantime, credit conditions will continue to tighten as bank balance sheets deteriorate and lending in the interbank markets becomes increasingly difficult.
Whatever the economic arguments for the Bush administration’s plan, it amounts to poor public policy.
America’s unfettered brand of capitalism is one of its strengths; investors may be less likely to trust a government that manipulates private contracts when conditions deteriorate.
At a time when the economy is already weak and the dollar is suffering from a crisis of confidence, Mr Paulson’s awkward intrusion into the mortgage market looks more like desperation than a hedge against further trouble.
George Bush’s subprime rescue plan will blunt the sharp edge of America’s housing crisis for a small group of borrowers, but it will not keep the industry’s historic slump from deepening. Nor will it prevent the economy from slowing to a crawl in 2008. What it may do, regrettably, is reassure lenders and borrowers that Washington stands ready to save them from their mistakes.
Mr Bush’s Treasury department unveiled a plan on December 6th aimed at curbing defaults by many of the 1.8m subprime borrowers whose mortgages will reset to higher interest rates in the next two years. Nearly 15% of subprime loans are already in default, destroying the value of securities backed by these loans. The prospect of a new wave of defaults and foreclosures has kept financial markets on edge for months. Credit has tightened, banks have written off more than US$50bn in mortgage-backed assets and housing has dragged the economy perilously close to a recession.
The rescue plan negotiated by the Treasury secretary, Hank Paulson, with other regulators and lenders will freeze interest rates for up to five years for some subprime borrowers. Others will be fast-tracked into new, more manageable private loans, or will be allowed to borrow from the government’s Federal Housing Administration.
Whatever else it may be, the Bush administration’s agreement is an extraordinary intrusion by the government into private mortgage contracts. It is not, however, a government bailout in the classic sense. No public money is being used to rescue borrowers or lenders, nor is the government imposing a solution on the industry. Rather, Mr Paulson has used his influence to pressure the mortgage industry into setting a national blueprint for dealing with borrowers in danger of default
Meddling in the markets
At one level, Mr Paulson’s meddling makes a certain amount of sense. He did not, after all, have to push very hard to convince lenders and mortgage servicers—those who collect monthly loan payments—to agree to a voluntary deal. Lenders, to be sure, had been counting on higher interest payments from subprime borrowers to boost their returns. Many subprime mortgages, for example, were due to rise to 11-12% in 2008 after an introductory rate of 7-9%. But when borrowers default, lenders and the investors who buy their loans get nothing. Better, then, to keep interest rates down and continue to receive a return of some kind.
From Mr Paulson’s perspective, a deal that prevents foreclosures may also help to calm financial markets, which have soared and plunged in recent months. By keeping foreclosed homes from returning to the market, a deal might also begin to stabilise the housing market, and perhaps place a floor under home prices. Although borrowers and lenders could, in theory, have negotiated individual solutions to their loan troubles—and some have done just that—the process was taking too long. Faced with a surge in subprime interest rates and a deepening housing slump, Mr Paulson thought it prudent to use his bully pulpit to force a deal.
But the agreement, in the end, will make only a modest difference. The relief will apply only to borrowers who took out loans between January 2005 and July 2007, and whose interest rates are resetting between January 2008 and July 2010. Borrowers already struggling with higher interest rates will not be helped. The agreement will also do nothing for subprime borrowers at either end of the credit spectrum—those who arguably can handle the higher interest rate, and those who clearly cannot afford a home under any circumstances. Those in the middle—with enough income to make monthly payments at the lower rates, but not enough to survive the rate spike—would benefit.
How many will be helped?
Mr Paulson says his plan may help as many as 1.2m Americans keep their homes, but the actual figure is probably closer to 250,000, based on an analysis by Barclays Capital, using a similar programme in California as a guide. For those homeowners, clearly, this agreement is good news. But how the process will work is not clear. A national blueprint may make it easier to identify those who are eligible for relief, but the process of renegotiating the loan, or applying a rate freeze, must be done individually. Lenders will need to check borrowers’ incomes, debt levels and the current value of homes before they can agree to a change in the terms of the loan. Mr Paulson, in fact, acknowledges his plan’s limitations by saying that other relief measures are under discussion.
The strains in the US housing market go well beyond subprime mortgages. The value of property owned by households soared from around US$10trn in 2000 to nearly US$20trn in 2005, amounting to one of the largest asset bubbles in history. Those excesses have been unwinding for nearly two years, and the process is far from complete. The inventory of unsold homes is at a record high; it is that surplus stock that is driving home prices down.
To be sure, the Paulson plan may help by keeping thousands of foreclosed homes from returning to the market, adding to the glut. But the Economist Intelligence Unit believes home prices, which are currently sliding at the rate of around 5%, year over year, are destined for sharper declines. By the middle of 2008, we expect prices to be falling by at least 10%.
Demand for homes will also be depressed by tightening credit conditions and still-high price-to-loan ratios. Indeed, the steady decline in home prices will keep many buyers out of the market as they wait for prices to drop even more. Nor will the Paulson deal do much to restore confidence and boost consumer spending. Most subprime borrowers are, by definition, at the lower end of the income ladder and account for only a small portion of all spending.
Mr Paulson’s plan may, over time, provide some relief for financial markets if it keeps mortgage default rates a couple of percentage points below where they otherwise would have been. But it will take months, at best, to see any appreciable relief from the new agreement. In the meantime, credit conditions will continue to tighten as bank balance sheets deteriorate and lending in the interbank markets becomes increasingly difficult.
Whatever the economic arguments for the Bush administration’s plan, it amounts to poor public policy.
America’s unfettered brand of capitalism is one of its strengths; investors may be less likely to trust a government that manipulates private contracts when conditions deteriorate.
At a time when the economy is already weak and the dollar is suffering from a crisis of confidence, Mr Paulson’s awkward intrusion into the mortgage market looks more like desperation than a hedge against further trouble.
Sunday, December 9, 2007
積 極 減 持
繼 續 積 極 減 持 ， 沒 有 興 趣 在 接 近 30000 點 以 及 聯 儲 局 會 議 日 子 才 入 場 做 快 閃 黨 ， 自 問 身 手 不 夠 敏 捷 ， 膽 識 亦 大 不 如 前 。
總 要 有 人 提 供 貨 源 給 快 閃 黨 行 動 ， 就 蝕 底 少 收 一 點 ， 希 望 皆 大 歡 喜 。
在 股 市 作 戰 ， 不 外 是 貪 婪 和 恐 懼 兩 大 情 緒 所 主 宰 。
跌 市 時 博 繼 續 跌 ， 現 在 又 貪 心 想 在 幾 日 內 短 炒 ， 去 賺 盡 最 後 的 升 浪 ， 主 因 應 是 自 命 不 凡 。
叻 仔 在 賭 場 多 數 沒 有 好 結 果 ， 自 己 寧 願 不做叻 仔 ， 捱 義 氣 接 貨 忍 受 心 理 折 磨 ， 回 升 則 賺 少 一 點 求 心 安 理 得 ， 可 能 才 是 克 服 貪 婪 和 恐 懼 的 最 佳 實 戰 方 法 。
順 勢 死 守 好 過 炒 出 炒 入
近 期 最 明 顯 的 轉 變 ， 是 美 元 轉 強 ， 這 一 點 令 自 己 相 當 不 舒 服 ， 甚 至 黃 金 長 倉 也 有 點 擔 心 ， 不 過 策 略 一 定 是 死 守 ， 頂 多 短 炒 跑 數 去 幫 補 。
美 元 的 強 勢 ， 應 是 市 場 在 平 淡 倉 ， 因 此 美 股 的 回 升 ， 同 樣 極 可 能 只 是 平 倉 盤 所 帶 動 ， 並 不 是 升 浪 的 開 始 。
港 股 形 勢 當 然 比 美 股 好 ， 可 是 本 地 地 產 股 及 銀 行 股 三 扒 兩 撥 勁 升 甚 多 ， 沒 有 理 由 冒 險 高 追 ， 中 資 股 氣 勢 只 一 般 ， 應 該 有 等 待 的 空 間 。
看 不 透 後 市 之 外 ， 時 近 年 尾 也 是 戰 意 下 降 的 主 因 ， 今 年 幾 上 幾 落 ， 連 場 大 戰 ， 身 心 都 相 當 勞 累 ， 而 且 在 賽 後 悟 出 一 個 道 理 ， 就 是 不 必 過 份 勤 力 ， 掌 握 一 些 大 趨 勢 ， 回 報 反 而 更 好 。
例 如 美 元 及 商 品 在 8 月 尾 後 根 本 是 單 邊 市 ， 只 不 過 順 勢 而 行 是 知 易 行 難 而 已 。
短 線 投 機 也 不 必 太 多 行 動 ， 過 份 貼 市 只 會 被 市 況 牽 走 。
耐 心 等 待 下 一 次 出 擊 的 機 會 ， 勝 算 和 回 報 都 會 更 高 。
如 果 參 考 印 度 股 市 ， 甚 至 強 勢 藍 籌， 繼 續 上 升 並 非 機 會 太 低 ， 只 是 入 市 講 求 值 博 率 ， 最 大 利 好 因 素 已 反 映 甚 多 ， 客 觀 證 據 又 不 夠 強 。
股 市 日 日 開 ， 耐 心 等 待 總 有 機 會 ， 此 刻 絕 非 理 想 下 注 時 機 。
總 要 有 人 提 供 貨 源 給 快 閃 黨 行 動 ， 就 蝕 底 少 收 一 點 ， 希 望 皆 大 歡 喜 。
在 股 市 作 戰 ， 不 外 是 貪 婪 和 恐 懼 兩 大 情 緒 所 主 宰 。
跌 市 時 博 繼 續 跌 ， 現 在 又 貪 心 想 在 幾 日 內 短 炒 ， 去 賺 盡 最 後 的 升 浪 ， 主 因 應 是 自 命 不 凡 。
叻 仔 在 賭 場 多 數 沒 有 好 結 果 ， 自 己 寧 願 不做叻 仔 ， 捱 義 氣 接 貨 忍 受 心 理 折 磨 ， 回 升 則 賺 少 一 點 求 心 安 理 得 ， 可 能 才 是 克 服 貪 婪 和 恐 懼 的 最 佳 實 戰 方 法 。
順 勢 死 守 好 過 炒 出 炒 入
近 期 最 明 顯 的 轉 變 ， 是 美 元 轉 強 ， 這 一 點 令 自 己 相 當 不 舒 服 ， 甚 至 黃 金 長 倉 也 有 點 擔 心 ， 不 過 策 略 一 定 是 死 守 ， 頂 多 短 炒 跑 數 去 幫 補 。
美 元 的 強 勢 ， 應 是 市 場 在 平 淡 倉 ， 因 此 美 股 的 回 升 ， 同 樣 極 可 能 只 是 平 倉 盤 所 帶 動 ， 並 不 是 升 浪 的 開 始 。
港 股 形 勢 當 然 比 美 股 好 ， 可 是 本 地 地 產 股 及 銀 行 股 三 扒 兩 撥 勁 升 甚 多 ， 沒 有 理 由 冒 險 高 追 ， 中 資 股 氣 勢 只 一 般 ， 應 該 有 等 待 的 空 間 。
看 不 透 後 市 之 外 ， 時 近 年 尾 也 是 戰 意 下 降 的 主 因 ， 今 年 幾 上 幾 落 ， 連 場 大 戰 ， 身 心 都 相 當 勞 累 ， 而 且 在 賽 後 悟 出 一 個 道 理 ， 就 是 不 必 過 份 勤 力 ， 掌 握 一 些 大 趨 勢 ， 回 報 反 而 更 好 。
例 如 美 元 及 商 品 在 8 月 尾 後 根 本 是 單 邊 市 ， 只 不 過 順 勢 而 行 是 知 易 行 難 而 已 。
短 線 投 機 也 不 必 太 多 行 動 ， 過 份 貼 市 只 會 被 市 況 牽 走 。
耐 心 等 待 下 一 次 出 擊 的 機 會 ， 勝 算 和 回 報 都 會 更 高 。
如 果 參 考 印 度 股 市 ， 甚 至 強 勢 藍 籌， 繼 續 上 升 並 非 機 會 太 低 ， 只 是 入 市 講 求 值 博 率 ， 最 大 利 好 因 素 已 反 映 甚 多 ， 客 觀 證 據 又 不 夠 強 。
股 市 日 日 開 ， 耐 心 等 待 總 有 機 會 ， 此 刻 絕 非 理 想 下 注 時 機 。
股市小笑話：散戶，豈只會割肉？
飯館老板貼出招聘啟事，有三個人前來應聘老板問頭一位：“你有什麼特長？”
“我做過操盤手。”
“手藝 怎麼樣？”
“也沒什麼，只不過能把股價從5 元炒到50元而已。”
“太好了，我這裏正需要一個大廚，就是你了”。
第二個人遞上了履曆表，老板翻了翻，說道：“噢，是股評家呀。這樣吧，你的工作就是每天站在門口，見人就給我往裏拉，這點事對你來說不難吧？”
轉頭問第三個人：“你是幹什麼的？”
那人羞得滿臉通紅，不敢吱聲。
第二個人急忙說道：“他是我帶來的，散戶出身，洗碗掃地什麼的隨便安排個活就行。”
老板有些為難：“我這裏很高級的，要散戶作什麼？”
正說著，忽聽大堂裏傳來一片吵嚷聲。
老板急忙叫過一個服務員，問她出了什麼事。
服務員回道：“采購員今天忘了買肉，客人點的菜半天送不上去，正在發脾氣呢”。
老板頓時慌了神，這時，身旁的散戶猛地拔出一把尖刀，捋起褲腿，“噌”地一刀割下一大塊肉，血淋淋地丟給服務員：“先拿去應急。”
轉身對老板說道：“老子別的本事沒有 ，割肉是經常幹的，不信你問問他們二位。
“我做過操盤手。”
“手藝 怎麼樣？”
“也沒什麼，只不過能把股價從5 元炒到50元而已。”
“太好了，我這裏正需要一個大廚，就是你了”。
第二個人遞上了履曆表，老板翻了翻，說道：“噢，是股評家呀。這樣吧，你的工作就是每天站在門口，見人就給我往裏拉，這點事對你來說不難吧？”
轉頭問第三個人：“你是幹什麼的？”
那人羞得滿臉通紅，不敢吱聲。
第二個人急忙說道：“他是我帶來的，散戶出身，洗碗掃地什麼的隨便安排個活就行。”
老板有些為難：“我這裏很高級的，要散戶作什麼？”
正說著，忽聽大堂裏傳來一片吵嚷聲。
老板急忙叫過一個服務員，問她出了什麼事。
服務員回道：“采購員今天忘了買肉，客人點的菜半天送不上去，正在發脾氣呢”。
老板頓時慌了神，這時，身旁的散戶猛地拔出一把尖刀，捋起褲腿，“噌”地一刀割下一大塊肉，血淋淋地丟給服務員：“先拿去應急。”
轉身對老板說道：“老子別的本事沒有 ，割肉是經常幹的，不信你問問他們二位。
Big Boys unloading ?
US trying to buy time may or may not work........... eventually someone has to foot the sub-prime bill...........
lately, US lawmakers trying to push through $50 billions increase in rich taxes which timing is too coincidental............
boom and bust cycles are the natural order of things.............
Too many BBs still stuck in the markets.......... just check out the US banking stocks which have been hammered down from the highs............ compounded with China credit tightening before the Olympics 2008........... this recent rally may be the last waltz for BBs unloading............................. Really do not see any strong reason for Dow to break record highs.................. anyone disagree with this???........... but again stock markets are emotional driven................. bottom line is to push up to unload .............
lately, US lawmakers trying to push through $50 billions increase in rich taxes which timing is too coincidental............
boom and bust cycles are the natural order of things.............
Too many BBs still stuck in the markets.......... just check out the US banking stocks which have been hammered down from the highs............ compounded with China credit tightening before the Olympics 2008........... this recent rally may be the last waltz for BBs unloading............................. Really do not see any strong reason for Dow to break record highs.................. anyone disagree with this???........... but again stock markets are emotional driven................. bottom line is to push up to unload .............
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