Health is richer than Wealth

Health is richer

than Wealth

When we are young, we strive hard to chase after riches or money so as to accumulate enough wealth for our future. As we get older and having accumulated some wealth, we begin to be concerned with our health.

Without good health, what is the point of having vast amount of wealth when one cannot live to enjoy it?

The journey to achieve wealth comes in many ways. Some invested in properties in the early stage of their working lives, some invested in the financial investment world, and some in commodities such as well, gold.

Some climb up the ladder of the corporate world. But I would like to believe that at some point of the journey, many would have invested some amount big or small in equities such as the stock markets.

For those who invested mostly in properties during the last two or three decades, the rewards are immensely huge if one is to use the expensive property price as a gauge today. Investment in property has been quite stable and steady until today.

What about gold? Sometimes back, when gold price was shooting up the roof, and overnight, many new gold investment consultants and gold funds sprouted up everywhere. Many ordinary people joined in the bandwagon to invest in gold fund. We all know what happened. Today all is very quiet when we mention about gold.

Now comes the main menu

of the day, the stock market.

After a good gradual steady rise in share prices from early January till end of September for most counters on Bursa Malaysia, most investors were looking forward happily to a wonderful year end closing with Christmas and New Year celebrations programmes in the list, the unthinkable happened.

Crude oil prices tanked towards the last few months of the year to touch new five years low, no thanks to OPEC's refusal to cut down production in order to maintain price low as to see off the shale oil producers from USA. How long and low will oil price remains in the next several months?

Because of this, share prices of most counters dipped superbly fast to near or new 52 week lows! For mostly individual or retailer like me or you, our paper wealth is depreciating fast by the days.

Should one cuts losses now? Should one takes whatever amount of profits including meagre amount now? Should one stands by and watch and pray for the best? Should one buys now? What should one do now?

Under such immense pressure in this turbulence times, many affected investors are bound to be very stressful. And that stress will not go away as long as share prices keep going down or under pressure from the oil crisis, from time to time.

One day you see the KLCI declining 20 points, up 5 points another day, down 15 points again and down some more. More downsides than even any small upside is the way the KLCI is moving these days.

Stress from the declining share market affects our health in many ways. Some will be moody in their everyday lives, some cannot concentrate on their work anymore, some will even not be able to smile when at home with their family, some will find their wife's delicious dinners no longer delicious any more, some will even cut down on their life style (My meaning is downgrading their lifestyle!)

My purpose of writing this blog this time is to help alleviate those who are feeling this damn stressful moment right now just because of the share market.

Firstly, one has to accept that declining and appreciating share prices is part and parcel of investment the very first moment you decide you want to invest in the stock. If you can't accept this, DO NOT INVEST and keep your money in the bank. You are guaranteed to be able to sleep peacefully and soundly at night.

Secondly, one should always practise asset allocations when it comes to investment. One should only invest with the comfortable amount within one's mean, so that one still has other reserved cash to rely on. If you are able to do so, you are considered a well disciplined investor who knows how to invest within one's comfortable range.

Thirdly, an investor MUST be able to maintain his current standard of lifestyle no matter what happens to his investment. This is extremely important as one's current lifestyle should not be tied up to the volatility swing of share prices.

If you have the above three criterias, then congratulations! You will find that life is indeed wonderful because you will remain healthy and without stress and pressure from your investment.

As I have always shared with my followers and readers that in anything we do, do it with fun and not stress. When the prices go up, we are happy. When the prices go down, we are just a bit "hati-sakit" only. And we continue with our happy daily life.

I hope any investor who are under great stress in the current market crisis will feel much better after reading this post. And you will see market rally and market crashes in a different way instead of the extremely highly stress way.

Buying 3,000 shares of

Supermax Corporation Berhad

at RM1.67 on Dec 16, 2014.

As market continues to trade lower as fear grips investors as long as oil prices remain low and in uncertain direction, many good fundamental companies are being sold down at the slightest of bad news.

The share price of Supermax hits a 52-week low at RM1.58 on Dec 15 following news of the boss CEO Datuk Seri Stanley Thai was being charged for insider trading related to APL Industries Berhad (APLI). Supermax's 52-week high was RM3.08.

Datuk Seri Stanley Thai, claimed trial to communicating insider information to remisier Tiong Kiong Choon, 54, that was expected to have a material effect on the price and value of APLI.

Bad news will always send shivers down on weak investors who will just throw down their shares at whatever price they can salvage. It is because of such opportunity that brave investors come in to buy at depressed prices.

As my purchased price of RM1.67 is not at 52-week low, but near that low when you considered its 52-week high of RM3.08, my risk has already been heavily discounted.

And I also know that Supermax is a leading international manufacturer, distributor and marketer of high quality medical gloves.

In case I do not have time to post another blog before the year end, I take this opportunity in advance to thank you - my readers and my followers for taking time to read my blogs.

As promised in my last blog that I would be posting my contract note for buying Thong Guan shares, here it is at the bottom. 

I sincerely wish you a Merry Christmas and Happy New Year 2015!

Life is great and wonderful as long as one stays healthy!

OPEC vs USA in Oil Crisis

OPEC vs USA in Oil Crisis

The recent sharp decline in oil prices has a devastating effect on Bursa Malaysia. Many, many stocks are now staring at 52-week low or new 52-week low in a space of two months. Yet in the beginning of the year until end of September and towards October, many stocks were trading near a new 52-week high or around there.

What causes oil prices to drop so sharply? Only a couple of months ago, nobody would have believed that oil prices would be selling at around US70 per barrel, especially during the conflict between Ukraine and Russia. At that time, many were fearful of oil price surging higher in the event the conflict turned into a full scale war with possible, other countries joining in to support Ukraine. Thankfully, the Ukraine-Russia conflict is not that severe as it seem to be.

So what caused oil prices to drop to this new five year low price? According to some reports, it is the ramping up production of shale oil by US due to their drillers becoming more efficient. Production per well was projected to increase in fields in North Dakota, Texas and Colorado.

The current production of shale oil grows 65 percent in the past five years to the highest level since 1986. The International Energy Agency said technological and organizational improvements that have enabled faster drilling rates, greater drilling density and higher new-well production have all been important to maintain production even in the face of increasingly steep decline oil prices.

However, there is a production cost for US shale oil drillers to break even.  It varies from drillers to drillers. According to Morgan Stanley, the break-even cost for producer Eagle Ford varies between US30 to US$60 per barrel. But most U.S. tight-oil reserves break even from US$60 to US$80.

A bi-monthly Malaysian business magazine published that the average cost is US55 per barrel from the U.S. producer. This means that as long as oil price stays above US60, shale oil will continue to be sold, thus competing with crude oil from OPEC countries.

Major crude oil producer Saudi Arabia is currently engaged in the price war with shale oil export US. Saudi Arabia can afford to even allow oil price to drop below US40 per barrel, but it remains to be seen if the US shale oil producers can withstand that price or beyond it.

Four of the world's largest economies countries, the United States, Japan, China and India are actually enjoying this unusual phenomenon of cheap oil prices. Cheaper energy will fuel their industries and economies and create a healthy growth from these largest economies and this should be a boon to global economic growth.

But the falling oil prices affects mainly emerging economies which are net exporters of oil or very dependent on oil revenues to finance the growth of their economies.

Malaysia is unfortunate to be caught in this declining price war situation as Malaysia is an oil exporter although some said Malaysia is actually an oil importer. Nevertheless, the declining oil prices has caused many oil and gas related companies to see their share prices dropping massively, thus causing an overspill into so many other counters.

Another factor is the depreciating ringgit against the green backs. A weakening ringgit also weakens the stock market, one way or another.

Investors or retailers or fund managers or who so ever simply sold down their shares. Strong good fundamental companies are suddenly painted in one master stroke with other "not-so-strong" companies and sold down every day and all the way.

Suddenly a few volume of 15,000 shares can cause a share price to drop by as much as 20 sen. Suddenly, many investors who hold fundamental stocks were dismayed by their declining "paper wealth". Suddenly in a space of two months, many investors who invested in the early parts of 2014 are staring at losses instead as the year comes to an end!

So for the stock market to recover back, oil prices must rebound back to the around US100 level. Will it rebound? When will it rebound? How much will it rebound? Will it stay there should it rebound back? See, these are all important questions that everyone is concerned to know.

Personally, I am not an economist. I am just like the ordinary guy who reads and try to understand the current oil crisis situation which affected the ringgit and the stock market.

But I like to offer my personal opinion that oil prices will not likely go down much further to as low as US40 per barrel because at the price, shale oil producers from US would not find it profitable  and attractive enough to drill and produce anymore.

Population growth continues and this will spur demand for oil from oil imported countries. China for one is now the number one customer for Saudi Arabia's crude oil.

Crude oil or shale oil are natural resources that cannot be simply produced by other raw materials. Hence, it is a resource that can be depleted over a period of times.

In fact, some analysts and research house are forecasting oil prices to bottom out in a matter of times and rebound back to the pre-levels soon. Should it happens before Christmas, share prices of most beaten down stocks are also likely to rally back especially those fundamental oversold companies.

Buying 4,000 shares of

Thong Guan Industries Berhad

at RM1.86 on Dec 12, 2014.

Today, I have started to accumulate quality and fundamental stocks with strong business and also paying reasonable good dividends as well. Another preferable criteria is that the buying share price should be trading to its near or new 52-week low rather than the other way round.

The risk of buying shares at near 52-week low is lower than at near 52- week high. But the reward is higher if one buys at near 52-week low and prepare to even average down.

The 52-week high of Thong Guan is RM3.10 and its 52-week low is RM1.83. Based on my purchase price of RM1.86, I am buying at its near 52-week low, hence my risk is not that great anymore.

Thong Guan is one such company that is cash-rich and has a sound fundamental business.

Thong Guan is principally engaged in investment holding activities, and trading of plastic and paper products. The Company's business segments include plastic products, food and beverages, and consumable products and machinery.

I shall be posting my buying contract note in my next blog, hopefully before Christmas. Cheers! Life is still wonderful and colourful despite the declining shares prices.

 

Perils of Failed Privatization Bids

Perils of Failed Privatization Bids

Bids by major shareholders to privatize companies are sometimes very intriguing. The recent unsuccessful bid by Perak Corporation Bhd (PCorp)'s major shareholders Perbadanan Kemajuan Negeri Perak (PKNP) is one example of how the share price swung sharply before and after the D-day's decision. D-day means the day shareholders know whether it is going to be successful or not.

In January 2014, PKNP proposed a selective share capital reduction (Proposed SCR) and a corresponding capital repayment under Section 62 of the Companies Act 1965 worth RM183.60 million in cash payment. This translates into RM3.90 per Perak Corp share for the other share holders.

Perak Corp's share price surged from below RM3 to RM3.75 in that month, and stayed there throughout the next several months until D-day recently. But for this Proposed SCR to go through, one major shareholders Sime Darby Property Bhd (SDPB) who holds a 13% stake, must support. Without SDPB's vote, the Proposed SCR would not be a successful one.

In October, expectedly, SDPB did not give this Proposed SCR its supports and thence, the privatisation bid ended in failures.

Immediately after the announcement came out on Oct 24, Perak Corp's share price fell by sharply the next day. By the time of posting, Perak Corp's share is trading at RM2.73 on Nov 28, 2014.

Now one very intriguing question in my mind is if SDPB did not support the bid, SPDB must have seen higher value then the offered price of RM3.90. According to regulatory fillings, the net asset value per Perak Corp share is RM5.32!

Shouldn't then that Perak Corp's share price be at least traded higher or at the same pre-Proposed SCR price? Instead, its share price fell to RM3 plus and  is now at RM2.73. Why are minorities selling at this depressed price knowing that the several major shareholders are not willing to let go at RM3.90? Surely the selling are not sold by the several major shareholders, otherwise, there would be announcement on the website of Bursa Malaysia.

So this brings the question of the participation of minorities. Why are they selling now? Shouldn't the minorities be happy that the bid was not successful and hang on the shares for the longer term for its share price to reflect its so-called higher value in the long run.

The major shareholders of Perak Corp are not fazed by the swings of its share price as they are basically companies holding on for the long term. But for the minorities, the wide swing of its share price has a big bearing on individual's portfolio. For example a minority holding 100,000 shares of Perak Corp would be feeling the big difference! If he had sold at the pre-Proposed SCR period, he could have sold at easily RM3.75 and thence netted RM375,000.00. But because he held, the current price of RM2.73 means his shares are now worth only RM273,000.00. See a different of around RM100,000.00. Any ordinary investor would feel very  "sakit hati" like it or not.

So as we can see, privatisation can cause minority shareholders to feel happy and depress when it does not go through.

This also make me wonder about my shares in Delloyd Ventures Bhd which is also in the midst of a  proposed privatisation. According to a report, Deputy group MD, Datuk Leon Tee Wee Leng said the company is currently going through a due diligence process, whereby independent advisors as well as valuers are being appointed.

Delloyd Ventures Bhd's proposed privatisation would depend on the shareholders' feedback at the company's extraordinary general meeting (EGM) to be held in December.

What would happen then? I do not know. I can only pray it won't go the way of Perak Corp and see the share price falling to RM4 or below.

Cameron Highlands is over developed

Recently our beloved famous Cameron Highlands was in the limelight for all the wrong reasons. Floods, some landslides, rampant illegal land-clearing, occupation by undocumented foreign workers and even deaths due to the one main issue - i.e. over development. Fingers are being pointed at who or whom are responsible for allowing all these illegal clearing of trees and land for cultivation of fruits and vegetables.

To witness the extend of these so called over development, last week I drove to see for myself how extensive it was. I must admit over development is not the correct word enough. Cameron Highlands is massively over developed from all sides. Whether illegal or legal, the authorities must immediately take the most drastic actions to stop this.

Compared to my trip five years ago and last week, there are simply too many developments from new hotels or apartments, new attraction park Lavendar where visitors would be greeted by a Mickey Mouse mascot, continuous clearance of land for cultivation every turn here and there along the road. Even one bee farm is doing extension of a two or three storey building for business just by the back of its bee farm.

The hotel where I stayed is in Brinchang where from my top view, I could see two major developments going on. Look at the picture which I captured. On the top right side are two giant cranes in action for a big development while on the top left side, one can see the top hill has been cleared and planted for cultivation. Now when the top side are cleared, surely continuous heavy rain's water will seep downwards below as there are no massive big trees to help retain the water. That is one of the reasons landslides occur.

To rehabilitate back Cameron Highlands is possible. No one can run away from any illegal clearance or new building without approvals. The authorities need to send their team on a regular weekly basis to check. I don't think the illegals have a chance against the authorities as long as they are being checked from time to time.

Perhaps more rangers/officials should be directed to cover certain stretch/ares of Cameron Highlands respectively and they are to report directly to their superiors in a weekly basis. The superiors would then submit a monthly report to the higher authorities. In this way, every officials are responsible for their own areas. In this way, officials would not be over burdened and would be able to carry out their duties more efficiently.

Only the highest authority has the power to direct such orders. It is still not too late to save Cameron Highlands.

 

Massive wastage of food and resources

Another moment that caught my attention was the massive wastage of food by a thirty plus couple during the morning buffet breakfast. As I was sitting next to their table, I noticed that they were busy accumulating varieties of food on their table. I also wondered if they are able to finish all those food. In the end, they left all those food untouched including chilly sauce!

It is not that I wish to criticize this couple, but really I felt very "geram" when this sort of incidents occur right in front of me. I really cannot understand what is in their mind when they left the table with all those untouched food, but taken. Not only the hotel staff has more unnecessary plates to wash, precious water and detergents are also needed just because of such uncallous action of people. So "geram"  was I on that morning that I snapped a few pictures to share with readers about this.