problems or opportunities? this time i will wait for the technical indicators before entering the market. previously in my post (read my investment mistake here), i mentioned that i made a mistake by not following my own rules and got me burned. this time around, i am wiser.
so even though the stock price looks attractive, i will wait until it reach bottom.
anyway a wise man once said -
an error is a mistake if we stop correcting it.
I did a simple analysis on LPI at what price to buy LPI. Based on my analysis the sticker price is RM8.41 and the price to buy LPI is at RM6.73 with margin of safety of 20%.
The data is extracted from LPI Financial Report 2007
LPI sticker price
Based on the stats, it shows that LPI dividend payout is much more that is why the equity growth is negative. I think the high dividend payout is not sustainable. I havent check the FCF and the debt ratio yet.
Therefore I will only consider buying LPI when the price reach below than RM8.40 even at the current dividend yields it is attractive but it is not sustainable.
Filed under: Stocks Investing | Tags: germany, global financial crisis, Malaysia, peer steinbrueck
i think after the rescue when everything goes back to normal meaning to say the banks are rescued. We will suffer high inflation thanks to the pumping of fiat money into the system.
what is the impact to Malaysia? commodities stocks will benefit the high inflation but rakyat again will suffer. this time for good. if malaysian government doesnt take any serious actions from now.
malaysian government should buy more golds than keeping the foreign reserves.
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Germany’s finance minister said in comments published Sunday that global financial markets could still collapse and that the situation remains dangerous despite government efforts to bailout lending institutions.
“The danger of a collapse is far from over. Any `all clear’ would be wrong,” Finance Minister Peer Steinbrueck told the Bild am Sonntag weekly. “We are still dealing with a very dangerous situation.”
Germany approved a 500 billion euro ($675 billion) rescue package for the country’s financial markets on Oct. 17. So far only one bank, the state-owned BayernLB, has requested assistance. Two other state-owned banks, WestLB and HSH Nordbank, indicated over the weekend they were considering seeking assistance.
http://www.businessweek.com/ap/financialnews/D9426I500.htm
Filed under: Stocks Investing | Tags: bursa malaysia, japan stock market down 26 year low, warren buffet
Japan stocks market down to 26 year low. This is interesting, i wonder what happen to the Bursa when it is opened tomorrow. I think Bursa also will go down further. Get ready for your cash to buy stocks.
buy when people are fear – warren buffet
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Oct. 27 (Bloomberg) — Japan’s stocks fell, sending the Nikkei 225 Stock Average to a 26-year low, as concern deepened that the financial crisis is dragging the global economy into recession.
Mitsubishi UFJ Financial Group Inc. led declines by Japan’s biggest banks after media reports they may raise capital through the sale of new shares to boost their eroded financial positions. Nintendo Co., the world’s biggest maker of handheld game players, fell 3.5 percent, while camera-maker Canon Inc. lost 1.1 percent.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXbXROJcLbvs&refer=home
i still remember when the fuel price was high and everyone said this was due to high demand from India and China. all the so called experts advisers compared the oil future market and iron ore which is sold by negotiation to justify the high demand.
the media went frenzy telling there was no more oil in the middle east. it will be dried soon. i dont believe all those craps because there were something wrong with the demand and they were to much volatility.
in simple words volatility means speculations. some hot money was pump out from the stocks market and the subprime investment to the commodities to hedge someone investments from inflation and from value being destroyed by their own bad decision.
unfortunately our malaysian government believed those rumors and the Pak Lah government hike the oil price from RM1.92 to RM2.70. It showed how incompetent was Pak Lah. He didnt understand about the economy. of course the rakyat suffered and he asked the rakyat to change our lifestyle.
i wonder where are the craps analysts saying the fuel price was due to “real” demand??? of course they will give a lot of scientific and economic reasons to justify their own mistake. there are no honest people when it is about money.ahaha
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NEW YORK (Reuters) – The average retail price for a gallon of gasoline in the United States plunged more steeply than ever over the last two weeks as the economic slowdown weighed on crude oil and drove consumers off of the roads, according to the latest nationwide Lundberg survey.
Prices will likely slide more, but at a slower pace, following the “extraordinary” decline this month, survey editor Trilby Lundberg said on Sunday.
The national average price for a gallon of self-serve, regular unleaded gas was $2.7785 on October 24, a decline of about 53 cents per gallon in the past two weeks, according to the survey of some 7,000 gas stations.
Gasoline is now about a penny cheaper than it was a year ago, and about $1.33 less than it was at a record peak in July.
“The drop is unprecedented,” Lundberg said in an interview. “It was dictated by the crash in crude oil prices and deepened powerfully by falling U.S. gasoline demand.”
Oil settled down nearly $4 a barrel on Friday on broader worries about a global economic recession, despite an agreement by the Organization of the Petroleum Exporting Countries to cut output.
At one point on Friday, U.S. light crude for December delivery dropped to $62.65, its lowest since May 2007 — just before the current credit crunch gripped U.S. markets and threatened to push the country into a recession.
“The even weaker economy now suggests that despite a price crash on the street … it is still probably not enough to inspire any strong comeback in demand any time soon,” Lundberg said.
“It looks as though gasoline prices will continue down but at a moderated pace, unless crude oil prices leap up substantially and stay there.”
The U.S. Midwest had the lowest prices, while the West Coast had the highest average prices, the survey found.
At $2.26 a gallon, Wichita, Kansas, had the lowest average price for self-serve, regular unleaded gas, while the highest price outside of Alaska and Hawaii was $3.37 a gallon in San Francisco.
Lundberg said diesel fuel fell 36 cents to $3.59 a gallon in the last two weeks.
http://www.reuters.com/article/domesticNews/idUSTRE49P36W20081026
Filed under: Stocks Investing | Tags: chrysler cut jobs, ge slash jobs, lpi, public bank, recession
if you reads new headlines lots of companies want to slash jobs. The crisis already is affecting the real economy. We will see economy contraction and global recession is nearby. i want to stress again to just be patient. The stocks will go down further.
I will purchase LPI and Public bank. I know public bank will be affected also by this crisis but don’t know to what extent. But based on their track record during the 1998 crisis, i think public bank can survive.
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Goldman Sachs May Slash 3,200 Jobs
Chrysler to cut 5,000 jobs
GE Will Cut Costs, Jobs, Immelt Says
Filed under: Stocks Investing | Tags: global financial crisis, us bank bankcrupt
already 16 banks bankcrupt. Are we seeing more banks to collapse? or is it the last one? i think this crisis is not over yet. it will take time maybe until middle of 2010.
so get ready our cash in order to buy cheap stocks. but be selective, exporters will be most affected as they won’t get payments from US importers due to credit unavailability.
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WASHINGTON, Oct 24 (Reuters) – U.S. bank regulators on Friday closed tiny Alpha Bank & Trust in Georgia, the 16th U.S. bank to fail this year as the weakening economy and falling home prices take their toll on financial institutions.
Customers of the banks’ two branches can access their insured deposits over the weekend by check, teller machine, or debit card, the U.S. Federal Deposit Insurance Corp said.
Stearns Bank NA agreed to assume the failed bank’s insured deposits, the FDIC said. Alpha Bank, based in Alpharetta, Georgia, will reopen on Monday as branches of Stearns Bank, which is based in St. Cloud, Minnesota.
Alpha Bank had total assets of $354.1 million and total deposits of $346.2 million as of Sept. 30, the regulator said.
The failure is expected to cost the FDIC’s insurance fund about $158.1 million. The insurance fund stood at about $45 billion at the end of June, which is the most updated figure publicly available.
A financial rescue plan passed by Congress earlier this month temporarily raised the limits on deposit insurance to $250,000 per account from $100,000.
The FDIC said the deposit assumption at Alpha Bank was the least costly alternative for its insurance fund, dented by increased bank failures this year, including Washington Mutual, the largest bank failure in U.S. history.
In 2007, three U.S. banks failed. (Reporting by Karey Wutkowski, editing by Richard Chang)
http://www.reuters.com/article/regulatoryNewsFinancialServicesAndRealEstate/idUSN2453475220081024
i like laura rowley advice ..down to earth and got values…
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With doomsday financial scenarios screaming from the headlines and television, there’s no question that kids will pick up on the anxiety in the air. Talking to them about what’s happening in both the economy and the family budget is crucial — because the less we say, the bigger they might imagine the monster in the closet to be. But what’s the best broach to this loaded topic?
Needs vs. Wants
First, be conscious of the way you talk about money, and cut out the “poortalk,” advises David Myers, professor at Michigan’s Hope College and author of “The Pursuit of Happiness.”
“‘I need that’ can become ‘I want that.’ ‘I am underpaid’ can become ‘I spend more than I make,’” Myers writes. “And the most familiar middle-class lament, ‘We can’t afford it,’ can become, truthfully, ‘We choose to spend our money on other things.’ For usually, we could afford it — the snowmobile, the CD player, the Disney World vacation — if we made it our top priority; we just have other priorities on which we choose to spend our limited incomes. The choice is ours. ‘I can’t afford it’ denies our choices, reducing us to self-pitying victims.”
I’ve always tried to frame finances in terms of choices for my kids. For instance, my daughter came home from a play date once and asked when we would be getting an “extreme makeover” on our house, since compared to her friend’s palatial digs we lived in a shack.
The Landscape Has Changed
I told her we were lucky not to have the disabling injuries, serious health problems, and other woes of the families on the “Extreme Makeover” TV show. Secondly, we could have a bigger home, but then Mom and Dad would have to get different jobs, leave early in the morning, and work late into the evening in New York City. (I work mostly from my home office.) And that would mean I couldn’t drive them to school or have a snack with them when they arrive home, and we wouldn’t be able to have dinner together as a family very often. Fortunately, she agreed that the tradeoff — more time with us — makes it worth having the smaller home. (Of course, she’s not a teenager yet.)
This philosophy is ideal for tough economic times. Rather than scare kids — “We can’t buy anything because Dad lost his job and we have no money!” — we can tell them that the economic environment has changed, and that we need to make different choices about our family budget for a while.
When we hide financial realities, and pretend life is seamless and effortless, we do both ourselves and our kids a disservice. “By keeping crises private, you prolong and intensify the pain and fear you’re feeling,” says Stephen Pollan, a New York consultant and author of “Lifelines for Money Misfortunes.” “You have control here; you can ask for raise, get a new job, cut down on spending. Money is actually one of the only serious problems that is totally within your control.”
Switching Focus
Enlist your kids’ help: Ask them to be creative and think of half a dozen low-cost ways to have fun as a family, or ways to earn more, whether it’s selling stuff on eBay, raking lawns, or babysitting. Asking kids to pitch in empowers them, because you’re acknowledging that they’re capable of making a difference.
Also put economic issues in global perspective. Lately, I’ve been doing that by renting foreign films from Netflix for family movie night. Movies like “Children of Heaven” — in which a poor Iranian boy accidentally loses his sister’s shoes, and they have to share his sneakers in a relay fashion — help my kids appreciate the wealth they enjoy. Or check out “God Grew Tired of Us,” a documentary about three Sudanese refugees who make their way to the U.S., and are astounded by luxuries like electricity, running water, and supermarkets (and genuinely puzzled by the relationship between Santa Claus and Christmas).
Perhaps the most important factor (and the one that requires the most discipline) is to be optimistic for kids, and focus on the good amid the tribulations. In “Learned Optimism: How to Change Your Mind and Your Life,” University of Pennsylvania psychologist Martin Seligman explains that optimists view setbacks in their lives as temporary rather than permanent; specific instead of universal; hopeful rather than hopeless; and external instead of internal.
The Optimistic Approach
For instance, imagine two families whose primary breadwinner loses his or her job. Here’s the difference in the way they perceive their situation:
• Optimists: “This rough patch will end and the bills will get paid; we’ll tighten our belts for a little while.” (temporary) Pessimists: “We’re going broke!” (permanent)
• Optimists: “We have the skills, experience, and contacts to find another job; meanwhile, we’re healthy, the kids are working hard in school, and our extended family is supportive.” (specific) Pessimists: “This is wrecking our lives.” (universal)
• Optimists: “Companies are cutting jobs across the board.” (external) Pessimists: “They thought I wasn’t good enough to keep.” (internal)
Ideally, an optimistic approach will teach kids that while we can’t control everything that happens to us, we can control our attitude about what happens to us. As Viktor Frankl wrote in “Man’s Search for Meaning“: “Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”
When kids see their parents struggle honestly with challenges, overcome them or learn to accept them and live with them (rather than go into denial or flee from them), they will be better prepared to cope with their own inevitable challenges. Life pitches us plenty of curveballs. Kids who see their family come together, swing for the fence, and keep swinging even when they strike out will grow up more willing to take risks, make mistakes, learn, and grow. That strikes me as a pretty good way to pursue happiness.
Filed under: Stocks Investing | Tags: dr mahathir, global financial crisis, tun mahathir
2. I hope we are right in forecasting the effect on us of the collapse of the world’s financial system. But I have a sneaking feeling that all is not well.
3. We are a trading nation which trades with all countries of the world. The United States and Europe are among the biggest of our trading partners. Roughly 40 per cent of our total trade is with them. I may be wrong but I believe that if our buyers cannot pay for what they import from us, we would not make the profit we had expected. In fact we would lose a lot of money as we will not recover the cost of the goods we sell even.
4. Now the common practise is for importers to open Letters of Credit (LCs) with banks to ensure that when they receive the goods the corresponding banks will release the money. However, if the importers’ banks go bankrupt they would not be able to transmit the payment.
5. They may be bailed out by the US Government. But they may not consider paying Malaysian exporters as a priority. In which case we will not be paid. Worse still we can no longer entertain orders coming from this market. Our trade must shrink.
6. We are not talking about one company. We are talking about hundreds of companies trading with America and Europe and other countries not getting paid for their exports. We are talking about tens of millions, even hundreds of millions of Ringgit worth of goods not being paid for.
7. These companies all borrow from banks to finance their operations. They hope to pay the banks from the proceeds of their export. When they cannot pay the banks, the banks in turn would have a lot of non-performing loans.
8. The banks would be wary of lending money to not only the exporting companies but to others as well. There will be a credit squeeze which would hurt other businesses. There will be margin calls. When the borrowers cannot meet this there may be foreclosures.
9. We see a lot of construction in Kuala Lumpur, all dependent on borrowed money. If these buildings are not sold or rented, payment by the developer to the banks would not be forthcoming. Again there will be a lot of non-performing loans.
10. When the Government withdrew the subsidy for oil the pump price increased by 40 per cent. The immediate result was to increase the prices of a wide range of food, goods and services commonly needed by the people. In other words the purchasing power of the people had been reduced.
11. Since then the price of oil had been reduced three times. But the prices of food, goods and services have stayed up.
12. Some cranks estimated that every citizen had lost purchasing power by RM300 a year. Since we have a population of 27million, the country’s loss of purchasing power amounts to RM8.1 billion. That is a lot money which is lost by food suppliers, cooked and uncooked, goods and service providers at various levels. A lot of small businesses would just fold up.
13. The Government has given back some money but not enough to reduce the losses sustained by the economy.
14. Now the corridors cannot be fully implemented. But this is fine because nothing had been implemented anyway. Unfortunately the anticipated earnings by contractors, sub-contractors, suppliers, workers, teh tarik and nasi lemak sellers would not materialise.
15. Maybe we will not need several hundred billions to bail out our banks. But the banks will also face the problem of unpaid loans incurred by their credit card users. They have been rather lax in providing credit card facilities to their customers, many of whom have no accounts with them. It is believed that unpaid credit card loans is in excess of RM20 billion.
16. Will the Government guarantee depositors will not lose their deposits when the banks which had in the past made huge profits now go bankrupt because of their mismanagement?
17. This is what the peoples of America and Europe are asking. Their money is used to bail out the banks whose profits had enriched their Chief Executive Officers and their share holders so much in the past. The people did not get a share of the profit, but they must pay for the losses.
18. We are told that six billion Ringgit in Foreign Direct Investment would flow into the country. But what about the RM30 billion outflow as foreign investors pulled out of the stock market?
19. I pray that I am wrong. I pray that the Government is right in declaring that the whole world may collapse but we would be the only country which won’t. We will sail calmly through the seas of shattered economies.
20. What is happening in the world today is the total collapse of the international financial system. This has been brought about by greedy people abusing the system. Instead of doing business in goods and services they now do business in money, in fictitious money.
21. We had experienced the effects of the trade in our currency in 1997-98. For no very good reason, our Ringgit was devalued so that its purchasing power was halved. And we became poor.
22. Fortunately for us we succeeded in stopping the trade in Ringgit and restoring its value. But the system is still in place. And now it is the US Dollar which is devalued.
23. But trading in currencies is only one of the abuses. The banks are lending more money than they have. They actually go to the people to persuade them to borrow.
24. Their clients can borrow 100 per cent of the money to buy a house for example.
25. They need not worry about paying or servicing the loan. The price of the house would appreciate. You may even have a second mortgage. You may even sell at a profit.
26. In the meantime the bank would register the loan and add the projected earnings from interest maybe over 20 years. That done the bank can put all the loans together and sell it to the hedge funds at a discount after adding potential interest.
27. The more risky the loan the higher would be the interest and the higher would be the profit. The hedge funds which buy the loans can basically sell the mortgages to investors in the fund or to the huge Government financed Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac.
28. Now the hedge funds and the banks would feel safe and enjoy the huge profits that they have made.
29. But when hundreds of thousands of house buyers find themselves unable to pay simply because they have no money, and could not sell the houses and could not borrow from banks, Freddie Mac and Fannie Mae would not be able to pay the hedge funds. Then the hedge funds would collapse and drag down the banks with them.
30. This simply is what happened. The same applies to credit cards. People with little or no money would be given credit cards. They would spend more than they can afford and the banks would be faced with huge amounts of non-performing loans. The banks cannot pay the bills submitted by the sellers of goods or suppliers of services. The banks would collapse and there would be a run on the banks and on other banks which had lent the money to the affected banks. And so we see one after another of the giant banks of America and Europe going bankrupt.
31. The Government may try to bail them out. But the confidence does not last long. Soon the bailout would be seen to fail.
32. Actually I am giving a very simplified version of what is happening. All these shuffling of papers and figures cannot but encourage cheating. The bigger the amount of money involved the bigger would be the returns. The tendency is therefore to play with very large sums of money.
33. But where does the money come from? From nowhere. The Government and the banks, including the Federal Reserve Bank conjured up the money from nothing. If you ask yourself where do the US700 billion Dollars come from when you know the United States’ Government has to borrow US1.5 billion every day, you will find no answer. Is the US Government holding US700 billion Dollars in its treasury just in case it has to bail out the banks? Not likely when it cannot even make ends meet, when it has twin deficits.
34. So money can be conjured up out of thin air. And this must be the money the banks lent, the money the hedge funds and currency traders play with, the payments for expensive wars etc.
35. Basically the international financial system and the market economy has failed. Unless and until a new system is introduced and Governments regulate with the running and operation of national and international finance and the so-called free market we are going to see the financial turmoil and collapse repeated over and over again.
SAN FRANCISCO — For months, Google has promised investors that the company’s online advertising system would do relatively well in an economic downturn. On Thursday, it showed evidence that it may be able to deliver on that promise.
Google said that its growth rate continued to slow in the third quarter. But the company fared better than Wall Street expected as it reported a solid 26 percent jump in net income to $1.35 billion, or $4.24 a share, from $1.07 billion in the third quarter of 2007. The company’s results were bolstered by strong gains in online advertising and efforts by Google to slow hiring and rein in costs.
Google’s shares, which rose to $353.02, or 4 percent, in regular trading on Thursday, jumped another 10 percent after the company reported its financial results. However, they remain down sharply from their high of just over $740 last November.
Google’s chief executive, Eric E. Schmidt, said the results reflected marketers’ acceptance of a system that is better and more measurable than other forms of advertising. He said that while the economic environment was unpredictable, Google was poised to continue doing relatively well.
“We are very realistic about the macroeconomic climate, but we are optimistic about Google’s future,” Mr. Schmidt said during a conference call with analysts.
While Google is the largest seller of online ads, its relatively strong results are not indicative of the overall health of the Internet advertising business. Google relies primarily on search ads, the fastest-growing segment of the market. Since marketers use such ads to lure people to their Web sites, analysts say they believe they are among the last thing advertisers would cut during a recession.
“This is the first quarter when the wheels are coming off the wagon on the economy and they’ve been able to have a decent quarter,” said Youssef H. Squali, an analyst with Jefferies & Company. “Google’s business model has proven to be better than that of your typical Internet company because of its focus on performance.”
Google said revenue for the third quarter, which ended Sept. 30, grew 31 percent, to $5.54 billion, up from $4.23 billion a year earlier. The growth rate is a further indication that Google’s business is maturing. The company’s revenue grew 56 percent in 2007 and 73 percent in 2006.
Google’s net revenue, which excludes commissions paid to advertising partners, rose to $4.04 billion, roughly in line with the $4.05 billion that analysts expected. The company beat Wall Street’s profit expectations. Excluding the cost of stock options and other items, Google’s income was $4.92 a share, higher than the $4.79 a share forecast by analysts.
The company also said that the number of times users clicked on its ads grew 18 percent from a year earlier, roughly the same rate as in the previous quarter.
In the conference call, Hal Varian, Google’s chief economist, said advertisers appeared to be willing to keep buying search ads because they were effective.
“Our experience is that advertisers are willing to take all the clicks they can get,” said Mr. Varian. “Even in tough times that continues to be true. No one wants to turn away a customer.”
Ahead of Google’s report, several companies that sell services and tools to search marketers said that they had seen little evidence of a slowdown. “We are not seeing any weakness in our business,” said Christopher Lien, the chief executive of Marin Software, whose technology helps marketers manage search advertising campaigns. For example, Mr. Lien said, a large apparel retailer had recently promised to double the amount of money it would spend on search ads.
Still, many analysts cut their revenue and profit expectations for Google in recent weeks, amid signs that the slowing economy would affect advertising budgets both online and offline. And some analysts say they believe that Google’s strong results in the third quarter are not necessarily indicative of future performance.
“Everything is getting worse in real time,” said Ross Sandler, an analyst with RBC Capital Markets. Because Google provides no financial forecasts, its results are “like looking in the rearview mirror,” he said.
But investors appeared heartened by Google’s focus on the bottom line. The company added approximately 500 employees in the quarter and reined in expenses across the board. In the year-ago quarter, it added 2,100 employees. “They are operating well in a tough environment,” said Douglas Anmuth, an analyst with Barclays Capital. “The key to the quarter is that they showed a real focus on cost controls and that’s what Wall Street needed to see.”
On Thursday, Google said that David Rosenblatt, the former chief executive of DoubleClick, was named president of global display advertising, a new position. Google bought DoubleClick last year for $3.1 billion in an effort to quickly expand its fledgling display advertising business. The appointment suggests that Google is getting ready to accelerate its push into that market.
In an interview, Mr. Schmidt said that he expected the display advertising business on YouTube and on partner sites to become the first sizable new business for Google beyond its traditional text ads.
“It looks to us that the sum of YouTube plus display is going to get there in terms of scale,” Mr. Schmidt said.
