Another important factor of investment is timing. Although a property or a stock has good return rate, a better timing of buying with easily maximise your return rate.

Just for example, as Dreamer said, PBB offer good dividen yield while stock is pretty stable to the upside so average return rate is about 7-10% (dividen + appreciation of share price) based on RM6.80 calculation.
But a better timing buying during 98 (once I bought) is 0.88 cents only! So you make RM6 with Rm0.88 capital only in 8 years time which bring you about 600% capital gain turn out to be 75% per annum (not yet calculated the dividen gave out every year).

It sound extreme because of financial crisis during that year which make the share price plunged but what I stressed is timing is also an important factor that will maximise your investment return rate. Economy has cyclical characteristic, so it is important to look for bottom before making investment accordingly. Although bottom is difficult to be certain but at least don't buy or invest when something is already sky high.

just as i mention above, here comes another calculation. FYI 0.88->6.00 (in 8 years), the average compounding interest is only 27% p.a, not 75%. Really bo lat liau ah. .

This post has been edited by Singh_Kalan: Nov 7 2006, 06:16 PM

sorry about the calculation, I don't look into it since I just simplified it since the what I stressed at that statement is that the importance of timing besides other factors.
I just simplified with Rm6.80-Rm0.88 = RM6 gain in 8 years and RM6/0.88 = 680% gain in 8 years, I know the calculation is flaw, just simply gave 75% which, since I am not using any calculator to calculate it, just a simple mind thought of it. with simple annual rate.
I know it is wrong but the calculation part is not my statement intention.

Sorry about the misleading part.

This post has been edited by cherroy: Nov 7 2006, 06:33 PM

So, if the economic crisis comes again, it's the time for us to invest in some stable and well-managed companies. Buy the share when price low, getting high dividend every year, then sell it when the market is high...you can maximize your investment returns.

ok..i understand your intention. But the reason why i want to stress for use of compounding interest is bcoz most investment r based on this calculation. Average interest give a wrong concept to novice and its not fair to the bank that provide product such as fixed deposit, saving acc, loans etc which is based on compounding interest. Most novice will then compare this compounding interest with average interest and make a wrong decision in investment. Wat cha think?

ya haha.... i knew i was right on this.... btw devil how come got people selling their odd lot at funny prices? odd lot can trade?


but then not all well-managed companies share prices will drop such steep and even if it does drop not many are willing to go into it

Leekk8,

Let me repeat one more time, if you get high dividend every year, why would you ever sell the stock?? In the case of buying PB at $0.68, it pays $0.40 every year. Why would you want to sell??

You only sell a stock if and only if you get better ROI by investing it on something else.

<< if it does drop not many are willing to go into it>>

Darkmage,

That is why you get a low price aka on-sale.

You make money by NOT following the herd. People are cows and they follow the herd. So, they buy high and sell low.

For high dividend yielding stock, when the price drop and you get a high yield, you do not have to sell the stock to make money. So, you could collect dividend forever while waiting for the price to go up. You are making money every year.

To be separated from cows/herd, you need to KNOW how to calculate. You need to know when something is a good deal.

Let's take an extreme example, let's say stock A pay $0.40 per year of dividend and the the stock drop to $4. And, I buy the stock. The dividend yield is 10%. But, the stock drop to $2. So, what?? Did I lose money?? No, I still have a stock that yield 10% per year for me. In fact, I can hold on the stock and collect dividend until I can find a even better deal. I had made my money when I buy the stock.

Dreamer

but then you have suffered a paper lost of $2

Darkmage12,

1) Who cares about paper lost?? It is NOT real?? I am collecting $0.40 every year. With this kind of dividend yield, I can hold on the stock forever and never sell. If I never plan to sell the stock to begin with, why should I care about paper loss??

2) Seriously, how long do you think a stock will stay at $2 if it pays out $0.40 every year?? Eventually, the market panic is over and the stock price will come back up again.

As what Warren Buffet had said, do not invest unless you can invest on something that you can forget about it and do nothing for 10 years. You make money when you buy NOT when you sell.

Dreamer

that's why we're only talking about good stocks . not the random stock that will never able to climb back the ladder after the crisis.

my aunty got stucked with her 40k cash in 1 stock until now when since 1997 economy crisis. if she sell it now, she'll lose money, so she wait. (altho tat might be forever).

chinese tradition related stocks are usually good stock - licensed dai yi lung, licensed gambling center, licensed choi san ye center etc.

This post has been edited by ky_khor: Nov 8 2006, 08:44 AM

People doesnt sell odd lot for fun
Odd lots are usually given out as bonus issue, share split or reverse split.
For example, Stock A declares a bonus issue 1 for 10
So if you are holding 100 units it your holding will eventually becomes 110 units.
However, as the normal market is traded in board lot of 100 units, you can only dispose it in odd lot market. And yes there is such a market but usually the commission rate will be higher.

then odd lot hard to sell?

sweet, i just noticed that the PB funds are all forward pricing ....

Yes, you're right. If the dividend yield is high, sure we no need to sell the stock. However, there're reasons for us to sell the stock:
- if management team is changed, the dividend yield might different
- if you know the share price will drop soon, why not you sell it and buy it when price low? You can earn the price appreciation and also the dividend
- if there's another good stock that you want to invest into

@leekk8
you should do contra trading

It has been a long time I haven't been here,so many old timers are still around!

There's a odd lot board that you can sell your odd lots,just ask your Remisier to put up the quotes for you.The quotes are normally quite far off from the current market price.

One point to note,you should sell your odd lots on the same day you sell the board lots,this is because in most broking firms,all selling contracts in respect of the same counter executed on the same day will be consolidated into one contract,and brokerage is calculated on the selling amount.That means you pay less brokerage fees this way compare to selling board and odd lots on different days .but you have to first check whether is consolidation practise by your broker.

This post has been edited by lklatmy: Nov 8 2006, 10:39 AM

<< You only sell a stock if and only if you get better ROI by investing it on something else.>>

Leekk8,

You are saying exactly the same thing that I am saying but with more words. Learn to say more with less.

Dreamer

You do not sell. You just buy more. You NEVER really know the share price will drop soon. You think you know that the share price will drop soon.

If anyone in the world know EXACTLY what will happen in any ONE share price, the person will be extremely rich.

Dreamer

P.S.: A few years ago, I made the mistake of believing that I know how a share price will move. It costs me 50% of my whole life's saving at that time. Hopefully, you will learn this lesson with much less money that I lost.

This post has been edited by dreamer101: Nov 8 2006, 11:02 AM

I think sometimes we got reason to sell :

1. Company profit will decline due to deterioration of economy situation, hence low profit -> low dividen.

2. Interest rate will go up, which is related to No.3 below.

3. share price is unreasonable price or price is expensive based on forward PE ratio. Eg. if interest rate is 5% so theorectically forward PE shouldn't be more than 20 since PE ratio of 20 is also about simple 5% return rate. What for you invest in share which give you the same return rate as FD. Forward PE is more accurate to measure, not current PE.

4. Poor prospect or management change (from good to bad)

5. Also, dividen yield must be based on profit earned, special dividen can't be reliable since it is one off which used company acculumated profit to give out. Eg. Pos Holding recent declare special dividen Rm1.++ which is one off.

Share price won't forever go up or go down. If economy situation or share market has peak that better sell it first and taking its profit. After all, like everybody said, it is still a paper profit untill you sell it.

Thanks dreamer for your advice, I will remember what you've said and try not to predict how the share move in short term...

Yes, I have to learn to say more with less, but it's not the only reason for us to sell the share...so, I disagree with the statement you made, which states IF AND ONLY IF... I agree with cherroy, if the management change, the performance might be poor, and dividend will be less or no more dividend. Just imagine, a good performance company change management then buy over some bad companies, sure the performance will become bad...