SHARE MARKET SENTIMENTS

Bursa going side ways for last couple of months. (Observation)  Volume is low. (Observation) Most brokers said likely 2016 earnings will be disappoint vs 2015. (Fact - GDP is dropping from 5% towards 4%).

Only exceptional stocks (that can provide good and sustainable growth) will perform well.  It is harder to find good stocks and with such weak sentiments, prices may move sideways.

GLUT, GLUT, GLUT

Observation and Fact (For Klang Valley only)

Retail properties (Shopping malls) in Klang Valley - Glut

Commercial properties in Klang Valley - Glut

Condos in Klang Valley - Glut

About 90% of GDP is household loans (credit card, car loan, property loan)

1. Housing loan by developers (sounds desperate) and Increase withdrawal from EPF (also not a great sign, meaning less people, especially first time house buyer, still unable to afford at current price).

2. With more properties (condos, shopping malls, commercial and shop lots) coming into the market (KV), most of them are "investment" for a return.  These many investors will find it hard to get their return, whether in rental yield or capital gain.  Due to glut, glut and glut.

3. Dry bulks chartering was in glut for more than 5 years, and still counting.  So is oil and gas.

4. Remember, the correlation between Properties and Stocks, about 78%?

5. So going forward, fund managers (especially for unit trusts), will be curse. 

HOW LONG SHOULD WE GAVE OUR FUND MANAGERS BEFORE WE SAID ENOUGH

1. Someone may ask, how long should we gave fund managers before we decide to continue or stop letting them to manage our money.
2. As usual, 2 years, 3 years or 5 years?
3. Based on my observation, I am referring to my Fund Manager, those who invested in 2014 make losses from 3-15%.  So they said they needed more time.
4. What happen if this Fund Manager end up like iCapbiz? 5 years, flat, lower than FD rates of 3.5%?  Give them another 3 years?
5. Of course, one of the closest benchmark is to compared their performance with top 20 unit trusts performance.
6. Like iCapBiz, out of the Top 50 best return for 10 years, iCapbiz rank 35, giving a CAGR of about 11%.
7. Of course, the question you may ask, how many of us hold iCapbiz since inception? 10%, 20% or 50%?
8. What if we benchmark iCapbiz for the last 5 years? Then, wouldn't icapbiz be ranked 500 of of 638?
9. So, its not easy to compare, we have to use our own wisdom.  Perhaps with KLCI index? If they invest in Small Cap, perhaps with Small Cap Index?
10. I know, lately, many fund managers are under pressure to perform, and they may even face higher withdrawals, make it harder to perform in the future.

QUOTES

I remember reading a blog with an interesting quote:

"Time is a friend of a great business, and it is an enemy of a lousy business"

SO, BUY, SELL OR HOLD?

1.  Buy and Hold Great businesses

2.  Sell lousy businesses

3.  Have a plan for all businesses (Plan, 70% invested, 30% cash for opportunity).

4.  Also have PLAN within a plan, to consider investment in other currencies.

5.  That means, we have 2 plans, one, how much is in foreign currency and two, in local currency, how much is cash and how much is investment in stocks.

IF GIVEN RM1.0 MILLION TODAY WHAT SHALL I DO GIVEN A HORIZON OF 3 TO 5 YEARS?

Plan 1:               70% in Ringgit           30% in USD

Plan 2:               70% Invested, 30% in FD

Plan 3:               For local stocks, I will invest 70% in OCK-W (22sen) and 30% in Gadang (RM2.85)

[If you get it at 16 sen and RM2.10, better still, you can average up]

We need GOOD MANAGEMENT, GOOD SUSTAINABLE BUSINESS and GOOD GROWTH PROSPECTS.