Warren Buffet on "Putting your money under your mattress, is it the right thing to do right now?
Saturday, May 16, 2009
AMMB net profit rises to RM860.8mil
AMMB Holdings Bhd yesterday announced net profit of RM860.8mil for the financial year ended March 31, 2009, up 29% from RM668.5mil the year before on lower provisions and minority interest payouts.
It is confident that its strategy for viable growth and rebalancing portfolio will strengthen its resilience to the global economic crisis.
“Retail, business banking and assurance segments were the main contributors to profit growth, while the investment banking and market trading results were impacted by difficult market conditions,” Group managing director Cheah Tek Kuang told reporters at a results briefing yesterday.
The group’s asset quality showed improvement and it had a lower non-performing loan (NPL) ratio of 2.6%.
For the year, AMMB Holdings posted earnings per share of 31.61 sen versus 28.24 sen for its 2008 financial year.
Cheah says NPLs may increase slightly to 4% for its current financial year due to difficult market conditions but bad loans would drop to 3% by the banking group’s 2012 financial year.
However, Cheah noted that the bank was well capitalised to face future challenges with Tier 1 capital adequacy ratio of 9.7% and total risk weighted capital adequacy ratio of 15.2%.
Net lending growth was expected to increase by 4% for its current financial year. Net loans lending was up by 8.3% to RM56.9bil in last year from the group’s 2008 financial year.
Meanwhile, deputy group managing director and chief financial officer Ashok Ramamurthy says the group’s capital expenditure was expected to increase by 30% to 50% or possibly higher this year as it would invest to position itself for an upturn in economic conditions the following year.
It expected the Second Stimulus Package (of RM60 billion announced by the Federal Government on March 10) to shield the economy from the worst impacts of the global downturn.
“We have spend about RM100mil (last financial year) to increase the number of branches and automated teller machines (ATMs) in high traffic volume locations as part of our key strategic initiatives,” he said.
The group had opened seven branches and set up 227 ATMs in various locations last financial year.
The group intends to increase its branches to more than 200 by 2011 from 187 currently.
Friday, May 15, 2009
commerze-cf versus commerze
On 14 April 2009, I noticed that commerze-cf premium was only around 6%. It was a low premium call warrants compared to others available call warrants in Malaysia. I bought 40000 shares of commerze-cf on 14 April 2009. Besides low premium, one of the reason I bought the call warrants because Commerze's CEO was Dato' Sri Nazir Razak. He is our prime minister's younger brother. So I thought Commerze could gain some advantage by having that kind of relation with our prime minister.
On 15 May 2009, I sold all the commerze-cf call warrants. I notice that its mother shares (commerze) had reached its resisitance level. I managed to close the position at RM0.165. It was the highest level of the day. Beside that, i wanted to take some profit off the table as i was not confident that the rally could keep going on without a near term correction. Most the counters listed on KLCI moved downward, so i thought i should sell those which move upward and buy those which move downward.
I managed to gain a 50% profit on commerze-cf within a month. If i were to buy commerze instead of its call warrants, I could only manage to gain around 15%.
Ok, enjoy your trading.
GOon
Thursday, May 14, 2009
sime-cg (call warrant) versus sime
On 10 April 2009, I noticed that Sime gained around RM0.35 from RM6.15 to RM6.50, sime-cg still hadn't respond to it. KLCI was moving upward on that day too. So I bought 20000 of sime-cg at RM0.135 (total investment capital was RM2700). RM0.135 was the lowest price of the day. I was right, sime-cg responded to its mother share and closed at RM0.15. I was happy as I managed to gain an unrealised profit of 11% on that day.
On 14 May 2009, I noticed that sime had reached its resistance level. I was not confident that sime would keep moving upward, so i sold all my sime-cg at RM0.18. On that day, sime closed at RM6.55.
With a investment capital of RM2700, if I were to buy sime (stock) at RM6.15 on 10 April 2009 and sold them on 14 May 2009, I could only manage to realised a profit of 6.5% (RM175).
With the same investment capital of RM2700 invested on sime-cg (call warrant), I managed to realised a profit of 33% (RM900).
The leverage effect enables me to gain exposure to the underlying through a small amount of money.
Enjoy your trading.
GOon
Power of Leverage- Warrants
A warrant, like an option, gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity and future time. However, unlike an option, an instrument of the stock exchange, a warrant is issued by a company. The security represented in the warrant (usually share equity) is delivered by the issuing company instead of an investor holding the shares.
There are two different types of warrants: a call warrant and a put warrant. A call warrant represents a specific number of shares that can be purchased from the issuer at a specific price, on or before a certain date. A put warrant represents a certain amount of equity that can be sold back to the issuer at a specified price, on or before a stated date.
Warrant certificates have stated particulars regarding the investment tool they represent. All warrants have a specified expiry date, the last day the rights of a warrant can be executed. Warrants are classified by their exercise style: an American warrant, for instance, can be exercised anytime before or on the stated expiry date, and a European warrant, on the other hand, can be carried out only on the day of expiration.
Warrants can offer significant gains to an investor during a bull market. They can also offer some protection to an investor during a bear market. This is because as the price of an underlying share begins to drop, the warrant may not realize as much loss because the price, in relation to the actual share, is already low.
The fundamental advantage of buying a call warrant, as opposed to a direct investment in the underlying asset, resides in the leverage effect that warrants offer. When buying warrants, the investor is required to outlay only a small proportion of the underlying asset price.
The leverage effect enables investors to gain exposure to the underlying through a small amount of money.
There are two different types of warrants: a call warrant and a put warrant. A call warrant represents a specific number of shares that can be purchased from the issuer at a specific price, on or before a certain date. A put warrant represents a certain amount of equity that can be sold back to the issuer at a specified price, on or before a stated date.
Warrant certificates have stated particulars regarding the investment tool they represent. All warrants have a specified expiry date, the last day the rights of a warrant can be executed. Warrants are classified by their exercise style: an American warrant, for instance, can be exercised anytime before or on the stated expiry date, and a European warrant, on the other hand, can be carried out only on the day of expiration.
Warrants can offer significant gains to an investor during a bull market. They can also offer some protection to an investor during a bear market. This is because as the price of an underlying share begins to drop, the warrant may not realize as much loss because the price, in relation to the actual share, is already low.
The fundamental advantage of buying a call warrant, as opposed to a direct investment in the underlying asset, resides in the leverage effect that warrants offer. When buying warrants, the investor is required to outlay only a small proportion of the underlying asset price.
The leverage effect enables investors to gain exposure to the underlying through a small amount of money.
CBOE Volatility Index (fear index)
Market volatility indicator reflects relative calm.
VIX is the ticker symbol for the Chicago Board Options Exchange Volatility Index, a popular measure of the implied volatility of S&P 500 index options. A high value corresponds to a more volatile market and therefore more costly options, which can be used to defray risk from volatility. If investors see high risks of a change in prices, they require a greater premium to insure against such a change by selling options. Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next.
The price of call options and put options can be used to calculate implied volatility, because volatility is one of the factors used to calculate the value of these options. Higher (or lower) volatility of the underlying security makes an option more (or less) valuable, since there is a greater (or smaller) probability that the option will expire in the money (i.e. with a market value above zero). So a higher option price implies greater volatility, other things being equal.
Investors believe that a high value of VIX translates into a greater degree of market uncertainty, while a low value of VIX is consistent with greater stability.
Traditionally the VIX has traded between 10 and 30. The VIX hit a record 89.5 in October at the height of the financial market meltdown.The index spent most of the first quarter in the mid- to upper-40s. In April it fell below 40 and it's currently in the low-30s. The recent downward movement indicates a sense of relative calm from big swings in the stock market.
But with the historical average around 18, the current level is nearly twice the norm. That means that while investors feel better than they did last fall and even earlier this year, they believe some market uncertainty still lingers. Their strengthened comfort level can be attributed, at least in part, to progress being made to stabilize the nation's banks. Investors have a better understanding of the government's bailout plan and they've seen some glimmer of hope that the recession may end later this year.
Saturday, May 9, 2009
Berkshire Hathaway reports a $1.5B 1Q loss
OMAHA, Neb. (AP) -- Warren Buffett's company reported a $1.5 billion first-quarter loss as it wrote down its ConocoPhillips investment and mostly unrealized derivative losses helped drag Berkshire Hathaway's results below last year's $940 million profit.
Berkshire Hathaway Inc. said Friday it recorded a loss of $990 per share in this year's quarter, down from the $607 net income per Class A share reported in the same period a year ago. It was Berkshire's first quarterly loss since 2001's third quarter when the company suffered large insurance losses as a result of the Sept. 11 terrorist attacks.
Analyst Justin Fuller, who writes about Berkshire online at http://www.buffettologist.com, said this was a tough quarter for Berkshire with the only bright spots coming in its utilities and insurance companies, which include Geico and General Reinsurance.
"Not surprisingly, every other business has been flat on its back in the last quarter," said Fuller, who works with Midway Capital Research & Management in Chicago.
Berkshire's revenue fell 9.5 percent in the quarter, to $22.8 billion from last year's $25.2 billion.
In his shareholder letter, Buffett already acknowledged a mistake in last year's purchase of a large amount of ConocoPhillips stock when oil and gas prices were near their peak.
Berkshire said Friday it sold 13.7 million of its 79.9 million shares of ConocoPhillips during the first quarter and additional shares were sold after the quarter to generate a loss that can offset past capital gains taxes. Berkshire reported a $241 million loss on the sale of investments in the quarter, compared to a $76 million gain on the sale of investments in the same period a year ago.
It also recorded a $1.9 billion after-tax charge to reduce the value of its remaining 71.2 million shares to March 31 values. Berkshire said in a news release that it expects to be able to recover $690 million in federal capital gains tax payments made in 2006 if it records capital losses this year of at least $1.98 billion.
Berkshire's derivative losses moderated in the quarter as the value of the contracts tied to equity indexes improved. But Berkshire had to pay out $675 million on derivative contracts tied to the credit risks of individual companies during the quarter.
Since the quarter ended, Berkshire paid out another $450 million on credit default derivatives, leaving it with about $3.3 billion in reserves for future losses on those contracts.
During the quarter, Berkshire recorded an overall loss on its derivatives of $986 million, down from a $1.1 million loss last year, and most of those losses weren't realized because most of the contracts don't mature for several years.
Fuller said investors should look beyond the $1.5 billion net loss because most of that was tied to the ConocoPhillips write down and unrealized derivative losses, so it's not as if Berkshire burned through $1.5 billion cash.
Berkshire executives say the company's operating earnings are a better measure of how the company is performing in any given period because those figures exclude its derivatives and investment gains or losses. Berkshire reported $1.71 billion in operating earnings in this year's first quarter, which was down nearly 12 percent from $1.93 billion in operating earnings a year earlier.
Berkshire executives typically do not comment on quarterly earnings reports, and they did not respond to an interview request on Friday.
Buffett said during the company's annual meeting last Saturday that Berkshire's utility and insurance businesses performed fairly well during the quarter because neither is greatly affected by the recession, but two one-time items affected the utility earnings.
Berkshire's insurance businesses generated an underwriting profit of $219 million and investment income of more than $1 billion in this year's first quarter. A year ago, the insurance unit delivered $181 million underwriting profit and an $802 million investment gain.
Morningstar analyst Bill Bergman said Berkshire is still in a good position compared to many other companies in the market, especially other insurance companies.
"I'm expecting them to gain market share in the next couple years," Bergman said about Berkshire's insurance businesses.
Berkshire's MidAmerican Energy utility unit generated $203 million net income in the quarter, down from $316 million.
Many of Berkshire's other businesses, such as its jewelry stores, Shaw carpet, Acme Brick and Clayton Homes, have been hurt by the recession and corresponding slowdown in consumer spending. Berkshire's manufacturing, service and retail division generated $258 million net income in the quarter, down from $487 a year ago.
Berkshire finished the first quarter with a total of $25.6 billion cash. But Buffett has said the day after the first quarter ended, Berkshire spent $3 billion of its cash to help Dow Chemical acquire rival chemical company Rohm & Haas. Berkshire made that commitment last summer, but the Dow deal didn't close until April 1.
Berkshire owns more than 60 subsidiaries including insurance, clothing, furniture, and candy companies, restaurants, natural gas and corporate jet firms. Berkshire also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
Berkshire Hathaway Inc.: http://www.berkshirehathaway.com
Berkshire Hathaway Inc. said Friday it recorded a loss of $990 per share in this year's quarter, down from the $607 net income per Class A share reported in the same period a year ago. It was Berkshire's first quarterly loss since 2001's third quarter when the company suffered large insurance losses as a result of the Sept. 11 terrorist attacks.
Analyst Justin Fuller, who writes about Berkshire online at http://www.buffettologist.com, said this was a tough quarter for Berkshire with the only bright spots coming in its utilities and insurance companies, which include Geico and General Reinsurance.
"Not surprisingly, every other business has been flat on its back in the last quarter," said Fuller, who works with Midway Capital Research & Management in Chicago.
Berkshire's revenue fell 9.5 percent in the quarter, to $22.8 billion from last year's $25.2 billion.
In his shareholder letter, Buffett already acknowledged a mistake in last year's purchase of a large amount of ConocoPhillips stock when oil and gas prices were near their peak.
Berkshire said Friday it sold 13.7 million of its 79.9 million shares of ConocoPhillips during the first quarter and additional shares were sold after the quarter to generate a loss that can offset past capital gains taxes. Berkshire reported a $241 million loss on the sale of investments in the quarter, compared to a $76 million gain on the sale of investments in the same period a year ago.
It also recorded a $1.9 billion after-tax charge to reduce the value of its remaining 71.2 million shares to March 31 values. Berkshire said in a news release that it expects to be able to recover $690 million in federal capital gains tax payments made in 2006 if it records capital losses this year of at least $1.98 billion.
Berkshire's derivative losses moderated in the quarter as the value of the contracts tied to equity indexes improved. But Berkshire had to pay out $675 million on derivative contracts tied to the credit risks of individual companies during the quarter.
Since the quarter ended, Berkshire paid out another $450 million on credit default derivatives, leaving it with about $3.3 billion in reserves for future losses on those contracts.
During the quarter, Berkshire recorded an overall loss on its derivatives of $986 million, down from a $1.1 million loss last year, and most of those losses weren't realized because most of the contracts don't mature for several years.
Fuller said investors should look beyond the $1.5 billion net loss because most of that was tied to the ConocoPhillips write down and unrealized derivative losses, so it's not as if Berkshire burned through $1.5 billion cash.
Berkshire executives say the company's operating earnings are a better measure of how the company is performing in any given period because those figures exclude its derivatives and investment gains or losses. Berkshire reported $1.71 billion in operating earnings in this year's first quarter, which was down nearly 12 percent from $1.93 billion in operating earnings a year earlier.
Berkshire executives typically do not comment on quarterly earnings reports, and they did not respond to an interview request on Friday.
Buffett said during the company's annual meeting last Saturday that Berkshire's utility and insurance businesses performed fairly well during the quarter because neither is greatly affected by the recession, but two one-time items affected the utility earnings.
Berkshire's insurance businesses generated an underwriting profit of $219 million and investment income of more than $1 billion in this year's first quarter. A year ago, the insurance unit delivered $181 million underwriting profit and an $802 million investment gain.
Morningstar analyst Bill Bergman said Berkshire is still in a good position compared to many other companies in the market, especially other insurance companies.
"I'm expecting them to gain market share in the next couple years," Bergman said about Berkshire's insurance businesses.
Berkshire's MidAmerican Energy utility unit generated $203 million net income in the quarter, down from $316 million.
Many of Berkshire's other businesses, such as its jewelry stores, Shaw carpet, Acme Brick and Clayton Homes, have been hurt by the recession and corresponding slowdown in consumer spending. Berkshire's manufacturing, service and retail division generated $258 million net income in the quarter, down from $487 a year ago.
Berkshire finished the first quarter with a total of $25.6 billion cash. But Buffett has said the day after the first quarter ended, Berkshire spent $3 billion of its cash to help Dow Chemical acquire rival chemical company Rohm & Haas. Berkshire made that commitment last summer, but the Dow deal didn't close until April 1.
Berkshire owns more than 60 subsidiaries including insurance, clothing, furniture, and candy companies, restaurants, natural gas and corporate jet firms. Berkshire also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
Berkshire Hathaway Inc.: http://www.berkshirehathaway.com
Monday, May 4, 2009
Don't give up on your dreams. She really inspired me!
If the video is lagging, here is the link to Susan Boyle youtube video.
http://www.youtube.com/watch?v=9lp0IWv8QZY
Susan Boyle, she is the greatest. I feel so emotinal after watching her performance. She definitely deserves a standing ovation! (this video on youtube has been watched by more than 50,000,000 people since 11 April 2009!
I really think everyone should have a dream. Yes, we must have a dream if we want our dream to come true! Don't give up on your dream. Without dreams, life would be like zombie.
I would to wish everyone dreams come true! Fight for our dream!
Here are the Lyrics(I dreamed a dream from Les Miserables) -
I dreamed a dream in time gone by
When hope was high,
And life worth living
I dreamed that love would never die
I dreamed that God would be forgiving.
Then I was young and unafraid
When dreams were made and used,
And wasted
There was no ransom to be paid
No song unsung,
No wine untasted.
But the tigers come at night
With their voices soft as thunder
As they tear your hopes apart
As they turn your dreams to shame.
And still I dream he'll come to me
And we will live our lives together
But there are dreams that cannot be
And there are storms
We cannot weather...
I had a dream my life would be
So different from this hell I'm living
So different now from what it seems
Now life has killed
The dream I dreamed.
Saturday, May 2, 2009
why 80% of investors lose money in stock market?
I guess this is how most of the 80% investors/traders react to stock market. They buy high and sell low. Bravo!!!In my humble opinion, one of the way to gain in stock market is to buy stocks when everyone is avoiding it and sell the stocks when everyone is fighting hard for it. It is really a simple strategy.
When people shout at you for buying stocks and you are a lonely investor----BUY signal.
When all uncles and aunties are putting their hard-earned money into stock market and coffee shops are filled with stock-market related chats------SELL signal
The right thing to do is to buy low and sell high. Does it sound easy? I don't know.
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