After giving it much thought, I've decided to recommend the following three books as a starting point:
1. Competitive Strategy: To learn how to study a business, I'd suggest she start by reading "Competitive Strategy" by Michael Porter. This is by far the best book ever written on how to determine the competitive position of a business.
2. Buffett's Annual Letters: Next, I'd recommend she read Warren Buffett's annual shareholder letters dating back to 1977 (www.berkshirehathaway.com) to learn how to value a business. Even today, most people don't realize just how lucky we are to have a giant such as Buffett openly share his thoughts with us.
3. Reminiscences of a Stock Operator: And finally, I'd suggest the classic "Reminiscences of a Stock Operator" by Edwin Lefevre to learn how to study the market.
Although the readings above are just a starting point, I think inside each you can discover links to other branches of knowledge in the investing tree.
But becoming a great investor isn't just about reading some books or making some money. It's an evolution; one that takes place over a long period of time.
The Evolution of an Investor
The evolution of a professional investor is a curious thing.
At a young age, most investors are still captive to their "institutional" programming. Thus, the ideas they have are based largely on what they've been told by their parents or taught in school. Facts are used to fit their preconceived notions of the world and the stock market.
Investors who operate at this level are still operating "within the box." All market moves are seen through a narrow lens.
But a good investor will begin to tear down conventional wisdom one experience at a time. He learns quickly that the market doesn't suffer fools gladly. If you don't have a healthy respect for the facts, the market will take your money from you, no questions asked.
At some point in his/her career – after gaining a certain amount of knowledge and experience – an investor begins to "see" things differently.
Instead of reacting to what the market does or what the headlines proclaim, you begin to act independently of them. At this stage of the game you have learned to trust your analysis of the facts to guide your decision making.
It's at this point that you realize cold-bloodedly that there actually is a "box", and 99% of all market participants operate within it. Personally, that's when I first looked in the mirror with pride and was able to call myself a professional investor.
But as you will see very soon, I was a bit early ...
To the Man with the Hammer, Everything Looks Like a Nail
I, of all people, should have known better.
That's why it didn't bother me to lose my money. From a very early age, the market trained me to study my losses objectively and move on to the next opportunity. I never carry losses with me for too long. Far worse was the humiliation I felt. How could I have done something so darn stupid, I asked myself repeatedly.
I remember one of my friends trying to console me one day over drinks. He said that it wasn't my fault. I had the "right idea at the wrong time".
But any businessperson worth his weight knows that's nonsense! Half the job of having a good idea is knowing when.
Mistakes Made ...
It took me almost a full year of anger and depression before I was even able to look at my actions properly. Believe me when I tell you I almost couldn't do it. To look at my actions objectively would require brutal honesty, which is hard to come by even on the best of days. But I knew that my primary goal in life was not to protect my ego – it was to become a great investor. And to continue on that road I had to be brutally honest with myself.
That brings me back to the second part of my answer.
It was this single experience that led to my understanding of the "intangibles" needed to continue on my road to become a great investor. While every great investor has gone through a watershed moment like this, I don't think it's possible to learn from their mistakes. Intellectually, I had read all the case studies and studied all the greats; but you don't "know it" until you experience it and recover from it.
I often meet older businesspeople who experience this moment of failure much later in their lives. In some ways I feel sorry for them. It's much harder on the ego, and, consequently much harder to recover, after you've had decades of success.
And certainly it doesn't help having the financial responsibility that comes with an established family. Fortunately for me, I was hindered by neither. But still, my path was extremely difficult.
Here's what I learned:
I first realized that my ego had gotten the better of me. Flushed with business success early in life, it simply never occurred to me that I could be wrong. Perhaps even worse was that my oversized ego led me to dismiss lessons learned as an investor: instead of taking my loss early, the company continued to wander around as a corporate zombie, half dead and half alive.
Since I was allocating capital personally, the buck stopped on my desk.
My inflated ego led me to myriad other problems that affected my decision making. However, due to the importance of each issue, each problem is worth noting on its own.
Secondly, I realized that I suffered from a tremendous lack of knowledge of both the markets and the industry I was operating in. My ignorance of both magnified the problems greatly.
With regard to the market, I should have realized that everything that was happening – cheap money, a booming stock market, the "new, new" thing – had happened before.
Last but not least, I was hampered by plain, old-fashioned greed.
Looking back now, I can say that my greed actually overwhelmed me. Curiously, I have always been a student of Warren Buffett's. His investment style has always fit my natural emotional disposition. But at the height of the boom, I even mocked his decision to stay on the sidelines. I convinced myself that he was "out of touch." As I studied my mistakes, I realized I was dead wrong about Buffett. He had done his homework and knew exactly what was going on. It was I who was truly out of touch.
How You Can Benefit from This
Whether you run a private business, own your own company, or simply invest in common stocks, you are an investor. We all do price/value calculations to determine where our time and money is best served.
But it's occurred to me that not many great investors discuss the single most important rule to becoming one: Having an awareness of our own human nature.
You see, without an understanding of your own nature, you will be controlled by your base emotions. Instead of using history and facts to see past the financial headlines, you will follow them; the result will be that your fear and greed instincts will control your investment decisions.
If that happens, mark my words, you will never make a killing in the field of investing. I know because I never made one until I transcended them.
Instead of the patience that comes with a strong understanding of history, you will be compelled to move at all times, which is a recipe for destruction. And finally, if you are unaware of yourself, your ego will find a way to cloud the facts, which will limit your ability to evolve.
When you are at the age when you sit on the porch with your grandchildren and they ask you about investing, one of two comments will come out. If you ignore this advice, you'll end up telling your grandchildren that Wall Street is a big casino that's rigged for the richest people in the world. This will have the intended effect: Your grandchildren will never take it seriously.
But, if you find yourself sitting on that porch one day and you're asked about Wall Street, you may say something far different indeed. You can pass on the knowledge that there is a "box," and the first order of business is to learn that it exists. Secondly, you will tell them that their ability to come back from ruin will mean far more than any success they ever have.
And finally, you will tell them that to be a master investor they have to understand and master their emotions. Then you will have truly passed on the kind of knowledge that allows our young ones to stand on our shoulders.
At least that's the way I see it at this point of my own evolution.
Saturday, April 24, 2010
3 Bad Investing Habits to Lose Immediately
This exercise is pretty much guaranteed to make you a much more profitable trader or investor over time.
It's very difficult, and even painful, to deprogram yourself and unlearn bad habits. It can be like changing your diet. But the results are just as rewarding!
So one of the very first things I am doing as I create new trading classes for Tycoon U is I'm putting together a system for unlearning bad habits.
Let's go over a few of the very basic bad habits you might need to unlearn to become a great trader and consistently outperform the general market. I can't possibly overstate the importance of this process, as 90% of trading profitably is simply managing your own emotions and avoiding reacting in a way that you as a human being are genetically programed to.
The high level of difficulty in going against human nature is actually a huge benefit to you as a trader because it gives you an immediate edge over those whose trading decisions actually move markets.
Why?
The biggest and savviest fund managers in the world also experience the same flaw that anyone does, as they, too, are human beings. If you can fight human nature, you can win most of the time.
I can't cover all the most common bad habits here, and that's a good thing for those who will REALLY use this article as an exercise, because you don't want to try to break too many bad habits at the same time.
"They" say it takes 30 days to make or break a habit. So let's chew on a few today and perhaps you can focus intensely for the next 30-days on breaking them.
Before deciding to give up because you think you don't stand a fighting chance against institutional savvy investors, let me tell you why you have an edge over them.
Studies show that since professional investors/traders are more confident, they perform much worse than they might have if they weren't as confident about their ability to make money in the market. The two most common biases among professional traders are over-optimism and overconfidence.
Bad Habit #1 - Overconfidence
Avoid overconfidence at all costs. Avoid the dangerous cycle that most traders repeat over and over again: The one where they become more and more confident as they become "hot" and then inevitably get SMASHED. They become humbled by the market and hopefully still have money to invest, which makes them better traders, and the cycle repeats itself.
This may be the hardest to break, so I focus on it first.
How do you break this one? You already have a head start if you're not a professional.
Overconfidence is particularly pronounced among experts as opposed to lay people. One study found that 68% of analysts thought they were above average at forecasting earnings. 75% of fund managers think they are above average at their jobs.
the absolute worst performers are generally the most overconfident. They say those that are overconfident "suffer a double curse of being unskilled and unaware of it." They are too confident about their ability to predict and typically have the "illusion of knowledge" driving that overconfidence.
Basically, the skills that are needed to produce correct responses are almost identical to skills needed "to self-evaluate the potential accuracy of responses. Hence the problem."
Forecasters continue to forecast even after overwhelming evidence that they aren't good at it, which can be explained as ignorance (not knowing the overconfidence exists) and arrogance ("ego defense mechanism").
So stay humble and avoid the cycle which will surely end up humbling you anyway (the stage that comes after overconfidence).
The students were 59% confident in their stock picking abilities on average and the professionals averaged 65% confidence. Obviously the lay people outperformed the professionals by a large margin.
When the professionals were 100% sure they were correct, they were actually right less than 15% of the time! Look below at how, as the "perfect calibration" line (confidence level) moves up, performance declined -- dramatically for the professionals. Also notice how lay people never said they were 100% confident.
You might think these studies are flawed or that I'm cherry picking the studies, but I have tons of research on this with a number of other studies that show the same thing. The point is you don't want to be overly confident when positioning yourself.
It's always important to know what the indicators that you're following actually mean, to get as good of a grip on market action as possible. But no matter what, always remain humble and avoid the cycle described above, and avoid having an ego at all costs.
It's no wonder 85% - 90% of fund managers underperform the market.
And what is "The Market" anyway? Not what most people think ...
Bad Habit #2 - Talking and Thinking in Terms of The Straits Times Index.
Quick! What's "the market doing" right now? You have 10 seconds to answer. Really see if you can do this. Check to see what the market is doing. I'll wait ...
You probably just quoted the amount by which the Dow Jones Industrial Average is up or down. Most people will say, for example, "the market" is up 100 points!
NO! You want to get away from that immediately. You might be saying "But Chris, the major financial news networks always tell us what the market's doing by quoting the Dow." EXACTLY! They are part of the problem. They have to give you bite sized bits of info for two reasons.
1. Time limitations.
They aren't going to sit there and tell you what small-caps or mid-caps are doing. Heck, they aren't even really telling you what large-caps are doing. They are mainly telling you what mega-caps are doing. They know you have limited time and you want EVERYTHING. You want to have your cake and eat it too by getting market info without spending real time getting it.
2. Confusion = lower ratings.
The last thing they want to do is give you what some perceive to be too much info. If they tell you what each group is doing, they will turn people off.
Become familiar with these indices bit by bit and, over time, it will become second nature.
If you do this, you will spot trends and reversals much faster, you will see the market much more clearly, and if you're like most of the people I gave this advice to over the years (who reported back to me) you will find yourself to be a much better trader/investor by the end of this year!
When you decide you want to be a black belt, start viewing the market in terms of sectors. We all know that stocks within the same sector act in unison. They mostly move at the same time like schools of fish. We know one sector can advance 20% while, in the same time frame, another can decline by 30%.
So if you want a true picture of how the market is performing, start viewing the market in sectors.
Bad Habit #3 - Talking About Positions or Trading in Groups
Don't do it!
It's incredibly important to have the ability to NOT stick to your guns, but to be willing and able to change your market stance, because markets are always evolving. When you talk about the positions you've taken, you're psychologically reinforcing your stance, thus making it more difficult to change that stance as needed.
Realizing you've made a bad decision is a lot easier when you know a bunch of other people did the same thing, right? WRONG! Your mind is playing tricks on you. You're almost guaranteeing bad performance if you make group decisions about your market posture or trading moves. Many bad decisions made by investors are the result of group interaction.
If we already know that in order to outperform the market we have to be the minority, and that if we want to lose money in the market we should think like the majority, then we know group decisions are a bad idea. You would only be making it more likely that you do what the majority is doing!
This is true unless, of course, your group decides to make the trades that the minority thinks it should make. But obviously that's not how it works -- the group will do what the majority thinks it should do.
It's Technical Analysis 101 to know how to use investor Sentiment readings as contrary indicators! I mean traders literally trade off of the fact that the large majority of investors are thinking the same way -- and are almost always wrong!
You don't have to be part of an investment club to be in this bad habit. Most people have this habit because it's impossible to look around the web to find your data and information on stocks or ETFs without stumbling upon other investors' opinions. And most of those investors are names of those you know to be smart investors.
But it IS possible to pull the information you need and to leave the rest.
I don't want to overload you with too many assignments of bad habits to break. Trying to break too many at the same time will just be too difficult, and Rome wasn't built in a day.
But I'll leave you with this final thought about taking advice from others.
I'm considering writing pieces like this once per month. Sort of a 30-day assignment each month for breaking bad habits. You can only do this with repetition and, while it may seem easy, it's hard to be very strict with this sort of thing because your bad habits are ingrained in your system.
But you'll realize superior returns if you focus on these three habits, hard core, for the next 30-days. Please leave your comments below telling me if you're going to do this. Will you make the commitment? Are you up for the challenge?
It's very difficult, and even painful, to deprogram yourself and unlearn bad habits. It can be like changing your diet. But the results are just as rewarding!
So one of the very first things I am doing as I create new trading classes for Tycoon U is I'm putting together a system for unlearning bad habits.
Let's go over a few of the very basic bad habits you might need to unlearn to become a great trader and consistently outperform the general market. I can't possibly overstate the importance of this process, as 90% of trading profitably is simply managing your own emotions and avoiding reacting in a way that you as a human being are genetically programed to.
The high level of difficulty in going against human nature is actually a huge benefit to you as a trader because it gives you an immediate edge over those whose trading decisions actually move markets.
Why?
The biggest and savviest fund managers in the world also experience the same flaw that anyone does, as they, too, are human beings. If you can fight human nature, you can win most of the time.
I can't cover all the most common bad habits here, and that's a good thing for those who will REALLY use this article as an exercise, because you don't want to try to break too many bad habits at the same time.
"They" say it takes 30 days to make or break a habit. So let's chew on a few today and perhaps you can focus intensely for the next 30-days on breaking them.
Before deciding to give up because you think you don't stand a fighting chance against institutional savvy investors, let me tell you why you have an edge over them.
Studies show that since professional investors/traders are more confident, they perform much worse than they might have if they weren't as confident about their ability to make money in the market. The two most common biases among professional traders are over-optimism and overconfidence.
Bad Habit #1 - Overconfidence
Avoid overconfidence at all costs. Avoid the dangerous cycle that most traders repeat over and over again: The one where they become more and more confident as they become "hot" and then inevitably get SMASHED. They become humbled by the market and hopefully still have money to invest, which makes them better traders, and the cycle repeats itself.
This may be the hardest to break, so I focus on it first.
How do you break this one? You already have a head start if you're not a professional.
Overconfidence is particularly pronounced among experts as opposed to lay people. One study found that 68% of analysts thought they were above average at forecasting earnings. 75% of fund managers think they are above average at their jobs.
the absolute worst performers are generally the most overconfident. They say those that are overconfident "suffer a double curse of being unskilled and unaware of it." They are too confident about their ability to predict and typically have the "illusion of knowledge" driving that overconfidence.
Basically, the skills that are needed to produce correct responses are almost identical to skills needed "to self-evaluate the potential accuracy of responses. Hence the problem."
Forecasters continue to forecast even after overwhelming evidence that they aren't good at it, which can be explained as ignorance (not knowing the overconfidence exists) and arrogance ("ego defense mechanism").
So stay humble and avoid the cycle which will surely end up humbling you anyway (the stage that comes after overconfidence).
The students were 59% confident in their stock picking abilities on average and the professionals averaged 65% confidence. Obviously the lay people outperformed the professionals by a large margin.
When the professionals were 100% sure they were correct, they were actually right less than 15% of the time! Look below at how, as the "perfect calibration" line (confidence level) moves up, performance declined -- dramatically for the professionals. Also notice how lay people never said they were 100% confident.
You might think these studies are flawed or that I'm cherry picking the studies, but I have tons of research on this with a number of other studies that show the same thing. The point is you don't want to be overly confident when positioning yourself.
It's always important to know what the indicators that you're following actually mean, to get as good of a grip on market action as possible. But no matter what, always remain humble and avoid the cycle described above, and avoid having an ego at all costs.
It's no wonder 85% - 90% of fund managers underperform the market.
And what is "The Market" anyway? Not what most people think ...
Bad Habit #2 - Talking and Thinking in Terms of The Straits Times Index.
Quick! What's "the market doing" right now? You have 10 seconds to answer. Really see if you can do this. Check to see what the market is doing. I'll wait ...
You probably just quoted the amount by which the Dow Jones Industrial Average is up or down. Most people will say, for example, "the market" is up 100 points!
NO! You want to get away from that immediately. You might be saying "But Chris, the major financial news networks always tell us what the market's doing by quoting the Dow." EXACTLY! They are part of the problem. They have to give you bite sized bits of info for two reasons.
1. Time limitations.
They aren't going to sit there and tell you what small-caps or mid-caps are doing. Heck, they aren't even really telling you what large-caps are doing. They are mainly telling you what mega-caps are doing. They know you have limited time and you want EVERYTHING. You want to have your cake and eat it too by getting market info without spending real time getting it.
2. Confusion = lower ratings.
The last thing they want to do is give you what some perceive to be too much info. If they tell you what each group is doing, they will turn people off.
Become familiar with these indices bit by bit and, over time, it will become second nature.
If you do this, you will spot trends and reversals much faster, you will see the market much more clearly, and if you're like most of the people I gave this advice to over the years (who reported back to me) you will find yourself to be a much better trader/investor by the end of this year!
When you decide you want to be a black belt, start viewing the market in terms of sectors. We all know that stocks within the same sector act in unison. They mostly move at the same time like schools of fish. We know one sector can advance 20% while, in the same time frame, another can decline by 30%.
So if you want a true picture of how the market is performing, start viewing the market in sectors.
Bad Habit #3 - Talking About Positions or Trading in Groups
Don't do it!
It's incredibly important to have the ability to NOT stick to your guns, but to be willing and able to change your market stance, because markets are always evolving. When you talk about the positions you've taken, you're psychologically reinforcing your stance, thus making it more difficult to change that stance as needed.
Realizing you've made a bad decision is a lot easier when you know a bunch of other people did the same thing, right? WRONG! Your mind is playing tricks on you. You're almost guaranteeing bad performance if you make group decisions about your market posture or trading moves. Many bad decisions made by investors are the result of group interaction.
If we already know that in order to outperform the market we have to be the minority, and that if we want to lose money in the market we should think like the majority, then we know group decisions are a bad idea. You would only be making it more likely that you do what the majority is doing!
This is true unless, of course, your group decides to make the trades that the minority thinks it should make. But obviously that's not how it works -- the group will do what the majority thinks it should do.
It's Technical Analysis 101 to know how to use investor Sentiment readings as contrary indicators! I mean traders literally trade off of the fact that the large majority of investors are thinking the same way -- and are almost always wrong!
You don't have to be part of an investment club to be in this bad habit. Most people have this habit because it's impossible to look around the web to find your data and information on stocks or ETFs without stumbling upon other investors' opinions. And most of those investors are names of those you know to be smart investors.
But it IS possible to pull the information you need and to leave the rest.
I don't want to overload you with too many assignments of bad habits to break. Trying to break too many at the same time will just be too difficult, and Rome wasn't built in a day.
But I'll leave you with this final thought about taking advice from others.
I'm considering writing pieces like this once per month. Sort of a 30-day assignment each month for breaking bad habits. You can only do this with repetition and, while it may seem easy, it's hard to be very strict with this sort of thing because your bad habits are ingrained in your system.
But you'll realize superior returns if you focus on these three habits, hard core, for the next 30-days. Please leave your comments below telling me if you're going to do this. Will you make the commitment? Are you up for the challenge?
Trading set-up
TRADING THE OPEN
During normal market conditions our regular setups generally do very well regardless what time they are taken. Trading right at the opening or start of tradng day always adds "risk". During this low volume "choppy" market condition, this risk is more pronounced. It is recommended that new trades not be taken for the first 5 minutes the market is open. I will treat each new trade that sets up during this time as a gap trade and wait till the stock comes back and takes out its 10 minute high or low.
Trading is risky. It is our job as traders to reduce this risk and increase our chances of success.
IMPORTANT: Take only the opportunities that you really like and understand. Always enter a trade with a trading plan. There is a much greater chance of success in your trading if you understand the trade. That is very important. Taking just a few trades is enough to be a successful trader. Overtrading is probably the number one reason new traders fail. I personally mostly take swing trades. Please remember to keep that in mind!!!!!!!!!!!!!!!
During normal market conditions our regular setups generally do very well regardless what time they are taken. Trading right at the opening or start of tradng day always adds "risk". During this low volume "choppy" market condition, this risk is more pronounced. It is recommended that new trades not be taken for the first 5 minutes the market is open. I will treat each new trade that sets up during this time as a gap trade and wait till the stock comes back and takes out its 10 minute high or low.
Trading is risky. It is our job as traders to reduce this risk and increase our chances of success.
IMPORTANT: Take only the opportunities that you really like and understand. Always enter a trade with a trading plan. There is a much greater chance of success in your trading if you understand the trade. That is very important. Taking just a few trades is enough to be a successful trader. Overtrading is probably the number one reason new traders fail. I personally mostly take swing trades. Please remember to keep that in mind!!!!!!!!!!!!!!!
Latest for Yangzijiang
Published April 24, 2010 ( business times )
BAKER Technology has accepted an offer from shipbuilder Yangzijiang Shipbuilding (Holdings) to buy PPL Holdings (PPLH) from Baker for US$155 million.
Baker, which received a letter of offer from Yangzijiang on April 16 to buy all of PPLH, said that accepting the offer allowed the company to unlock the value of its investment in PPLH. PPLH is an investment holding company that holds a 15 per cent stake in PPL Shipyard, which constructs offshore drilling rigs.
Baker also said it had received a letter from Sembcorp Marine on April 22 through its lawyers 'demanding that (Baker) not accept the offer' as Sembcorp Marine alleged that any sale to Yangzijiang would circumvent Sembcorp Marine's pre-emptive rights to have first right of refusal over the sale of PPLH's shareholdings in PPL Shipyard. Sembcorp Marine has an 85 per cent stake in PPL Shipyard.
'The board has sought and received legal advice that Sembcorp Marine has no basis for its claims,' Baker said in an announcement on the Singapore Exchange yesterday evening.
So...by right, we should see both Baker Tech and Yangzijiang lifting the trading halt and be trading on this coming Monday. Hopefully it will be round 2 of "chionging" and profits for those who have vested, cheers!!
I also was looking at Baker Tech's chart....and it's the sky is limit for the stock. Looking at it's report after the sales of PPLH....it's NTA will be swee swee too. That is another story since I didn't vest in it!
BAKER Technology has accepted an offer from shipbuilder Yangzijiang Shipbuilding (Holdings) to buy PPL Holdings (PPLH) from Baker for US$155 million.
Baker, which received a letter of offer from Yangzijiang on April 16 to buy all of PPLH, said that accepting the offer allowed the company to unlock the value of its investment in PPLH. PPLH is an investment holding company that holds a 15 per cent stake in PPL Shipyard, which constructs offshore drilling rigs.
Baker also said it had received a letter from Sembcorp Marine on April 22 through its lawyers 'demanding that (Baker) not accept the offer' as Sembcorp Marine alleged that any sale to Yangzijiang would circumvent Sembcorp Marine's pre-emptive rights to have first right of refusal over the sale of PPLH's shareholdings in PPL Shipyard. Sembcorp Marine has an 85 per cent stake in PPL Shipyard.
'The board has sought and received legal advice that Sembcorp Marine has no basis for its claims,' Baker said in an announcement on the Singapore Exchange yesterday evening.
So...by right, we should see both Baker Tech and Yangzijiang lifting the trading halt and be trading on this coming Monday. Hopefully it will be round 2 of "chionging" and profits for those who have vested, cheers!!
I also was looking at Baker Tech's chart....and it's the sky is limit for the stock. Looking at it's report after the sales of PPLH....it's NTA will be swee swee too. That is another story since I didn't vest in it!
Latest on SMIC
Just share this here as a guide for your trade ( the power of google )
HONG KONG (Dow Jones)--Chinese contract chip maker Semiconductor Manufacturing International Corp. (SMI) said Monday it plans to book several charges to its 2009 results, a move that could lead to a wider-than-expected loss.
In a statement, the company said it expects to book a charge of US$114.6 million for bad debt and a provision for long term receivables as well as a loss of US$20.9 million stemming from the assessment of claims and potential claims against the company.
The company also raised it first-quarter revenue guidance, projecting a 4%-6% increase from fourth-quarter revenue of US$333.1 million. The company cited stronger-than-expected customer orders.
SMIC, China's largest chip foundry by capacity, said in February it expects first-quarter revenue to be flat to up 2% from the fourth quarter of 2009.
But the company said it expects to post an additional non-operating expense of US$146.6 million in the first quarter to reflect the change in the fair value of shares and warrants.
The company is slated to release full-year earnings on April 26.
From the above....I will said that the new management is doing the only thing open to them to wipe the "old slate" clean in a smooth stroke so that they can move forward with their own plans for the company which is a good thing. ( just like the old saying of a "new broom sweeps clean" )
Yes.....looking forward to a "swee swee" ride for this stock. Please do a "test-water" for those who is trying to ride this penny stock for the 1st
time....yes, it's "big risk" when trading penny stock.
HONG KONG (Dow Jones)--Chinese contract chip maker Semiconductor Manufacturing International Corp. (SMI) said Monday it plans to book several charges to its 2009 results, a move that could lead to a wider-than-expected loss.
In a statement, the company said it expects to book a charge of US$114.6 million for bad debt and a provision for long term receivables as well as a loss of US$20.9 million stemming from the assessment of claims and potential claims against the company.
The company also raised it first-quarter revenue guidance, projecting a 4%-6% increase from fourth-quarter revenue of US$333.1 million. The company cited stronger-than-expected customer orders.
SMIC, China's largest chip foundry by capacity, said in February it expects first-quarter revenue to be flat to up 2% from the fourth quarter of 2009.
But the company said it expects to post an additional non-operating expense of US$146.6 million in the first quarter to reflect the change in the fair value of shares and warrants.
The company is slated to release full-year earnings on April 26.
From the above....I will said that the new management is doing the only thing open to them to wipe the "old slate" clean in a smooth stroke so that they can move forward with their own plans for the company which is a good thing. ( just like the old saying of a "new broom sweeps clean" )
Yes.....looking forward to a "swee swee" ride for this stock. Please do a "test-water" for those who is trying to ride this penny stock for the 1st
time....yes, it's "big risk" when trading penny stock.
Friday, April 23, 2010
Yangzijiang
SHIT....again a trading halt just after I bought in this afternoon, sighed!
Now...again hoping that it does the same as last week, good news then lifted the "halt" on Monday so that the share price can move up.
So....there is so many "if and hope" for this stock here hahaha!
As for the above trading "halt" if I got the news right then it is due to it's planned purchase of the 15% of PPLH from Baker Tech. The majority owner of PPLH, SCM is objecting the planned sale as they will not given the rights to the sales option for the stake by Baker Tech. But the thing is that Baker Tech has sought legal advices on the matter and said that SCM has no legal basis for their objection. For Baker Tech....what they always want is they get the highest price for their stake and since Yangzijiang has made an good offer and they did accepted the offer. It's the end of the story for them. But for SCM....they may not be happy with the idea since they are the 85% owner plus the fact that they have very deep pocket.
So....the longer the trading "halt" for Yangzijiang, then it will not be good news for the investors. Btw I bought 50 lots just before the "halt" at noon time when the share price was around $1.42/1.43. Got them for $1.42 all 50 lots.
Seriously....I still feel this stock will trend higher since there is a new IPO ( New Century - in the same line as Yangzijiang ) doing it's road-show and will be traded on 11th May if it lists as plan. Therefore there shall be a "play" for shipping/ship building S-chip stocks eg Cosco, Yangzijiang, JES.
Now...again hoping that it does the same as last week, good news then lifted the "halt" on Monday so that the share price can move up.
So....there is so many "if and hope" for this stock here hahaha!
As for the above trading "halt" if I got the news right then it is due to it's planned purchase of the 15% of PPLH from Baker Tech. The majority owner of PPLH, SCM is objecting the planned sale as they will not given the rights to the sales option for the stake by Baker Tech. But the thing is that Baker Tech has sought legal advices on the matter and said that SCM has no legal basis for their objection. For Baker Tech....what they always want is they get the highest price for their stake and since Yangzijiang has made an good offer and they did accepted the offer. It's the end of the story for them. But for SCM....they may not be happy with the idea since they are the 85% owner plus the fact that they have very deep pocket.
So....the longer the trading "halt" for Yangzijiang, then it will not be good news for the investors. Btw I bought 50 lots just before the "halt" at noon time when the share price was around $1.42/1.43. Got them for $1.42 all 50 lots.
Seriously....I still feel this stock will trend higher since there is a new IPO ( New Century - in the same line as Yangzijiang ) doing it's road-show and will be traded on 11th May if it lists as plan. Therefore there shall be a "play" for shipping/ship building S-chip stocks eg Cosco, Yangzijiang, JES.
Time to Replace the 4% Rule
Retirement-Savings Withdrawal Strategy Is Flawed, but Replacement Is Complex
How much -- when the time comes -- should you withdraw from your accounts earmarked for retirement? Answer that question correctly and you get to enjoy the retirement of your dreams. Answer it incorrectly and you either outlive your assets or you leave more money to your heirs than planned.
Conventional wisdom suggests that you withdraw on average 4% adjusted for inflation. Now comes a paper co-authored by William Sharpe, the winner of the 1990 Nobel Prize in Economics, challenging the conventional wisdom.
"It is time to replace the 4% rule with approaches better grounded in fundamental economic analysis," wrote Sharpe in his paper "The 4% Rule -- At What Price?" (That paper appeared in The Journal of Investment Management in 2009, but resurfaced last week in the financial-adviser community and is sparking debate anew.)
"Supporting a constant spending plan using a volatile investment policy is fundamentally flawed. A retiree using a 4% rule faces spending shortfalls when risky investments underperform, may accumulate wasted surpluses when they outperform and, in any case, could likely purchase exactly the same spending distributions more cheaply."
Having a surplus is a problem. It means that you spent less than you could have in retirement, that you short-changed yourself. It means you could have spent more traveling to exotic places or visiting family and friends or splurging on your hobbies and philanthropic endeavors.
Having a shortfall is a much bigger problem, however. It means that you lived too large, too fast. And while it might not mean eating dog food late in life, it sure as heck could mean a much lower standard of life as you age.
According to Sharpe, who is also the founder of Financial Engines, the typical 4% rule recommends that a retiree annually spend a fixed, real amount equal to 4% of his initial wealth, and rebalance the remainder of his money in a 60%-40% mix of stocks and bonds throughout a 30-year retirement period.
What's more, he shows the price paid for funding what he calls "unspent surpluses and the overpayments made to purchase its spending policy." According to Sharpe, a typical rule allocates 10%-20% of a retiree's initial wealth to surpluses and an additional 2%-4% to overpayments.
By the way, the improvements to the strategy include changing the amount to withdraw based on market performance, or the length of the plan, or the portfolio mix, or the rebalancing frequency, or the confidence level.
Sharpe's study, in essence, shows that retirees waste money by adopting the 4% rule. "The 4% rule's approach to spending and investing wastes a significant portion of a retiree's savings and is thus prima facie inefficient," Sharpe wrote.
Instead, he suggests that retirees consider "maximizing their expected utility," an approach advocated by financial economists. "While we still may be far away from such an ideal, there appears to be no doubt that a better approach can be found than that offered by combinations of desired constant real spending and risky investment. Despite its ubiquity, it is time to replace the 4% rule with approaches better grounded in fundamental economic analysis."
These are points, said Boston University economics professor Zvi Bodie, "that have long been known to academics."
The only problem with what academia knows to be right and what's practical in the field -- even by Sharpe's own admission -- is this: "Many practical issues remain to be addressed before advisers can hope to create individualized retirement financial plans that maximize expected utility for investors with diverse circumstances, other sources of income, and preferences," Sharpe wrote in his paper.
Nothing Better Than 4% Rule
E. Tylor Claggett, a finance professor at the Perdue School of Business at Salisbury University, said the question of whether it's time to toss the 4% rule in the circular file is an old one and it has always been perplexing.
"The truth is, no one has a crystal ball," he said. "Therefore, no one knows how long the retiree will live, what his or her actual future financial needs will be (due to health issues and the like) and the future year-to-year performances of the various capital market components. If all of these were known, we would not have to have this discussion. Instead, we are left with looking for 'rules-of-thumb' to increase the probability that a retiree's needs will be met given his or her asset base at the time of retirement."
Others agree.
"It may be true that from an academic standpoint the 4% rule is less efficient than a more fine-tuned, more complicated approach that adjusts the withdrawal percentage based on time horizon and ongoing performance," said Rande Spiegelman, vice president of financial planning, Schwab Center for Investment Research. To Spiegelman, any rule of thumb, no matter how useful for long-term planning purposes, has limitations when applied to individual facts and circumstances.
So instead of slavishly following any approach, Spiegelman says it's always a good idea to remain flexible. "The 4% rule is easy to understand and follow, and provides a good starting point for the average investor looking for a ballpark idea of how much they need to save or, conversely, a ballpark estimate of how much they can safely withdraw," he said.
Meanwhile, Stephen P. Utkus, a principal with the Vanguard Center for Retirement Research, agrees that the 4% rule is flawed. But he also notes, as did Sharpe, that there's no practical mechanism to replace it with and that further research is required.
In the paper, Sharpe hinted at one strategy, which involves the purchase and sale of a complex set of options, but this, said Utkus, is "a technique that is not practical today and doesn't not exist in the real world of consumer finance."
Right now, Utkus said there's a big gap between academic theory and practice.
"Until academic methodologies come to a more practical set of solutions for households, they remain conceptual approaches, not strategies that can be implemented today with real-world clients and investors," said Utkus. "Over time, of course, the challenge is for academic models to become more real-world, and for real-world practitioners to learn from the academic models. Right now, there is a sizeable gap."
Meanwhile, academics are debating various models of what optimal draw-down methods should be, though by no means is there any settled consensus on the issue. What Sharpe's statement is saying is that, according to an economic model we have constructed, the 4% rule is flawed. Fair enough.
POWER - yes, it is good to have this is a guide for retirement planning.
How much -- when the time comes -- should you withdraw from your accounts earmarked for retirement? Answer that question correctly and you get to enjoy the retirement of your dreams. Answer it incorrectly and you either outlive your assets or you leave more money to your heirs than planned.
Conventional wisdom suggests that you withdraw on average 4% adjusted for inflation. Now comes a paper co-authored by William Sharpe, the winner of the 1990 Nobel Prize in Economics, challenging the conventional wisdom.
"It is time to replace the 4% rule with approaches better grounded in fundamental economic analysis," wrote Sharpe in his paper "The 4% Rule -- At What Price?" (That paper appeared in The Journal of Investment Management in 2009, but resurfaced last week in the financial-adviser community and is sparking debate anew.)
"Supporting a constant spending plan using a volatile investment policy is fundamentally flawed. A retiree using a 4% rule faces spending shortfalls when risky investments underperform, may accumulate wasted surpluses when they outperform and, in any case, could likely purchase exactly the same spending distributions more cheaply."
Having a surplus is a problem. It means that you spent less than you could have in retirement, that you short-changed yourself. It means you could have spent more traveling to exotic places or visiting family and friends or splurging on your hobbies and philanthropic endeavors.
Having a shortfall is a much bigger problem, however. It means that you lived too large, too fast. And while it might not mean eating dog food late in life, it sure as heck could mean a much lower standard of life as you age.
According to Sharpe, who is also the founder of Financial Engines, the typical 4% rule recommends that a retiree annually spend a fixed, real amount equal to 4% of his initial wealth, and rebalance the remainder of his money in a 60%-40% mix of stocks and bonds throughout a 30-year retirement period.
What's more, he shows the price paid for funding what he calls "unspent surpluses and the overpayments made to purchase its spending policy." According to Sharpe, a typical rule allocates 10%-20% of a retiree's initial wealth to surpluses and an additional 2%-4% to overpayments.
By the way, the improvements to the strategy include changing the amount to withdraw based on market performance, or the length of the plan, or the portfolio mix, or the rebalancing frequency, or the confidence level.
Sharpe's study, in essence, shows that retirees waste money by adopting the 4% rule. "The 4% rule's approach to spending and investing wastes a significant portion of a retiree's savings and is thus prima facie inefficient," Sharpe wrote.
Instead, he suggests that retirees consider "maximizing their expected utility," an approach advocated by financial economists. "While we still may be far away from such an ideal, there appears to be no doubt that a better approach can be found than that offered by combinations of desired constant real spending and risky investment. Despite its ubiquity, it is time to replace the 4% rule with approaches better grounded in fundamental economic analysis."
These are points, said Boston University economics professor Zvi Bodie, "that have long been known to academics."
The only problem with what academia knows to be right and what's practical in the field -- even by Sharpe's own admission -- is this: "Many practical issues remain to be addressed before advisers can hope to create individualized retirement financial plans that maximize expected utility for investors with diverse circumstances, other sources of income, and preferences," Sharpe wrote in his paper.
Nothing Better Than 4% Rule
E. Tylor Claggett, a finance professor at the Perdue School of Business at Salisbury University, said the question of whether it's time to toss the 4% rule in the circular file is an old one and it has always been perplexing.
"The truth is, no one has a crystal ball," he said. "Therefore, no one knows how long the retiree will live, what his or her actual future financial needs will be (due to health issues and the like) and the future year-to-year performances of the various capital market components. If all of these were known, we would not have to have this discussion. Instead, we are left with looking for 'rules-of-thumb' to increase the probability that a retiree's needs will be met given his or her asset base at the time of retirement."
Others agree.
"It may be true that from an academic standpoint the 4% rule is less efficient than a more fine-tuned, more complicated approach that adjusts the withdrawal percentage based on time horizon and ongoing performance," said Rande Spiegelman, vice president of financial planning, Schwab Center for Investment Research. To Spiegelman, any rule of thumb, no matter how useful for long-term planning purposes, has limitations when applied to individual facts and circumstances.
So instead of slavishly following any approach, Spiegelman says it's always a good idea to remain flexible. "The 4% rule is easy to understand and follow, and provides a good starting point for the average investor looking for a ballpark idea of how much they need to save or, conversely, a ballpark estimate of how much they can safely withdraw," he said.
Meanwhile, Stephen P. Utkus, a principal with the Vanguard Center for Retirement Research, agrees that the 4% rule is flawed. But he also notes, as did Sharpe, that there's no practical mechanism to replace it with and that further research is required.
In the paper, Sharpe hinted at one strategy, which involves the purchase and sale of a complex set of options, but this, said Utkus, is "a technique that is not practical today and doesn't not exist in the real world of consumer finance."
Right now, Utkus said there's a big gap between academic theory and practice.
"Until academic methodologies come to a more practical set of solutions for households, they remain conceptual approaches, not strategies that can be implemented today with real-world clients and investors," said Utkus. "Over time, of course, the challenge is for academic models to become more real-world, and for real-world practitioners to learn from the academic models. Right now, there is a sizeable gap."
Meanwhile, academics are debating various models of what optimal draw-down methods should be, though by no means is there any settled consensus on the issue. What Sharpe's statement is saying is that, according to an economic model we have constructed, the 4% rule is flawed. Fair enough.
POWER - yes, it is good to have this is a guide for retirement planning.
Thursday, April 22, 2010
Stock market up-date
With the Greece's problem not settled yet....the stock market would never go up esp since it has already "gone" up so much. It seem that the market is looking for an excuse to sell down...and it could be "it".
Yes...the market is doing the "cha-cha thingy" again with more "drops" than "up" days. Once the US market corrected....all the houses of cards will come down too.
That's the reason...I am selling off most of my holding to turn to cash. So that when things is bad...I have the bullets to fight another day.
Now...licking my wounds!
Yes...the market is doing the "cha-cha thingy" again with more "drops" than "up" days. Once the US market corrected....all the houses of cards will come down too.
That's the reason...I am selling off most of my holding to turn to cash. So that when things is bad...I have the bullets to fight another day.
Now...licking my wounds!
Stopped out for SMIC
Yes...at last, kena "stopped out" for my remaining holding for SMIC. The losses for these few days....last friday till today is nearly HKD100K not counting the commission. That is about 19K here.
WTF....really!!! and now looking at the ADR trading in the US, it is dropping further by another 5+%....meaning I will lose another load if I am still holding onto the stock.
So....I should be happy about the whole situation.
WTF....really!!! and now looking at the ADR trading in the US, it is dropping further by another 5+%....meaning I will lose another load if I am still holding onto the stock.
So....I should be happy about the whole situation.
Wednesday, April 21, 2010
Yangzijiang
Managed to double up on this Yangzijiang shares on Monday when it re-start trading after a 2-days halt, as it went down below the halt price of $1.43 to open at $1.37.
But after seeing it went down to $1.36 and start to hook-up, I bought at $1.38 and it closed at $1.49 then Tuesday...it closed higher again to $1.55
This morning with the Dow closing higher again...this share started at $1.56 and traded up to $1.57 before turning south to $1.52. So I decided to lock in some profit when it touched $1.53 and again it went south to $1.49 before turning up again. This time...I let "go" the other half at $1.53 again and called it a day for this stock. And it went to close at $1.50
Overall...managed to book nearly 7K of profit, not bad for a couple of days trade.
The market is not looking good....I have started to clear some of my other holdings to hold the cash. Cash is king when the market soured.
But after seeing it went down to $1.36 and start to hook-up, I bought at $1.38 and it closed at $1.49 then Tuesday...it closed higher again to $1.55
This morning with the Dow closing higher again...this share started at $1.56 and traded up to $1.57 before turning south to $1.52. So I decided to lock in some profit when it touched $1.53 and again it went south to $1.49 before turning up again. This time...I let "go" the other half at $1.53 again and called it a day for this stock. And it went to close at $1.50
Overall...managed to book nearly 7K of profit, not bad for a couple of days trade.
The market is not looking good....I have started to clear some of my other holdings to hold the cash. Cash is king when the market soured.
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