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very sad......
Friday, December 28, 2007
Thursday, December 06, 2007
Global top 20 countries International reserve assets - top 11 by country
Rank Country Current Reserves(USD$ bn) Percent of World
World Total $5,962.64 100%
1 China $1,433.61 24.04%
2 Japan $930.26 15.60%
3 Russia $407.11 6.83%
4 Taiwan $265.92 4.46%
5 India $262.90 4.41%
6 South Korea $260.14 4.36%
7 Eurozone $200.71 3.37%
9 Singapore $158.17 2.65%
8 Brazil $154.49 2.59%
10 Hong Kong $142.20 2.38%
11 Malaysia $97.78 1.64%
Source: Merrill Lynch Market Analysis, Bloomberg
Out of Top 11, 8 are from Asia, 2 from Europe and 1 from South America. We all know that Asian posses a high save rate, so it is not surprise to see that majority of them are from Asia. The hike of petroleum price boosts up Russia and Brazil's reserve, how about countries from Middle East like Saudi Arabia, Iran, Iraq, Kuwait, UAE....etc? They are not even in the list of Top 20, where's the petrol monies go?
Rank Country Current Reserves(USD$ bn) Percent of World
World Total $5,962.64 100%
1 China $1,433.61 24.04%
2 Japan $930.26 15.60%
3 Russia $407.11 6.83%
4 Taiwan $265.92 4.46%
5 India $262.90 4.41%
6 South Korea $260.14 4.36%
7 Eurozone $200.71 3.37%
9 Singapore $158.17 2.65%
8 Brazil $154.49 2.59%
10 Hong Kong $142.20 2.38%
11 Malaysia $97.78 1.64%
Source: Merrill Lynch Market Analysis, Bloomberg
Out of Top 11, 8 are from Asia, 2 from Europe and 1 from South America. We all know that Asian posses a high save rate, so it is not surprise to see that majority of them are from Asia. The hike of petroleum price boosts up Russia and Brazil's reserve, how about countries from Middle East like Saudi Arabia, Iran, Iraq, Kuwait, UAE....etc? They are not even in the list of Top 20, where's the petrol monies go?
Wednesday, October 24, 2007
Jason Zweig talk on Neuroeconomics
Jason Zweig is a senior writer for the Money magazine and has been a guest columnist for Time and cnn.com. He is also the editor of the revised edition of Benjamin Graham’s ‘The Intelligent Investor’. In an interview to Vivek Kaul, Zweig speaks on Neuroeconomics and his philosophy of investing.
I find it striking that in a society with cultural traditions of great patience and acute analytical ability, so many people trade as if their knickers were afire, scoffing at the long term and analysing nothing but the craziness of the crowd.
Dopamine makes us pursue whatever we think will be rewarding. When we earn more than we expected, that generates a “positive prediction error” - a flood of dopamine that signals to our bodies that something good has happened.
After only a few repetitions, the dopamine is released in our brains, not when we earn the actual gain, but when we believe we know that the gain is coming.
It is not the reward but the prediction of it that generates pleasure in the brain. I call this the “prediction addiction.”
You become addicted to your own belief that you are about to make money. Like any addict, when the reward does not come, you will go into a painful withdrawal.
If you do not put policies and procedures in place, in advance, to control your emotions, you will never be able to resist the siren song of the markets when the markets go mad. Common sense and good judgment are vastly more valuable than intelligence.
What makes investors book profits fast, but hold on to their losses?
We do not merely buy stocks and sell them. What we really are buying is pride and prowess, and what we really are selling is pain and shame.
Once a stock earns a large gain, you want to lock in the reason for your pride and the proof of your prowess; if you hang on too long, the profit may disappear.
But, once a stock produces a big loss, you want to hide the source of your pain and shame.
If you sell at the bottom, you will have to admit your error, and that admission will only compound your shame. Whenever humans are ashamed of anything, we cover it up. So we cover our financial losses by pretending they are not there.
The life of a rising professional is busy enough without having to spend precious time and emotion following every momentary rise and fall of every stock you own. If your money cannot buy you peace of mind, why invest at all?
Monday, October 15, 2007
达赖喇嘛的人生智慧：转念
“四依”的佛教信条刚好可以应用在聪慧的修行方法上。这些信条如下：依循教导的讯息，而不是教师本人； 依循意义，而不是言词； 依循确切的意义，不是暂时的意义； 依循你的智慧之心， 而非常识之心。
"We should follow the teaching, not because of the grand name of the master;
We should follow the meaning of the words, not the words itself;
We should follow the real meaning, not the temporary one;
We should rely on our own experience and enlightenment, not the worldly meaning."
Monday, September 03, 2007
A Tale of Two Cities
"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only." -- “A Tale of Two Cities” Charles Dickens, English novelist (1812 - 1870)
Sunday, August 12, 2007
At last, Virgin lands on Malaysia......
Some excerpts from Sir Richard Branson interview in Malaysia....click here to view.
“I think the incumbent airlines or so call flag carriers will fight very hard to avoid competition. But the Government should have none of that. The government represents the people and the people's interest is competition. The people's interest is not protecting the flag carrier. Tony's company is just as much Malaysian, representing the people as the flag carrier. So, the Government should have no part with the argument that competition is bad for consumers.
“Competition is always extremely good for the consumers. The Government should create competition and that's what their job should be. Of course, Tony should be able to fly between
“If the flag carriers do a good job, they will survive and the competitor will survive as well. If they don’t reduce their fares and offer consumer good value for money, then like any old dead tree, the old tree will die and new saplings will take their place.”
Thursday, July 26, 2007
Turtles in Omaha
Excerpts from Turtles in Omaha by Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management. Click here to view more.
The Mindset of Great Investors
The difference in [investment] return had nothing to do with knowledge and everything
to do with emotional and psychological factors. We had all been taught the same thing,
but my return . . . was three times that of the others. Over the years, I kept finding
evidence that emotional and psychological strength are the most important ingredients
in successful trading.
-- Curtis M. Faith, "Way of the Turtle"
Nassim Taleb’s latest book, The Black Swan, is a treatise on the improbable events Buffett has in mind. 5 The term black swan comes from philosopher Karl Popper’s criticism of induction: We get closer to truth if we focus on falsification instead of verification. Seeing lots of white swans
(verification) does not allow for the statement “all swans are white,” but seeing one black swan
(falsification) does disprove the statement. This is relevant in investing because investment
strategies based on the reoccurrence of white swans can be toppled by one black swan event.
Taleb suggests all black swans have three attributes: they are outliers, they have an extreme
impact, and people seek to explain them after the fact.
Three High Hurdles
Here are three psychologically-difficult barriers great traders and investors must overcome: loss aversion, frequency versus magnitude, and the role of randomness. How individuals cope with these barriers provides good insight into their investing temperament.
Loss aversion. In what is now a well-documented and well-known phenomenon, humans suffer roughly twice as much from losses as they receive pleasure from comparable gains. An important consequence is investors will turn down positive expected-value financial propositions, especially when their recent results have been poor.
Faith provides a powerful example of this point. Following the expiration of the confidentiality
agreement he signed, Faith explained the turtle system to a friend. Noting that cocoa presented a great trading opportunity in 1998 through early 1999, he inquired how his friend was doing in
cocoa. The friend replied he stopped trading cocoa because he had lost money and thought the
trade was “too risky.”
Then Faith explains the circumstances. Following the system would have generated 28 total
trades (average size $10,000 – $15,000) from April 1998 through February 1999, producing a
total profit of nearly $56,000. But of the 28 trades, 24 were unprofitable (average loss of about
$930) while 4 were profitable (average gain of roughly $20,000). Even more difficult, the first 17 trades in a row lost money.
Given this profit pattern, it is not difficult to see why a trader would abandon the commodity and perceive it as overly risky. But Faith’s point is crucial: Recency bias and loss aversion often cause you to give up right before the trade becomes profitable. Sticking with positive expectation financial propositions is essential to maximizing profits over time.
Frequency versus magnitude. This concept is really an extension of loss aversion. Most of us frame the success or failure of a financial proposition in terms of the price. For instance, if you buy a stock at $30, any price above that level is mentally successful; any price below it is
mentally unsuccessful.
What investors often fail to consider is that change in wealth is not a function of how often you’re right, it’s a function of how much money you make when you’re right versus how much you lose when you’re wrong. You need to consider both frequency and magnitude to understand investment results.
Faith illustrates this point by sharing 20 years of results for a trading system. Over that time span, the system generated about 5,600 trades, or around 250 a year. Of those trades, a shade over two-thirds lost money, making the success ratio less than one-third. But the winning trades
earned 2.2 times the losing trades on average, netting a substantial overall profit.
As with loss aversion, operating according to the frequency-and-magnitude maxim is easier said
than done. Faith notes, “Some of the Turtles had a hard time with this concept; they felt the need to be right and to predict markets.”
The expected-value mindset has served many well-known investors well. One example is George Soros. Former colleague Scott Bessent said in a recent interview, “George has a terrible batting
average—it’s below 50 percent and possibly even below 30 percent—but when he wins it’s a
grand slam. He’s like Babe Ruth in that respect.”
Role of randomness. Most people agree stock prices move more dramatically than business
values move. In the stock market, like most probabilistic systems, there is a great deal of noise in the system. However, most investors fail to recognize the degree to which randomness affects
short-term results. And, as bad, many investors have emotional reactions to short-term
randomness that undermine the quality of their decision making.
This is Faith’s comment; the idea applies to nearly everyone involved with markets: 16
Most traders do not understand the degree to which completely random chance can
affect their trading results. The typical investor understands this even less than the typical
trader does. Even very experienced investors such as those who operate and make
decisions for pension funds and hedge funds generally do not understand the extent of
this effect.
Here’s the point: A trader, or investor, can put on a positive expectation bet (correct process) and still have poor results (outcome) for some period of time due solely to randomness. But many investors attribute bad outcomes to bad processes, which leads to substantial error. As insidious is attributing good outcomes to a good process. A thoughtful investor must carefully consider process and recognize long-term outcomes will follow.
Here are some data to substantiate the point. The first is a study by The Brandes Institute called “Death, Taxes, and Short-Term Underperformance.” 18 The researchers screened for largecapitalization, actively-managed funds that had a 10-year track record through 2006. This yielded 591 funds. They then ranked the funds by decile based on annualized gains.
The top-decile group had returns in excess of 10.9 percent, and all of them delivered better
returns than the S&P 500 index. The researchers posed two questions: Did these funds have
periods of relative underperformance? If so, by how much?
The answer to the first question is a resounding yes. In fact, all 59 of the funds in the top decile
underperformed for at least one year. In its worst one-year period, the average top-decile fund
underperformed the index by 1,950 basis points, with a range of negative 650 to 4,410 basis
points.
Over a three-year period, the average underperformance was still 810 basis points, with a range
of positive 250 to negative 2,240 basis points. The one- and three-year numbers of these good long-term funds clearly show the limitations of relying on short-term results to decipher the
ultimate outcomes.
Unfortunately, the randomness in short-term results exerts a cost. Most institutional investors,
including pension funds, endowments, and foundations, rely on short-term investment results to
judge the managers they hire. Despite this, they would be better off with a robust way to assess
process. The focus on outcomes, combined with the limited appreciation for randomness, leads
to bad decisions.
In a recent academic paper, researchers tracked the decisions of 3,500 plan sponsors over a
decade. 19 What they found is not surprising. Plan sponsors hire managers after they have
enjoyed three years of excess returns. After they are hired, the managers generate excess
returns “indistinguishable from zero.”
Further, plan sponsors often fire managers after a period of underperformance, but the managers often go on to generate excess returns after they’ve been fired. Said differently, plan sponsors would have been better off on average keeping the manager they fired. And this analysis leaves aside costs.
While very understandable, this performance chasing shows many plan sponsors are fooled by
randomness. Evidence is voluminous that individual investors, too, chase performance to the
detriment of their long-term results.
Faith adamantly argues for a focus on process:
Good investors invest in people, not historical performance. They know how to identify
traits that will lead to excellent performance in the future, and they know the traits that are
indicative of average trading ability. This is the best way to overcome random effects.
This mindset fits comfortably with Buffett’s point about assessing chief investment officer
candidates based on “how they swing at the ball.”
The Mindset of Great Investors
The difference in [investment] return had nothing to do with knowledge and everything
to do with emotional and psychological factors. We had all been taught the same thing,
but my return . . . was three times that of the others. Over the years, I kept finding
evidence that emotional and psychological strength are the most important ingredients
in successful trading.
-- Curtis M. Faith, "Way of the Turtle"
Nassim Taleb’s latest book, The Black Swan, is a treatise on the improbable events Buffett has in mind. 5 The term black swan comes from philosopher Karl Popper’s criticism of induction: We get closer to truth if we focus on falsification instead of verification. Seeing lots of white swans
(verification) does not allow for the statement “all swans are white,” but seeing one black swan
(falsification) does disprove the statement. This is relevant in investing because investment
strategies based on the reoccurrence of white swans can be toppled by one black swan event.
Taleb suggests all black swans have three attributes: they are outliers, they have an extreme
impact, and people seek to explain them after the fact.
Three High Hurdles
Here are three psychologically-difficult barriers great traders and investors must overcome: loss aversion, frequency versus magnitude, and the role of randomness. How individuals cope with these barriers provides good insight into their investing temperament.
Loss aversion. In what is now a well-documented and well-known phenomenon, humans suffer roughly twice as much from losses as they receive pleasure from comparable gains. An important consequence is investors will turn down positive expected-value financial propositions, especially when their recent results have been poor.
Faith provides a powerful example of this point. Following the expiration of the confidentiality
agreement he signed, Faith explained the turtle system to a friend. Noting that cocoa presented a great trading opportunity in 1998 through early 1999, he inquired how his friend was doing in
cocoa. The friend replied he stopped trading cocoa because he had lost money and thought the
trade was “too risky.”
Then Faith explains the circumstances. Following the system would have generated 28 total
trades (average size $10,000 – $15,000) from April 1998 through February 1999, producing a
total profit of nearly $56,000. But of the 28 trades, 24 were unprofitable (average loss of about
$930) while 4 were profitable (average gain of roughly $20,000). Even more difficult, the first 17 trades in a row lost money.
Given this profit pattern, it is not difficult to see why a trader would abandon the commodity and perceive it as overly risky. But Faith’s point is crucial: Recency bias and loss aversion often cause you to give up right before the trade becomes profitable. Sticking with positive expectation financial propositions is essential to maximizing profits over time.
Frequency versus magnitude. This concept is really an extension of loss aversion. Most of us frame the success or failure of a financial proposition in terms of the price. For instance, if you buy a stock at $30, any price above that level is mentally successful; any price below it is
mentally unsuccessful.
What investors often fail to consider is that change in wealth is not a function of how often you’re right, it’s a function of how much money you make when you’re right versus how much you lose when you’re wrong. You need to consider both frequency and magnitude to understand investment results.
Faith illustrates this point by sharing 20 years of results for a trading system. Over that time span, the system generated about 5,600 trades, or around 250 a year. Of those trades, a shade over two-thirds lost money, making the success ratio less than one-third. But the winning trades
earned 2.2 times the losing trades on average, netting a substantial overall profit.
As with loss aversion, operating according to the frequency-and-magnitude maxim is easier said
than done. Faith notes, “Some of the Turtles had a hard time with this concept; they felt the need to be right and to predict markets.”
The expected-value mindset has served many well-known investors well. One example is George Soros. Former colleague Scott Bessent said in a recent interview, “George has a terrible batting
average—it’s below 50 percent and possibly even below 30 percent—but when he wins it’s a
grand slam. He’s like Babe Ruth in that respect.”
Role of randomness. Most people agree stock prices move more dramatically than business
values move. In the stock market, like most probabilistic systems, there is a great deal of noise in the system. However, most investors fail to recognize the degree to which randomness affects
short-term results. And, as bad, many investors have emotional reactions to short-term
randomness that undermine the quality of their decision making.
This is Faith’s comment; the idea applies to nearly everyone involved with markets: 16
Most traders do not understand the degree to which completely random chance can
affect their trading results. The typical investor understands this even less than the typical
trader does. Even very experienced investors such as those who operate and make
decisions for pension funds and hedge funds generally do not understand the extent of
this effect.
Here’s the point: A trader, or investor, can put on a positive expectation bet (correct process) and still have poor results (outcome) for some period of time due solely to randomness. But many investors attribute bad outcomes to bad processes, which leads to substantial error. As insidious is attributing good outcomes to a good process. A thoughtful investor must carefully consider process and recognize long-term outcomes will follow.
Here are some data to substantiate the point. The first is a study by The Brandes Institute called “Death, Taxes, and Short-Term Underperformance.” 18 The researchers screened for largecapitalization, actively-managed funds that had a 10-year track record through 2006. This yielded 591 funds. They then ranked the funds by decile based on annualized gains.
The top-decile group had returns in excess of 10.9 percent, and all of them delivered better
returns than the S&P 500 index. The researchers posed two questions: Did these funds have
periods of relative underperformance? If so, by how much?
The answer to the first question is a resounding yes. In fact, all 59 of the funds in the top decile
underperformed for at least one year. In its worst one-year period, the average top-decile fund
underperformed the index by 1,950 basis points, with a range of negative 650 to 4,410 basis
points.
Over a three-year period, the average underperformance was still 810 basis points, with a range
of positive 250 to negative 2,240 basis points. The one- and three-year numbers of these good long-term funds clearly show the limitations of relying on short-term results to decipher the
ultimate outcomes.
Unfortunately, the randomness in short-term results exerts a cost. Most institutional investors,
including pension funds, endowments, and foundations, rely on short-term investment results to
judge the managers they hire. Despite this, they would be better off with a robust way to assess
process. The focus on outcomes, combined with the limited appreciation for randomness, leads
to bad decisions.
In a recent academic paper, researchers tracked the decisions of 3,500 plan sponsors over a
decade. 19 What they found is not surprising. Plan sponsors hire managers after they have
enjoyed three years of excess returns. After they are hired, the managers generate excess
returns “indistinguishable from zero.”
Further, plan sponsors often fire managers after a period of underperformance, but the managers often go on to generate excess returns after they’ve been fired. Said differently, plan sponsors would have been better off on average keeping the manager they fired. And this analysis leaves aside costs.
While very understandable, this performance chasing shows many plan sponsors are fooled by
randomness. Evidence is voluminous that individual investors, too, chase performance to the
detriment of their long-term results.
Faith adamantly argues for a focus on process:
Good investors invest in people, not historical performance. They know how to identify
traits that will lead to excellent performance in the future, and they know the traits that are
indicative of average trading ability. This is the best way to overcome random effects.
This mindset fits comfortably with Buffett’s point about assessing chief investment officer
candidates based on “how they swing at the ball.”
Sunday, June 24, 2007
段永平：照巴菲特说的做
"因为投资有一个最大的特点就是你不能够给自己定目标，说我今年一定要赚百分之多少。因为价格是市场给的，但是价值是它内在的东西，所以你最重要的是了解它的价值，然后等待市场最后给它一个公平的价格。一般来讲，这个时间也不会很长，以我个人的经验看，大概最多也就3年。你只要有个两三年的耐心，找到好公司，拿在手里怎么着都是能挣钱的。但倒过来讲，你拿错了股票，拿的时间越久可能就越糟。"
"比方说像网易，我大概是0.8-1美元买的，留到八、九十美元都没有卖。这个过程中，其实每天都是可以卖的，但如果你了解这个企业，认为它有这个价值，可能就不着急卖，否则你每天都会受价格的影响。"
"最重要的是首先要做对的事情，然后把事情做对。"
To view more, click here....
Monday, June 18, 2007
Brave investors rise up
A good example of the investors to stand out when the directors of the company could not perform. Will it set a benchmark for the coming similar situations? Let's see......The article is from "The Edge Daily"
18-06-2007: The 'small man' acts
By M Shanmugam
Email us your feedback at fd@bizedge.com
In what is probably an unprecedented move in local corporate history, the minority shareholders of a Mesdaq Market-listed company are seeking to wind up the company and recover some RM10.94 million, being the balance of its listing proceeds, instead of seeing the money put to use to sustain the company.
Three shareholders of Litespeed Education Technologies Bhd, who had collectively subscribed to 14.7 million shares in a private placement exercise when the company was listed in November 2005, filed a suit last week to wind up the company.
The suit was filed by Wan Hamimie Ariff, Dr Syed Ibrahim Mohd Ismail and Mokhtar Ahmad at the Kuala Lumpur High Court through legal firm Tommy Thomas and Associates.
It is normal for creditors to file winding-up petitions against listed companies in their bid to recover amounts owing. But rarely do shareholders file to wind up a listed company to recover what's left, as this would mean them cutting their losses on their investments.
For instance, the three shareholders had collectively invested RM6.8 million for 14.7 million shares at 46 sen a share. Last Friday, the counter closed at 13.5 sen. The petitioners claimed that in its prospectus issued in October 2005, Litespeed had forecast a profit after tax of RM7.51 million on a turnover of RM19.89 million for the FY ended April 30, 2006, but posted a loss of RM9.7 million.
The petitioners claimed that Litespeed was making losses in 2005 but the directors did not disclose this information in the prospectus, thereby misleading the regulators, investing public and them (the petitioners).
The petitioners claimed that out of the RM20.55 million that was raised from the listing, the unutilised balance stood at RM10.94 million, and that the directors had proposed that this amount be used as working capital.
The petitioners claimed the amount was supposed to be utilised for setting up regional offices (RM7.55 million) and for research and development (RM3.39 million).
The petitioners claimed that in seeking the revision in the utilisation of the listing proceeds, the directors were abandoning their objectives that were outlined in the prospectus and which were re-stated in a research report announced by the company last December.
The petitioners further claimed that:
* an analysis of the company's financial performance since its listing showed that it was consistently making losses and the situation was aggravated each quarter, except for the quarter in which it entered into a licensing agreement with Prestariang Trading and Simulation Sdn Bhd (PTS), which was announced on June 29, 2006;
* the company's revenue was insufficient to finance its cost of sale. They claimed that, on average, the monthly expenditure and other costs incurred were about RM500,000. They claimed this meant that if the company was allowed to use the remaining RM10.94 million from the listing proceeds, the entire amount would be wiped out within the next one or two years without any reasonable prospect of profit or any reasonable plans towards making a profit for the company;
* under the licensing agreement with PTS, the company was to receive a lump sum payment of RM4 million or three equal instalments of RM1.6 million. In return, PTS will have the exclusive rights to use, re-sell or modify certain key educational products, namely the Dr Series, in Malaysia on an exclusive basis for five years with the extension of two years;
* in the prospectus, the Dr Series was represented as being capable of earning RM2.5 million per year in sales revenue in Malaysia due to its intellectual property rights. The petitioners claimed that considering the revenue as listed in the prospectus, the logical licensing price should be RM12.5 million. They claimed the fact that the directors chose to sell the product at RM4 million amounts to mismanagement;
* last November, the petitioners together with other minorities of the company requested for a board representative but there was no appointment. Subsequently the petitioners, via their solicitors, sent a formal request for two nominees to be on the board, but it was rejected by the directors in a letter dated April 18.
The petitioners believed it was not in the best interest of the company and its shareholders to allow the directors to carry on the business and use what was remaining of the listing proceeds.
They felt it was in the best interest of the company and its shareholders to have Litespeed wound up to preserve the unutilised balance of RM10.94 million which they said could be distributed to shareholders after creditors are paid.
Among the directors at the time of Litespeed's listing were Pok Vic Tor, its executive chairman and group CEO, Pok Vic Sent (executive director), Fock Mun Hong and Wong Kai Choon.
Unlike other exchanges, the listing requirements of Mesdaq companies are less stringent and it essentially is a "buyer beware" exchange.
What this means is that although the authorities approve the listing despite them not being profitable, investors have to bear the risk and scrutinise the forecast carefully.
18-06-2007: The 'small man' acts
By M Shanmugam
Email us your feedback at fd@bizedge.com
In what is probably an unprecedented move in local corporate history, the minority shareholders of a Mesdaq Market-listed company are seeking to wind up the company and recover some RM10.94 million, being the balance of its listing proceeds, instead of seeing the money put to use to sustain the company.
Three shareholders of Litespeed Education Technologies Bhd, who had collectively subscribed to 14.7 million shares in a private placement exercise when the company was listed in November 2005, filed a suit last week to wind up the company.
The suit was filed by Wan Hamimie Ariff, Dr Syed Ibrahim Mohd Ismail and Mokhtar Ahmad at the Kuala Lumpur High Court through legal firm Tommy Thomas and Associates.
It is normal for creditors to file winding-up petitions against listed companies in their bid to recover amounts owing. But rarely do shareholders file to wind up a listed company to recover what's left, as this would mean them cutting their losses on their investments.
For instance, the three shareholders had collectively invested RM6.8 million for 14.7 million shares at 46 sen a share. Last Friday, the counter closed at 13.5 sen. The petitioners claimed that in its prospectus issued in October 2005, Litespeed had forecast a profit after tax of RM7.51 million on a turnover of RM19.89 million for the FY ended April 30, 2006, but posted a loss of RM9.7 million.
The petitioners claimed that Litespeed was making losses in 2005 but the directors did not disclose this information in the prospectus, thereby misleading the regulators, investing public and them (the petitioners).
The petitioners claimed that out of the RM20.55 million that was raised from the listing, the unutilised balance stood at RM10.94 million, and that the directors had proposed that this amount be used as working capital.
The petitioners claimed the amount was supposed to be utilised for setting up regional offices (RM7.55 million) and for research and development (RM3.39 million).
The petitioners claimed that in seeking the revision in the utilisation of the listing proceeds, the directors were abandoning their objectives that were outlined in the prospectus and which were re-stated in a research report announced by the company last December.
The petitioners further claimed that:
* an analysis of the company's financial performance since its listing showed that it was consistently making losses and the situation was aggravated each quarter, except for the quarter in which it entered into a licensing agreement with Prestariang Trading and Simulation Sdn Bhd (PTS), which was announced on June 29, 2006;
* the company's revenue was insufficient to finance its cost of sale. They claimed that, on average, the monthly expenditure and other costs incurred were about RM500,000. They claimed this meant that if the company was allowed to use the remaining RM10.94 million from the listing proceeds, the entire amount would be wiped out within the next one or two years without any reasonable prospect of profit or any reasonable plans towards making a profit for the company;
* under the licensing agreement with PTS, the company was to receive a lump sum payment of RM4 million or three equal instalments of RM1.6 million. In return, PTS will have the exclusive rights to use, re-sell or modify certain key educational products, namely the Dr Series, in Malaysia on an exclusive basis for five years with the extension of two years;
* in the prospectus, the Dr Series was represented as being capable of earning RM2.5 million per year in sales revenue in Malaysia due to its intellectual property rights. The petitioners claimed that considering the revenue as listed in the prospectus, the logical licensing price should be RM12.5 million. They claimed the fact that the directors chose to sell the product at RM4 million amounts to mismanagement;
* last November, the petitioners together with other minorities of the company requested for a board representative but there was no appointment. Subsequently the petitioners, via their solicitors, sent a formal request for two nominees to be on the board, but it was rejected by the directors in a letter dated April 18.
The petitioners believed it was not in the best interest of the company and its shareholders to allow the directors to carry on the business and use what was remaining of the listing proceeds.
They felt it was in the best interest of the company and its shareholders to have Litespeed wound up to preserve the unutilised balance of RM10.94 million which they said could be distributed to shareholders after creditors are paid.
Among the directors at the time of Litespeed's listing were Pok Vic Tor, its executive chairman and group CEO, Pok Vic Sent (executive director), Fock Mun Hong and Wong Kai Choon.
Unlike other exchanges, the listing requirements of Mesdaq companies are less stringent and it essentially is a "buyer beware" exchange.
What this means is that although the authorities approve the listing despite them not being profitable, investors have to bear the risk and scrutinise the forecast carefully.
Tuesday, May 22, 2007
Sunday, May 06, 2007
潘石屹 London Trip Blogs
Some excertps from PangShiYi London Trip blogs, click here to view more....
"在诺丁山的街道上，最引起我注意的事情是，几乎每家咖啡厅和餐馆的门口都贴着一张黄色纸张，上面说明室内提供免费无线上网服务。无线宽带上网的确把我们从 空间和时间的约束中解放了出来，这可能就是近十年来最大的变化。几年前，我们还在争论办公空间和居住空间能不能融合在一起，而今天我们的办公空间已经发展 到可以是室内，也可以是室外，可以是任意的地方，随时随地，在这样的工作环境中，形式主义的打卡，按时上班都成为过去式。在今天，评价一个人的工作业绩主 要看你工作的结果，工作的质量，有没有效率，有没有创造力，至于你在什么地方工作，你在什么地点工作已经变得不重要，地点不再成为工作的约束。"
"这篇博客是我在五台山去往佛光寺的路上在笔记本电脑上写的。"
"在短时期之内北京的CBD取得如此大的成功的原因是什么？只有一条，那就是：市场的选择。市场需要什么，开发商就建什么，多家房地产开发公司共同开发，才 形成了今天多样化的建筑生态环境。对于城市建筑的规划来说，最可怕的事情就是单一，如果十年前北京CBD建设规划之初出现了一位伟大的人物，这位伟大的人 物要么是有足够大的权力，要么是有足够多的金钱，而他头脑中又有一个坚定不移的幻想，按照他的意志想当然地去规划和建设一个北京的CBD，今天可能就不是 这样的情况了，很可能会将CBD建成他心目中好看的，但一定是不好用的城市区域和建筑，而这种好看不好用的城市区域和建筑最终也是丑陋的，是这个社会和城 市的负担。"
"安静地思考的环境和精神状态，对做任何事情都很重要，我想，无论在何种状况下，我们都要保持这种做事情的状态：聚精会神地，一心一意地，这样才能把干扰减少，把事情做好。"
"在伦敦交易一所房子只需要三天的时间，三天之内所有法律手续、过户手续都会办好，而且没有任何限制。当我们问到伦敦的房价为什么这样高，比巴黎高出将近一 倍时。他说，在撒切尔时代，政府就决定不允许在城区内再建新房子，就这样房价一路不断在上升，带来的好处是城市的交通得到了很好的解决。其实就在前几年， 因为伦敦城市车辆的增加，交通也出现了问题，他们就在城市最核心的区域画了一个控制范围，白天车辆一驶入就要交8英镑，相当于100多元人民币，就这样城 区的交通问题得到了缓解。"
Saturday, April 28, 2007
Wednesday, April 25, 2007
Limitations of Financial Reporting
The excerpts from "Sense and Nonsense in Corporate Finance" by Louis Lowenstein, professor emeritus of law at Columbia University:
The freedom to mark assets to market brings to mind the remark by Mark Twain that "a mine is a hole in the ground with a liar on top." Twain could as well have been speaking of land appraisals of all types.
In the best of worlds, financial statements would produce numbers that are truly comparable, both across companies and for the same company across time. Did General Motors' earnings increase from 1985 to 1989? According to the company, they did, rising slightly, even though GM sold only 7.9 million cars and trucks in 1989 compared to 9.3 million in 1985. There were a number of reasons, including a turnaround in GM's European operations, but an important reason was that in the interim, the company had rearranged some of the estimates and assumptions on which its financial statements were based. In addition to the already mentioned 1987 change in the estimated life of its auto plants, in 1986 the company raised the expected rate of return on its pension funds, which increased that year's net profit by $195 million. By 1989 the annual report no longer contained sufficiently detailed information from which to calculate precisely the continuing effects of these and other revisions. One estimate is that, in all, they added over $1 billion of after-tax earnings for 1989. Without that $1 billion, there would have been no increase in earnings since 1985. Yes, GM was able to find that $1 billion without breaking any of the rules. The rules are very flexible.
Do words and numbers mean only what management says they mean, or is there some consistency? It's a problem of credibility in the marketplace, but it also threatens to distort management's own analysis and the internal discipline. In other words, numbers that are no longer comparable from year to year or company to company are a problem not just for investors trying to make portfolio decisions but for creditors and for management itself.
When I first became involved in the supermarket industry in the 1960s, it was commonplace for the smaller public companies in the industry-typically those that were growing rapidly but had weak balance sheets-not to buy anything larger than a cash register if it meant putting debt on the balance sheet. Instead of borrowing money to build and own, say, a store, these companies would lease the finished store from the developer or pursuant to a so-called financial lease from a lender, such as an insurance company. These lease financings were always more expensive than borrowing the money to own the store outright, but neither the companies nor the financial community seemed to care, so long as the company could keep the obligation off the face of the balance sheet, disclosing it only in the footnotes. This is the kind of seemingly pointless paper shuffling that economists find incredible. But that was how the world was. It's easy to say that this was foolishness, but it was conventional foolishness.
In the 1970s the FASB adopted an accounting standard that succeeded in pushing a large part of this off-balance-sheet financing back onto the balance sheet, but it did not succeed entirely. Many companies still arranged their leases to avoid capitalizing them. They were even willing to give away renewal options and other significant economic values to do so. To paraphrase Kurt Vonnegut, these companies had adopted the philosophy that you are what you pretend to be.
Click here to view more...
Friday, April 20, 2007
Monday, April 16, 2007
Thursday, April 12, 2007
Saturday, April 07, 2007
N2N
In investing, generally there could be divided into 2 groups of people. The first group is invest based on fundamentals and rationality and the second group invest/speculate based on “Insiders’ news”…etc. While choosing which type of investment method is personal preference, one should always aware of the pros and cons of the method.
In the blog of Malaysian Finance dated
Let’s do some examinations before you decide to put your hard-earned monies into N2N shares:
Market cap as at
N2N at RM 667 million 2.24 66.08
MEMS at RM 451 million 0.69 32.24
EBWorx at RM 138 million 0.60 18.63
MQTech at RM 60 million 0.315 8.36
Microlink at RM 57 million 0.45 8.89
SMRTech at RM 34 million. 0.34 5.82
N2N, EBWorx and Microlink involve in similar industry, ie: financial solutions to financial institutions.
Gearing for N2N, MEMS, EBWorx and Microlink is 0 or near 0, while their ROE is double digits.
P/E for Yahoo is 61.46, Google at 47.44.
Once upon a time, there was a lady attending the party. She got to rush back to home before clock reach at 12 midnight otherwise a pretty clothes would turn back to ugly and old clothes. She is lucky enough because she left a pair of glass shoes that lead a prince to find her and lastly she becomes a princess. Will an investor/speculator of N2N has a luck like this lady? While a lady has a clock to tell her when the time is reaching, the one who attend the party of N2N do not have this privilege.
With P/E of 66.08, do a valuation of N2N at RM 2.24 per share justifies for you to invest on it? You decide……
Tuesday, March 27, 2007
Saturday, March 17, 2007
A Tale From Dr. Marc Faber
It was autumn, and the Red Indians on the remote reservation asked their new chief if the winter was going to be cold or mild. Since he was a Red Indian chief in a modern society, he couldn’t tell what the weather was going to be. Nevertheless, to be on the safe side, he told his tribe that the winter was indeed going to be cold and that the members of the village should collect wood to be prepared.
But, being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked, “Is the coming winter going to be cold?”
“It looks like this winter is going to be quite cold indeed,” the meteorologist at the weather service responded.
So the chief went back to his people and told them to collect even more wood.
A week later, he called the National Weather Service again.
“Is it going to be a very cold winter?”
“Yes,” the man at the National Weather Service again replied, “It’s definitely going to be a very cold winter.”
The chief again went back to his people and ordered them to collect every scrap of wood they could find.
Two weeks later, he called the National Weather Service again.
“Are you absolutely sure that the winter is going to be very cold?”
“Absolutely,” the man replied.
“It’s going to be one of the coldest winters ever.”
“How can you be so sure?” the chief asked.
The weatherman replied, “The Red Indians are collecting wood like crazy.”
Monday, March 12, 2007
Sunday, March 11, 2007
Thursday, March 08, 2007
Chairman's Letter 2006 6
"We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels."
Wednesday, March 07, 2007
Chairman's Letter 2006 5
"Let me end this section by telling you about one of the good guys of Wall Street, my long-time friend Walter Schloss, who last year turned 90. From 1956 to 2002, Walter managed a remarkably successful investment partnership, from which he took not a dime unless his investors made money. My admiration for Walter, it should be noted, is not based on hindsight. A full fifty years ago, Walter was my sole recommendation to a
“How would you summarize your approach?” Edwin replied, “We try to buy stocks cheap.” So much for
Modern Portfolio Theory, technical analysis, macroeconomic thoughts and complex algorithms.
Following a strategy that involved no real risk – defined as permanent loss of capital – Walter produced results over his 47 partnership years that dramatically surpassed those of the S&P 500. It’s particularly noteworthy that he built this record by investing in about 1,000 securities, mostly of a lackluster type. A few big winners did not account for his success. It’s safe to say that had millions of investment managers made trades by a) drawing stock names from a hat; b) purchasing these stocks in comparable amounts when Walter made a purchase; and then c) selling when Walter sold his pick, the luckiest of them would not have come close to equaling his record. There is simply no possibility that what Walter achieved over 47 years was due to chance.
Tuesday, March 06, 2007
Chairman's Letter 2006 4
"When someone with experience proposes a deal to someone with money, too often the fellow with money ends up with the experience, and the fellow with experience ends up with the money."
Monday, March 05, 2007
Chairman's Letter 2006 3
"Corporate bigwigs often complain about government spending, criticizing bureaucrats who they say spend taxpayers’ money differently from how they would if it were their own. But sometimes the financial behavior of executives will also vary based on whose wallet is getting depleted. Here’s an illustrative tale from my days at Salomon. In the 1980s the company had a barber, Jimmy by name, who came in weekly to give free haircuts to the top brass. A manicurist was also on tap. Then, because of a cost-cutting drive, patrons were told to pay their own way. One top executive (not the CEO) who had previously visited Jimmy weekly went immediately to a once-every-three-weeks schedule."
Sunday, March 04, 2007
Chairman's Letter 2006 2
"Be fearful when others are greedy, and be greedy when others are fearful."
Saturday, March 03, 2007
Chairman's Letter 2006 1
"Size seems to make many organizations slow-thinking, resistant to change and smug. In Churchill’s words: “We shape our buildings, and afterwards our buildings shape us.” Here’s a telling fact: Of the ten non-oil companies having the largest market capitalization in 1965 – titans such as General Motors, Sears, DuPont and Eastman Kodak – only one made the 2006 list." -- Warren Buffet, Chairman's Letter 2006
Thursday, March 01, 2007
The Tibetan Book of Living and Dying
Dialog between an author of "The Tibetan Book of Living and Dying", Sogyal Rinpoche and Zen Master, Sheng Yen.
"西藏有句谚语说，如果你愈想走得快反而更慢到达，慢慢走反而还会快点到。"
(There is a Tibetan proverb: You would be reach destination later if you wish to walk faster; you would reach there earlier if you walk slowly.)
"有两件事是人最大的敌人，那就是太多期望和太多的恐惧，"
(There are 2 biggest enemies of us -- too much hopes and too much fears.)
“没有一个东西是禅宗的心要，这就是禅宗的心要."
(There is no core value of Zen, That is a core value of Zen.)
Read more from here.
Black Tuesday -- 27th February 2007
Is "Black Tuesday" is a stand alone stock market crisis?
What's the implication to the overall market?
Will people will shy away from investing in stock market? .... etc....
These questions arise after Black Tuesday which happened on 27th February 2007. It started from Shanghai and Shenzhen stock markets because of the rumour that Chinese regulator would impose a capital gain tax to cold down the soon to be bubble market.
Similar crisis happened in May 2006. While the market lost quite significant wealth in the short period, the market rebound after few months and passing through several new history high, especially in Shanghai, Shenzhen, Ho Chi Minn and Singapore.
While the incidence on Tuesday hurt many investors especially retail investors who bet on margin/loan and those deal with Day Trade and they may shy away from the market for a short period, they tend to forget and return to the market in the shortest period. My friends who gain 2 weeks ago and bet more in the hope that they will gain more but the incidence on Tuesday made their hope disappear. The overconfidence turns to sad mood after losing monies in the market. When you compare the "prediction" of those fund managers, chartists, technical analysts, media and so forth, you will puzzle that their "prediction" could change to reverse side in 2 weeks time. 2 weeks ago, they were overconfidence that the market will surpass new high but now all change direction.
Will people stop speculate/gamble on stocks? Very unlikely.... because
"What I learn from history is people never learn from history." -- Warren Buffett
What's the implication to the overall market?
Will people will shy away from investing in stock market? .... etc....
These questions arise after Black Tuesday which happened on 27th February 2007. It started from Shanghai and Shenzhen stock markets because of the rumour that Chinese regulator would impose a capital gain tax to cold down the soon to be bubble market.
Similar crisis happened in May 2006. While the market lost quite significant wealth in the short period, the market rebound after few months and passing through several new history high, especially in Shanghai, Shenzhen, Ho Chi Minn and Singapore.
While the incidence on Tuesday hurt many investors especially retail investors who bet on margin/loan and those deal with Day Trade and they may shy away from the market for a short period, they tend to forget and return to the market in the shortest period. My friends who gain 2 weeks ago and bet more in the hope that they will gain more but the incidence on Tuesday made their hope disappear. The overconfidence turns to sad mood after losing monies in the market. When you compare the "prediction" of those fund managers, chartists, technical analysts, media and so forth, you will puzzle that their "prediction" could change to reverse side in 2 weeks time. 2 weeks ago, they were overconfidence that the market will surpass new high but now all change direction.
Will people stop speculate/gamble on stocks? Very unlikely.... because
"What I learn from history is people never learn from history." -- Warren Buffett
Sunday, February 25, 2007
Q&A between Warren Buffett & University Georgia MBA students , Jan 2007
"The chains of habit are too light to feel until they are too heavy to break."
"Human behavior allows for success if you are able to detach yourself emotionally."
"This is OK because i don't need to win every game, just the ones I play."
"If you don't bring anything to the game, you shouldn't expect to win."
"Human behavior allows for success if you are able to detach yourself emotionally."
"This is OK because i don't need to win every game, just the ones I play."
"If you don't bring anything to the game, you shouldn't expect to win."
Saturday, February 24, 2007
Friday, February 23, 2007
Wednesday, February 21, 2007
Sunday, February 04, 2007
Saturday, February 03, 2007
Friday, February 02, 2007
Thursday, February 01, 2007
Miller Comment on Dell
"We’ve made 30 to 40 times on our money in both Dell and AOL. Most investors rarely hold companies long enough to make 30 to 40 times their money. They’re lucky if they make 50, 100 or 200 percent. We’ve got not only 10-baggers, but 20-, 30- and 40-baggers. (10-bagger is a term popularized by Peter Lynch for a stock that increases 10 fold from your purchase price.) You get those only if you actually invest in companies as opposed to trading them and trying to guess when the stock is going to pull back. We don’t spend time trying to guess stock price action. We spend our time trying to value businesses. "
"When we analyzed Dell, for example, in February 1996, that was a period when you had rumbles of Fed tightening and everybody thought we were going to have a recession. Investors had sold tech stocks down to levels that looked to us to offer an opportunity. Most value people at the time were buying paper, steel, and aluminum, which also were down in the dumps. When we did all the valuation work on those companies, we concluded thay were not terribly attractive or mispriced by the market. Their business fundamentals were poor and were likely to remain so. On the other hand, when we looked at Dell, trading at the time around $1-2 on a split-adjusted basis, we saw a company that had a superior business model, excellent competitive advantages, growing at 25 to 30 percent a year, earning 30 percent on invested capital, and trading at five times earnings. Why would we ever buy a paper company at five times what they hope to earn if paper prices go up if we can buy a terrific company at five times today’s earnings? When we got further into the detail of the business, it looked to us that the market had systematically misunderstood the potential of the company. Historically, PC companies traded between 6 to 12 times earnings. Even when value investors were buying PC companies, they would buy at 5 to 6 times earnings, and sell when they got to 12 times earnings because that was the peak multiple these companies historically had attained. When we analyzed Dell, we concluded it was worth at least 25 times earnings as a business. If you were to buy the whole company, you would pay up to 25 times earnings, whereas the market had peaked valuation out historically at around 12 times. We thought it was worth about five times what the market thought it was worth. It’s highly unusual to find things that appear to be that mispriced, so we loaded up on it. As it turned out, we were right. We actually underestimated the ability of management to execute what turned out to be a very superior business model. Fortunately, because what we do is dynamic valuation, our models are updated every quarter or more often as we get more fundamental data. We’re always trying to figure out the underlying business value and the intrinsic value of the company. Earlier in 1999, Dell reached a level where we thought it was moderately overpriced, so we sold a fairly significant portion of it."
Sunday, January 28, 2007
Bill Miller -- Letter to shareholders of Legg Mason Value Trust Q406
“Active managers are paid to add value over what can be earned at low cost from passive investing, and failure to do that is failure.”“As I often remind our analysts, 100% of the information you have about a company represents the past, and 100% of the value depends on the future.”
“What we try to do is to take advantage of errors others make, usually because they are too short-term oriented, or they react to dramatic events, or they overestimate the impact of events, and so on. Usually that involves buying things other people hate, like Kodak, or that they think will never conquer their problems, like Sprint. Sometimes it involves owning things people don't understand properly, such as Amazon, where investors wrongly believe today's low operating margins are going to be the norm for years. It is trying to invest long-term in a short-term world, and being contrarian when conformity is more comfortable, and being willing to court controversy and be wrong, that has helped us outperform. "Don't you read the papers?" one exasperated client asked us after we bought a stock that was embroiled in scandal. As I also like to remind our analysts, if it's in the papers, it's in the price. The market does reflect the available information, as the professors tell us. But just as the funhouse mirrors don't always accurately reflect your weight, the markets don't always accurately reflect that information. Usually they are too pessimistic when it is bad, and too optimistic when it is good. So grounding our security analysis on valuation, and trying to abstract away from the sorts of emotionally driven decisions that may motivate others, are what leads to the stocks that we own, and it is the performance of those stocks that has led to our performance.”
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