All,

I started this thread so that I can post my views on personal finance and let's others to post questions to me.

Dreamer

---

Added on July 16, 2007, 7:49 amLayered cake approach of investment

Imagine that you have a cake and there are multiple layers to that. For investment products, there are various level of risk versus return and you put money into each layer accordingly.

1) I do not consider emergency fund as investment. That is the minimum level of safety before you take any kind of risk.

2) Insurance is for risk management. For insurance products that provide return, it needs to tested against other product as for it risk adjusted return.

In the foundation, you have low risk, lower return product. In that category, you put most of your money. You should have low or close to zero risk of losing your money. Safety first. In the foundation, you have slow and steady growth.

On the upper layer, you put in less money. You have chance to lose money here but the return should be high enough that if you win, you win big.

The problem in Malaysia is we have SOME but not many choice in the investment products.

In USA, my base foundation is based on USA stock index fund, world stock index fund, USA Real Estate Fund, World Real estate fund, and USA bond fund. This is where I put most of my money. The bottom layer is designed to grow 9% on the average in the long run. It is tested against 60 years of historical data.

I do speculate and gamble on some stock. But, it is less than 5% of my money. I only buy stock that may provide 3 to 10 times return. For that risk, I prepare to lose 100% of my money in stock. I do not buy any stock that promise less than that. It is not worth my effort.

Dreamer


This post has been edited by dreamer101: Jul 16 2007, 07:49 AM

I've been reading many of your constructive threads/posts for sometime and I have to say that they are good.

I have bookmarked this and am certainly looking forward for some good stuffs from you.

Keep up the good work. Thanks

http://www.ricedelman.com/planning/default.asp

All,

One of author that I highly respected and where I learn the layered cake approach from.

Dreamer

It's good of u to share your knowledge on investment so may I suggest u start with teaching us how to go about investing in those funds u mentioned. Thanks.

You need to ask the FIRST QUESTION first. How do you know XYZ product is RIGHT for you?? You can lose MONEY by investing on the WRONG PRODUCT for you.

Not everything works for everybody.

For example, for people that deal with short term trading, they have to watch the stock closely. You may or may not be able to do that. Or, you have much better thing to do in life.

I am NOT trying to sell anything to you. I want people to take a strategic view of investing and construct their own LAYERED CAKE.

Dreamer

There is no such thing of a right rule for everybody. Each person is different in term of financial situation, willingness in risk exposure, knowledge, job commitment etc. Example if you are working as a pilot, you don't have time to monitor the market nor acceess market information in time, then UT or ETF might be (might be but not necessary since there are some stock that you almost can forget about it after you bought) better choice compared to invest your own.

May I ask on how people with little capital construct their Layered Cake, especially for those younger and just-started-working ones?

These people have little choice of investment and most likely can only concentrate on one kind of investment due to shortage of capital for diversified investment.

This post has been edited by kimhoong: Jul 16 2007, 12:20 PM

First of all, I agree with dreamer on the emergency fund and insurance. I believe one should take care of all his/her security matter before going after any investment. Assume 1 day you fall sick and lose your job, how are you going to survive the rest of your life ? The answer is your emergency fund and insurance will take care of you (and your family) in the worst possible scenarios.

Now on the investment part... Investing in USA... Let's try to make this a constructive post for everyone. I believe it's easier for us to see the big picture if we list down all the pros and cons for investing in USA comparing investing locally or emerging market.

Pros
1. Lower Cost for most UTs in USA (except for hedge fund... hedge funds dont really apply here since dreamer is going after conservative to moderate investment vehicles only)
2. Highly diversified portfolio

Cons
1. Barrier of Entry - How can one get started investing in USA ? Whats the minimum fund required ? How to get hold of the cheapest exchange rate around ? It raised a lot more concerns compared with investing locally. I do not have any experience investing in USA directly, perhaps dreamer can tell us more about it.
2. Forex Market - Its true that investing in a USA index can enjoy a more diversified portfolio. But does the risk adjusted return of investing in USA really bigger than the risk adjusted return investing in locally ? From what we have observed in the past 1 year+, USD has depreciated ~10%, and many experts believe that the USD is still going to depreciate even further. So, is it wiser to wait for the USD depreciates more before we enter the market ?
3. Economy Growth - USA is running at a <3% growth annually now, and they are having problem coping with the rising inflation rate. There have been many speculations on USA will be getting into recession soon. If some day, the inflation rate > growth rate happens, it would mean they will experience a negative real growth. With such economy prospects, is it worth to invest in USA in long term ? You can argue that its still possible to make money from USA as many of its firms is making enormous gain from foreign market. But.... wouldn't it be wiser you invest directly into the foreign market ie the emerging market ?
4. Almost always perform poorer than the index - An index fund will almost always perform poorer than a market fund because of its charges. Not by much, by 0.x% annually. For people who can afford to take more risk and wish to make above market return, what would you suggest ?
5. Worst possible scenario - If you have seen the historical past of USA market in their recession, they struggled A LOT more than we did with our market. So now both M'sian and USA market are at its peak. Someday they will fall, if both will be going through the deep recession, which economy will be suffering more ? How long would it take for USA market to recover compare with Msian market ? Given the current USA economy condition, it certainly doesn't look good if recession were to hit the country.

Investment method
I'm wondering what kind of investing method do you use to take full advantage of this highly diversified USA market ? A dollar cost averaging method ? A lump sum investment ? Purely passive investment or changing your equity exposure from time to time ? Different methods certainly would bring different outcomes.

I have a question on how did you get the 9% return over a USA portfolio ? Is it a raw gain or net gain ? Have you deducted all the expenses incured in forex, transaction fee etc ?

I personally believe in long run, investing in emerging market like china, hk , taiwan, s.korea, sg, msia would provide a better return (while it's possible to expose to slightly higher risk). The key is the investment method you pursue to get your return from these markets.

It's just the little thing I can think of atm, feel free to update the pros and cons list above.

This post has been edited by ejleemy: Jul 16 2007, 02:04 PM

I'd been thinking for years to start some investment but I never get chance to study due to my heavy work load! (well, can be considered as I don't have the patient to read on those stuff! )

Till now... the spare cash still hanging there with bank!!!

dont be rush planning your investment, lots of people wants to get rich quick and they gamble everything in one kind of investment, then the UT or mutual funds will starts going down..

i agree with dreamer's first post's point no 1 and 2.

dreamer, you are a senior here. i agree with your investing methodology but i want to know how to get it done practically. i do know that everyone has different taste in investing, but i want to know your "taste". i want to know how to invest in the US, which fund you invest, how you file your tax returns, which local stocks you choose and why if you can guide me step by step and if i can take all the risks, i would most probably follow your footsteps.

as an investor, i take calculated risk and always go for best return for money.

as for yygal, planning to invest is good. have been planning to invest for years but never done so due to work? 365x2 (years, plural) = 700days, not one day for investment study? well, it;s your lucky forum. there are many people who are investing savy here, some are even agents. call them out for a talk, you don;t have to buy. bring along your friends for your safety and sharing information. the more you procrastinate, the more you tend to lose out on the advantage of compounded interest.

---

Added on July 16, 2007, 4:31 pmalso you guys might be interested to visit this URL page.

about US inflation rate and also tells that year-to-date April, the inflation is running 4.8% to 7.4% in US. there's also inflation risks apart from the risks that ejleemy mentioned.

This post has been edited by 1stLaksamana: Jul 16 2007, 04:33 PM

If you buy good solid stock and the lot size is only 100, you can start with little money.

ejleemy,

You do not understand the basic of asset allocation model. We are using an A/C in USA. We are investing on asset, stock, bond all over the world. It is NOT in USA ONLY.

Do you understand that in most cases, you can use asset classes to manage your risk? For example, in recession when the USA stock market clashes, the bond market is doing very well. By having investment in both, you diversified and cancel out each other. Due to re-balancing, you always buy low and sell high.

For example, to protect against US currency devaluation, I invest on international stock index and international REAL ESTATE. So, I diversified and manage the risk. You can do this as an individual investor in USA easily. I am my own fund manager. I can hedge my risk. This is call the science of investing.

Dreamer

---

Added on July 16, 2007, 6:58 pm1stLaksamana,

For every kind of risk, there are SOME asset class that gain from that. So, you manage your risk by spreading your investing out to enough asset classes that you hedge your risk.

What makes you think inflation is a problem?? Stock in USA always return higher than inflation in the long run. It is NOT a problem.

Dreamer

This post has been edited by dreamer101: Jul 16 2007, 06:58 PM

Dreamer,

Actually I don't quite understand something here. Many said that if the stock market crashed, switch to bond. When the market really crashes, can we really switch in time to bond? This bond thingy, is it limitless? I mean can it be fully bought? If we all rush to buy bond when the stock market crashes, can there be enough bond for all of us to buy?

Cheers,
max

maxwoo,

<<Many said that if the stock market crashed, switch to bond.>>

That is why most people LOSE MONEY. That is the worst time to switch to bond. You sell stock (LOW) and buy bond (HIGH). When you buy high and sell low, you always LOSE MONEY.

In asset allocation model, you always have investment in both STOCK and BOND. Let's use a simple example of 50% STOCK and 50% BOND.

When the STOCK MARKET crashes, BOND market went up. So, now, you have 70% BOND and 30% STOCK. You do re-balancing. You sell enough BOND (HIGH) to buy STOCK (LOW) to make sure that you have 50% STOCK and 50% BOND again. Your re-balancing make sure that you SELL HIGH and BUY LOW. And, you only do this once every 12 to 18 months. It is a mechanical system that take emotion out of equation. People won Nobel price for proving this.

Ditto, you can have investment in USA and outside the world and so on to balance thing out. In fact, you want asset that DOES NOT correlate with each other as much as possible. Aka, they do not move and react to each other.

In this kind of system, you do not switch fund except maybe once a year for re-balancing.

The goal here is TO MAKE MONEY under all circumstances. Take luck out of equation. It is a science and NOT an art.

Dreamer

This post has been edited by dreamer101: Jul 16 2007, 08:32 PM

Sorry for my noob question, so usually we buy the 50% stock and 50% ourselve or there is some kind of fund that help us do the mentioned task.

so buy high sell low?

sorry but you have yet to reply to my questions. if you can just teach me exactly like what you do, i'd be grateful.

mainly this part "i want to know your "taste". i want to know how to invest in the US, which fund you invest, how you file your tax returns, which local stocks you choose and why"

Oops!! I made a mistake. It should be you always lose money when you BUY HIGH and SELL LOW.

https://flagship.vanguard.com/VGApp/hnw/fun...&FundIntExt=INT

VSMGX

In USA, you can buy one fund that consist of 4 funds and they will do the re-balancing for you automatically.

Dreamer

---

Added on July 16, 2007, 8:36 pmBond is equal to fixed income. So, you pick the best fixed income investment product that is available to you. Fixed income could be FD and other stuff.

In USA, you can buy a fund that has both stock fund and bond fund. The fund itself will do all the work for you. I do not believe there is any good UT on this for Malaysia since we have NO REAL INDEX FUND.

Dreamer


This post has been edited by dreamer101: Jul 16 2007, 08:36 PM

Thx for sharing, are we able to emulate this model locally?

Dreamer,

I tried looking at the fund you mentioned but how can I invest in that particular fund. I can't find any useful link for non-US investors. Kindly advice.

max

Hi Dreamer, after reading this article, I am very interested in your views and opinions.

I am 18 this year and I was thinking of investing. Stock market is too early for me right?

I do have 2 funds in UT, under my mom's name. I just put the minimum amount only, just to see what I could get.

Anyway, any suggestions for people aged like me?

Kindly appreciate if you have advice.

Dreamer, a lot of unanswered questions from my previous post.....

Of course I do know the asset classes and potential risk-reward on different classes. I was expecting you could provide us your method that would allow a conservative investor to invest and go to sleep for 5 years (something you have mentioned repeatedly for N times) and gain a handsome avg return like 9% you've mentioned.

But now you are talking about active management is needed together with market speculation. How can someone go to sleep for 5 years in this case ? I don't deny vanguard has one of the best reputation in UT industry. If you were to invest in that fund, you are relying on the fund manager's skills to gain profit from the market and you have no guaranteed that the manager will be around for the next 5 years no matter how good he is. There are more and more high profile fund managers leaving these big firms to setup their own hedge funds and make billions of dollars. It makes not much difference compared with investing in a local or asian UT except you are swapping the cost of entry with other potential risk.

So you agree with me on the potential USD forex risk... if we look at the recent record, the person who has invested in a global index has gain less than the person invested in an emerging market index. One could just avoid the direct risk of USD forex if the person goes for an emerging market indexes in a more stable currency. There's no absolute right and wrong on investing, just wise or not wise. It's wiser to invest in only the good market segment.

Aha... I see the min investment for the fund is USD 3k equivalent to about RM 10k+, work out to be about 3 month income from an average Msian household. It's too much risk for an average Msian to put 3 month income to try out this US investment if there's no guarantee it would be as good as you've mentioned.

ejleemy,

<<But now you are talking about active management is needed together with market speculation.>>

You need to get your BRAIN out of Malaysia. There is NO REAL INDEX FUND in Malaysia. So, you have NO IDEA what a REAL INDEX FUND is.

VSMGX consist of 4 funds: 3 of them is REAL INDEX FUNDS. One of them is an asset allocation fund that move between STOCK INDEX FUND and BOND INDEX FUND. I like that asset allocation fund so I use VSMGX. But, you could have choose this

https://flagship.vanguard.com/VGApp/hnw/fun...&FundIntExt=INT

VBINX

that always do 60% stock and 40% bond.

In a REAL INDEX FUND, there is NO ACTIVE MANAGEMENT. The fund just buy all the stock or bond in the index. SO, there is NO FUND MANAGER.

<<So you agree with me on the potential USD forex risk... if we look at the recent record, the person who has invested in a global index has gain less than the person invested in an emerging market index. One could just avoid the direct risk of USD forex if the person goes for an emerging market indexes in a more stable currency. There's no absolute right and wrong on investing, just wise or not wise. It's wiser to invest in only the good market segment.>>

1) You are looking at a very short term. So, what do you do if USD strengten against RM?

The best strategy is something that works regardless of whatever the currency situation.

2) So what? I had hedged my foreign currency risk by investing in BOTH US STOCK INDEX FUND and World STOCK INDEX FUND.

<<It's wiser to invest in only the good market segment.>>

Buy HIGH sell LOW. How do you make money?? When you know it is GOOD, other knows it too. And, the price will be HIGH.

Dreamer

---

Added on July 16, 2007, 10:02 pmairbag_grado,

It is a generic concept. You are constructing a portfolio of multiple asset classes.

My goal is to teach you on how evaluate the different asset classes and you can build your own cake base on what works for you.

Only buy investment products that you can understand. If you cannot understand how XYZ can make money for you and when it can lose money for you, don't buy.

Sometimes, you just need to learn by mistake. Put a little bit of money and try it out too.

Dreamer

This post has been edited by dreamer101: Jul 16 2007, 10:02 PM

Doh, stop trying to avoid my questions already.

My post was referring to the link https://flagship.vanguard.com/VGApp/hnw/fun...&FundIntExt=INT you given on the actively managed fund. That's an actively managed fund. ISN'T IT ? I would believe investing with warren buffett could gain a higher risk-adjusted return than with this actively managed fund you mentioned as long as warren buffett still take charge of his company. Do you realize there's skill needed in selecting actively managed fund ? Don't simply point an actively managed fund out then divert the attention to another index fund.

We do not have a complete KLCI index fund, but we do have a FBM30 ETF that has covered on major leaders from various sectors in Msia.

And that fund is an USA market fund.... gotta expose to high forex risk. Why would someone follow your advice to invest USD 3k in this USD index fund then ? You need enough reasons to convince people to do so. Therefore I listed out all the pros and cons.

What other funds you have got ? Please list all of them out. And how do you recommend someone similar to your risk profile in investing these funds ?

You need to learn first before you invest on anything.

Know what you are getting into.

Dreamer

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Added on July 16, 2007, 10:12 pmhttps://flagship.vanguard.com/VGApp/hnw/fun...&FundIntExt=INT

ejleemy,

Check out the URL.

A) This fund ONLY has 25% actively managed.

B) This fund has 10% in international index fund

<<Why would someone follow your advice to invest USD 3k in this USD index fund then ?>>

I am NOT selling anything. I am NOT advising people to buy this fund.

<<What other funds you have got ? Please list all of them out. And how do you recommend someone similar to your risk profile in investing these funds ?>>

I intentionally do not want to list them out. I want people to THINK for THEMSELVES. What is RIGHT for me is bound to be WRONG for others. I have MANY MANY reason unique to myself that why I am choosing this set of portfolio.

I am INTERESTED in teaching people how to pick the RIGHT SET of product for themselves.

<<We do not have a complete KLCI index fund, but we do have a FBM30 ETF that has covered on major leaders from various sectors in Msia.>>

A) That is new. Show me the information please.

B) I hate NEP. I refuse to support GLC. So, 50% plus of KLSE is NOT an option for me.

C) I believe that Malaysia Economy will crash and may never recover.

Dreamer

---

Added on July 16, 2007, 10:21 pmAll,

The problem here is EVERYONE want to SELL you something and earn commission from you. And, EVERYONE want to BUY SOMETHING without learning anything. Guess what. It does not work. You need to learn or else, you should stay in FD. If not, be prepare to lose a lot of money.

Dreamer

This post has been edited by dreamer101: Jul 16 2007, 10:22 PM

Dreamer, have you got any idea on how to measure risk at all ? I've never seen you provide any useful data on assessing your risk with USA investment at all.

Oh, I just found out a good chart from your recommended site. Perhaps you could start working from there. Do it scientifically, go get the latest 10 year data along with the forex. And show us how much risk there really is in investing in USA. Who knows it might really be a good undiscovered deal right ? Prove it. If it's really that good, I will be entering the US market next month.



We survived the 1997 crisis. Didn't we ? Again, please prove your statement... My view is opposite. As stated in my previous posts, if both USA and Msia were to go thru recession, USA will be the one trouble recovering given my rough analysis on current and future of USA economy.

I thought this topic is on USA investment. There's nothing to do with sales. In fact, have you realized you are paying to the fund manager to invest in any actively managed fund like the one you mentioned ?

Dreamer, I hope you can wake up to see the big picture after you done with the risk assessment.

This post has been edited by ejleemy: Jul 16 2007, 10:33 PM


Attached thumbnail(s)

to ejleemy and other guy,please note that

1)dreamer has us citizenship/pr(i can't remember,please check his old topic).so generaly,he need not worry the malaysia tax and malaysia currency issue.howewer,he still Malaysian i think(dreamer please correct me if i wrong),so he can invest in Malaysia too.please don't think him do not want to teach you all about the tax and currency,he just no need to worry this,instead of must dreamer answer this,how about make it a open question,anyone has experience can answer.

2)please read carefuly,he never ask anyone one to invest in us,he just show how he done in us,he want we to see the way he do,see we can implement in our very own situation or not.

please have a serach on dreamer old topic,you all will know him more and figure out why his have such investment strategy.

to Dreamer,i try to do a explain for you,so that you do not need to repeat old thing many times,howewer,if anything i say wrong,please accept my apologies.

please note above statement is base on what i understand dreamer after follow up his post sometimes,if anything i say different with dreamer reply later,please use his statement.

hope this will help people more easy to read dreamer further post.

Cheer!

I beg to different, even though we did survive it, but it is not as successfully as compare to other country that suffer the 1997 crisis. Most of the other company are having better improvement in economic compare to us after the crisis. But you might not find this reported in our media.

ejleemy,

1) No, This topic is NOT on US investment. It is on INVESTMENT STRATEGY.

2) You pick and choose what make sense for you to construct your portfolio.

3) I have my biases and what makes sense for me. I am not trying to convince others to follow my particular portfolio.

4) I trying to show people what is the way to evaluate and construct a portfolio.

5) You still DO NOT GET IT. You have a chart of US STOCK INDEX. So what if the US STOCK MARKET crashes?? In a balanced portfolio where you have both US Stock and US bond, you would have make money from US bond when US stock market crashes. In re-balancing, you sell bond (HIGH) and buy stock (LOW). Then, when US STOCK market has a BULL RUN, the bond will do badly. You sell STOCK (HIGH) and buy bond (LOW). You need to study modern portfolio theory.

It works!!

athlon 11,

1) I have US PR and Malaysian citizenship. I am trying to hold on my Malaysian Citizenship but Malaysia may goes to hell and nothing to come home to.

2) Correct. I am NOT trying to sell anything. I am here to teach and let people figure out what is right for them.

kockroach,

IMHO, we survive 1997 by using our OIL MONEY. We did not reform our economy like others. But, in this thread, I am not trying to talk about economy.

The correct question is you should have a portfolio that can profit and survive any economy crashes.

Dreamer

so the key word or the strategy is balancing and buy low sell high....it sounds simple, very simple indeed, how come so many people didn't realize about it and still lose money?

I think they don't have enough funds to sustain losses,

need to lose to be a winner

http://www.marketwatch.com/news/story/here...7D&siteid=yhoof

Lazy Portfolios' beat S&P 500's 'record'
Vanguard, Fidelity and T. Rowe Price have peak-to-peak winners
By Paul B. Farrell, MarketWatch
Last Update: 10:23 PM ET Jun 4, 2007

Here is the deal. I do not know how the Malaysia and US tax situation works in this kind of situation.

1) Malaysian cannot open mutual fund A/C in USA.

But, Malaysian can open USA Stock Brokerage A/C like e-trade. And, with E-trade A/C, you can buy all kind of ELF/ETF that represent the same stock and bond index fund. And, the commission is around USD $10 to $15 per trade. You can buy as little as one share.

So, with around USD $5K, you could buy ETF/ELF in US Brokerage A/C as per the portfolio shown in the URL above.

Dreamer

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Added on July 17, 2007, 4:14 amThree reasons:

1) Knowledge. They do not know this. And, nobody want to tell them since most people are only interested in selling as opposed to education. And, if people know this, they will be out of job.

2) Discipline. You need to know enough and believe in it to work. Remember, you are doing opposite of what everyone is doing. Aka, when people panic and selling in stock market, you are buying. And, reverse.

3) It may now work for Malaysia stock market/economy. I have faith in USA to survive a recession. But, Malaysia mat crash and sink.

It takes me 15 years to learn this. Until I am willing to admit that I am stupid and I cannot play in stock market, I am not willing to adapt this system.

Dreamer

This post has been edited by dreamer101: Jul 17 2007, 04:14 AM

dreamer/fellow forumers,

i am planning to get involve in property investment. is it better to buy an available property and rent out
or
build it from scratch? i plan to buy a 1 acre of land, and use it as a collateral to get loan from bank and build a brand new home from scratch, i will either rent it out or sell it at higher price. usually how much does it cost to build a simple double storey house with 3 rooms and 2 toilet cum bath rooms? by the way the place is in sabah.

---

Added on July 17, 2007, 4:35 am[quote=dreamer101,Jul 17 2007, 04:09 AM]Three reasons:

1) Knowledge. They do not know this. And, nobody want to tell them since most people are only interested in selling as opposed to education. And, if people know this, they will be out of job.[/quote]you mean the fund manager lose their job?

[quote]2) Discipline. You need to know enough and believe in it to work. Remember, you are doing opposite of what everyone is doing. Aka, when people panic and selling in stock market, you are buying. And, reverse.[/quote]i guess the average people throw life savings into one bond or stock only, when it drop they panic and sell low.

[quote]3) It may now work for Malaysia stock market/economy. I have faith in USA to survive a recession. But, Malaysia mat crash and sink.[\quote]it may NOW work or it may NOT work?

[quote]It takes me 15 years to learn this. Until I am willing to admit that I am stupid and I cannot play in stock market, I am not willing to adapt this system.[/quote]mind sharing what you did wrong?


This post has been edited by ah_suknat: Jul 17 2007, 04:35 AM

ah_suknat,

How do you know that it will make money?? If you do not know, why do you want to do it??

The best real estate deal in Sabah that I know of is Oil Palm plantation. But, the scale is very big and it is in the 1,000 acres range. It will take a few millions to plant Oil Palm but the profit/cash flow is very good.

1) Why do fund manager/UT sales person want to tell you things that put them out of business?

2) Average people are cows. They follow herd instinct.

Play with stock market in the bull run. Get out too late. Lost half of my life savings. My sweat and blood money that I save for a long time by living only with 25% of my gross income.

Dreamer

i cannot 100% sure that it will make money, but base on my speculation, it has huge potential. 1stly, the piece of land is situated in the developing town of ranau, it's near to sabah most tourist attraction which is the mount kinabalu the hot spring, kinabalu national park etc. more and more chinese businessman start to invest and do business here. a lot has been change since the past few years. more job opportunity being offered, so i guess there must be a demand for housing.

as you said few millions....it's waaaay out of my league...unless you wanna joint venture lol.

but if their advice is always flaw, they risk their reputation no?

quote of truth.

as a result of no diversification aka balancing?

I think US will definitely survive any crashes coming forward. Most of us know that US is living on a borrowed money from Middle East, Japan and China and all these countries will continue to do so to ensure the stability of the world economy. Until another country can take US role as world no.1 economy, I think the whole world will continue to pump money into US.

There are various reports saying that Malaysia is not ready for another financial turmoil. Try to google it for more information. In fact, many warnings has been initiated since beginning this year. Our oil reserves is expected to finish by 2020 and by 2010, we will have to start to import oil. There's really not much time left.

max

ah_suknat,

1) I do not have first hand knowledge about this kind of stuff. But, my aunt exchange her land for 30% of the houses in a joint venture with developer. This might be safer way to go.

2) Somehow, I feel like you need to borrow a few millions to build the houses.

3) People in Malaysia are not smart enough to evaluate fund manager yet. In USA, there are REAL INDEX FUND. The fund manager has to beat the REAL INDEX FUND or else that we know they are no good. But, in USA, there are still many funds out there and people still buy them even though they are no good.

4) Yes and I am a lousy gambler. I do not have the right mentality to speculate. I am the WRONG person for this kind of strategy.

Dreamer

Hi,

I'm just curious, how are we going to open a US stock brokerage account?

1) I been through 2 USA recessions and one Malaysia recession.

2) If you borrow $1 and you only have to pay back $0.50, you are doing well. When you are debtor, your currency devalue means that you have to pay back less. Of course, it will not last forever. USA will get into trouble.

Dreamer

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Added on July 17, 2007, 8:08 amSomebody in lowyat.net claim that they can do it by www.etrade.com

Post a new topic and see whether someone can help you.

Dreamer

This post has been edited by dreamer101: Jul 17 2007, 08:08 AM

Dude... Dreamer has already shared with us what HE knows and what HE thinks is right. Keyword is WHAT HE THINKS is right. This is his thread so why each of your post is like challenging his views and what HE thinks is right.

Why not you just go "prove it" yourself if you're so interested. No point posting all these negative messages. Dreamer is just trying to share HIS views with us. Asking people to go get 10 year data and all that is a bit too much. If you don't believe his theory or is views you should just go get the data yourself and make a judgement yourself.

Whether USA or Msia makes it thru the next recession we will never know for sure until the next recession comes.

So just stop being a pest and let Dreamer speak. I find it very annoying when someone is trying to help but someone else in the background is like trying to discredit what this person is doing.

Well, he has admitted on his biasness on Msian market. I just knew he's a USA PR. Hence investing directly in US market is a very reasonable thing to do for him. But is it for a typical Msian like myself ? I am eager to find out, because I would like to take advantage of it too if the market there is really that good. I do not deny the possibility in the future I might start an online investment account in USA and could use some of his advice. Therefore Im here to find out. Understand ?

One can just view a stock market as a mathematical model with many variables and each of them carry a different weight and has different impact on short/mid/long term. It would be a more appropriate way for us to view the attractiveness of this market if we see it in mathematical way.

For the recession discussion, one can refer to the great depression happened in USA. Use it as a reference. When a deep recession were to come, both bonds and stocks will lose its REAL VALUE. Only RESOURCES (like gold, oil) will have its real value intacted in such circumstance.

I send my apology to dreamer and anyone here who I might offended in my previous posts in my attempt to pinpoint all the reward-risk with this market.

cktwai,

1) I had provided a URL about how a portfolio beat S&P 500 index for 7 years. See first quote.

2) As part of the service provided by Vanguard to A/C holder, your portfolio is analyzed using 60 years worth of data. The problem is I cannot show that information without revealing too much of my personal data.

The service is called "Portfolio Watch". You can google "Portfolio Watch" and Vanguard to get more information. You probably can do the same thing with morningstar.

<<This is his thread so why each of your post is like challenging his views and what HE thinks is right. >>

3) I have NO PROBLEM that he challenges my view in this thread. I can be wrong. But, so far, I think he does not know the basic about Modern Portfolio Theory and Asset Allocation Model very well.

Dreamer

WHOOA.. man.. dreamer, you just gave away the secret to backdoor investing in US.
You all need to read a few post up see 'em.

Yes, anybody in Malaysia actually can open account with a brokerage firm in US and you can even buy great stocks like GOOG, AAPL, IBM, etc. or Mutual Funds of your choice.

Also, BN kept a very close eye on how much money you're transmitting out of the country, just don't do it in one lump sum (<RM10K per transac).

As non-residents, you'll be subject to withholding or have to pay US taxes as non-resident (1040-NR), the capital gains as not subject to tax because you'll be doing arm-chair trading using your computer from Malaysia.

This post has been edited by netfan: Jul 17 2007, 10:19 AM

theres only couple of blue chip stock in Malaysia can buy, for eg : Telekom, Tenaga, Calsberg, Pos Malaysia, TOTO, Magnum, Bernas.. thats all i know.

I dont think you hit Dreamer's favourite. You said couple but got 'n' examples?
But Tenaga is the one that will make profit even how bad the market is, but it is prone to oil price.

A lot of people don't realise Tenaga currently buying natural gas from Petronas at a huge subisidy/discount compared to market price. Without the indirect subsidy from the Petronas, Tenaga needs to increase the tariff again otherwise it won't be registering good financial result.

Malaysia did survive through the 1997 financial crisis but we all pay the hefty price, our saving is depreciated more than 30-50% indirectly. But the recovering is surely lagging behind compared to others.

You are right about subsidising, most GLC have that. I wonder when will be the next tariff hike? Tenaga is monopolying the electricity supply in our country, so what I mean in my previous post is we still are the main consumers of Tenaga even how bad the market it. They might not be earning money but they are monoploying the market.

It is true that our country economy fundamental is not strong, we are lagging behind many SEA countries. Look at Singapore now, and we can know. Someone said we cannot compare two country from two different category, what I think is 'open your eyes'.

Rising oil price will hurt global economy.

Shih,
I am not saying Tenaga is good or not (to be classified as good blue chip or not) which is not my main point.

The highlighted quoted statement, is the main problem of many GLCs, can't or difficult (since totally said can't is a bit harsh, at least to be fair to them) survive on their own without gov.
I am not saying it should raise tariff nor Tenaga won't have good earning or not. Just to point out the problem of of some GLCs.

This post has been edited by cherroy: Jul 17 2007, 02:45 PM

I know that. No offence at all. Many GLC cannot really perform without the assistance of government. I just want to mentioned something, it is the market shares, I mean Tenaga is taking the almost the whole cake. I think there should be a competition between the electricity suppliers, as consumers, we might be benefited. Just like our country TELCOs, the tariff is going down instead of rising. (not sure whether I used the correct example)

YTLPOWER, GENTING seems like have certain expertise in this field also.

Shih,

You are wrong. Tenaga is forced to buy electricity from Independent Power Provider (IPP) at high price. Plus, Tenaga has to purchase the power even it does not need it. So, Tenaga is at a very bad spot.

I do not invest on any GLC period. After the 97 UEM affair, I refuse to be trapped into that kind of situation again. If you want to invest in GLC, you need to learn about the 97 UEM affair and decide whether it is worth the risk.

Dreamer

Hi Dreamer101,

I am afraid that you might miss my thread so I took others advice to contact you directly on your personal thread.

I am making ~RM6k a month and have some savings, I want to do some investing but I do not know where to start so I hope I am able to get some guidance in here.

My options are pretty are but not limited to:
1. Stock - I am learning this and my friend's mom is reliable and active in the market so I just follow her buy. (No, she is not those pasar lady who dont know stuff, she knows her stuff and was a business lady, resigned to be full time in stock market)
2. Unit Trust - Public Mutual have China Fund, Far East Fund and etc. I would like to know more about the risk and ROI
3. Fixed Deposit - Last option and preferably not touch this
4. I see all this: (May I know which is for non-bumi? and applicable to all races?)
1. Amanah Saham Nasional (ASN)
2. Amanah Saham Bumiputera (ASB)
3. Amanah Saham Wawasan 2020 (ASW 2020)
4. Amanah Saham Nasional 2 (ASN 2)
5. Amanah Saham Malaysia (ASM)
6. Amanah Saham Didik (ASD)
7. Amanah Saham Nasional 3 Imbang (ASN 3)
8. Amanah Saham Gemilang

What's the difference in Unit Trust, Mutual Fund and Bond? Can someone give me a clarification, please? I tried to Wiki these terms but its not very clear to me especially all the examples I read is based on other countries. Can someone give me a local example?

Will you be able to drop me some good advice? Thank you.

---

Added on July 17, 2007, 11:46 pmAnother family / personal matter, it may be wrong or not feasible but I would like to hear advice of others on my scenario.

I currently have 4 houses.
- 20 years single storey terrace, X
- 20 years double storey terrace, Y1 and Y2
- brand new bungalow, Z

Currently, my family (including parents and myself) are living in a double-storey terrace (Y1). We just bought the bungalow(Z) last year and took a 15 years loan for it paying RM4000 a month. I am not poor, nor rich but just average. My family runs our own business shared with other relatives, so our income is quite stable.

Now, my dad plans to sell away the single storey terrace (X) for RM120k. This money will be used to pay for our bungalow(Z) which is ~15km away from where we currently live. He decided to sell the house(X) because we are never moving back and having that single storey was giving us quite a lot of trouble. For a rental of RM500, we need maintenance and its not very easy to get tenant in my area. That's why we decided to let it go.

We will move into our bungalow(Z) in 3 - 6 months from now. Then, my current double storey house(Y1) will be empty. My other double storey house(Y2) is rented to a relative, so its fine and stable income every month.

My idea is to sell away my current double storey house(Y1), it's worth around RM300k, and take the money to buy another new double storey house nearer to my parents new bungalow. The purpose of my thoughts is that, I am getting married soon and I want to live in a new house with my wife, separated away from my parents but still near enough to take care of them, equally near my in-law as well just to be fair.

I spoke to my mom about it but she just jumped around making noise. I have not talk to my dad. Based on my mom's reaction, I can say she thinks I am thinking 'wrongly'. I think mainly is because RM300k will not be able to buy me a new house which has the same measurement as my current home (Y1) or maybe even smaller!

What is your advice?

ADDED:
X and Y1 is in Taman Chi Liung and Y2 is at Taman Selatan. These two neighbourhood are just next to each other. Z is at Setia Alam.

I am thinking of selling Y1 to buy another at Setia Alam.


This post has been edited by Casanova: Jul 17 2007, 11:46 PM

Casanova,

1) That is gambling / speculation. It is OKAY to put some (10% to 20% ) of your money in that. But, it is NOT investing. To invest you need to buy stock that you can go sleep for 5 years and still fine. There are ONLY less than 5 stocks in KLSE that allow you to do that. So find out those 5 stocks. Make sure that they are good and invest on those 5 stocks when the price is rght. I only buy one.

2) It is a GOOD idea to diversify away from Malaysia by buying unit trust that invest oversea. But, you need to spend fair amount of time to do research and find out what works. I have A/C in USA so that I can buy mutual fund that invest all over the world. That is a better than any UT in Malaysia. But, you have foreign currency risk that you need to manage accordingly.

3) FD -> you need some money in there for your emergency fund.

4) If you are a BUMI, I would advice you to buy ASB. If you are a non-bumi, I would advice you to avoid all ASX

A) I do not trust the government. Remember UEM - Renong Reverse takeover
B) I hate NEP and I refuse to support any GLC


Houses and etc..

1) Have you talk with your future wife?? Did you ask her what she think??

2) You definitely will have a smaller house in Setia Alam.

3) It might be better for you and your wife to be far away from everyone in the beginning of your marriage. Decide later whether to move to Setia Alam. Setia Alam will be building house for the next 20 years. You can wait.

4) It is a lot of money to get married, buy house, furnish house and so on.. Can you afford it?

Dreamer

First of all, thank you for your reply even though it is already so late. I really appreciate your effort and advices. Thanks again.

I know stock is very risky, the higher the risk, the higher your ROI. I know its a dangerous game so I only play very small. Enough to make RM500 is ok for me, enough to feed the family for 4 Sundays dinner at a restaurant. Whatever helps. Maybe this is a wrong mentality but right now, this is how I see it. I hope someday, my view will expand beyond what I am doing now and make even more.

Unit trust - I dont know about it very much. I need more details. I know my dad buys Public Mutual but I try not to talk to him about it. However, I will give it a shot this weekend to see what I can learn from my old man. Traditional Chinese family, parents do not like children to ask about their money, investment are seen as a form of gambling and asking is like prying into their privacy. Typical.

Avoid all ASX - Amanah Saham X? Anyway, I dont quite understand what Renong and all. I was not and still consider is not active in the investment world so there are many things that I do not know yet. I am reading, catching up whenever I can with The Edge Financial Daily. My parents subscribe for that.

I spoke to my wife very briefly about it. Since Y1 and etc is all my family house, I did not think I had to ask her. Anyway, she did say she can live even in a single storey as long as there is space for the kids and pets to run. I think she meant corner lot. Her dad gave her one already but I dont want to depend on my in-law nor parents. I prefer to own it on my own. Her dream is a semi-D which I probably cannot afford right now so we are planning to live in with my parents for the first few years before we move on.

I come to realize that Setia Alam homes are quite expensive compared to Aman Perdana. I believe some reality agent told me that the Petaling group has bought over the piece of land in front of Aman Perdana. That piece of land was initially going to be Klang Sentral but now the Petaling group will be building a new housing estate there. I am waiting to see how the pricing goes in the coming 2 - 3 years.

I agree we will have a smaller house at Setia Alam. But thats where everyone is and thats where my wife and I wants to be around. Its near to her parents and its also near to mine. Being the only son, I cannot just move out and stay far apart.

Thank you for reminding me that Setia Alam is building houses for the next 20 years. Hopefully they come up with something affordable for me around that time.

We have getting married covered. Buying house is just a thought. I thought it would be great to sell my current house for around 300k and buy a semi-D near our parents place. Do you think its not a good idea? Furnishing is a problem but that can be done slowly, we dont mind and we have already talked and agreed to it.

Anyway, thank you for going through my long post. Goodnight!

<<I know stock is very risky, the higher the risk, the higher your ROI. I know its a dangerous game so I only play very small. >>

So, you are NOT investing. I am talking about finding good solid stock that you can invest in.

<< Her dad gave her one already but I dont want to depend on my in-law nor parents. I prefer to own it on my own. Her dream is a semi-D which I probably cannot afford right now so we are planning to live in with my parents for the first few years before we move on.

We have getting married covered. Buying house is just a thought. I thought it would be great to sell my current house for around 300k and buy a semi-D near our parents place.>>

I think you should live with your parent for a while.

IMHO, you and your wife have a problem. Both of your families are too rich. You both might be use to living (semi-d) beyond what both of you can support with your income (6k per month). Can you support your life style if you live away from your parent??

1) You need to spend more time and read more edge before investing on anything.

2) It seem like you will be putting most of your money into the house that you will be living in. Is it wise?

3) You DO NOT have 4 houses. It is shared between you and your parent. Are you the only child?

Dreamer

if he wants to speculate or rather my favorite term "invest trading", so let him be. as long as he makes money. that's his goal, everyone's goal. in a way, it is good for him since capital gains are not taxed but dividends are. if you see his income, we'll know that he's already in a high tax bracket. anyway, he'll learn more about how local stock market runs as well.

i couldn't care less if the company is GLC-ed or any other crap, as long as it makes money for me legally i'm good.

I HATE NEP as well.

"the higher the risk, the higher your ROI" not always the case buddy.

---

Added on July 18, 2007, 5:18 amone has to go to us for the firm and open an account? if yes, how many malaysians can do that? and if we did, we are still troubled by <RM10K per trans = about USD3K. how many shares can we buy?

ontop of XXX risks, still have to "pay US taxes as non-resident (1040-NR)" as in 27% for non malaysian resident tax?

can the us stocks or funds talk be stopped? they are not helping at all, i hope this segment of the forum can provide (and debate) constructive ways to make money with the method or investment vehicles that are available to the malaysian general public.

This post has been edited by 1stLaksamana: Jul 18 2007, 05:18 AM

1stLaksamana,

<<if he wants to speculate or rather my favorite term "invest trading", so let him be. as long as he makes money. that's his goal, everyone's goal. in a way, it is good for him since capital gains are not taxed but dividends are. if you see his income, we'll know that he's already in a high tax bracket. anyway, he'll learn more about how local stock market runs as well.>>

You do not advice a person to gamble unless the person has the discipline to limit themselves. I don't have that kind of discipline. And, that is why I lost that much money. And, if you think I am the only one. You are WRONG. Almost all people that I know had that problem and we all lost a lot of money in that US bull run.

<<one has to go to us for the firm and open an account? if yes, how many malaysians can do that? and if we did, we are still troubled by <RM10K per trans = about USD3K. how many shares can we buy?>>

No. You do not have to go to USA to open an account.

The RM10K per transaction has to do with transferring of the money out of Malaysia. Once the money is in USA A/C, you can do any sizes of transaction.

In USA, there is NO lot size. You can buy as little as one share.

<<ontop of XXX risks, still have to "pay US taxes as non-resident (1040-NR)" as in 27% for non malaysian resident tax?
>>

http://www.offshorepress.com/offshoretax/alientax.htm

You need to file the tax buy I do not think you need to pay any capital gain tax. Dividend is taxable.

<<can the us stocks or funds talk be stopped? they are not helping at all, i hope this segment of the forum can provide (and debate) constructive ways to make money with the method or investment vehicles that are available to the malaysian general public.>>

1) This is MY THREAD.

2) It is accessible to people that want to know. I am NOT INTERESTED in general public.

3) How long do you think Malaysia can keep the financial market close?? It is just a matter of time before those American funds is available in Malaysia.

<<i couldn't care less if the company is GLC-ed or any other crap, as long as it makes money for me legally i'm good.>>

That was what most investor think until the UEM reverse take over of Renong in 97/98. I guess some people just have to learn from their own mistake.

I learnt my lesson.

Dreamer


This post has been edited by dreamer101: Jul 18 2007, 06:23 AM

Dreamer,

1. It is true that there is no real Index fund available in M'sia, but if the fund can outperform the benchmark, isn't it considered the fund manager beat the index?

2. Is the real index fund that you mean same to ETF?

3. Do you trade foreign ETF? due to the charges are comparisonly low compared to mutual fund/UT?

4. There is one disadvantages that I read about ETF which is lack of liquidity. Can you explain more on that? Is there any other risk that we should know?

Thank you.

shih,

1) Bingo. Have you ever see someone really benchmark those UT versus KLSE or some kind of index?? I bet you that in Malaysia as compare to most part of the world, those UT will lose to the Index.

2) No. I mean a passive fund where they only buy stock in the index as proportional to the index.

3) I do not trade. I invest. I only sell to re-balance my portfolio.

4) No problem in USA. There is liquidity problem in almost all stocks in KLSE anyhow. Do you know that?? Since 50% or more of KLSE belongs to GLC and GLIC and the government do not sell their stocks regularly, there are no many stock/share being traded everyday.

http://www.investopedia.com/terms/i/indexfund.asp

Dreamer

This post has been edited by dreamer101: Jul 18 2007, 10:57 AM

SO WRONG, they always do the benchmarking. Refer to public mutual website performance chart you will see the benchmark. Same goes with OSK and other company funds. If you find that's still not enough, morningstar has it all. And Msia has been one of the outperformer in our region and did better than the global average in the 1st half of 2007.

---

Added on July 18, 2007, 11:46 amCheck this out ! See what does SG think about our market.

http://www.fundsupermart.com/main/research...?articleNo=2243

This post has been edited by ejleemy: Jul 18 2007, 11:46 AM

ejleemy,

You still do not get IT. In order for somebody to show that he/she is a good fund manager, the fund has to do BETTER than the MARKET aka the INDEX. Or else, we should not need the fund manager. We could have just do the passive index approach.

Could you tell me that XYZ fund perform better than KLSE by how many percent in H1 of 2007?? This is how it is done in USA. Malaysia's has not reach that level of maturity yet.

Dreamer

P.S.: The first ETF that launch in Malaysia suppose to be a REAL INDEX base ETF. So, from now on, we can compare all UT with that ETF. If the fund manager cannot beat that ETF, we know that they are not better than market. This is similar to what happen in USA when Vanguard launch the S&P 500 index fund in 1976.

---

Added on July 18, 2007, 10:06 pm<<The FBM30etf will be the first ETF, introduced by AmInvestment Bank Group, to be listed on the Bursa Malaysia next Monday.>>

All,

I am looking for information on this ETF. This ETF is using the same index as EWM -> an ETF in USA.

So, we can use EWM's historical data to compare.

http://finance.yahoo.com/q?s=EWM

<<YTD Return (Mkt)²: 29.67%>>

Ignoring the negative effect of the USD currency (aka USD went down against RM), the local UT has to return much better than 30% for early part of this year in order to beat the market.

What I am saying here is if FBM30etf is a real index fund based on the same index as EWM, you will get much better than 30% for year to date.

So, why are you paying 5% to 7% commission to get in plus 1% to 1.5% annual maintenance when you can buy this ETF at 0.65% annual maintenance and minimal brokerage commission?

I would not buy it because my bias against GLC plus I am NOT optimistic about Malaysia stock market. But, if you want to invest in KLSE, this ETF seem to be the best option if the information that I collected so far is correct.

Dreamer


This post has been edited by dreamer101: Jul 18 2007, 10:06 PM

LOL seriously I think you are the one who doesn't get it or you are just too ignorant to learn how does a local mutual fund works and what really is a benchmark. They benchmark against the KLSE which is better than an index fund as index fund pricing is almost always lower than KLSE because of its charges.

http://www.publicmutual.com.my/application...erformance.aspx

Play around with it, for ex: select PSF and this year date => you see how it is benchmarked against KLSE.

If you are too ignorant to visit a local UT website, you can find them on morningstar.com too.

Msia YTD return only around 23-24%. The reason for an american investor who would make 29.67% YTD in that Msian Index fund is because RM appreciated against USD. As you can see how powerful is the forex. Any fund that gained over 24% YTD is an outperformer measured in RM. Not 30% ok ? Please learn to calculate forex properly.

FBM30 is a good deal for those who don't speculate much and go for a long long term. For those who like to go in and out market all the time where it will seriously add up their transaction fee, they should consider a mutual fund.

Mutual funds initial service charge is hefty at first to a lot of people, but as long as they keep invested, switching is at minimal cost or even free, they could take advantage of bull run in every region of the world for life ! And the best part is they have the option to BEAT the market whereas an index fund will never do that.

The bottomline is if you plan to go for a mutual fund, go for a good one, go for one that can beat the market, and always take full advantage of what the UT company offers... else just invest passively for the index fund.

Thank you.

Sorry for the late reply. It takes a lot of time to absorb some new terms, problems of my own and Q&A of others. I am trying to squeeze in as much as I can.

Yes, I know stock cannot be considered as investing. It's moving too fast for me sometimes and I had to have my friend's mother help me look after my own investment. I hate being dependent on others but while working, I really cant find the time to monitor it. I understand your point.

I will live with my parents for a while. I would like to correct something. Honestly, my gf IS from a very rich family. I am from an average family that runs a freight business. Her family are kind and never demand for anything from me. We can live a normal lifestyle away from my parents. We are prepared for that. We know not everyone in the world is so fortunate to go on living a dream.

I will take your advise on reading up on the Edge before investing. And I also know its not wise to put all my money into the house I will be living in but that's the way it is right now. I am trying to find more ways to get more income.

I do not have 4 houses indeed. Shared between my parents is correct. I am the only son. A sister is PR in Australia and another is very very young - still in secondary school.

ejleemy,

Thank for the URL and now I have REAL DATA to argue with you.

Choose PSF and date range of 3/1/2007 to 17/7/2007

PSF return is 22.59%
KLCI return is 22.57%

Please tell me why am I paying 6% to 7% load plus 1% to 1.5% annual maintenance fee to beat the market aka KLCI by (22.59% - 22.57%) = 0.02%??

In fact, after factor the fee and load, I am a few percents below market benchmark aka KLCI.

Why am I paying MORE to get LESS?

I would have get a better return if the ETF is available in the early part of this year.

Now, who is IGNORANCE?

Dreamer

---

Added on July 19, 2007, 1:57 amCasanova,

1) Check out FBM30etf. Do more reading on edge. This might be a good low cost long term investment product.

2) Fish do not know the existent of water. Average family do not live in a bungalow. So, both of you are from a higher income families. My question is more along the line of how are you living in a lifestyle that both of you can support?? Currently, your life style is partially support by your parents.

3) There is a problem of living among people in bungalow. The peer pressure will force you into a luxury life style and you will not even realize it.

<<Yes, I know stock cannot be considered as investing. It's moving too fast for me sometimes and I had to have my friend's mother help me look after my own investment. I hate being dependent on others but while working, I really cant find the time to monitor it. I understand your point. >>

4) This is fine as long as you do not put ALL your money in it. You need to set a limit.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 01:57 AM

dreamer,
do we need a license to build for sell houses? i heard you need some sort of license known as development license, and are those only granted to bumiputra only?

and how about build for rent, or build motels(rumah tumpangan)? coz i got an idea of doing motels business... as part form of long term investment...as prices of land hardly falls, and many tourist looking for budget motels in that area.

ah_suknat,

I do not know.

Dreamer

DO YOU KNOW HOW TO INVEST IN MUTUAL FUND AT ALL ? You go for long term. Yours only a half-year period comparison. People are suggested to go for a minimum 3-year period. If we are looking at 3 year period, see the chart. Compare a person who invested in USA with your index fund with a person invested in this PSF 3 years ago, tell me who would gain more ?

Another fact is Public Saving Fund is not even the best performing funds. It's just an old fund offered by Public Mutual with a good long consistent record. There are many many other funds that do much better. In terms of risk and adjusted risk return (you can get the data from morningstar), a good fund often enjoy LOWER volatility and HIGHER return than an index fund at the same time.

Dreamer, seriously you have to learn to see things objectively. Wake up !!! There are pros and cons for both index fund and mutual funds. No clear winner in every case for every investment vehicle.

To the people out there,

REITS is another big thing coming, the charges are moderate to high, but return is always better than FD in long run and very stable. While both index and mutual funds might suffer short term fluctuations greatly, REITS can get a stable return in most economy conditions. It could be a good investment choice for those retired people.

This post has been edited by ejleemy: Jul 19 2007, 08:44 AM


Attached thumbnail(s)

KLSE return is 62.39%
Public savings fund return is 75.37%
Public industry fund return is 98.54%

Assuming a front end load of 7%, the actual total return of

Public saving fund is 75.37% * ( 1 - 7%) = 70.09% ~ 7% better over 3 years
Public industry fund is 98.54% * (1 - 7%) = 91.64% ~ 30% better over 3 years

So, those funds are good. And, it is beating the market index.

<<REITS is another big thing coming, the charges are moderate to high, but return is always better than FD in long run and very stable. While both index and mutual funds might suffer short term fluctuations greatly, REITS can get a stable return in most economy conditions. It could be a good investment choice for those retired people.>>

REITS in which country that you refer to? Malaysia?? I will be VERY CAREFUL investing on REIT in Malaysia. The law separating the management company and the actual REIT property is not that strong.

<<If we are looking at 3 year period, see the chart. Compare a person who invested in USA with your index fund with a person invested in this PSF 3 years ago, tell me who would gain more ? >>

1) Who cares?? That is NOT my goal anyhow. I would not put MOST of my money in Malaysia anyhow. Plus, I refuse to support/invest on those 90+% companies.

2) I have NO CONFIDENT that Malaysia economy will survive in 5 years.

3) I do not TRUST the economy of any single country in the world including USA. And, I do not have to. My goal is to make money under ALL circumstances.

4) I do not do market timing.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 09:43 AM

Ok, good work Dreamer. That's the way to calculate net gain over 3 years. I think there's a typo somewhere, but nvm, the calculation is clear and close enough.

REITs are pretty new in Msia and there are not many REITs in Msia. There's a huge REITs market in Australia, HK etc.

As for local market, I believe Starhill REITs has the potential. The rental yield is expected to go up. It could be a decent stable investment. Risk and return wise should be somewhere between bonds and stock market.
However, I think REITs investors do not enjoy as much tax benefits as a mutual fund does in M'sia. Need to do more research on that matter.

ejleemy,

I invest on REIT in USA plus REIT around the world.

World REIT

http://finance.yahoo.com/q?d=t&s=RWX

US REIT

http://finance.yahoo.com/q?d=t&s=VNQ

Both are ETF of REIT index aka they cover all the companies in their index. I do not pick and choose. I invest on the whole market. Not a single country real estate market can take me down.

This is what we call asset allocation and REAL diversification.

Do you understand something here?? You are talking about tactic and products. I am talking about STRATEGY. I do not rely on timing or any single asset classes. I do REAL diversification and INDEX investing. I do not beat the market by pick the RIGHT fund. I use my portfolio to diversify and re-balancing to provide GOOD risk adjusted return.

It WILL NOT give you the BEST return since it is diversified. But, you can tune your portfolio to give you the BEST risk adjusted return for the amount of risk that you are willing to bear.

My goal is to have a portfolio that is across multiple asset classes and across the world with minimal cost.

Dreamer

MY comment about REIT law in Malaysia is in comparison to the REIT law in USA. USA has tougher law to prevent the management company from doing unreasonable thing with the REIT. Those laws does not exist in Malaysia.

http://www.nareit.com/portfoliomag/default.shtml

There are some good stuff about REIT in general on the above URL. Please note that it is US centric. There are a lot of stuff that is NOT available in Malaysia yet. But, the way to do calculation and valuation of REIT is the same.


This post has been edited by dreamer101: Jul 19 2007, 10:19 AM

Dreamer, I know your desire to invest with the highest possible diversification possible and do not care to outperform the market by picking any fund or region.

There are also other kinds of investors who would like to outperform the market. These people will pursue other methods like stockpicking, investing in a good mutual fund, investing in a selected good regional market etc.

There's no best investment method really. Every method has its pros and cons. Your method works well for a low risk taker who has no intention to beat the market. Other methods like stockpicking, mutual fund investment work better for a moderate to high risk taker with extra time devoted to study the market.

Hedge funds have gained a lot of popularity in USA lately, they are the fastest growing funds there. There's none in Msia. Since you have been investing in USA, I know you dont have any involvement with them, Im curious on how do you look at these hedge funds ? Do you think it could be a good investment choice for a moderate to high risk takers like some of us ?

http://www.investopedia.com/terms/h/hedgefund.asp

<<In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of over $1 million, along with a significant amount of investment knowledge.>>

You need to have a net worth of USD 1 million before you can invest on this.

Seriously, if you want to take risk why don't you get Warren Buffet to invest for you??

http://finance.yahoo.com/q?d=t&s=BRK-B

BRK-B is around USD $3,649 per share.

Dreamer

Actually, I thought before investing with Warren Buffet but not now as majority of its subsidiary companies are still operating mainly in USA. Will wait till the USD fall to a reasonable level. But, he might be retired by then.

Warren Buffet stock is classified as a moderate risk stock whereas the hedge fund is at high risk. Can't really compare them directly. Statistically, some hedge funds do have a very high alpha value compared with other investment.

There are so many hedge funds out there and many good ones are charging insanely high. Some managers are getting paid for 1 bil USD per year to manage these funds. For the richer group in Msia, is it wise for them to give it a try ? Not to put majority assets into it of course, just a mere 5-10% portfolio value will do.

ejleemy,

No idea. But, all the studies shown that most hedge fund's investors are not doing well.

1) The question here is how to pick the right one.

2) Current US bull market will not last. The prediction is US will pull out of Iraq war after 11/2008 presidential election. And, historically, recession comes after a war.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 07:13 PM

bump up a vry nice topic from dreamer....

Basic Financial Calculations

Present value = PV -> The amount of money in the beginning

Future value = FV -> The amount of money in the end

Periodic payment = PMT -> The amount of money that you pay in every period

Number of payment period = N -> Number of period

Interest/ return of a period = I -> Interest rate and return per period

Those are the basic terms.

In finance, the goal is stated in a series of cash flow. You put money into something and you hope/plan to get the money back. And, you measure/calculate how much money you get back.

For those 5 terms, PV, FV, PMT, N, I , in most cases, if you know 4 oout of 5 parameters, you can find out the fifth terms. All those functions existed in Excel as financial calculations.

Let start with a simple example. Let say someone come to you and say if you put in RM500 every month for 10 years. And, after 10 years, you get 100K. Is this a good deal?? How do you know?? What is the return?

You always compare it to FD. Assuming you put in one year FD at 3.7%.

So,

PV = 0 -> you start with no money
PMT = -500 -> you put in 500 every month so it is negative
N = 12 * 10 = 120 -> 120 period
I = 3.7% / 12 -> Remember it is interest for the period. In this case, the period is one month for your annual interest rate of 3.7% need to be divided by 12

You are trying to find FV aka Future Value. How much do you get in the future?

In excel, you key in this
= FV(0.037/12,120,-500,0,0)

And, you get $72,472

And then, you play around with interest rate

=FV(0.095/12,120,-500,0,0)

And, you get $99,540

So, if you invest in FD, you get $72,472. And, this is risk free. If you invest in whatever the person is selling, you return rate is annual rate of 9.5%. Now, is it worth take the risk??

The return rate is 9.5% versus 3.7%. The amount is 72K versus $100K about 28K more. How risky is the investment??

Now, you can make a calculated decision comparing a risk free option (FD) versus this investment.

Dreamer

P.S.: We learnt 50% of this in our old days for our primary standard 5 SRJK© math class. Does anyone still teach this?

This post has been edited by dreamer101: Jul 21 2007, 08:06 PM

yes, but i learnt this in corporate finance degree course *swt*

Dreamer,
briefly, can u explain the Renong reverse takeover matter? I think knowing this knowledge cud help us understand more on GLC stocks and make better decisions. Thx.

sharesa,

This is TOO SENSITIVE. Just google "Renong UEM reverse takeover" and you will find the story.

Dreamer

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Added on July 24, 2007, 3:14 amhttp://www.fundadvice.com/fehtml/bhstrategies/0108/0108a.html

All,

The ultimate buy and hold strategy. And, this is available to Malaysian investor opening a US stock brokerage A/C and buying ETF.

Can we do it via Malaysian UT?

Dreamer

This post has been edited by dreamer101: Jul 24 2007, 03:14 AM

Hi guys,

I'm really interested with opening a US stock brokerage account and buying their ETF. How can i do that? The www.etrade.com website can't really help. Please advice.

Also, I was thinking about the BLR and how central bank will play around with it to maintain the economy. Correct me if i'm wrong here.

If the economy is too good (too hot), central bank will normally raise the interest rates (BLR). This is to control inflation. If the economy is not good, central bank will lower the interest rates to spur economy and encourage spending.

My question is, now that our economy is considered "good" and when the recession do come, the interest rates will fall, right? So when people say that when during recession some can buy hot property at hot price, how can that be?

Interest rate will be lowered so people can still buy it. Unless those who have no money to even pay the monthly amount due to burn in stock market.

Any advice on this.

AC

achcmy,

1) Post a new topic on main forum and ask. Someone had done this before.

2) Our economy sucks big time. It is our stock market that having a bull run which does not reflect the actual economy. So, the stock market will crash. It is just a question of when. Probably after general election.

<<If the economy is too good (too hot), central bank will normally raise the interest rates (BLR). This is to control inflation. If the economy is not good, central bank will lower the interest rates to spur economy and encourage spending. >>

3) Our economy is no good and our interest rate is at historical low. Bank has too much money now. People that has money just choose not to invest or they are investing outside of Malaysia. So, lowering BLR will not help anything.

4) If people has no job/income, bank will not loan them money. Low interest rate does not help.

<<So when people say that when during recession some can buy hot property at hot price, how can that be? >>

5) At that point of time, cash is king. Whoever that can pay cash to buy stuff wins.

<<Interest rate will be lowered so people can still buy it. Unless those who have no money to even pay the monthly amount due to burn in stock market.>>

6) If interest is lower, RM will drop. People will move money out of Malaysia.

Dreamer

Thanks Dreamer for the nice thread. Still digesting the info slowly. One question regarding your "buy low sell high" rule: I'd imagine you do the exact reverse when speculating in the short term, yes?

1) I don't speculate/gamble except for less than 5% of my money.

<<I'd imagine you do the exact reverse when speculating in the short term, yes?>>

2) No. For my speculation/gamble, I try to buy when something is on-sale aka low price. I am not the kind of person that goes with the crowd.

Dreamer

have you ever tried catching a falling dagger then?

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Added on July 24, 2007, 3:18 pmsomebody mentioned about BLR(interest rates) as a means to control inflation.. not exactly the entire picture.

interest rates is a tool the govt use to "control the flow of money"...

This post has been edited by lwb: Jul 24 2007, 03:18 PM