Why we should buy shares in November

History tells us stocks now are entering what normally is their strongest period for gains. But some investors worry that this year, current events could outweigh history.

Over the past 100 years, the best three-month stretch for stocks has been November through January. On average, the Dow Jones Industrial Average records strong gains in all three months, jumping 1.5% in December alone, according to Bespoke Investment Group.

The S&P 500 shows a similar trend since 1928, the period for which data on that index are available. It has risen an average 3.4% over the three months, nearly double its 1.86% average gain for three-month periods in general.

Many money managers hope to see that now, even though stocks aren’t cheap.

“The fact that stocks in the U.S. are a bit stretched, which they are, doesn’t prevent them from moving ahead in the next three to six months,” said Russ Koesterich, chief investment strategist at BlackRock Inc., which manages $4.32 trillion.

Stocks have risen despite high prices all year. They rebounded from sharp pullbacks in January, April, July, September and October. The Dow is up 4.9% for 2014 and the S&P 500 has risen 9.2%, with both at record highs.

Investors offer several reasons for the November-to-January strength. Year-end is when many companies record their biggest sales, as consumers spend on the holidays and businesses invest in equipment for the new year. And January is when some retirement funds put fresh money into accounts.

But the higher stocks go, the more skittish investors become. The S&P 500 has almost tripled since its 2009 low and trades at 18.7 times component companies’ net profits for the past 12 months. That is well above its long-term average price/earnings ratio of 15.5, Birinyi Associates calculates.

With investors sitting on big gains, they are quick to take profits when they face anxiety about slow global growth, tensions with Russia or expectations the Federal Reserve will raise interest rates next year. So far, they have overcome their worries, most recently because of positive earnings reports, better U.S. and European economic numbers and a huge new Japanese stimulus program.

The risk is that investors could sell again if they get more bad news about earnings, the economy or global tensions.

“There are so many things that could shock markets that I think are very fully valued,” said Michael Farr, president of Farr, Miller & Washington, which oversees $1.1 billion in Washington. “I would caution investors to make sure they have a seat when the music stops.”

Mr. Farr has focused on conservative stocks that tend not to fall as heavily in downdrafts, avoiding stocks such as Facebook Inc. and Twitter Inc., he said.

There are reasons for worry: The pullbacks’ frequency has increased, and the October one was particularly sharp. And other types of investments are signaling that the world economy remains troubled.

Investors are holding large sums in the relative safety of U.S. Treasury bonds, which has kept bond prices high and yields low. The appetite for Treasurys reflects doubts about the global economic and political outlook.

With the Fed ending its long-running bond-buying program and preparing to raise target interest rates, many bond experts thought Treasury yields had to rise. But after starting the year at 3%, the yield of the benchmark 10-year Treasury note finished Friday at 2.335%.

Oil shows a similar pattern. Crude-oil futures finished Friday at $80.54 a barrel, down 18.2% for 2014 and off 11.6% in October alone. Soft oil demand is widely seen as a sign that China’s economy is slowing, crimping its need for raw materials. Industrial metals have behaved similarly.

Corporate earnings also could be better. With two-thirds of big companies reporting, their profits are up 7.3% for the third quarter. That is above the 4.5% analysts projected at September’s end, but below the 8.9% they expected in June, said John Butters, senior earnings analyst at FactSet. The results look good mainly because analysts cut their forecasts, notably in the weak energy and financial sectors.

“Overall, the numbers have come down and the companies have turned around and beat those estimates,” Mr. Butters said.

Analysts now are cutting estimates for future sales and earnings, at a time when investors believe companies need to boost sales to keep record profit margins up. Analysts now forecast 2.6% fourth-quarter sales gains, down from 3.8% forecast at the end of September.

And yet, money managers see reasons for optimism.

In addition to stocks’ normally strong performance from November through January, stocks also do well following off-year congressional elections and at the end of lame-duck presidential terms. That is true even when stocks have risen a lot in the previous year or two. Stocks also often advance when Washington is gridlocked, said Bespoke Investment Group’s co-founder, Paul Hickey.

And slow earnings and economic gains aren’t necessarily bad, especially if they hold down interest rates, inflation and wage gains. Capital costs and wages are two of the biggest expenses companies face, and keeping them low boosts profits.

“This slow, grinding growth, with very low interest rates and not much in the way of wage gains” is why profits are so high, said Mr. Koesterich of BlackRock. “Margins are a lot higher than people thought they would be, and they are staying there.”

“We could lose some steam as the Fed starts to raise rates” next year, he added, especially since Congress isn’t likely to spend on economic stimulus. But even then, he said, rates should remain so low that they shouldn’t derail the market.


By  E.S. BROWNING
The Wall Street Journal

Durex Special Condom for Pre Mature Ejaculation

Every time we meet with this remisier friend, he always talks about three things: i)asking us to buy very big TV, ii)Viagra; and iii)said those with pre mature ejaculation can try using Durex special condom.

I’ll explain to you what he said and then I will relate it to stock market.

i)Buy very Big TV

He suggested us to buy very big TV, because most of our entertainment at home is on TV. Every day we watch Astro, news, DVD, all on TV. Besides sleeping, the whole family spend a lot of time on TV, regardless of age, small kid watch cartoon, grandparents also watch TV, men normally like watching sports, etc. Due to the above reasons, he said TV is a very good investment, use it every day and can last for few years.

ii)Viagra

He told us Viagra good. Not just good for those with erection problem, but also for those who cannot sustain erection during love making. Actually Viagra is a popular brand and most people know about it.

iii)Durex special condom for pre mature ejaculation
He told us for those with pre mature ejaculation, can try Durex special condom, called Performax, Performa, Pleasure Max, Performax Intense. Don’t know why he said got different name. Inside the condom there is something to numb the penis head and delay ejaculation. He said very effective, delay ejaculation without feeling the numb and without losing the sensation feel. What is inside the condom is similar to what the dental use inside the mouth to numb our gum during dental treatment. So if it is safe inside our month, then is safe on men’s penis. He said it is not available in Malaysia, but can be bought in Singapore or can buy via online.
 

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I relate what he said to stock market.

 

i)Buy Big TV

This is similar to invest big in stock market, because just like the TV, it is a good investment and we should look at long term, buy and invest big and keep for few years.

ii)Viagra

When we buy stock, many times the stock does not move up, this is because the stock lack of Viagra, or in stock market we called it catalyst. Catalyst is something (can be news, buying interest, project, speculation, rumour, etc) that push up the stock price. I wanted to write a topic on catalyst, but I myself still have not really been able to identify stock with catalyst or Viagra.

iii) Durex special condom Performax

After making 10% or 20% gain from a stock, many people will sell it. Normally sell it too early, so we called it pre mature ejaculation. Now no, hope people will keep and make 100% or 200% or more. When we invest in stock market, we need to wear Durex Performax, and not to sell too early. Continue and enjoy the price increase and dividend. Note: A reader told me in Malaysia there is a pill called Priligy, may help. No details on that.

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In my blog, I always relate our daily lives with stock market, eg Kung Fu vs Stock Market, 4D vs Stock Market, apply BCG Growth Matrix in stock market, apply 6 thinking hats in stock market etc.

Hope you enjoy reading and benefit too.

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Do YOU agree with ME?

Look at the following and see whether you agree with me.

I always hear people say don't convert the currency. For example, they say in Singapore the cost of living is very cheap, eg food, chicken rice only S$3.00, but in Malaysia is RM5.00. 5 is more than 3, so they say Malaysia is more expensive than Singapore. But I say if I convert S$3.00 X 2.5 will be RM7.50, more expensive than RM5. However, they always disagree with me, asking me not to convert. Keep saying $3 is cheaper $5 and they like to make the statement "you work there you spend there".

I can't accept this. I told them if UK selling at £2 (RM10), and Indonesia selling at 7000 Rupiah (RM2.24), meaning UK cost of living is lowest and Indonesia cost of living the highest? Cannot be right? But they still refuse to listen, keep saying you work there you spend there. Actually more 20 friends, relatives or family member always saying that. No one is on my side.

For me, we need to convert, but also need to compare with income. For example 12 years ago my friend with a degree started working,  got offer from Singapore with S$1,500 pay and his Malaysia job offer him with RM2000, doing similar job. Assuming now starting pay S$2000 , and Malaysia is RM2700, I don't know the figure, just assuming. Chicken rice S$3.00 is 0.15% of S$2000. In Malaysia RM5.00 is 0.185% of RM2700. A better way is to use Per Capital Income.

Then if you tell me Singapore cost of living is lower because chicken rice only cost 0.15% of salary but cost 0.185% in Malaysia, I will accept.

Stop telling me "DON'T CONVERT, YOU WORK THERE YOU SPEND THERE".

Thanks.

How to measure success in stock market?

How to measure success in stock market?
There are many ways to measure success in stock market. Success here means gain from trading in stock market or gain from shares or share price movement. Someone made $2 million, may not be more successful than someone who made $1.5 million. Refer to the list below and you will have more understanding.

In measuring success in stock making, it can be measured based on the following:

Total money made
Someone who made $2 million is more successful than someone who made $1.5mil.

Percentage return

The higher the percentage gain, the more successful. Example if Mr A invested $10 million and made $2 million (20%), compare with Mr B invested $0.5 million and made $ 1.5 million (300%), Mr B is more successful.

Consistency

Mr C made 30% per year for two years and then never touches stock market anymore. Mr D makes average 25% every year for the past 15 years, then Mr D is more successful where Mr C’s track record is not proven yet.

Portfolio Performance (stock and cash) rather than just Stock Performance.

Mr E’s stocks value increased from $50,000 to $80,000. Cash $5 million.
Mr F’s stocks value increased from $50,000 to $70,000. Cash $10,000 only.
Mr F is more successful because with total portfolio of $60,000 ($50,000 stocks and $10,000 cash) he managed to increase $20,000 or 33%.
Mr E with portfolio of $5.05 million, only managed to increase $30,000 or 0.59% only.
 

Total Profit in comparison to Personal Total Net Worth

Mr G is a rich man with $100 million net worth, he made only $100,000 from stock market.
Mr H is an average working class worker with $200,000 net worth, he managed to make $80,000.
Mr H is more successful in stock market.

Time needed.

Mr I made $100,000 within 10 years. Mr J made $100,000 within 5 years only.
Mr J is more successful.

Effort Needed

Mr S just look at some simple research figures and made $50,000 within 5 years.
Mr T made deatailed study, attended seminar, do detailed analysis, buy and sell many times, and made the same $50,000 within 5 years.
Mr S is more successful.
 

Age

Mr K made $100,000 within 10 years, Mr K now is 35 year-old.
Mr L made $100,000 within 10 years, Mr L now is 34 year-old.
Mr L is more successful.

Tips

Mr M’s tips are more accurate than Mr N.
Mr M is more successful.

Actions and Result

Mr O’s tips are more accurate than Mr P, but Mr P made more money than Mr O because Mr O talk only, no action, he himself seldom buy. Mr P is more successful.

Economy and Stock Market Index

Mr Q made 200% from year 1992 to 1996.
Mr R made 200% from 2007 to 2011.
Mr R is more successful because from 1992 to 1996 the economy and stock market index perform better than from 2007 to 2011. More easy to make money from 1992 to 1996 than from 2007 to 2011.

CONCLUSION

The list can actually goes on and on.

You can see that it is very difficult to measure who is more successful.

If I tell you now that I have made $5,000, it does not mean that I am less successful than someone who made $6,000. It does not mean that I am more successful than someone who made only $4,000. Many factors need to be considered.

Some people may make less from stock market because they use their money to invest in other investments which make more money than stock market, example in their own business, property, or gold, and some may want to invest more in their children by giving them better education, food, care, etc.

I’m not saying that we cannot compare. If we want to compare, please bear in mind that there are many factors involved, and direct comparison is almost impossible.

  

Articles you may like:

Reason Why Squash is Not in Olympic
http://politemarket.blogspot.com/2012/08/reason-why-squash-is-not-in-olympic.html

Promotion: Cheapest Brokerage $0.20 per trade in Bursa Malaysia

http://politemarket.blogspot.com/2011/12/promotion-cheapest-brokerage-020-per.html

6 Thinking Hats to Improve on Stock Market Performance

http://politemarket.blogspot.com/2012/02/6-thinking-hats-to-improve-on-stock.html

How To Use BCG Growth-Share Matrix to Invest in Stock Market

http://politemarket.blogspot.com/2012/08/how-to-use-growth-share-matrix-to.html

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Reason Why Squash is Not in Olympic

Which sports will be in the Olympics are determined by the International Olympic Committee (IOC). Factors to consider include whether it is widely practiced around the world. Many sports are in and out of Olympics since the Games started.
The 2012 Summer Olympics in London have 26 sports and two additional sports will be added to the 2016 Summer Olympics in Rio.

One sport, can further divided into several disciplines, sometimes being commonly refereed to separate sports. For example Aquatics has five disciplines, 1) Swimming, 2) synchronized swimming, 3) Diving, 4) water polo, 5) open water swimming

A Discipline can further divided into several events, and each event a gold medal is actually awarded.

The two sports that will be added into the 2016 Olympics are Golf and Ruby Seven.

Bowling, Squash, Snooker, Karate, etc will not be in the 2016 Games.


Why Squash is Not in Olympics?
The committees are mostly concerned about the difficulties in televising the sport. Camera angles are difficult and hard for audience to see the ball. Also, the argument between referee and players.

The Squash Committee has made some changes and hopefully the sport will be in the 2020 Olympics games.

Changes:
1) Glass Floors and wall
2) New scoring system
3) Extra referees
4) Video replays inside venue


Now that with High Definition (HD) camera/ TV, it overcomes the concern that TV viewers unable to see the ball.

With World Champion Nicol David from Malaysia, I think most Malaysian will want Squash to be in the Olympic Games.

I want to say that Datuk Lee Chong Wei did a very good job, so close. I think we should not have the mentality that we can only win our first Olympic Gold Metal via Squash. With so many countries managed to do it, I think Malaysia Boleh.



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How to use Growth-share matrix to invest in Stock Market

How to know what stocks to buy. Boston Consulting Group (BCG) Growth-share matrix may help. Let me explain.

I learned this BCG Growth-share matrix during my college days. It is to be applied in Business but I came out with an idea and started to use it in stock market since early 2010. I think it may be helpful to some people in stock market.

Basically the Growth-share matrix is a chart divided into four sections:
1)Stars
2)Cash Cow
3)Dogs (Pet)
4)Questions marks




STARS
This is where the stock that we bought is performing or has very great potential and recommended by many analysts. The company is announcing growth in profit. The share price is increasing. We all are very happy. Although sometimes due to poor market sentiment, the share price may drop, but because the company is achieving growth in profit, we know sooner or later, the share price will increase.


CASH COW
This is where the stock that we bought is paying very high dividend. Many prefer to buy Stars stock, but Cash Cow has its own advantage.
Stars stock price increase may take time, but as for Cash Cow stock, we receive good dividend very fast.
Some people may use Share Margin Financing to buy shares. Therefore, we need some cash to service the interest. If we buy all Stars stocks, if the price drop temporary due to poor market sentiment, we may be subject to margin call or foreselling.

Cash Cow also provides us with the cash flow to buy stocks that we have newly identified. If we had bought all Stars, we may not have the necessary cash flow when opportunity arises.

Sometimes, during poor economy the Stars may be hit and may suddenly make much lower profit or even loss. Cash Cow stocks are in business that are quite stable. Also, the Cash Cow stocks generally the prices are quite stable, even during poor market sentiment.

Therefore, we buy many Stars stocks and buy some Cash Cow stocks as a defensive strategy, and reinvest the dividend we receive.


QUESTION MARKS
This is the kind of stocks that is very risky, but if successful the reward can be extremely good.
You just don't know whether to buy or not. Example many trouble penny stocks if successfully turnaround, the stock price will shot up sharply. But if not, then it may be delisted.

Another example is where the Company may be having some risky project and if successful, the profit can be very great.

Many may want to buy some of these stocks due to the potential great profit. But due to the high risk involved, you may just buy smaller amount because you cannot risk losing most of your money.

Other examples are takeover, pending restructuring, new company, small company, new projects or venture, penny stocks, call warrant, etc.



DOGS (PETS)
Dogs are the stock that you know probably you will lose money if you buy it, but you still want to buy. Based on past experience, you know that if you trade speculative stocks, chances of making money is lower than making losses.

But due to emotion, you have no choice and you still buy. You saw other friends are buying and you want to follow. You heard tips and rumours.

Many people will tell you don't buy and just focus on fundamental stocks. Do you think is easy to control our emotions? That is why so many people make losses in the stock marker. Especially remisiers and dealers who sit in front of the stock prices screen very day, it is not easy to control their emotion.

Can buy, but use very small amount to trade.

In business, Dogs are for examples, doing charity, continue loss making business for the overall Company Group image, etc.

If you lose money in stock market by buying Dogs shares, consider it as learning, charity, and playing games. By the way, not all the times you lose. Sometimes dogs share price can increase sharply and you can make very good profit.


CONCLUSION
If we buy all Stars, sometimes we may have some problem.
If we buy all Cash Cows, profits are not so great.
If we buy all Question Marks, and if not successful we will lose a lot of money.
If we buy all Dogs, chances of making losses are high.

In my view, I think for non-expert investors, we can allocate our portfolio into the four BCG Growth-share matrix . Buy many Stars, then some Cash Cows and Question Marks. And finally, use very small amount of money to buy/trade or speculate dogs. If you can control your emotion, then no need to buy Dogs.

Sometimes it is very hard to differentiate between Stars and Question Marks. Dogs and Questions Marks. If in doubt, put them in Question Marks because you are having a question on where to put and the name is already being called "question marks".



BCG Growth-share matrix in stock market is something that I came out with and I have been applying it for few years and has been successful so far. Hope it can help non-professional or non-expert investors in stock market.


Please note that the above is just my opinion and a case study for myself and is not an advice. Please read the disclaimer clause in my blog. Please consult your investment financial adviser.

Two years ago I already have plan to write this article. The reason of waited for two years is because I normally post short article and I considrer this is long. I was quite lazy to start writing. I really hope there is at least one person who like this article.




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Bayu @ Pandan Jaya review

This afternoon went to Bayu @ Pandan Jaya, total 3 blocks. Block B and Block C have been fully sold, except one middle unit and one corner unit at the highest floor and the price is RM553k and RM541k respectively. They said Block A will be open for sale mid of January 2012.
The location is immediately after the Pandan Jaya LRT station. Block A is nearest, just after the car park of the LRT station. It is along the LRT track heading the MRR2 direction. But in front of Block A, there is a water treatment plant.

The starting price is RM450k and I randomly picked a unit on 7th floor, the price is RM499,000.

They only have one direction. All the balcony are facing KL Centre, and can view KLCC indirectly. All the main doors with corridor are facing LRT tracks . Because they only have one direction, the density per floor is quite low, only 8 unit per floor.

2 car parks per unit. As usual they will absorb the legal fees for S&P. But buyer will have to pay the bank loan legal fee.

Developer is Extensive Gain Sdn Bhd. Melati Ehsan Group. They asked Kim Realty to sell. Melati stock is listed on Bursa Malaysia and Melati share price is RM0.74 very thinly traded and most of the times are untraded.

For more info on Bayu @ Pandan Jaya:
http://politemarket.blogspot.com/2011/12/bayu-pandan-jaya-condo.html


Other articles:

Is GOLD money? Or is it a commodity?

How NOT to buy a house or property in Share Market

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