Stock price is cheap or expensive is not based on perception alone. Stock price valuation is about a relative to its ability to generate earning, giving handsome dividend to the shareholder as part of return and wealth generation of the company aka asset appreciation and expansion.

A stock might be Rm0.50 but it can only generate an annualised earning of RM0.01 without much improvement or little improvement, do you want to invest into it? It is much better use to money to put into FD which has much better return.

It is much about how well the stock can generate the return rate. If the stock price is not attractive enough to provide better return than other alternative investment like bonds or FD than there is no reason to invest into stock anymore since you take bigger risk and get the same return as bonds or others which is totally not worth then you will start to see stock market bearish until it drops to a level which its return rate is attractive enough to lure back the investor.

It is not simple a perception. Although there are various opinion how the future economy will be but eventually stock price can't run away its basic fundamental. In short term, yes, stock price can overshoot its fundamental due to over bullishness but in longer term, it surely back to its reasonable valuation based on fundamental.

This post has been edited by cherroy: Apr 21 2007, 09:14 AM

Stock market isn't like that, the more you buy the more expensive it might be. Yes, you get lower brokerage fee but not significant 0.2-0.3% compared to retailers 0.42-0.6%, but the more you buy the expensive the stock become then there is no advantage at all instead of disadvantage. (not talking of 'goreng')

Even for IPO, instituitional price is higher than retailers price normally. As I said before why UT outperform retailers because retailers are poor on stock pick, always like those 'goreng' and 'tips' stock which hope for short term quick gain only while those blue chip which will make significant return rate in the long term looks boring and uninterested for the retailer.

Dreamer,
"goreng' is not illegal as long as it stays at a fine line that didn't cross the line of manipulation. It is somehow a grey area.

As for global fund, some are really good but also some are not that good typically Public global fund, its global fund really underperform compared to others.

I invested in one global fund that makes more than 30% last year if including the unit distribution/dividend of 4 cents then almost 35%. But sadly after deducted the entry fee of 5% then it is about 30% only. That's why I dislike about the UT.

You need to check the global fund feed into what fund since normally they didn't invest on their own rather just feed into overseas well established fund.

Generally, you can't said which type of fund is good or not good, it largely depends on their portfolio and how well the market perform whether economy situation is favourable for bond or good for equities.

To be fair, fund performance should be campared as benchmark since you can't compared bond fund with equities fund because equities fund can generate a return rate of 10-20% easily when equities is doing welll while bond fund generally won't more than 8-9% even at good time while risk exposure is different.

Bonds also come in variety, US treasuries, MGS (Malaysia Government securities), Australian bond etc all goverment related. Don't mistaken that goverment bond cannot being default, there is some history of some poor goverment default their loan especailly when a country facing crisis.

For corporate bonds, locally also got a lot but as Dreamer said, mostly are involved GLCs one. There is a fund called instituitional fund that invest primary on those corporate fund but yield is so so only, not attractive due to excess liquidity in the market even Forex FD yield surpass it though there is a currency risk there.

Different type of bond carry different risk and yield. So still a little bit of diversification of the bonds is somehow needed if you are talking of big fund. Still don't put eggs into a basker applied in bond also.

For global fund, until now those feeder type of global fund is outperforming invest directly one, may be due to inexperience of local fund managers invest abroad, I also don't know.

Korea still got sound good on fundamental but China market has not much solid issue to support its current crazy bull market. Average PE for the market is about 40+, almost an identical scenario with Nasday during 2000.
Almost everyone in China is crazy about stock market, even buying UT also need to queue like mad in the early morning just to buy the UT IPO. People there all think stock market is a gold mine now, that's how scary it is.

FYI, Shanghai composite run up from 1200 level at the beginning of 2006 to near 3800 level at the moment.

Actually, experienced and proffesional analysts are agreeing is that, we can identify and find out when the market or share price is cheap, the difficulty part will be identify when the share price is expensive aka selling is much difficult that buying.

The logic part is that when market has a huge run up or bull run, generally people will be over-optimistic and reluctant to sell even though share price yielding will be so so at that level only since they are hoping (or afraid) share price might even go higher.
Just like many so called analysts, last year when being asked what is your target for KLCI next year, almost 70-80% said 1250-1350, now when KLCI has touched new highat 1334 then eveyone changed their view to 1500-1700 in just less than 6 months time. Yes, I knew target should be changed due to changing economy situation and better business improvement but the most important question, did it change so drastically in this 6 months time, I also don't have the answer. What am I highlight is not to criticise but just to show when market has a bull run then people changing their target sometimes not because of just purely valuation but optimistic perception and influence by environment which is also the weakest part of human decision making.

In bull run time, momentum sometimes carry the share price to unrealistic level typically example is China, it current surge is largely due to its momentum rather than other thing else.

No one can forsee the market accurately, but if you knew it is expensive then why you want to invest? but if you see it has room for the upside means share price not yet expensive then still can invest. There is no perfect answer to this. Judge your own, just beware the risk behind when investing then you already taking a step forward.

Investing is stock market is like more risk more return, if has the higher risk while offering low return rate that can be achieved by other alterative safer investment tool then surely it is not worth anymore. It is about balancing risk rewarding.

Not to criticise PB fund but until now it lacks of creativity of other in term of global and regional fund. Yes, no doubt, locally, it is still the best performing or one of the best but still lag behind in term of global fund.

Recently, others already various of fund type to suit different investors appetide by lauching Agri-culture fund, Property Reit fund, Mulit-asset, Resources, basic materials, European, Indo-China fund etc. Although, mostly are same, equity based but it has different exposure at least.

Dividend fund is just a type of equity fund. Just they are more concentrate investing in high dividend yield stock. While normal equity fund may opt to invest into some high growth stock that might has low or no dividend yield.

Locally, typical dividend stock would be like BAT, Guiness etc while high growth stock would be like Airasia, Astro which has no dividend yield or little only but growth prospect is bright.

Not necessary, if high growth stock perform well.

In bull market and high economy growth situation, high growth stock generally (not 100% though depends on company to company) do better than dividend stock. But when market poor time, dividend stock has much strong footing to withstand the downturn.

But based on historical data in long term, dividend stock did outperform high growth stock.

But remember, it is 'projected' based on historical performance, not guaranteed, bare in mind. A lot of people still don't understand the 'projected' term. It is just based on equity performance last few year which sometimes personal think it is a bit misleading especially for those not familar and fully understand how mutual fund works.

For dividend fund and growth fund, in bull market 90% growth fund will outperform dividend fund. But when market has a hard time, dividend fund or dividend stock is more resilience. But in general, over decades, dividend stock performance is better than growth stock, if you total up all the stock or as ETF like.

The Golden Dragon fund is a very high risk fund, a lot of bankers don't quite highly recommend as everyone knew that China market is on the bubble state.

Yet, high risk high gain.

So invest according to your risk appetide.

Yup, no one can predict when the bubble will burst or the bubble just slowly shrink which is ideal case for current China market situation then no harm done or even the bubble keep on inflating, don't know. But valuation point, it is a really really expensive, no doubt about it.
Gov can control up to certain extent but not the market force.

But personally would play more safe, loss of gain better than losing money afterwards. A loss of 10-25% gain better than losing more than 30%, since if it really burst then it might takes very very long time to recoup back, as seen by KLSE takes 10 years to recover back to original level, and Nasdaq after 7 years, still just at about 50% of its 2000 high, as second board index is just at 100 after hitting crazy high of 600+.

That's why I said invest according to individual appetide.

I had exit and starting to unwind some of the global fund I got, one of it is Hwang-DBS global properties mainly it has exceeded (way beyond I had expected) the projected target aslo concern about the non-stop moving up China market which if burst then might affect the regional market in short term. Although it doesn't mean necessity it will burst, I opt to play a bit safer by taking some profit off the table.

Properties fund and Reit has been performing very good for the last 3 years or so, gaining about roughly 25-30% per annum for the last 3 years. Now, it is not so good considered that interest rate is on the way up for European Union also housing stock or company may face difficulty ahead with previous housing bubble.

The fund started at Rm1.00 now drop to 0.93xx just about 2 months time, bad timing of the launching since it lanuched when properties stock and Reit is on the high side.
But long term, reit is a nice play if you look for yielding, can consider when Ringgit reach its peak since Ringgit appreciation will mean exchange loss for the fund also and vice versa.

Personally think that should avoid any equity fund in near term as stock is not cheap at current moment. Anyway just my personal view, not necessary correct, just like China stock market although is on bubble state, the bubble keep on inflating non-stop. You never know when the bubble stop inflating and burst. But for sure, it is bubbling.

If equities melt down, property stock and reit also can't spare from it. If really want defensive strategy then better look for bonds. But currently bonds are in bearish trend due to increase in interest rate.

In equities defensive approach, consumer and healthcare stock is much safer than properties stock. Consumer and heathcare stock will also hit if equities market plunge but with less degree.

It is like people there already making tons tons of money, then the fund goes there to pick up the left over on the floor. If timing not right then the roof collapse then take years to heal then.
Don't get me wrong here, it doesn't mean it won't make money but just to warn off the high risk of the fund.

Olympics game is a lame excuse, then after 2008, no olympic how? China economy and stock collapse since no more Olympics? If said China got tremendous growth prospect then still make sense, just because Olympics?


Also unit trust agent always tell people to invest 2-3 years before can see the fruit, (mainly because of high entry fee 5% and management fee 1.5%, there go's already 6.5% before you start)
But Olympic game is a year ahead, sounds contradiction, isn't it. Then how to 'cabut', no 'fruit' yet.

Olympic game or whatever, just an excuse, no doubt, it boost the economic activities, but in the end of the day, it is the economy and company earning that's matter, if company earning can't match the patch of stock price icnrement then surely it wil correct back soon or later.

This post has been edited by cherroy: Jun 1 2007, 08:54 AM

Yup, quite correct, there are some China company listed in HK and NYSE also. China Shanghai market (A share) is for their local investor, in HK, there are plenty of B shares that can be traded for foreigners so if not mistaken, those fund invested primary into those and not directly into China market.

Correct me if I am wrong, only familar a bit on China market, information there kind of hard to obtained.

Another point is that using distribution to reinvest is not so wise, my personal opinion. Distribution if taxable then lose some more 5% the entry charge on the reinvest. I always insist my fund distribution being paid as cheque or directly bank into account, never opt to reinvest.
I knew a lot of bankers and unit trust company will auto reinvest your distribution if not specified during buying, with that they earn more from it.

If not mistaken, the reinvest will use the 'seller' price to buy the new unit, not its NAV or buying price so there is a 5%-6% disparity *entry charge between them.

Correct me if I am wrong.

This post has been edited by cherroy: Jun 15 2007, 02:02 PM