Follow blindly in whatever surely will bring one to "holland' that I can assure.

MISC, UEM never ever being considered a gem in stock market, I knew some did back then especially a lot of investment bank. In fact all GLCs can't be considered a blue chip either (although most research houses did), any company survive or profit non based on its competitiveness strength in the free market is not appropriate to be considered a real gem or blue chip. That's why we called it GLCs or PLCs (political linked company). That's why I said in recent post Plus is not considered a good long term investment target.

You only invested in some company that is competitive and survive on its strength on its own, not because of preference or monopolised business.

Qualified professionals like fund managers don't mean they are good, even some forumers here with good knowledge and skills are qualified for the job as well. It is just a job to handle the fund only, it is not a sophiscated job that general people perceived.
Just like when we are computer noob time, we think those able to install, tweak and play with computer hardware some sort like very sophiscated and high skilled but once you already learned and known about, you will just see it is just another normal job out there.

Japan has the ultimate biggest bubble in the modern history, while they are reluctantly to pay the pain of it and restructuring and dragging until now. If US doesn't tackle well current crisis, it might end with identical to Japan. But it is unlikely, because of nature spending habit of both countries is totally different. If an economy can't grow then don't expect stock market can grow as well. By no mean stock market must grow over the long term, stock market only can grow because of improvement of corporate earning. So if one expect there is no growth ahead for the economy in the next 3-5 years or even longer, then stock market is not a good choice currently that I can 99% assure of.

Index is not a good indicator a particular investment target how well they are performing, it is just a reference or benchmark of a basket of it. Unless one is buying the index or buying the stock identical with index components, then yes, it is true. But most retailers are not buying all of it. Most retailers even fund managers (except index fund manager) won't be buying all of it, just like if one buy IOI, you don't care whether KLCI is 800 or 1,500, right? you care about how IOI is performing. Another example, when KLCI surged to 1,500, Plus, Maybank never reach its previous historical high either, in fact they are moving marginally like 10-20% gain only, so KLCI index surges to 2,000 also meaningless to those shareholders.

Yes, I agree on your points, if one is always tend to buy at peak then better put the money in the FD. Just like if investing period is 1996-2008, surely based on index, you will make a loss. But if one bought Pbbank, Genting or IOI, or others real blue chips, then you still make a gain even though you bought at 1996, but with signficant reduced gain. That's the different.
Also you need to compare where the FD rate is, if for Japan, FD rate is 0.1%, so put 10 years you only get 1% only.

What Warren Buffett good at is stock pick. Warren Buffett is not investing in index.

When to invest and which to invest are always the 2 most important element. You don't buy when stock is high, you only wish to buy when the stock is cheap, right? You don't buy when Genting has just surged from 4.00 to 8.00 in matter on 1 year period, right? or IOI surged from 2.00 to 8.00, in just 2 years time.

Also, that's why we always repeatively to advise only invest in good stocks, not all are the same.

Personal opinion, UT has several disadvatange, ie. high management fee and portfolio is not that flexible. You know why Public Mutual funds mostly and high % outperform other? because almost all their fund, Pbbank is their top choice of the portfolio, as simple as that.

But if doesn't know or sure which stock to invest, then surely FD is the better choice.

Data is a dead thing, human is flexible. One can choose peak to bottom (1996-1998 or 1996 - now) to show the poor performance of it. While another one can choose 1998 to 2007 to show how good it is. It depends on the individual selective choice, which both are right as well.
That's why I disagree fund prospectus to put up some historical performance to convince people to invest in it which often for those newly launched fund as they are very clever to be selective about it to show the good face of it. No offence. funds can be good investment target as well especially for those non-investment savy people.

No one is defending whether who is right or wrong or Warren Buffett investment philosophy is right, in fact he never claimed he is clever in the stock market or his philosophy is right.

Often we came across people to say he is old fashioned and outdated, better go for short term quick gain or time the market perfectly, like sell now, buy back tomorrow, then sell again when up.
But how many people become rich because of short term quick gain or in and out often in the market? how many people become rich because owning some good stocks for long term?
Just like everyone knew owning 1,000 Genting shares back 1970's mean you might be a millionaire now.

So, general people see the benefit on investing in good company stocks over the long term which has made a lot of people wealthy because of it. But it doesn't mean one must fall in love in a particular stock either, once it is too high, you still sell it or condition or fundamental no longer is the same. Never ever fall in love with it.

But if one intends to invest in all the stocks across, then most probably better stick with FD that you might get better return rate over the long term.
In fact, good stocks over the long term are not that many can be choosed from, particularly here.

Just my 2 cents.

No one knows it was a peak nor it is now a bottom. But generally we knew the market is high even after 1,300 level. Just like we feel now it is low (may not a bottom or market can still sink further) but the price right now is already discounting a lot of negative factor in it already. You are buying the something that already put some discount mechanism in it already, then if over the long term, if economy recovers, then those discounted negative news is the factor that you can gain significantly over the long term provided you pick the right stock.

Investment in equities never be a safe nor must generate return if hold for long term, again stock pick is one of the most important criteria.
It is wrong perception if one holds a stock for long term that can gain. The better or more correct perception should be hold a right stock and buying at low (not bottom, as nobody will buy at bottom), and hold for long term 95% of chance you can register some handsome gain which is much better than FD rate.

Another perspective is that dividend is seen very important factor for those long term investors as those dividend are the one comparable to FD interest rate.

We always welcomed any view. One doesn't need to agree on other, just speak out opinoin and fact of it only.

I don't have the exact figure that Pbbank went to how low. But I can confirm with you that it was 0.88 during 1998, as I bought that time, Pbbank-F or now called Pbbank-O1. (before 2:1 merged and excluding the bonus issue in between)

Dividend yield is about how much % you are getting based on your buying price or current stock price. It has nothing to do with par value.

For dividend stock, mostly are in the range of 5-8% over the long term.

This post has been edited by cherroy: Dec 17 2008, 08:03 PM

Index fund is the fund the basically investing in index or according to the index, i.e. in Index ETF or having the portfolio identical to index component stock or investing in index futures.

Most UT charges annual management fee of around 1.5% or above. So if their portfolio stock don't move for 10 years, then UT holders will lose 15% out of it to pay for the manager's fee. Manager can be doing nothing in this period of time while still can earn 15% out of it, how nice.

No offence or don't get me wrong on this, don't mean to criticise on the fund managers parts as some actually did a good job to protect clients interest by investing wisely in some stocks that yield good return.

I did comment on the part of non-flexible means that when UT holders redeem their investment fund managers need to sell disregard when the stock is low or not, even at cheap cheap price, they also need to sell to pay back their client money.
On the other hand, fund managers need to respond to the client's demand when people are investing in UT, then fund managers have plenty of cash, then they need to start to invest, even though market is high at that moment, they can't sit with 75% or 50% of cash even though they view market is high.

Fund can be diversified when first launched by investing in various stocks/counters, then just leave it there for years, and in between, they can just do some minor switching and tweaking here and there.
Fund managers don't necessary need to buy and sell everyday, they can also buy and hold for years.

If you see the PM funds portflio, Pbbank is always in their top 5 holding, while Pbbank is one of the stock in KLSE that performing well compared to most stocks out there.

Pbbank in the first place needs to perform well in term of profitability wise, otherwise, no matter how one pushes the price, the stock also can't be sustainable at the high side.

In fact you look at the record earning of earning improvement by Pbbank, it is one of the top dog in KLSE. It is the only one bank that didn't register a loss even during 1997 crisis.

Locally, ETF is not popular. You need to go to overseas bourses to buy one. ETF is more popular in more developed bourses.