We Didn't Start The Fire

When Billy Joel came up with the song, it was effective, protest-like, summarising the social and political angsts of Americans brilliantly. Well, this version is best appreciated by Malaysians only, pretty smart, pretty funny too ... How apt "we didn't start the fire" ... hell no we didn't, but we have fires burning everywhere politically and socially. Well done guys.

band: thehavenots

Then and Now

I especially like the parents-teacher cartoon ...

Plantations Very Ripe For A Robust Run, Watch IJM Plantations

If you were to read the latest sector reports on CPO, you'd get probably 70% neutral/under weight calls on the sector. The sharper investors would have noted that the outlook of the sector is better than most would think. Selective smaller players have been improving their yields and margins. Genuine corporate exercise to create value and add liquidity have boosted some of the related counters.



The Rimbunan Sawit story has not ended, although the cream of the best returns may be buying just before the recent corporate exercise. Still one cannot and should not deny the compelling valuations still. The most undervalued stock on KLSE is probably Jaya Tiasa, and possibly the most illiquid as well. Its transformation into a CPO centric cum timber play has not registered in most investors' radar. But the illiquidity is barring investors from having a reasonable exposure.


SOP is another recent giant killer. The profits have been superb. The recent 9 months profits almost doubled from the previous 9 months. Again the cream of the return would have been buying around RM4.50 a few weeks back, still there should be another ringgit in it.


Its Not All About The CPO Price
Many are maintaining CPO forecast at RM2,850-3,000/t for 2012E based on a weak global outlook. On a sustained global recovery, CPO price could overshoot with upside of up to RM3,200-3,400/t.


CPO is also correlated to the other soft commodities such as soyabean, even corn and wheat. That has been missing from a lot of analysis. We can expect soy oil and CPO prices to be well supported due to supply constraints issues from related crops due to lower production from US and China as well as potentially lower soybean planting in the Mar-31 US planting intention as corn wins more acreage. 



Moderation in CPO supply growth from 9% in 2011E to 4% in 2012E due to reversal in the biological yield upcycle, further exacerbated by La Nina conditions. Analysts have been too timid and cautious in their estimates of effectes of La Nina, and overplaying the impact from E.U. crisis.


Downside risk includes the removal/scale back/delay of bio-fuel mandates/subsidies; Non renewal of US subsidies for ethanol and bio-diesel which expires in Dec-11, will cap upside /soften edible oil prices; 


Valuation Implied Currently
The implied CPO price at current levels for most listed CPO counters is RM2,600-2,700/t. Hence all things being equal, the entire sector is overdue for an upgrade of at least 10%. The solid results from mid-smaller players have encouraged more foreign funds, we can expect confidence to return more convincingly.  Foreign shareholding level has been slowly rising, from 15.3% in Dec-10 to 17% in Dec-11.   

I see a weaker growth in SEA palm oil production and normal demand expansion which will set the stage of a bull market in 1H2012. I would not be shocked if  Malaysian palm oil will hit RM3,600-3,800 by June 2012 on strong demand chasing tight supply. CPO prices is going to RM3300 in January/Feb on output made worse by top producers Indonesia and Malaysia entering a flat phase in the oil palm biological cycle tht lasts between 6-9 months.
 

Analysts Revising As We Speak
I know of a couple of houses about to revise their sector outlook positively even as I write this. This should be an excellent time to load up on plantations. Several positive factors are emerging that might encourage investors to turn bullish on palm oil stocks. The first factor is the weather, specifically, flooding brought about by high rainfall because of the La Nina effect, which might cause production to drop. Just as an indicator, the most recent La Nina in January and February this year, caused production to drop by up to 40%. Typically, a hectare can yield between 1.8 and 2 tonnes of so-called “fresh fruit bunch” (freshly harvested palm oil fruits, before processing). During the last La Nina, this measurement fell to between 1.15 and 2 tonnes per hectare.

Still on the positive side, if OilWorld, an industry research bureau, is correct, global demand for crude palm oil is expected to grow over the next 12 months by 6.8% on year. By contrast, global production is only expected to increase at a slower pace of 4.9%. According to forecasts by OilWorld, the biggest demand growth will come from Indonesia, with an expected demand of 6.82 million tonnes for 2011-2012, up 12.4% compared to the likely 6.07 million tonnes for 2011. Malaysia’s consumption is also expected to grow strongly: up 15.9% between 2011 and 2012, reaching 2.28 million tonnes.

The current La Niña weather pattern has been causing very hot and dry weather in South America which has lead to a late rally in the grain markets after decreased global demand had been driving commodity prices lower.


Soft Commodities Prices

Corn prices increased by 7.7% in December and closed at $6.47 per bushel. Soybean prices increased 5.9% this month to $11.98 per bushel on the Chicago Board of Trade. The USDA estimated that domestic soybean exports decreased by 25 million bushels to 1.3 billion bushels due to a slow pace of shipments, outstanding sales through November, and strong export competition from South America. Soybean prices had decreased 1.9% to $11.10 after the USDA WASDE report release, but the outlook of the South American crop is deteriorating quickly as reports of the La Niña are causing extreme dry heat for the top yielding corn and soybean land of Argentina, Brazil, and the rest of Latin America.

Wheat prices were sent 9.7% higher during December to $6.53 per bushel due to increased speculative buying and the correlation to soybean and corn prices. 


If you note the charts of the 3 soft commodities, it is all perking up with strong volume growth over the last few weeks. Birds of the same feather, people.

SOYA BEAN FUTURES

http://futures.tradingcharts.com/chart/SB/?anticache=1325677345

CORN FUTURES

http://futures.tradingcharts.com/chart/CN/

WHEAT FUTURES

http://futures.tradingcharts.com/chart/ZW/ 

Why IJM Plantations

One, its in the right sector. Two, its volume build up looks great. Three, its Indonesian plantations should bring about significantly higher returns over the next 12-24 months. Four, and most probably, IJM Corp/EPF have been "rumoured" to be keen to take IJM Plantations private, especially in light of the Indonesian factor. The exercise will be highly EPS accretive and value driven from all angles. A G.O. if it happens should be in the range of RM3.60 at least.

Even if the corporate exercise does not happen, the over-riding positives should lift the stock a lot higher from here anyway. Plus, did you know that there is only ONE company issued plantation warrant on the whole of the Malaysian market, yup, IJM Plantation-W.

1	IJM Corporation Berhad	441,832,715	55.11%
2	Citigroup Nominees (Tempatan) Sdn Bhd	101,257,219	12.63%
3	Desa Plus Sdn Bhd	37,000,000	4.62%
4	HSBC Nominees (Asing) Sdn Bhd	23,109,268	2.88%
5	Amanahraya Trustees Berhad	20,334,100	2.54%
6	SG Plantations (Sabah) Sdn Bhd	19,953,947	2.49%
7	Sakilan Desa Sdn Bhd	17,040,000	2.13%
8	Malaysia Nominees (Tempatan) Sendirian Berhad	13,902,943	1.73%
9	Citigroup Nominees (Asing) Sdn Bhd	7,719,971	0.96%
10	Amsec Nominees (Tempatan) Sdn Bhd	6,576,502	0.82%

2011/2012 Quarterly Financial Highlights:-

Click on the respective quarters to view the Financial Result Announcements (PDF format)		2011				2012
		1st Qtr (75 KB)	2nd Qtr (77 KB)	3rd Qtr (81 KB)	4th Qtr(162 KB)	1st Qtr 67 KB)	2nd Qtr (66 KB)
OPERATING REVENUE	RM'000	113,255	133,633	160,426	98,970	128,351	180,933
PROFIT BEFORE TAX	RM'000	38,768	64,692	59,830	32,726	66,387	62,880
PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY	RM'000	29,895	47,336	44,045	25,915	49,474	46,883
ISSUED SHARE CAPITAL	RM'000	400,672	400,672	400,673	400,673	400,856	400,857
SHAREHOLDERS FUNDS	RM'000	1,193,768	1,234,914	1,270,240	1,306,017	1,291,837	1,352,330
TOTAL ASSETS	RM'000	1,413,213	1,432,302	1,495,842	1,504,282	1,568,042	1,567,551
EARNINGS PER SHARE (Basic)	Sen	3.73	5.91	5.50	3.23	6.17	5.85

Today, IJM Plantation rose 11 sen with 3.622 million shares traded, a highly significant jump if you are a value momentum trader.

03/01/2012	2.82	2.81 - 2.85	2.85	+0.03 (1.06%)	578,300
30/12/2011	2.81	2.81 - 2.83	2.82	+0.01 (0.36%)	1,243,300
29/12/2011	2.81	2.78 - 2.82	2.81	0.00 (0.00%)	250,700
28/12/2011	2.80	2.78 - 2.81	2.81	+0.01 (0.36%)	11,100
27/12/2011	2.82	2.80 - 2.80	2.80	-0.02 (0.71%)	3,500
23/12/2011	2.79	2.78 - 2.85	2.82	+0.03 (1.08%)	694,800
22/12/2011	2.78	2.77 - 2.80	2.79	+0.01 (0.36%)	63,500
21/12/2011	2.76	2.76 - 2.78	2.78	+0.02 (0.72%)	26,400
20/12/2011	2.80	2.76 - 2.80	2.76	-0.04 (1.43%)	505,800

IJMP currently has a total landbank of 78,116ha and a total planted landbank of 38,805ha with an average age of 9.4 years as at 31 Mar 2011.


NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Can You Become A Super Investor

Can you become a super investor?

by Koon Yew Yin

Many investment psychologists do not think an adult can master all the following 7 traits if he does not have them in his genes or learned them when he was young and become a super investor, like Warren Buffet.   

       

I started serious investing in public listed shares when I retired from executive work with IJM Corporation Bhd in 1983 at the age of 50 years. I was not an accountant nor have I a MBA degree. I was just a civil engineer and I hardly knew how to read a balance sheet at that time.

I started by reading to understand the basic fundamental principles of share selection as practiced by Warren Buffet, Peter Lynch and other great investment gurus.

Trait 1: Be a contrarian investor, the ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China declared that they wanted to take back Hong Kong, the people were selling as if there was no tomorrow because the Communists were coming. The Hang Seng Index plunged to about 700. Currently it is around 18,500.

In such a situation at that time, would you buy Hong Kong Shares?

I use all the money I had and I bought H.K. Realty and Trusts at $ 3.60. Its price was $13.60 before the crash. When the former British Prime Minister Margret Thatcher went to Beijing to negotiate the sovereignty of Hong Kong, Beijing rejected the appeal and the stock market plunged further. I bought more H.K. Realty at $ 3.00 with margin finance. Most investors would not buy and they would say that I was mad to try to catch a falling knife.  This was the most agonising period when HSBC was selling below $ 7.00.   

After several months of negotiation, Beijing granted another 50 years extension of capitalist system. The market rebounded immediately and H.K. Realty & Trust went rapidly back to $13.60. As the value of my holding went up, I bought more and more shares with increasing margin. In 1986, I even bought 47% of a stock broking company, called Kaiser Stocks and Shares Ltd. How I took advantage of the rising trend is history.

Trait 2:  Obsession in playing the game and wanting to win. These people don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching. They are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk. They are obsessed in enhancing the value of their holdings and they have very few friends.

Trait 3: The willingness to learn from past mistakes. Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.” But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career.

Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are often ‘a buy’ recommendation. It is very seldom they recommend ‘a sell’ because they would lose the business from the company he has recommended ‘a sell’. You must always take any analyst report with a pinch of salt. I believe the greatest risk control is common sense which is not so common sometimes.

Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never got into the dot-com mania though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble bust.

Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads.

Trait 7: And finally the most important, and rarest, trait of all: The ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do. When the market makes a severe correction, most people dare not buy more shares to average down or to put any money into stocks at all when the market is plunging. People do not like short term pain even if it would result in better long-term results. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just cannot see it that way; their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.

Many investment psychologists do not think an adult can master all the above 7 traits if he does not already have them in his genes or learned them when he was young. 

By that time, your potential to be an outstanding investor later in life has already been determined. It can be improved, but not developed from scratch because it mostly has to do with the way your brain is wired and experiences you have as a child. That does not mean financial education and  investing experience are not important. Those are critical just to get into the game and keep playing. If you cannot become a super investor, you would still earn more than the average earning of most people.

3rd Jan 2012  

Investing Is A Bitch

What is investing? Door us to win others have to lose and vice versa. Is it the same amount of funds circulating and the game is just people making decisions to shift money either to sell or buy? If it is indeed a zero sum game, then we must make bloody sure we end up more on the winning side. So, who is left on the losing side?



Losing side would be the newbies, the amateurs, the aunties and uncles ... and actually a lot of institutional funds. Look at the performance of funds in general, its not that they can actually outperform the averages. A detailed study revealed that more than 80% of fund managers under perform the very indices that they were benchmarked to. 


Let's assume the sum of money in the system stays constant. Companies technically are there to make money from their businesses. Not all manage to of course. Where do they make their monies? From the larger economy that is not listed primarily. Hence all things being equal, the sum of money in the system is not constant, you can put in a lot of funds into the listed markets, or just as well take out a lot of funds from it by being cashed up.



Safe to say now that the amount of funds is not stagnant. Money circulates, reserve banks print money, some back by reserves but the big boys just print, really just print. All things being equal, if you keep pumping liquidity into the system, eventually the market capitalisation just have nowhere to go but up. But is that quality money, is that quality earnings.


You should know where this is going to, that currencies of most kinds have been debased no end over the last 10-15 years by reserve banks who print with abandon. Where is the real value of currencies? Technically speaking the USD is almost worthless but it cannot be allowed to fail. The Euro is getting there as well. The Yen is in a silly situation, as government debt is just astounding and artificially kept alive by the silly amount of domestic savings still seeing JGBs as their only source of investing.


If the top 3 major currencies are a sham, and they are, how is the whole thing going to play out? To answer it would be a savvy economist with greater knowledge than me. All I know is its a stupid platform but the whole platform cannot afford to breakdown as the whole global financial system would crumble overnight.


How to ensure we will end up on the winning side of the investing game (listed companies)? Be wary of your currency exposure. When financial crisis happens, a lot of funds get sucked out of the system and stay sidelined. Those big powers can then print their way out of their misery as the smaller guys cannot say "hey, too much bro". But when financial crisis happens to smaller nations, (Asian crisis), we are expected to borrow real funds from IMF and cut our budgets significantly and suck it up. Thats the wonderful world we live in.



How to be ahead of the game? One, be an issuer of paper/stocks. That means growing a business and listing it. Two, stay close to the top of the pyramid. The pyramid relates to how the stock market works. People at the top are always a few steps ahead of the rest, you could the CEOs, directors, CFOs, syndicates, investors who really do their research properly and can anticipate trends and revaluations. The bottom layer as the pyramid widens, relates to those who buys and sells based on hearsay, third hand research information, gossips, people who jump in blind without any understanding of trading skills or deep technical knowledge etc...


Because at the end of the day there is financial promotion, listing, financial engineering, and then distribution. Thats basically the whole cycle. Earnings growth, PER, NTA are there for academics to talk about stuff,or try to explain stuff. Your justification for buying a stock could be very valid based on deep fundamentals, but you still may not make sufficiently for the risk undertaken. If it was so easy, there would be a lot more millionaires.


There are investors wearing so many different hats, they all find roles which they take on as thats what they know best. There are those Ben Graham/Buffett loyalists who will buy and keep for 10 years. There are the day traders looking for the 2 or 3 bids. There are the momentum traders. There are the technical junkies looking for buy and sell signals. There are the insiders who might be selling or buying for various reasons. There are the program traders. etc. etc.



No matter what hat you might be wearing, make sure you are in the top tier. If not, you might as well get out and do something else. Investing is not for everyone. You want to be a surgeon, you have to be qualified, you want to drive a motorcycle, you need that license, you want advise people on investment, you also need to have licenses ... but you want to buy and sell shares, you do not need any qualification. You have money, thats your chips. Why is something so potentially dangerous, not needing the participants to be "qualified"?


Here's wishing all a profitable year in 2012, failing that, hope that we do not lose our pants at least.

How The Light Gets In

Sydneysider Kristian Anderson, 35, has been having chemotherapy since he was diagnosed with cancer in October 2009. He made the video for his wife of seven years, Rachel, as a birthday present and a thank-you for her support. The video features cameos by New Zealand Prime Minister John Key -- since Rachel is a Kiwi -- and Hugh Jackman, who appeared in the video after Kristian asked Triple M's The Grill presenter Gus Worland for help.


Music: 'Marry Me' by Train

Sydney man Kristian Anderson, made famous by a YouTube tribute to his wife after he was diagnosed with terminal bowel cancer, has died. (2 January 2012).

His wife Rachel confirmed Mr Anderson died at Manly Hospital just after 8am today.

"My darling husband went to meet Jesus this morning. It was peaceful and beautiful. Funeral details to come soon," she tweeted on his account.

Advertisement: Story continues below

The 36-year-old from Curl Curl had been having chemotherapy since he was diagnosed with cancer in October 2009. His touching YouTube clip was made as a birthday present for his wife and as a thank you for her support. It featured an introduction by New Zealand Prime Minster John Key, because Rachel is a Kiwi.

In his last interview, Mr Anderson told The Daily Telegraph of his love for his wife and their sons Cody, 5, and Jakob, 3.

"I'm not afraid of dying but I am afraid of leaving them behind," he said in early December.

In his last entry on his blog How the light gets in, posted by his wife after his death, Mr Anderson reflected on his battle with cancer.

"The truth being we're all broken, we're all cracked and what so many people see as a fault or a malfunction really is something to be considered useful," he wrote.

"I'm not sure how much longer I have left but it appears that the physical and medical signs are all pointing to my end.

"Thank you for journeying with me this far. I pray you find the same peace I have."

Bowel Cancer Australia spokesman associate professor Graham Newstead said Mr Anderson's battle with bowel cancer touched tens of thousands of people.

"Like many people who in some way shared this young man's journey, those involved with Bowel Cancer Australia are saddened by the death of Kristian Anderson," Professor Newstead said in a statement.

"We are, however, also very grateful to him for his brave and valuable work in raising awareness about bowel cancer."

The disease kills about 4000 Australians each year.

Read more: http://www.smh.com.au/technology/technology-news/youtube-cancer-star-kristian-anderson-dies-20120102-1pi1e.html#ixzz1iH9JJnkR

Read more: http://www.smh.com.au/technology/technology-news/youtube-cancer-star-kristian-anderson-dies-20120102-1pi1e.html#ixzz1iH91olXy

Tribute To The Amazingly Beautiful & Talented Zooey

Some of you might be wondering what's with the gwailows as the banner. Just as I expected, Zooey Deschanel's first TV series is absolutely marvellous. Funny, witty, off center and probably very close to her real character. No need for me to reiterate what I have written before, below was my gushing tribute about a year ago: (oh, her new series is The New Girl, easily the funniest stuff on TV for a long time since Will & Grace and Friends).


~~~~~~~~~~~~~~~~~~~~~~


You know I never featured Western stars in my blog. Cannot help it but I think Zooey Deschanel is the best thing to come out of music and movies for a very long time. Her looks is so captivating, very 40s, not exactly very beautiful but very intoxicating to look at. If you see her act or sing, her demeanour totally overwhelms you, she is irresistable.

Well, let's hope she stays that way, old soul and pure ... I sure hope she won't get jaded, disillusioned, cynical or get her spirit sucked dry by the peripheral Hollywood types.

She has been in movies from a very young age. Back in 2000 she was in Almost Famous, 2002 in The Good Girl, 2005 The Hitchhiker's Guide To The Galaxy ... but you have to see her in Yes Man with Jim Carrey and her very dominating performance in (500) Days of Summer to appreciate her enormous talent.



In addition, she is a very good singer and songwriter as well. Her album She and Him, sensational and she wrote all her songs.

and even when she does an old song, her old soul shines through ...