2009-02-27

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Wednesday, February 25, 2009

Why Cut the OPR Rate My Genius? Aren’t we’re Insulated?

Iwas wondering if some hackers were recruited by the federal government to hack my notebook to either plant some Trojan horses or just to deny my access to the internet – surfing was bloody slow that I could leave my notebook to fetch its pages while I disappeared into kitchen to cook a bowl of instant noodle. Today, Streamyx admitted their broadband users will have to bear with sluggish surfing speeds until March 5 (since Feb 18) due to circuit faults on the Asia Pacific Cable Network 2 (APCN2) between Malaysia and the United States. It further claimed that only servers located at United States would be affected but when I tried to do some transactions via Maybank2U it was crawling and screaming for help. I’m doubted if Maybank2U hosted their applications out of Malaysia though.

Anyway the breaking news was indeed the 50 basis point cut in OPR (overnight policy rate) by Central Bank to 2%, apparently because it was worried about growing risk of an economic contraction this year. The Central Bank has already cut the rate by a whopping 75 basis point about a month ago and to do so again with such quantum and span of time have indeed raised many eyebrows. If there’s one thing the federal government is good at, it is definitely its ability to lie through its teeth so much so that about half the analysts or economists interviewed were convinced the Central Bank will leave the OPR alone this time. How wrong they were but can’t blame them since even the PM-in-waiting Najib Razak almost swore that the country will be insulated from the current global Great Recessionand we should continue partying all day and night *grin*.

It was not long ago that various government agencies were confident Malaysia’s economy will register GDP growth of 5.7% and 5.4% for the year 2008 and 2009 respectively. Of course all of us are now watching these smart people scrambling to revise the growth, repetitively *cool*. The question that Najib and his gang of financial experts should answer now is why desperately cut the OPR again? Are there unfavorable statistics that is beyond the government’s explanation once published? The social impact from the economic crisis has already been felt with longer queues at government hospitals and health clinics as people try to save. Strangely the federal government could still smiles from ear to ear making good money out of the fuel prices despite the crude oil going under $40 a barrel. Maybe the Prime Minister, whoever he is, should be made to appear before a US-like House Financial Services Committee where the President (in this case Prime Minister) will be grilled over controversial efforts such as bailout plans or packages. Anyone knows what happened to the first RM7 billion stimulus package?

Now, to see how bad U.S. economy has become since its 2007 peak, we got to measure the shares performance from some big boys:

• General Motors Corp. (NYSE: GM, stock) shares have fallen from $30.30 to $2.22, less than the cost of a standard spark plug (about $3.79).
• A share of Citigroup Inc. (NYSE: C, stock), which cost $55.66 at the beginning of 2007, now costs $2.60. ATM fees can total $3 or more for using an out-of-network bank card.
• New York Times Co. shares have fallen from $24.27 to $3.95, cheaper than the $4 cost of its Sunday edition.
• General Electric Co. shares fell from $30.30 to $9.08, cheaper than a GE two-slice bagel toaster at Wal-Mart, selling Tuesday on the clearance rack for $12.
• Office Depot is down from $38.27 to $1.26, less than a 12-pack of medium point Papermate BallPoint Stick Pens which runs $1.89.
• US Airways has fallen from $53.89 to $3.66, less than the current $4 cost of two in-flight coffees.

Maybe, just maybe, you could witness the stock prices of the blue-chips tumbles and sit together with those so-called useless penny stocks.

Other Articles That May Interest You …

• Ahoy there, Dow is sinking below 7,000-level
• What can Najib do to increase Rating and win Voters?
• Stocks Investing - what you can learn from PC Fair
• Here’s 10 cents for you beggar, I’ll take 50 cents myself
• Bailout of bankers is bad but Maika’s bailout is pure Stupid
• Stimulus Plans, to be spent Wisely or ended up Elsewhere?
• Let’s Close the Global Stock Markets, shall we?
• Panic again, $700 billion is insufficient to treat disease

Tuesday, February 24, 2009

Ahoy there, Dow is sinking below 7,000-level

U.S. financial crisis is getting worse and it seems the current cycle of recession could stretch deep into 2010. While it was a good sign for traders to short the stock or whack the Put Options when Dow Jones plunged below 8,000-level recently, the global financial systems could experience turmoil many times worse than 1997-1998 Crisis. It’s either Great Recession or Great Depression for you, there’s no two ways about it. And if you’ve patiently waited until now without committed any hard-earned money into the local stock market then give yourself a pat. I mentioned local stock market because if you’re trading U.S. stock market then you should be laughing all your way to the bank – provided you go along with the pulse of the market.

This is the best time to test your emotion (yeah, I’ve mentioned that boring statement yet again) and if you can filter between the diamond and glass then this is probably your time to make the first barrel of gold. And by this I meant you can differentiate if analysts / fund managers / economists were actually bull all their way to confuse novice investors. But you really can’t blame them because their boss was yelling at them to increase the transaction volume (else start packing) so here you are reading “Buy” calls from them. Sometimes I wonder if they know what they’re doing considering 7,000-level is quite vulnerable and have never been tested for its support strength for many years. Dow plunged another 250 points Mon to 7,114.78 and is starting threatening the 6,000-level.

If Dow never recover or show its muscle above 7,000-level then expect the worst to come any minute soon. All this while the Dow has been absorbing the pains of beating and it can only do so for so long after which it would probably drop like a rock. You might say “Nah, it can’t be that bad” because President Obama won’t let it. Well, I suppose time will tell but if you need a Yale professor to convince you otherwise then you shall have it. Yale professor Robert Shiller agreed (with StockTube *grin*) that it’s not bottom yet for both the housing or property sector and the stock market. In fact Shiller thinks the housing prices still have another 50% to fall before reaches fair value despite the already 25 percent nationwide decline since the 2007 peak. As for the stock market Robert Shiller believes he could get a better deal when the S&P 500 drops further to single digit P/E (from current P/E 14X).

Sure, we shouldn’t talk ourselves into this gloomy and doomy thingy as it would just make things worse. But why fly against the wind when the writing is on the wall? Robert Shiller also believes that President Obama’s administration has yet to find the silver bullet to the current problem. To add salt to the wound, it appears Citigroup Inc. (NYSE: C, stock) is quietly taking advantage of the havoc by asking U.S. government (or rather taxpayer) to convert its $45 billion of preferred stock in Citigroup to common stock and hence increase government’s stake to 40% from current 8%. But the problem is if the government was to do so it should end up owning 80% of Citigroup and not 40%. This is just one of the many problems that could prolong the economic recovery process as the bailout or rescue plans seems to be getting complicated.

However with the pending installation of Najib Razak as Malaysian sixth Prime Minister in early Apr 2009 and the much talked about second stimulus package of about RM35 billion plus the coming UMNO general election, the local stock market “should not” experience any huge drop (invincible hands are supporting the KLSE) unless of course the U.S. financial market drops extraordinary bombshells to the already pessimistic investors.

Other Articles That May Interest You …

• Unemployment – How Bad Could It Get?
• Part-2 of financial problems haunting the Stock Market
• More data coming, more volatility, lesser ammunition left
• When is the Right time to buy Stocks? Ask yourself

Sunday, February 22, 2009

UMNO begging QC’s help in London – a Mistake Coup?

Ever since the federal government (or rather UMNO) forcefully taken over one of opposition’s states of Perak the de-factor opposition leader Anwar Ibrahim couldn’t afford to smile as much as he used to be. Just like the stock market Anwar was charging like a bull as if the market was experiencing Super Bull-Run after his party PKR together with team-mates of PAS and DAP unexpectedly captured 5 states. For a moment he felt immortal and the reach to the Putrajaya was within sight. However unlike the outgoing Prime Minister Abdullah Badawi, the PM-in-waiting Najib Razak did not waste much time wrestling Perak state from Anwar. It was not many months ago that Najib via another UMNO warlord Muhyddin Yassin successfully forced Abdullah to agree to resign in Mar 2009.

Now it seems the hunter becomes the hunted and vice-versa. And just like the stock market Anwar feels vulnerable and is crawling like a bear while Najib becomes the bull charging like there’s no tomorrow. Suddenly the view of Putrajaya becomes so far away to Anwar while Najib’s wife, Rosmah, began to taste the power of those who walk in the corridors of power. She must have enjoyed herself to the fullest in her appearance in the government-controlled media during the campaign asking for donations for the Gaza. Like her husband Rosmah can smells the aroma of the number-1 seat currently held by Jeanne Abdullah. The clock is ticking and the vision of her being installed as the most powerful woman come this Mar is enough to make her climax, who wouldn’t right?

Unlike PR (Pakatan Rakyat) who managed to win over Perak state through peoples’ vote, BN (Barisan Nasional) used the back-door (intimidation, bribery and threat) in bringing down the Perak government. The last thing on federal government BN’s menu is a state-level snap election not because BN will fail miserably but because the scale of embarrassment could influence the state of Sarawak to deliver important State and Parliament seats to opposition PR coalition. Hence BN would rather play dirty to win battles than to fight like gentlemen. In fact the current dirty politics adopted by BN makes even the former Prime Minister Mahathir disgusted. When a former dictator felt irritated with the dirtiness it goes to show that the current situation is so pathetic that besides skin-color the future leader is comparable to Zimbabwe's President Robert Mugabe *scary huh?*.

But make no mistake about the current low-standard of leaders who resort to intimidation, barbarian way of take-this-bullet-you-sucker threat, paying top dollars to peeping-tom for nude photos and bribe anyone possible. The PM-in-waiting still has former dictator Mahathir as political-strategy adviser and former Finance Minister Daim Zainuddin as economy-strategy adviser as his left and right hand men. Despite the hiccup in Perak where the powerful Speaker role was forgotten during the coup by BN, it appears the advices from PM-in-waiting’s advisers were to continue with the assault to weaken the Selangor (the most developed state captured by opposition) government.

This time the silver bullets were Selangor chief minister’s “Cows and Car”accusation. And the main actor used is none other than Malaysian Anti-Corruption Commission (MACC) chief Ahmad Said Hamdan who went beyond his job scope as the head of an independent body by “declaring” that there was strong evidence that Selangor chief minister misused his powers over the maintenance of his personal car and the distribution of 46 cows worth RM110,400 for slaughter during Aidil Adha celebrations in his parliamentary constituency of Bandar Tun Razak last December. If you do not know Ahmad Said he’s the person whose son, Ahmad Shauqi bin Ahmad Said, a former pilot with Malaysia Airline System (KLSE: MAS, stock-code 3786) who was caught importing child pornography when he arrived at Adelaide Airport early last year.

Boy! It was really one big messy battle – short of army’s tanks and submarine BN is basically mobilizing all resources ranging from the police force, judges, sultan, print and electronic media, supposedly independent anti-corruption commission and election commission, nation’s coffer, jobless Mat Rempits and peeping Tom in their effort to cripple the opposition from taking over the federal government possibly by next general election. Its’ do or die kind of war in this country of less than 30 million population. Amazingly the once proud and arrogant UMNO is now panic and has sent its senior lawyer together with several politicians to London seeking Queen’ Counsel helps to combat the latest constitutional crisis. Huh? still couldn't get enough of colonialism? One wonders what happens to the brightest team of lawyer Muhammad Shafee Abdullah, Attorney General Gani Patail, Justice S. Augustine Paul and other have-money-will-sell-souls top-brains.

Sure, AG Patail has led his team to the defeat of Pulau Batu Puteh’s sovereignty to Singapore but that was because the International Court of Justice has 16-judges.It wasn't Patail fault that the judges couldn't be "persuaded" to swing the decision in favor of Malaysia. I’m willing to bet all my fortunes that if 3-local-judges led by Augustine Paul were to hear the Perak Constitution Crisis dispute; BN should have an easy victory over the opposition. Heck, I’m sure that Speaker V.Sivakumar would be crying arguing his case when Muhammad Shafee Abdullah opens his mouth in court. We’re talking about top brains here dude so it doesn’t make any sense for the government running helter-skelter booking tickets for the trip to London. You meant those foreign Queens’s Counsel knows better than Muhammad Shafee Abdullah, Gani Patail or S. Augustine Paul about the country’s constitution? Simply unbelievable that UMNO is reduced to such a pathetic situation that they’ve chickened away to London and is begging Queen’s Counsel for help!

Other Articles That May Interest You …

• Perak Government – Now You See It, Now You Don’t
• Dirty Politics and Economy – Choose Wisely, Najib
• UMNO is big Bully but that’s because PKR-DAP are Babies
• Reason we do not need America’s Funniest Home Videos
• An island for Singapore, rocks for Malaysia – Amazing!

Saturday, February 21, 2009

Defensive Stocks Screwed - more after F&N & Carlsberg?

One of the readers asked me about Genting Group’s (KLSE: GENTING, stock-code 3182) stock, a company I last wrote in June 2008 and since then I never look back. The stock was on free-fall back then and I presumed nobody dares to catch a falling knife. In fact when the group succeeded in its bidding for Singapore’s $5.2 billion Integrated-Resort project, investors had temporarily pulled their hand-brakes simply because the risk on the stock had increased many folds - the project will suck-up huge amount of money while the revenue would have to wait for some years. Hence why the rush for the shares? Genting is not a defensive stock and investors who bought the stock did so because they were in for long-term *like Warren Buffett, grin*.

However the problem with such huge project is the uncertainties in the overall cost especially the raw materials. Just like stock market either you’ve locked in cheaply or you were sucker for paying high price for the materials. Unfortunately there’s no crystal ball to tell and not even the late gambling tycoon Lim Goh Tong could predict the outcome of this game. And Genting’s latest announcement thatSingapore’s theme park opening costs has increased and will erode earnings this year was enough to send the stock price lower. Genting International Plc (SIN: G13) is optimistic the Singapore project is on schedule for the grand opening by early 2010 but it is still at the mercy of the global recession. So for the time being, I’ll give the stock the pass.

Talk about defensive stocks – perhaps the most shocking news came fromCarlsberg Brewery Malaysia Berhad (KLSE: CARLSBG, stock-code 2836) andFraser & Neave Holdings Berhad (KLSE: F&N, stock-code 3689). Surprisingly Carlsberg board decided not to declare a special dividend despite having cash reserve of RM227 million, up from RM217 million a year ago. Investors were furious that the company only maintained final dividend of 12.5 sen in 2008 (same as in 2007) without the normal special dividend. Without surplus payout (60% less from at least 35 sen) investors found little reason to hold on to their stocks and thus the sell-off. Carlsberg meanwhile justified that the company needs to preserve cash for investment and analysts believe the company may have set its eyes on company to acquire soon.

Long-term wise it makes perfect business sense to keep cash either for acquisition or just to maintain its business operation since it’s fourth quarter net profit for 2008 fell by 61% to RM9.6 million. While it’s true that Carlsberg is a defensive stock worsening global recession might push the business to the wall. Equally disappointed with Carlsberg’s latest earning result is Credit Suisse which released its new target price for Carlsberg at RM2.80 a share (from RM4.00 a share). As much as I like to see the stock price plunges to RM2.80 a share *drooling* the fact that the Denmark parent company Carlsberg Brewery A/S is holding the controlling 51% stake via UOBM Nominees (Asing) Sdn Bhd means it would be a while (if you’re lucky) before the shares are beaten to this level. But really, does Carlsberg Denmark needs to sacrifice its Malaysia cash for regional acquisition(s) - presumably there's one in the pipeline?

F&N which has just celebrated its 125th birthday in Malaysia last year has another set of unexpected problem. Despite a 73-year old relationship since 1936 The Coca-Cola Company (NYSE: KO, stock) decided not to extend its bottling and distribution agreements with F&N when they expired on Jan 26, 2010. Understandably F&N tried to tone down the latest development arguing that it won’t have any material impact for financial year ending 2009 but many thinks otherwise. Sales revenue of Coca-Cola Co products, mainly Coca-Cola and Sprite, amounted to RM421 million, or 35% of F&N’s soft drinks division’s revenue in FY08. F&N CEO Tan Ang Meng wasted no time after the news broke that it was a divorce after 73-year of marriage. Obviously Tan has taken great pain in explaining what the company will do to repair the havoc left by Coca-Cola’s pull-out.

While F&N can now claims freedom from restriction under agreement with Coca-Cola, in reality you need times to market and penetrate new market. Here you’re talking about replacing a branded Coca-Cola soft drink so the impact from the lost-sales will definitely be felt else why repetitive explanations? Heck, nowadays you can even find Coca-Cola Chicken Rice as part of the menu. Frankly speaking if F&N could substitute Coca-Cola with its own drinks (regardless whether it’s carbonated soft drinks, coffee, tea, isotonic, fruits or Tongkat-Ali) without major business impact then why chose to be at Coca-Cola’s mercy all this while? Surely it’s better to be in control rather than being controlled in your business expansion and growth, no? The relationship between Coca-Cola and F&N was said to be quite fragile with both can’t see eye to eye.

The giant Coca-Cola was said to be eager to bring in other beverages which would compete directly with F&N’s own products. Naturally F&N felt it was bullied as it can’t sell products that could compete with Coca-Cola but on the other hand Coca-Cola could do so. In short Coca-Cola was slowly pushing F&N to the wall and given such scenario both parties will eventually break-up, sooner or later. F&N has assured investors that its dividend policy remains unchanged but obviously it depends very much whether the company can narrow the $421 million revenue gap left by Coca-Cola. So should you rush to accumulate F&N shares? Again, it depends very much on your risk factor but I would like to wait and see. Considering the seriousness of the global recession which may has not peaked as we speak, I would like to stretch my buying power per share to the maximum.

Other Articles That May Interest You …

• Dividend Yield Stocks (Part 3) - Carlsberg Brewery
• Stocks Investing - what you can learn from PC Fair
• Cash is King but do you have the bullets?
• Dare to catch falling knife Genting now? It could be cheaper
• Malaysian Casino King, Lim Goh Tong, passed away at 90
• TOP Reasons Why Genting Agreed To Partner Stanley Ho

Wednesday, February 18, 2009

Perak Government – Now You See It, Now You Don’t

If there’s one thing that keep us all entertained and the Perak Constitutional Crisis still in play, it’s because the Speaker, V Sivakumar, has not been bought yet by the federal government known as BN (Barisan Nasional). And let’s hope this Sivakumar has the balls of steel and stays that way. The Perak state legislative assembly speaker V. Sivakumar has just suspended Menteri Besar Zambry Abdul Kadir and his six executive council (exco) members from attending the state legislative assembly for a period of 18 months and 12 months respectively – for contempt of the assembly.

Whoa! This drama is indeed better than making 100% profit in stock investing. Who would have thought that the Speaker post that was previously dominated by BN and “equipped” with such a power would one day fall into the hand of opposition and in turn being used to embarrass the BN instead? Maybe the karma has finally comes and it’s true that whatever goes around comes around. Of course the most fortunate thing was that the traitor former DAP Jelapang assemblywoman Hee Yit Foong who betrayed her party in exchange for more than RM20 million (and the pending Toyota Camry) was not the Speaker else it would be almost game-over for PR (Pakatan Rakyat). It’s funny that the architect (Najib Razak) who plotted the downfall of PR government in Perak could miss out this important aspect.

But now the question is whether the latest action by the Speaker to suspend the assemblymen without first bringing it before the assembly is legitimate. Rest assures that Najib Razak will have restless night burning the midnight oil to re-strategize a new plan in response to the latest counter-attack by the PR. Will the people be amazed once again with another round of dirty politics from the federal government? Now that the PR has regained its majority of 28 seats against BN’s 24 seats (with 7 seats suspended) will the Sultan of Perak reverse his earlier decision to have another round of Menteri Besar (Chief Minister) swearing ceremony? Gosh! This is getting ridiculous.

It will paint a foolish picture on the Ruler if such “now you see it, now you don’t”in relation to the Menteri Besar were to continue. Won’t it be wise for the Ruler to dissolve the assembly and return the power to choose a new government to the people initially? Of course business and money speaks louder than thunder but at the same time to sacrifice the Royal’s dignity? Sometimes you just got to admire the wonders money can do to human being. So what are the options Najib has now that the ball is in his court?

1. Perform the David Copperfield magic again – Perak Speaker V. Sivakumar somehow has to disappear and there’s nobody that has master such skill-sets other than Najib’s team themselves.
2. Re-use the controversial but highly effective ISA - Forcefully arrest Perak Speaker V.Sivakumar under the pretext that he needs to be protected as the government intelligence received information that Sri Lanka guerillas are on their way onboard AirAsia Airbus A320 to kidnap Sivakumar *convincing huh?*.
3. Money speaks volume – Offer RM100 million cash to V.Sivakumar plus two units of Camry and penthouse with KLCC view. Throw in a Deputy Menteri Besar post if he’s still stubborn. In addition he has the option to own 20 hectares of land beside Samy Vellu’s in Australia for a token of RM1 Ringgit.
4. Declare State Emergency in Perak – the fastest way to control the state indefinitely. With police, army, judicial at its disposal nobody dares to threaten or question the federal government decision. Highly unlikely and foolish to opt for this option.
5. Deface V.Sivakumar personality – pay RM500 bucks to a photoshop specialist to doctor V.Sivakumar’s photo with a local Bollywood actress in a sexual intercourse position. In hours you’ve another Elizabeth Wong’s nude photos scandal. Now get Samy Vellu (Khir Toyo needs to rest) to demand V. Sivakumar’s resignation *simple huh?*.

Whatever it is Speaker V. Sivakumar and his immediate family members have to be protected by PR guards because he’s now the hottest celebrity in town. Boy! This guy needs security that even the President Barack Obama might not enjoy. This bring the next question – will PR seeks audience with Sultan of Perak to dissolve the assembly and lets the people decide on the new government once and for all? What will the Sultan of Perak decision be?

Other Articles That May Interest You …

• What can Najib do to increase Rating and win Voters?
• Go get Kedah and Selangor. Then focus on economy, deal?
• Dirty Politics and Economy – Choose Wisely, Najib
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid

What can Najib do to increase Rating and win Voters?

Public in general is getting sick and tired with the excessive politicking and the stalled economy which is directionless. The writing is on the wall that PM-in-waiting Najib Razak will take over the premiership from outgoing Abdullah Badawi in another month so the former does not have to overly panic but instead rejoice together with his wife Rosmah for the coming “Big Day”. Najib should start demonstrating that he knows Economy 101 and is miles better than the sleepy Abdullah. The fact that his political moves, including Perak’s recapture, so far are perceived to be dirty is enough to trigger alerts amongst his advisors to re-strategize the game-plan. People are sick with his tainted image especially with the Mongolian Altantuya baggage. Najib needs re-branding else the novice coalition of PKR-DAP-PAS will find it too easy to capture the Putrajaya.

Really, Najib can actually scores some points if he concentrate on the country’s economy in preparation for the recession onslaught scheduled to hit the shores not many moons away. It’s scary thatDow Jones is now trading below 8,000 psychology level and it could get worse. Najib who was adamant that the country will not enter recession finally admitted that 2009 GDP forecast needs reviewing. There’re times to boost your ego and there’re time to eat humble pie. He may need to cut the fuel price and electricity tariff further to gain people’s support during current trying period. Voters especially the Chinese could easily be swing over to BN during the coming two (or three depending on Elizabeth Wong’s decision) by-elections if Najib can convince the voters that he’s the leader with sound economy understanding.

Stop insulting people’s intelligence when you hiked electricity by 24% in July 2008 but decided to reduce it by merely 3.7% starting Mar 2009. It’s your problem that you happily agreed to purchase excessive power from IPPs (independent power producers) at high price. It’s laughable to read that Tenaga Nasional Berhad’s (KLSE: TENAGA, stock-code 5347) president and chief executive officer Che Khalib Mohamad Noh was chosen as the Malaysia’s CEO of the Year 2008 Award. Not that I’ve any grudges against this person but to continue register losses and to take the easy way out by increasing electricity tariff to improve bottom-line is a pretty simple job, no? Going by the rate on how the company’s total debt increases from RM22.7 billion (Aug 2008) to RM24 billion (Nov 2008) it seems your children will continue to pay for the debts. Sure, go on and blame it on foreign currency conversion losses etc. Couldn’t they find a better CEO for the award?

The 3% cut in EPF contribution for employees with the hope that RM4 billion to RM5 billion could be released to the man on the street doesn’t seem to work because people opted to save the extra dollars instead. It would be nice to declare 2008 and maybe 2009 as tax-free year. Corruptions or leakages are part and parcel of BN’s life but if only during this tough time the federal government could stop the craze-race for the pies and ensure efficient and equal distribution of the taxpayer money in the form of stimulus packages, people would definitely appreciate it. People understand that in order to prevent the power-crazy and greedy BN politicians from running amok, they have to be fed with taxpayer money but now are not the time. The first RM7 billion stimulus plans was already stuck somewhere along the red-tape or bureaucracy pipes and sucked by greedy cronies so if the second stimulus package were to face the same “challenges” then it would be disastrous.

Every Tom, Dick and his dog knows or at least have the perception that the latest Elizabeth Wong’s nude photos issue was politically motivated and all the fingers are pointed at Khir Toyo and Najib’s incoming administration. Even if it was done by enemy within Pakatan Rakyat coalition itself, people tend to believe it’s the hidden hands from BN. And this damaging image of BN that is cheap and willing to go so low to discredit the opposition is something that Najib’s new administration has to tackle. The joke is if Elizabeth Wong was to resign to take responsible for this privacy intrusion than the simple strategy to get Najib to resign is to take his photos when he answers nature’s call *grin*.

Other Articles That May Interest You …

• Go get Kedah and Selangor. Then focus on economy, deal?
• Dirty Politics and Economy – Choose Wisely, Najib
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid
• Why Recession is important and we still need it?
• The Junk US Dollar Skyrockets but whose fault is it?
• In time of Cheap Lobster, Peoples Money are Robbed
• Windfall Tax - Punishment or Desperation for Money?
• Maths Genius Sufiah enjoys Sex career, no Regrets

Tuesday, February 17, 2009

Curse the Blogs, blogger to die before new PM sworn in?

Could you imagine what would happen if today is the year 1993 or better still1988? Both years are important because it was during these periods that Malaysia experienced her biggest Constitutional Crisis. And the mastermind who architected both Constitutional Crisis was none other than the father of Mukhriz Mahathir and its puzzling the son of the former prime minister is now crying wolf asking opposition DAP Chairman Karpal Singh to be charged under Sedition Act or the Internal Security Act (ISA). In the 1988 Judicial Constitutional Crisis Mahathir amended the Constitution so that the Judicial only has powers if the Parliament (Executive) thinks they may have it. In the infamous 1993 Monarch Constitutional Crisis Mahathir stripped the legal immunity of the royalty and with the amendments to of Articles 32, 38, 42, 63, 72 and 181 in the Constitution of Malaysia, the public can now criticize or even sue the Sultans or even the Yang di-Pertuan Agong without fear of Sedition Act.

It’s ironic that only UMNO can criticize and ask the Rulers to fly kite but when it was the opposition to point out that Ruler can be sued, thanks to Mahathir, all hells break lose. Not the world’s most powerful supercomputer can perform algorithm to derive the logic why it was ethical to harass and embarrass the Rulers in 1993 but un-ethical to re-read the current law that the Rulers can be sued. Silly isn’t it? But this article is not about the boring crisis again. This article is about the influence of blogs and how blogging has shortened the time of information-flow to the netizens. Only the federal government is still in denial mode about the influence of blogs despite what it (blogs) has delivered during last year’s general election. Can you imagine if blogging was a goblok’s hobby back in 1988 or 1993?

It was reported that independent investigator Harry Markopolos knew something fishy was going on with Bernie Madoff years before the Ponzi scheme burst. Unfortunately he couldn’t get the SEC (U.S. Securities and Exchange Commission) to move their fat-asses to start an investigation. Indeed if only Harry Markopolos had blogged about his analysis and why he thought Madoff’s business model was a Ponzi scheme after all then this scandal could be stopped and many peoples’ hard-earned money could be saved. Blogs travel at lighting speed and could spread better than wildfire if its content is explosive. Remember how the Malaysian government was protective of Lingam and Chua Soi Lek over their videos’ scandals? Government-controlled media did not reveal the names but the blogosphere were already updated with the actors’ indentity. And now we have Elizabeth Wong who claimed she was a victim when her nude photos were distributed on the internet.

Together with YouTube, blogs can become very useful and informative or disastrous depending on which sides you belong to. People who were cheated and fed with lies or propagandas before the explosion of blogging are now banging their heads against the wall for their past stupidity. And if you’re trading the U.S. stock markets you’ll realize how fast information travel and the effect of blogs’ financial information to the stock prices. Remember how the speculation of Steve Jobs’ health in the blogs brought the stock price of Apple Inc. (Nasdaq: AAPL, stock) to its knees recently? Of course there’re risks associated with this new found journalism especially social-politics blogs. And we may read the first blogger to dieinside the jail simply because he reveals too much about the dark secret of PM-in-waiting. The million dollar question is was RPK serious about it and would his death bring about smooth sailing for the PM-in-waiting? So far only Malaysia-Today has all the links and connections in exposing jaw-dropping scandals and life would be meaningless without “No Holds Barred” and “The Corridors of Power”.

Other Articles That May Interest You …

• Go get Kedah and Selangor. Then focus on economy, deal?
• Dirty Politics and Economy – Choose Wisely, Najib
• UMNO is big Bully but that’s because PKR-DAP are Babies
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid
• Why Recession is important and we still need it?

Monday, February 16, 2009

Go get Kedah and Selangor. Then focus on economy, deal?

President Barack Obama has gotten the Congress to pass the $787 billion economic stimulus plan. There’s nothing to shout about because the U.S. economy will take at least another year, if you’re lucky, to see favorable result. Meanwhile over in Malaysia everyone is waiting for the coming second stimulus economic package to excite the sliding economy. The quantum is still unknown but it’ll be between RM7 billion to RM35 billion. Only certain top politicians and the governor of Central Bank knew the figures because they knew how the country was doing in fourth quarter of 2008. So if the country is about to grow at 0% this year then they may pump in RM35 billion which is equivalent to 5% of the country’s GDP (gross domestic product), if their intention was to declare 5% positive growth. Simple and you don’t need to become David Copperfield.

Investors are either still parking their money in the banks or already bought some stocks hoping to make some money when the mini-bull starts displaying its tail once the second stimulus plan is announced. But there’re other excitements other than the potential RM35 billion stimulus package. If the year 2008 was the year when the complacent BN (Barisan Nasional) government was given a knock on the head when it lost five states, the year 2009 could well become the year BN strikes back to reclaim its lost dignity and face. Compared to opposition PR (Pakatan Rakyat) the BN has the advantage of coaxing the Rulers to become one of them, not to mention the unlimited supply of money at its disposal.

Malaysia-Today made a lengthy explanation and justification why Sultan of Perak was playing a fair game to both PR (after they won the majority from the people) and BN (after they paid millions of dollars for defections and won back the majority now). It further claimed that the Perak state might fall again back to PR but franklyI’ve my reservation because money talks and at this moment PR does not have the deep pocket to turn the table around. In addition it’s beyond everyone’s understanding why the Sultan of Perak did not opt to dissolve the assembly for a state-level election when it was put on the table that the Ruler knew both BN and PR could not form a strong government. Why prolong the situation when the writing was already on the wall?

Tactical-wise Najib Razak should activate the next phase to take over Kedah state from PR now that five PR state assemblypersons have confirmed their defections, RM100 million to recapture the state is indeed cheap. Malaysia-Todayalso claimed the Selangor state could collapse with promise of Chief Minister position to Hassan Ali if he could pull the carpet under the PR government. It appears that besides Toyota Camry the traitor former-DAP Hee Yit Fong was doing the worst thing a Chinese can do (betrayal) to pull her husband out from the hole of debts, the same way once popular former-DAP Bukit Bintang assemblyman Lee Lam Thye did to settle his wife’s debts. Lee Lam Thye’s wife was known to be a hard-core gambler and Genting Highland was her second home.

I suppose it’s true that everyone including politician has his / her price tag. Stop crapping about your struggle to help the communities and the people because given an envelope or briefcase, politicians would rather take RM20 million – RM50 million and abandon the people who voted them in. So can you blame the Rulers to put their business interest on top of other priorities? It was only natural for the Selangor Sultan to defend his uncle, Perak Sultan, and if PR were to go through the same cycle as their brother in Perak, consider the Selangor state gone. If Najib is smart enough, he should capture the Kedah follows by Selangor now that the PR is in disarray and would not be able to mount any effective counter-strike.

Other Articles That May Interest You …

• RM35 Billion - did you make any money from Gamuda?
• Dirty Politics and Economy – Choose Wisely, Najib
• UMNO is big Bully but that’s because PKR-DAP are Babies
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid

Friday, February 13, 2009

RM35 Billion - did you make any money from Gamuda?

By now you are an idiot if you still think the global recession is not real and a confirmed moron to think that the current economy crisis will not affect your country. You can’t pretend to see no evil hear no evil simply just because you’re clueless on how to tackle this problem. It’s alright to admit that you’re clueless and helpless on how to go about it. Furthermore the most powerful person in the world, the President of the United States, is still searching for the magic potion so there’s nothing to be ashamed of. However it would be disastrous if you try to cook up misleading stories and pictures that the country is doing well and is insulated or shielded from this disease called recession.

Japan’s economy contraction is predicted at more than 10 percent in the fourth quarter. Job cutting is gaining momentum with Pioneer Corp., Sony Corp., Nissan Motor Co., NEC Corp.,Toyota Motor Corp. and more big names to reveal the impact on their businesses. The European economy declined 1.5 percent in the fourth quarter or 6 percent contraction based on annualized basis. Even the Seattle-based coffee giant Starbucks Corp.’s (Nasdaq:SBUX, stock) which has $17 billion global market share decided to jump into the instant coffee market, away from its comfort as a seller of expensive coffee sellers. Starbucks is set to introduce “Via” instant coffee – three single-serve packets at a cost of $2.95 and 12 packets at $9.95.

At this moment nobody knows if we’ve just entered the tunnel of another Great Depression but understandably most of us would rubbish such scenario. What about Great Recession then? It sure sounds better than Great Depression so it’s acceptable. Investors specialize in distressed debt and bankruptcy believes theUnited States is going through a “Great Recession”. Holly Etlin, a managing director at AlixPartners with 30 years of experience in restructuring, said financial distress will last three to five years due to a lack of liquidity in credit markets and lack of debtor-in-possession financing. Nevertheless there’re still opportunities to make money in the stock markets but before that you need to ask yourself what type of investors you are?

If you’re a long-term investor, are you flexible enough to adapt the method of short-term investing? And if you’re a short-term investor, can you get out of the box and adopt swing trading strategy? You would have made some pocket money if you know how to take advantage of situation around you. There’re opportunities in every crisis. Remember the Perak Constitution Crisis? Did you read StockTube's previous article - Perak, PR, BN and Gamuda - It’s all about Business, Stupid. Political anger aside, you would have made some bucks on Gamuda Berhad (KLSE: GAMUDA, stock-code 5398) if you read the little hint in the article. Today Gamuda shares jumped the most since Nov 10th and it’s all because of the believe that the company will enjoy the fruits of the coming second economic stimulus package scheduled to be announced on Mar 10th.

Whether Gamuda will be given “special preference treatment” or not (after the recent political crisis in Perak), the company is expected to reap its lion shares in projects via direct negotiations. If the hint from PM-in-waiting Najib Razak’s mentor and adviser, Mahathir Mohamad, is anything to go by the second stimulus package will be in the region of RM30 billion – RM35 billion. This staggering amount of money is enough to buy over one’s dignity and principle. Heck, businessmen and businesswomen are willing to bend over just to get small pie of this package. All the eyes are on Najib to take over the premiership from the sleepy Abdullah Badawi in Mar. So if you intend to make fast bucks, just go and whack all those stocks related to Najib Razak’s family members.

Anyway Gamuda seems to have hit the resistance of RM2.10 a share and if it can breach this level, the next resistance will be RM2.60. The fact is Najib Razak is almost guaranteed to be the country’s sixth Prime Minister in compliance to the R.A.H.M.A.N prophecy. And the new wave of companies or cronies closed to Najib is set to laugh all their way to the banks.

Other Articles That May Interest You …

• Dirty Politics and Economy – Choose Wisely, Najib
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid
• Another yardstick on Economic’s Health - Starbucks

Wednesday, February 11, 2009

Dirty Politics and Economy – Choose Wisely, Najib

Sometimes you can’t help but wonder if this old fox was really senile or just pretending. The explosion of Perak Constitution Crisis created dilemma to the same people who had been lauding the Perak Sultan as the most learned and respected Ruler ever seen. Suddenly they couldn’t accept the fact that their beloved Ruler has turn against them. They couldn’t swallow the bitter pill, what more with the tainted PM-in-waiting, Najib Razak, smiling from ear to ear appearing twice at the palace and ultimately “convinced” the Ruler to declare him the “winner”. It was like the people were being betrayed and slapped in the face. Instantly the memory of former premier Mahathir came into picture.

Mahathir single-handedly stripped the country's sultans of immunity from prosecution for any breaches of the law 16 years ago. It was a period of chaos whereby the rulers of nine of Malaysia’s 13 states gained spotlight for the wrong reasons. Sultan Ismail Petra of Kelantan refused to pay more than $800,000 in import tax to the federal government for a Lamborghini Diablo sports car that he had imported. Douglas Gomez, a Johore hockey coach, had been summoned to the palace and beaten up by Sultan of Johore, Sultan Mahmood. Even Shahidan Kassim (rice cartels warlord) claimed that the Sultan of Johore and his elder son had been implicated in 23 criminal acts in the last two decades, including rape, assault and manslaughter.

So thanks to Mahathir the sultans now do not enjoy absolute legal immunity.Sultans can be sued over both civil and criminal matters relating to their personal conduct. Nevertheless that didn’t affect the rulers’ business empire. Instead the business transactions flourished and at one time the Negeri Sembilan ruler was leading the race. The $1 million suit by Standard Chartered bank over Negeri Sembilan ruler recently somehow tainted and brought shame to the status of the monarchy. Mahathir was indeed the finest architect so far – but it was laughable when the former prime minister said while the law allows for a Sultan to be brought to court, ethically it is not good. Heck you meant it was ethically good to do so16 years ago but not now, after you’ve left the office?

Back to Perak the local kopitiams (coffee shops) suddenly became alive and not so boring anymore. People have found new topics for their discussions. The joke of the town was that there was actually reason why Najib Razak won Perak Sultan’s heart while people’s Menteri Besar Nizar Jamaluddin lost. Najib left (the palace) and return the second time because he forgot to bring the check-book *grin*. Anyway now that there’re two pending by-elections around the corner the pressure has abruptly shifted from Anwar to Najib’s shoulder. Well, Anwar has lost a state and all the fingers were pointed at him. But the palace and Najib may have under-estimated the reactions from average-Joes. And these two by-elections may be the litmus test to measure the anger of people on the street. Between both it appears Najib will have more to lose than the Sultan of Perak. Due to the status of Sultan people might find the convenience of making Najib the next most hated leader next to President Bush *where’s the shoe?*.

Really, what can Najib do to regain at least some support from the people? His approval rating is going down the toilet bowl so he better do the right thing, fast. Frankly he should stop thinking about capturing the next state but insteadassemble the finest intellectual possible to turnaround or provide the best method to cushion the economy recession that is expected to make a hard landing. When President Obama is fighting an economic battle that could cost his seat if not succeed, PM-in-waiting Najib should know the consequences if he is still busy and obsessed with his little toy of bribing opposition assemblymen to defect. Najib has to drive the nation to the next economy’s paradigm-shift and his buddy Mahathir Mohamad may have provided the clue today.

“The main thing is to increase income so that the economy will rise through higher consumption of local products … Malaysia needs to conduct a careful study on ways to turn the country into a high-cost, high-wage one to ensure the sustainability of its economy in the years to come”, says Mahathir Mohamad in an interview with Business Times. He cited Singapore as a country that not only found its niche in financial services, but had managed to increase both its gross domestic product and per capita, disposal income of its people, to reach a developed nation status. Although it’s amazing he didn’t realize such a model when he was the PM before at least he admitted (indirectly) his mistake of adopting (forever) cheap-labour concept. One wonders where he was all this while. Hasn’t he heard of a city called Hong Kong?

Other Articles That May Interest You …

• UMNO is big Bully but that’s because PKR-DAP are Babies
• Perak, PR, BN and Gamuda - It’s all about Business, Stupid
• Yippee! State Governments for Sale - Any Top Bidders?
• Boycott US-made products? No Thanks, it won’t work
• Leave IJN alone you Greedy Sime and Corrupt Politician
• Take your pick – Yoga, Beer, Jobless or Corruption
• Out of Subsidy Mentality but into the Crocodile’s Mouth
• Stimulus Plans, to be spent Wisely or ended up Elsewhere?
• The New Great Depression is a Different Animal, Stupid

Monday, February 09, 2009

UMNO is big Bully but that’s because PKR-DAP are Babies

Ididn’t know that my previous article (read here) was picked and published by the famous and cotroversial Malaysia-Today (read here) until one of my readers alerted me (thank you). And from the comments received it appeared almost 100% of them are against the decision by Sultan of Perak’s decision to “award” the trophy to federal government BN (or rather UMNO). Government-controlled print and electronic media are still in the denial state and continue to play the one-sided and bias reporting as if the whole population of 20-plus million populations were born yesterday. DAP Tiger Karpal Singh and PKR People Champion The-Rock Menteri Besar Nizar Jamaluddin were the new targets selected by UMNO in their latest attempt to put the duo to fight with the monarchy.

What else can I say about Karpal Singh except that he’s a man with strong principle as far as politicians are concerned and for that you either hate him or love him (at least he calls a spade a spade) – there’s no two way about it. Sure, he’s famed for pick up fights with almost everybody – former dictator Mahathir, his former boss Lim Kit Siang and now the opposition de-facto leader Anwar Ibrahim. You may admire him because he’s a real cool and great lawyer but as a politician he can’t be a leader because he’s not a team-player and could be as stubborn as a mule. He talks and sleeps law and won’t blink twice about suing anyone he thinks have violated the laws and this includes the Royalty – the Sultan of Perak. And this game the UMNO new bullets to divert the whole Perak latest crisis from Najib to Karpal Singh. 

UMNO is corrupt, arrogant, bully, power-crazy, racist, pirate, dictator, hypocrite and so on. MCA is corrupt, UMNO’s running dog, hypocrite, prostitute, traitor and so forth. MIC is, well, a corrupt, gangster and the ultimate prostitute of all time. Combined together the UMNO-MCA-MIC is the undisputed champion for the last 50-year making fools out of Malaysian average Joes. Over time these three musketeers have proven themselves to be the snakiest yet dirtiest player in the politic arena. Thus you shouldn’t fell off your chair with the sudden Perak government collapse because the PKR-DAP-PAS is still a fragile team born yesterday. As a newly born baby naturally they (or rather PKR and DAP only?)cries non-stop when the pacifier was taken away from them. Yes, while three of them were fighting for the pacifier since captured the Perak state 11-month ago the bigger bully and loser UMNO came from behind, walking like a Pink Panther and “robbed” the pacifier away.

As with normal bully UMNO hides their hand that steals behind their back and pointed their fingers that it was the decision by Sultan of Perak to give the state back to BN. They were not to be blamed and in fact the babies PKR and DAP should now be punished for seditious act for going against the Sultan’s decision. See how the master in work? Maybe it’s true that the former government of PKR-DAP-PAS is still not capable of running a state and I’m talking about defending your territory against the barbarians outside cruel wall, mind you. Perakians may have found their truly people’s champion but obviously PKR-DAP-PAS is not ready for the real survival in the dog-eat-dog world. Threw in a Toyota Camry and you can get DAP clerk Hee Yit Foong wagging her tail defecting to the new master UMNO, although I’m not sure if she dares to go back and meet eye-to-eye her Jelapang constituents.

Although the current new government of Perak may not survive come next general election at least the BN (and other cronies) has another four years to plunder the state. The RM12.5 billion (US$3.67 billion) double-track railway may regain steam after electrified by the latest crisis that saw the BN government back to power. Gamuda Berhad (KLSE: GAMUDA, stock-code 5398) needs no introduction here while another winner in this latest episode is indeed MMC Corp Berhad (KLSE:MMCCORP, stock-code 2194). Low-profile Syed Mokhtar Al-Bukhary who owns MMC Corp is a long-time supporter and fundraiser for UMNO and running the political party needs lots of money so it’s only normal to feed the people who give you back the money - from left to right pocket. Again, it’s all about money and nothing personal.

It’s time for PKR-DAP-PAS to stop sulking and scratch each other’s face about the lost pacifier. Instead they should re-strategize on how to move forward to capture the federal government in the next general election. Hey, who says the next general election is four-year away? It could be earlier if a nation-wide snap election is being called should the UMNO power-struggle enter another level. Again, see how brilliant UMNO is in diverting their internal problems to this Perak crisis? Anwar, via his previous experience in UMNO, perhaps should conduct a Basic-101 class to his partners, DAP and PAS about their common enemy – the bully UMNO. The next state to fall could be Kedah although new plans and more money might be needed to deploy the same model to the last two frontiers, Selangor and Penang.

Other Articles That May Interest You …

• Perak, PR, BN and Gamuda - It’s all about Business, Stupid
• Gamuda and IJM Corp on their way to Merge soon?
• The Richest Malaysians, Robert Kuok scored the perfect 10
• Gamuda’s Game-Over reveals Dark Side of Economy?
• Money is Evil? But it can buy you Frogs (Cheap Postman)
• MMC overpaying SATS, Albukhary sucking money out
• Windfall Tax - Punishment or Desperation for Money?

Friday, February 06, 2009

Perak, PR, BN and Gamuda - It’s all about Business, Stupid

Dubai is probably the best yardstick to measure the economy of the Gulf region; at least Dubai was the most prosperous city within the region. People might not know where Oman is but they can’t miss Dubai. For years people have been flocking to this city hunting for their first pot of gold. As with the normal cycle property market was booming with tons of first-time speculators snapping up properties as if they were buying tiramisu cakes. Money was stretched to the limit in order to buy maximum number of properties possible. These properties would then be rented out without much problem, thanks to the booming economy, and thus generating positive cash-flow. It was a no-brainer method to generate wealth until now.

Now that the property bubble has burst, thanks to global economy recession, these novice speculators are selling their once-cash-cow to anybody at fire-sale discount. Effectively most of Malaysian construction companies were crying asprojects agreed got hold or cancelled. Gamuda Berhad (KLSE: GAMUDA, stock-code 5398), the country’s largest construction and engineering with interests in construction, water, toll and property development is feeling the heat (7% of Gamuda's outstanding order book comes from the Gulf region) after the WCT Berhad and Meydan LCC joint venture to build a RM4.6 billion race-course in Dubai was cancelled. Gamuda generated investors’ interest recently when the founder and Managing Director Lin Yun Ling cashed-out early 2008 sending the stock price to the south.

Another interesting fact about Gamuda - the largest shareholder is also the second richest woman on the 2008 Forbes 40 Richest Malaysians at #35 spot. She isRaja Datuk Seri Eleena Raja Azlan Shah, the daughter of the Sultan of Perak, Raja Azlan Shah. She was worth RM773 Million ($228 Million) at #25 spot in 2007’s 40 Richest Malaysians but this figure dropped to RM510 Million ($150 Million) in 2008 at #35 spot. Based on today’s stock price of RM1.91 a share her fortune is only at RM287.46 million based on her remaining stake of 7.5% in Gamuda via Generasi Setia (M) Sdn Berhad. Naturally when his father refused to dissolve the state assembly for a fresh election various rumors and speculations began its circulation.

Malaysian politics is perhaps the dirtiest but you can’t blame the public to have a perception that the federal government was twisting the arms of the Sultan (silly assumption, is it not?). However on the business perspective you do not need to wake Einstein up from his grave to tell you that Gamuda is basically at the mercy of the Federal government. With water taps closed by the federal government to three of the most developed states, Selangor, Perak and Penang, Gamuda is screaming for projects. Certainly the nation has the money. In fact the country is flushed with more money than before the Mar 2008 general election simply because the federal government does not know where to pump the money to since the most developed states such as Selangor, Perak (was) and Penang are controlled by opposition parties.

PM-in-waiting Najib Razak is set to take over the premiership end of Mar 2009 so expect more goodies and good news (lower electricity tariff soon?). The first RM7 billion stimulus package may have been “well spent” into certain pockets already. Najib’s mentor, former dictator Mahathir, has hinted that the second stimulus package should be about RM35 billion or 5% of the country’s GDP (gross domestic product) so you can expect the figure to be announced by Najib. Whether this whopping RM35 billion will go into stock market or projects everyone is drooling for a piece of the cake – including Gamuda. Hmm, Najib may be right after all that the country may not enter recession. So, is it good time to accumulate some Gamuda shares *grin*?

Anyway let’s imagine (it’s Friday dude) a conspiracy theory and this Perak crisis is just the tip of an iceberg. Let’s assume Anwar has the number to take over the federal government but at the same time he’s also aware that to do so could backfire badly. He needs to start the ball-rolling and he announced about the defection, 916 and so forth. After Permatang Pauh and Kuala Terengganu, he knew Najib is desperate for trophies so the plot was to sacrifice Perak. He accepted the bait (was it?) offered by Najib with this fella Nasarudin. A good strategy to test water (effect of defections) and to flush out traitors within PKR, Perak has to fall to BN. Now Najib has gotten Perak State as the trophy to show off during the coming UMNO election and claimed it was Anwar who started the defection plan and he simply finished it. The next episode will see that Anwar will snatch the federal government with the readied defectors while screaming “Najib started the battle so I'm just finishing the war”. What a wet dream!

Other Articles That May Interest You …

• Experience the Real Panic in Persian Gulf Slowdown
• More data coming, more volatility, lesser ammunition left
• Gamuda and IJM Corp on their way to Merge soon?
• The Richest Malaysians, Robert Kuok scored the perfect 10
• Litrak Capital Repayment, a nice way to suck money out
• Gamuda’s Game-Over reveals Dark Side of Economy?
• Gamuda tumbled, opportunity to Buy or reason to Sell?
• From desert to Tourism and Property Magnet

Thursday, February 05, 2009

Yippee! State Governments for Sale - Any Top Bidders?

Finally, the honeymoon is over for Pakatan Rakyat after 11-month running the Perak state. The Sultan of Perak seems to think that state assembly dissolution is not necessary over the current crisis. Interestingly police and FRU were speedily fast in taking over the State Secretariat building after outgoing Menteri Besar (Chief Minister) Nizar was reportedly refuse to resign. Why the Sultan of Perak disagreed to dissolve the state assembly is beyond many imaginations and it appears many netizens are not happy with the decision but to resists is futile – as the saying goes. It’s wise to remain calm and refrain from posting any seditious comments as that could be easily used as an excuse by the federal government to put more heads behind bars (no wonder Najib was grinning from ear to ear after his meeting with the Sultan).

In reality the chess-master Najib has planned the whole takeover brilliantly, easily outclassed Anwar in this battle. It doesn’t matter if it has costs RM200 million (RM50 million each) of taxpayer money to fish the four defectors to bring down the Perak government. Considering that the ruling government has spent a whopping RM500 millon but still lost the Kuala Terengganu by-election recently, this RM200 million is very well spent. Duplicate the same model on Selangor, Kedah and to some extent Penang you might be able to wrest back all those states lost in the 2008 Mar general election. People are fuming that if this is the way to topple (or rather buy) government then why bother vote for the party they desire? Sure, if the Perak state is dissolved then the possibility of Pakatan Rakyat gaining two-third majority is pretty high, as what some pundits said but I guess we'll never live to know this theory.

But what transpired between the Sultan and Najib that was so convincing that Nizar failed to impress upon? Sultan Azlan Shah, a lawyer by profession, was a former Lord President of the Federal Court so he should be well-versed on matter pertaining to law and Constitution. Instantly rumor-mill started churning out theories that the Sultan was somehow shown files (the former dictator Mahathir was master in this area) that could threaten his kingdom if he does not follow instruction. The fact is all the Sultans have their own businesses (hey! Money talks) and one way or another the dotted lines ended up at the federal government. Actually by looking at how Najib brought the whole battalion of the 28 plus 3 parasites and frogs with him confidently into the palace as compared to the lone ranger Nizar should have given tips on the result.

Anwar and his gang can get the 100,000 supporters for a showdown in Ipoh stadium but it can’t change the fact that the Sultan has made the decision (but the Constitution said otherwise about how Menteri Besar can be dismantled?). Maybe what the Sultan has done is a blessing in disguise. It will awaken the politicians and people that wresting a government by way of defections is simply sillybecause the betrayals could jump to the other site of the fence once again. Like it or not there’re still many assemblymen especially the opposition parties who has not smell the aroma of RM1 million, let alone RM10 or $50 million. The Sultan cannot take this (money politic) into consideration as according to the law, he has to agree to assemblyman who commands the majority of support and unfortunately Barisan Nasional has it. But hey, why Najib is leading the group and not the incoming Menteri Besar (Chief Minister)? Najib is not the one who’s going to be the next Menteri Besar so he has no business negotiating with the Sultan (see the link about the theory that Sultan was being arm-twisted here?).

So, if there’s no leader amongst the 28 plus 3 fellows doesn’t that mean nobody has actually gain the majority support yet to become the next Menteri Besar? Anyway the incoming BN government is expected to be equally weak as it depends on these four frogs (or rather three independent) but then these three frogs can always join BN components very soon. The question is what if there’re hoppers from BN itself? If this happen then it would paint a picture that Sultan’s decision today is deadly wrong as His Highness should have return the decision to choose the new government to the people instead. Of course the possibility of opposition assemblymen hopping over to BN is greater, generally speaking.

Whatever it is the floodgate is now opened to anyone desire to jump to any party and this is not healthy although interesting *and fun*. What better way to become instant millionaire than to hop around? Assuming you’ll get RM10 million per-hop the dream of becoming a billionaire is definitely not far away *grin*. But then could this whole drama is just the starting episode of more explosive conspiracy plans by Anwar and Abdullah (or rather his son-in-law Khairy)? Nevertheless a crisis could be brewing between Pakatan Rakyat and the Monarchy.

Other Articles That May Interest You …

• It’s 100% Profit, small amount compared to RM10 Million
• Money is Evil? But it can buy you Frogs (Cheap Postman)
• Country is already in Recession – Forever a Liar
• I Have A Dream – A Day When Money Can’t Buy Votes
• Muhyiddin, the newly crowned AP King of the Kings?
• Take your pick – Yoga, Beer, Jobless or Corruption
• Flip-flop Badawi to the Exit Corridor – from Hero to Zero
• Economy Meltdown – Stop being Selfish and Stubborn

Wednesday, February 04, 2009

It’s 100% Profit, small amount compared to RM10 Million

The breaking and hottest news must be the current political crisis that is brewing in the state of Perak. In the latest twist it seems the Barisan Nasional Perak has secured the majority of state seats to form a new Perak Government after four Pakatan Rakyat assemblymen left their respective parties and pledges allegiance to the BN (Barisan Nasional). The ball is now in the Sultan of Perak’s court. After listened to the current Perak Menteri Besar Mohammad Nizar Jamaluddin's justification for a request to dissolve the state assembly it’s only natural for the Sultan to listen to what the mastermind Najib has to say tomorrow *cool, more actions!*.

It would be amazing if the Sultan would eventually grant the much needed dissolution but on paper it appears His Highness may satisfy that the Barisan Nasional commanded the majority thus hand-over the crown, depending on how Najib present his justification. While the perception from the public or at least mostly Perakians was that millions of dollars were paid to gain the defections, the Sultan needs some time to go back to the law books. It’s hard to say at this moment if His Highness will put this “Unwritten Law” (RM10 - RM50 million) into consideration but the fact is the Menteri Besar must step down when he loses majority support in the assembly. Going by how tactful Najib maneuvered the whole game to check-mate Anwar’s team, you just got to salute the former as with a stroke of dirty strategy the federal government manages to topple the state government. Hey! Politics is the dirtiest game ever created by human, is it not?

So what went wrong with the Pakatan Rakyat government in Perak so much so that it could collapse so easily after the short celebration when Bota Assemblyman Nasarudin Hashim defected over to Pakatan Rakyat less than a month ago? What are the lessons learnt from this latest political game?

Firstly Anwar obviously has not mastered the Art of War comprehensively during his stay in the jail. He may be caught in surprise over the easy victories after the Mar general election that it prompted him to act hastily (or rather stupidly) by declaring his next game plan to take over the federal government – by defections. And when Najib presented Bota assemblyman to him in the form of a Trojan horse (or rather a bait) Anwar gladly accepted it with smiles from ear to ear. The whole purpose was to put the blame on Pakatan Rakyat that it was them who started this unethical game so don’t blame BN to join in the poker game. Obviously BN has very deep pocket and everyone who knows the rule of poker game knows he who has the most money win the game.

Secondly many Pakatan Rakyat’s assemblymen are of low quality so you don’t have to be a rocket scientist to guess why a former postman and his buddy could be bought over with RM10 – RM15 million to cross-over. Besides, additional promise to let them free from the corruption charges should seal the deal. Of course the worst defector is former DAP Jelapang assemblyman Hee Yit Foong. She should be on top list (RM50 million) for the amount of money received in order to betray her party.

Thirdly the Pakatan Rakyat assemblymen should realize that they got their positions because the people voted them, period. Hence instead of startinginternal politicking they should instead strengthen their already fragile pact and work for the people. Maybe it’s true after all that while it’s extremely difficult to teach old dog new tricks, it’s equally hard to teach stupid dog new tricks. Newly found power could blinded these novice assemblymen and this latest political landscape should serve as a good and bitter lesson to both PKR and DAP parties that nothing is forever yours in politics. Sure, the BN is probably the dirtiest political party they can ever find in this planet but they’ve proven that they might be the ultimate survival of all.

Talk about money, since it’s so useful I’ve decided to take money off the table after hit the 100% profit. I can’t bear the sight of losing my money if I were to let the greedy side of mine to show its color. Surprisingly the stock has breached the $95 bucks a share so my AAPL Feb 80 Call Option is ripe to be picked. It may not be $10 million for that matter but I earned it the legitimate way, unlike some dirty frogs who could sacrifice their souls and family names for that stacks of money. Hey! I should be made the new candidate for Pakatan Rakyat should there be a state election because I’ve strong principle – I won’t defect (I promise) *grin*.

Other Articles That May Interest You …

• Money is Evil? But it can buy you Frogs (Cheap Postman)
• Unemployment – How Bad Could It Get?
• Country is already in Recession – Forever a Liar
• I Have A Dream – A Day When Money Can’t Buy Votes
• Flip-flop Badawi to the Exit Corridor – from Hero to Zero

Tuesday, February 03, 2009

Money is Evil? But it can buy you Frogs (Cheap Postman)

The saying goes that money can’t buy everything but then without money you can’t buy a single thing and so people still worship money till today. People still debates if money can buy true love, happiness and so forth but it’s quite subjective, really. Individual who can’t live without money thinks money can actually bring happiness. In fact how many of us can still declare that we’re still the same happy person without money due to retrenchment? I bet your sex life would turn for the worse if you’re suddenly jobless. You partner will probably give you the kick before you can even say “honey …” In reality the pros of having money overwhelmingly outshined the cons of having it.

While it’s feeling jolly good to have tons of money to your advantage, there’re many other factors that could turn the tide against you. In stock investing or option trading certain factors could turn your trades into a losing position and the losing game could snowball even after you tried to average down. In a nation’s economic crisis a decision to pump in $700 billion bailout package could do more damage – a sign or confirmation from investors that the country was indeed in deep trouble so it’s time to sell massively. In politics you chose to spend RM500 million in a by-election trying to buy votes but still you lost the battle. Strange world, isn’t it?

Fortunately there’re still many cases whereby money can buy your desired toys. For RM10 millions each you can buy over two “froggy” assemblymen (one is a former postman) to cross over to your side (why spent RM500 million on a single by-election campaign then? *scratch head*). Also money can empower you to miraculously convert a supposedly independent Election Commission to suddenly become devils and a judicial body overnight by overriding a decision made by the Perak speaker on the vacancy of two state seats. Of course in this crisis it’s strange the mighty ruling government with unlimited national funds and machinery at its disposal is simply too scare to go all out for two open by-elections, let alone a state-level election, to determine once and for all who the real winner is.

Sure, this latest Perak crisis will not be the last that we’ll see considering the same invincible hands are playing the same money-can-buy-you-over game in other states such as Kedah and Negeri Sembilan as well. The cat-and-mouse game will definitely continue even after March when the country sees its new Prime Minister and this political instability will add to the rocky economic slowdown. The ruling government may be dying but the possibility of these losers to bring down the whole nation together with them leaving debris and empty vaults to the opposition parties is simply disturbing. The new Prime Minister might choose not to call for a snap election after all (after he took over) but prefer to stubbornly hang on to the power. He can still prolong his stay with millions of dollars per-head to the opposition candidates with the intention to destabilize his opponents.

Mind boggling as it may appears, the battle for the crown is between Anwar Ibrahim (de-facto opposition leader) together with Abdullah Badawi (outgoing PM) against Najib Razak (PM-in-waiting) together with Mahathir Mohamad (former dictator PM). The excitement may have return but let’s hope there won’t be a last desperate dirty tactic of Operasi Lalang which could spoil the fun of the series. Tell you what, I’ll boycott US-made blockbuster movies if the tag-teams above could continue to entertain me with explosive actions and dramas *grin*. With more political uncertainties in the pipeline, who says it’s time to enter the local stock market?

Other Articles That May Interest You …

• Country is already in Recession – Forever a Liar
• Boycott US-made products? No Thanks, it won’t work
• Operasi ISA Started? Climate of Fear for the Country

Friday, January 30, 2009

Unemployment – How Bad Could It Get?

It surely feels good to see Apple Inc. (Nasdaq: AAPL, stock) shares trading above $90 bucks a share after my previous article. I suppose it’s time to take money off the table *grin* today as Friday is always a good day to lock in profit, if you know what I mean. In fact the best time to cast away your greed and fear is during such long holiday whereby your determination to let your stop-loss (or rather stop-profit) do the work is put to final test. It will be even better if you do not have internet access thus denying you the ability to monitor the stock movement and manually override your earlier decision. Sometimes it’s amazing what the greed and fear could do to you.

Sooner or later you need to train yourself to put your trades on autopilot since it could put the strain off your muscles over long period of monitoring. Long hours of stock monitoring is never a good thing to your health, what more if you have many open positions. That brings to the topic of whether it’s wise to have many open positions and if not then how many is sufficient but that will be another discussion on another day. While autopilot has its advantages, it definitely robs you of the fun and excitement of predicting the stock movement in the next few hours or days. Nevertheless autopilot is your best friend when you do not have sufficient time or resources to digest macro and micro economic news and make decision thereafter.

Anyway Friday is also the day U.S.’s Commerce Department is set to release a report showing the economy shrank at a pace of 5.4 percent in the October-December period. If the forecasts are correct then the fourth quarter performance will be the worst since 1982’s recession but if the report shows otherwise (worse than estimation) then the Dow could plunges further *scary, scary*. The effect of global recession is hitting Japan’s economy real bad with unemployment rate jumped to 4.4% from 3.9% in Nov. Sony and Honda Motor Co.’s net profits in the Oct-Dec quarter plunged a whopping 95% and 90% respectively. The Japanese factory output (Industrial Production) plunged 9.6% in Nov, the worst reading since 1953 and it’s taking its toll globally including Malaysia where unemployment may climb to 6% this year – the highest in more than 20 years. This will translate to about 660,000 unemployed zombies *Wow! Think of the possible crime rates*. Spiraling unemployment will spawn many other problems you won’t want to know.

Forget about PM-in-waiting Najib Razak’s claim that the country will never enter recession and Bank Negara’s (Central Bank) attempts to trumpet misleading signals because chances are high that Malaysia’s GDP may be in negative territory (0.7% contraction) against government’s forecast of 3.5% growth. That’s why Najib is desperate to get the so-called second stimulus package out. But the question is what happened to the first RM7 billion stimulus package? Has it been fully disbursed in the first place? If not then why ask for more money and if yes then why the effect is not felt? The last thing we want is another scandal whereby a staggering RM7 billion evaporated into thin air. On the other hand if the argument is the RM7 billion is too small a figure then why such figure in the first place?

President Barrack Obama may be right in calling Wall Street bankers “shameful” to be paid more than $18 billion in bonuses last year but I doubt he could do much with the U.S. economy even with another $1 trillion on top of Bush’s earlier $700 billion bailout package. The U.S. economy is in great mess and you don’t have to be a rocket scientist to know the country’s recovery requires a long journey. They have not even find the right medicine to their problem yet so you can imagine the scale of problem U.S. is facing now. And do I have to repeat that we’ve not even heard about Credit Card’s potential bubble?

Other Articles That May Interest You …

• Country is already in Recession – Forever a Liar
• Why Recession is important and we still need it?
• Boycott US-made products? No Thanks, it won’t work
• It Ain’t Over Yet – China and Unemployment are Next

Friday, January 23, 2009

Country is already in Recession – Forever a Liar

Ithought I would be able to make another 100% profit on my AAPL Call Options after the company announced its earnings that beat analyst estimates. The stock jumped almost 10% after trading hours to $90.70 a share. For the quarter, the company earned $1.61 billion (or $1.78 per share) up from $1.58 billion (or $1.76 per share) a year earlier. Revenue grew 6% to $10.2 billion. Analysts were looking for EPS of $1.40 on $9.74 billon in sales. During harsh environment such as now analysts are complacent and happy if you can beat street expectation. So long as you do not announce that your company has been cooking the accounting books or your key person is having cancers naturally you can expect the stock price to jump and gap-up.

However the Dow Jones and Nasdaq’s stars were not aligned and hence Apple Inc. (Nasdaq: AAPL, stock) was not able to breach the $90 a share resistance, not that it could prior to the earnings release but I expect the stock to do so this time around. But I have to be contended that the stock closed above $88 a share. With Dow currently trading at the strong support of 8,000 I expect there would be limited chance of major sell-off Friday. I hope my prediction will come true and the stock will test the $90 again and above that level thereafter; failing which I’ve to take the money off the table, close shop and enjoy the Chinese New Year *grin*.

Frankly I would have sold off my call options Thursday (even if no 100% profit) if my internet connection didn’t give up on me. Yeah, that sucks especially when you’ve open trading positions that require immediate action. Streamyx sucks but that’s the best line you’ve for the time being so you’ve to live with it. Equally sucks was when your Celcom line got barred because you forgotten (on purpose) to pay the bill. Hey, it’s not my fault that your bill didn’t arrive on my doorstep on time because I adopt a policy to pay to myself first before I pay to others *grin*. And even after I paid the line still got barred with the customer services promised roses that the line would get reactivated after half and hour but it didn’t happen *Celcom Sucks*.

Of course my ranting is nothing compared to politicians who suck big times especially the PM-in-waiting who almost swore that the country will never goes into recession. Heck, the country might have already experiencing recession as we speak else why the drastic 75 basis points cut to 2.5% on Wednesday. In fact most of researchers and analyst expect more cuts to come after Chinese New Year. If indeed the PM-in-waiting is confident that recession will never hit the shore, why adamant about the RM7 billion stimulus package and is now toying with the idea of another stimulus package? If you need billions of dollars to generate a nice positive growth number, that is equivalent to cheating. I supposed you know why the standard of education in the country is falling compared to foreign universities despite record after record year of high scorers. If you lower the standard of passing marks so that the education minister can claims such artificial achievement, it’s cheating. So what if you have 10, 20 or even 50-straight-A’s scorer?

You don’t really have to look too far to see the consequences of creating production lines that create graduates with low quality. Go to Jakarta and ask those people squatting on the street. Most likely they’ve a degree from some sort of universities. Singapore has unveiled a massive S$20.5 billion plan in its 2009 Budget to help Singaporeans keep jobs while Malaysia is still hiding the actual situation from the public. It’s perfectly alright if you trumpet a false hope provided you’ve the mean to contain the situation. But when you’ve potentially hundreds of thousands of jobless people coming back from Singapore and more sectors to be affected besides manufacturing domestically then you’re playing with fire. I’ve mentioned that there’s nothing wrong to prepare the people mentally about the coming recession so that they can plan for themselves how to cope with the situation.

Maybe it’s time the country needs Malaysia Obama who can reverse the stupid policies from previous Bush (Mahathir) administration. That’s right, the current ruling government sucks and things can only get worse without political will to drive the country into a better shape. Now that President Barack Obama has signed executive order for the closure of Guantanamo Bay detention facility, it’s high time the PM of Malaysia do the same to the ISA detention center. Let’s see how Najib can lies when the official figures about the economic situation are revealed. But I supposed once a liar forever a liar! What the country needs now is “Hope”, “Change” and “Progress”.

Other Articles That May Interest You …

• I Have A Dream – A Day When Money Can’t Buy Votes
• It Ain’t Over Yet – China and Unemployment are Next
• It’s President Obama, learn from this Great Nation please
• Will Malaysians wake up to face the Economic Challenge?

Tuesday, January 20, 2009

Barack Obama inauguration – the 17 minutes speech

Barack Obama’s inauguration will be televised as well as live-streamed and simulated in virtual worlds. Web sites such as Joost, Twitter, Flickr are some of the many sites readied in broadcasting Tuesday’s events live. Of course you can tune in to CNN (Astro subscribers) to enjoy the historical moment with popcorns, chips, Cokes or beers *watch that belly of yours*. The theme of Obama’s inauguration will be “A New Birth of Freedom” – a great theme that can be re-used in the current Malaysia political landscape *grin*.

The climax is definitely the moment (Jan 20 2009, 12pm E.T.) when Barack Obama places his hand on the Bible and takes the Presidential Oath of Office as specified in the Constitution that reads “I do solemnly swear that I will faithfully execute the office of president of the United States and will do the best of my ability preserve, protect and defend the Constitution of the United States”. Let’s wait if Barack Obama could match John F. Kennedy’s famous quote – Ask not what your country can do for you; ask what you can do for your country.

Nearly 2 million people are expected to hit the streets to watch Barack Obama sworn in as the 44th president. About 5,000 portable toilets and 10,000 National Guard troops are readied for the inauguration day, not to mention tons of Secret Service roaming the Washington to ensure Barack Obama and Vice President-elect Joe Biden' safety. This bring back the memory of television series 24 to me *where are you Jack Bauer?*. However on the sad note more than 2 million Americans lost their jobs last year and the stock market lost its shine by almost 45 percent. Barack Obama’s presidential inauguration is estimated to cost $160 million, the most lavish ever.

But there’re people who will make their fortunes specifically for this presidential inauguration. People who gotten free tickets that were initially given to congressman and senators to be distributed freely to constituents are auctioning it on the internet for as much as $40,000 each. How I wish I managed to rub shoulders with some congressman *grin*. Of course Barack Obama still has a long and challenging road ahead, thanks to the mess he’s set to inherit from outgoing President Bush.

Wall Street however has run out of steam from the Obamania’s effect as it points for a lower opening Tuesday. After today’s craze for Obama the next stop would be Apple Inc. and Google Inc.’s earnings result.

Other Articles That May Interest You …

• I Have A Dream – A Day When Money Can’t Buy Votes
• It Ain’t Over Yet – China and Unemployment are Next
• It’s President Obama, learn from this Great Nation please
• Will Malaysians wake up to face the Economic Challenge?

I Have A Dream – A Day When Money Can’t Buy Votes

Citigroup Inc. (NYSE: C, stock) was splitting (what happen to the financial supermarket buzzword? *grin*) and Bank of America (NYSE: BAC, stock) was getting a whopping $138 billion government bailout. What a major milestone in the history of American capitalism. Nobody dares or cares to predict the bottom because the fact is the United States will keep spending billions or trillions, if need be, to revitalize the ailing economy. Intel Corp. reported its net profit plunged 90% to $234 million while Motorola, Oracle, Microsoft and even the Google Inc. (Nasdaq: GOOG, stock) is laying off their greatest asset – people. Who says Google wouldn’t chop their staffs even though it’s still very profitable? It’s a cruel world out there.

One day before Barack Obama is to be sworn in as the first black U.S. president, the stock market is closed in honoring the slain civil rights leader, Martin Luther King Jr. – famous for his “I have a dream” speech more than 45 years ago in 1963. Now everyone is waiting for Obama’s speech Tuesday with 85% polled said it will be an excellent or good one. On the contrary it appears the Malaysian PM-in-waiting, Najib Razak, could be having problem leading the country, let alone commanding the respect from the people in Mar 2009 when current PM Abdullah Badawi is expected to hand-over the crown to him. If the result of just concluded by-election, Kuala Terengganu, is any indication to measure Najib’s approval to become the new PM, he fails.

Not only did the opposition PAS won with a stronger majority of 2,631-vote margin, the opposition also gave the still-arrogant ruling party UMNO a run for their “money” and a hard kick on the butt by wrestling the parliamentary seat. The 2,631-vote margin might be less than the expected figure (5,000 to 8,000 majority) but there’s so much the opposition can do against the wealthy ruling government who has been claimed to be spending up to RM1,000 (per-vote) in vote-buying. Even two journalists were not spared when they suddenly given envelopes containing RM600 although the purpose for doing so is still unknown (to write that the loser has win instead *scratching my head*). It’s hilarious to read how the Chinese voters were bribed with early “ang-pows” worth RM200 each only to donate it to the opposition, not to mention for the dinner hosted by opposition.

However when all the news were drumming that the Chinese voters were the kingmakers and should be treated like a spoilt-brat, the by-election result surprisingly showed that the Chinese still voted the ruling government. Almost everyone called the Chinese cowards and deserve to be secondary citizens who could be easily bribed with RM35 million of Chinese schools and projects goodies but revelation by RPK seems to makes sense. With a whopping 8,000 police personnel stationed in Kuala Terengganu and the multiple threats and intimidation from ruling government to avenge the Chinese voters should they voted for the opposition, who can blame the old and conservative Chinese voters not to pee on their pants? There were more than 1,000 young Chinese voters who didn’t turn-up, most probably because they’re saving their leaves for the long Chinese New Year holiday which is 1-week away.

But the icing of the cake was the theory that the Chinese voters somehow “knew” it would be the Malay voters who would swing big to the opposition hence there was no need for the Chinese votes. To save their businesses from being targeted as part of the “retaliation” operation by the ruling government later, the local Chinese voters decided to give enough votes to the UMNO to paint a picture that the Chinese are still with the ruling government but at the same time give the remaining votes (40% to 45%) to the opposition and let the Malay votes deliver the ultimate “punch”. It was a brilliant strategy if you ask me, if only this was made known to the opposition strategists. It was just like the “Art of War” whereby you lure the enemy into an area while you prepare the final assault on another main target. So while the Chinese voters were the red-herring where the ruling government spent days and nights trying to suck-up to, the Malay voters were slowly convinced to deliver the blow.

And to read that Najib (and his wife) was actually speechless with the defeat but brave enough to declare that the latest defeat was just a temporary setback is laughable. However credit should be given where it’s due and you should be proud to have a leader like Najib – how many of us could pull a thick skin and shamelessly hide our head under the denial-syndrome mask and smile over it? Yeah right, the country can never go into recession. Tell to tell that to the retrenched workers after the Chinese New Year dude.

Other Articles That May Interest You …

• Part-2 of financial problems haunting the Stock Market
• Why Recession is important and we still need it?
• Boycott US-made products? No Thanks, it won’t work
• Flip-flop Badawi to the Exit Corridor – from Hero to Zero
• People kicked UMNO out of Penang, again? Ouch!

Saturday, January 17, 2009

Time DotCom, the Blood-Sucking Leech that never dies?

Remember how one of the worst and dying companies in town was awarded the precious 3G license while another successful company was denied not many moons ago? The puzzle was solved when Time DotCom Berhad (KLSE: TIMECOM, stock-code 5031) was literally given free 27.5 million shares in DIGI.com Berhad (DIGI : stock-code 6947) in exchange for a piece of paper – 3G license. With a stroke of a pen (approval for the 3G license) the good for nothing Time DotCom was given RM700 million pocket money to fool around *spa anyone, grin*. Of course the icing of the bail-out deal was the fact that DIGI.com was actually leasing the 3G license for 10-year period, after which the playboy Time DotCom would charge again in exchange for that piece of paper (3G license).

Time DotCom has just reduced its stake in DIGI.com after it disposed 22.5 million shares for RM463.5 million cash or RM20.60 per share in order to reduce borrowings. Can you see how DIGI.com was actually paying Time DotCom’s huge debts? Sure, DIGI.com can choose not to pay for the 3G license and send the cash back to Norway but it could have done the arithmetic and found out that it stands to make profits even with the parasite stubbornly sticking to it, feeding on whatever leftover disposed by DIGI.com along the process.

To eat up DIGI.com alive is easy but the problem that the government faces by doing so is to find the replacement for DIGI.com’s management. The greatest asset of DIGI.com is the people that build the brand and subsequently the customer-base. Time DotCom on the other hand does not have the quality people who have the forte to grow the company even though the company was listed more than a decade ago. Fortunately Time DotCom has the backing of government who could help in other way (such as securing the 3G license) so that the company may stay afloat. Long-term wise it is no-brainer that Time DotCom needs to buck up but the question is will the company ever able to stand independent on its own without begging for money the cheat-way anymore? Already the people inside Time DotCom are more interested in playing politics instead of develop the company.

Hence for the time being it’s wise to leave Time DotCom sticks onto DIGI.com like a leech and profit from there instead of force itself and risk creating another monster Time DotCom – with bigger issue of debts. You have to remember that part of the deal between Time DotCom and DIGI.com partnership was to provide training to the former on how to run a telephony business so you can guess why Time DotCom was suffering all these years. They’ve no idea how to run a telco business, let alone the profitability aspect of it *poor thing*. But there’re other problems besides the right people needed to run the business. The whole organization structure of Time DotCom needs revamping, not to mention a strong corporate leader is required to provide direction and to execute business plans.The company needs to be run like a business empire, not like a political party.

However it’s easier said than done considering the culture in Time DotCom resembles that of political party UMNO. Groups of cronies are flourishing and you would get culture shock if you’re not prepared to adapt the working environment. When another severe recession strikes Time DotCom could dies naturally the same way Renong died during 1997-1998 Economic Crisis.

Other Articles That May Interest You …

• Telenor reduced stake to 49% in compliance
• Bail-Out with a piece of paper worth RM700 million
• DIGI to Bail-Out Time DotCom via Share-Swap?

Friday, January 16, 2009

Part-2 of financial problems haunting the Stock Market

Share prices of U.S. banks are unbelievably cheap nowadays and if you think it’s already damn cheap it could go down further. Faith is fast fading for stocks such as Citigroup Inc. (NYSE: C, stock) and Bank of America (NYSE: BAC, stock). The problem could be bad enough for Citigroup to let go of controlling stake in its Smith Barney retail brokerage business, a crown jewel, to Morgan Stanley (NYSE: MS, stock). Bank of America, the largest U.S. bank, is seeking billions of dollars of government aid after it realized that credit losses at Merrill Lynch & Co, which it bought on January 1, were much higher than expected.

Investors are now betting the U.S. financial institutions could reveal its Part-2 of problems soon. Citigroup is expected to report its fifth straight multibillion-dollar quarterly loss (estimated at $10 billion or more) on Friday. In addition oil prices tumbled below $35 a barrel Thursday as new employment claims rose and government reports show that unused gas and oil inventories continue to build. The Energy Information Administration said Wednesday that crude inventories grew by 1.2 million barrels for the week ended Friday after jumping 6.7 million barrels the previous week. U.S. oil inventories have been rising for months, suggesting that the recession has slashed energy demand.

It appears that the bull would have to cut short its orgasm and pass the baton back to the bear. If the earnings continue to be bad and banking institutions were to drop bombshells, it could spell more troubles and the emergence of financial crisis Part-2. Nevertheless the news that Apple Inc.’s (Nasdaq: AAPL, stock) Chief ExecutiveSteve Jobs is taking a leave of absence due to health issues is enough to see the stock plunges further today but remains stable at above $81 resistance level. It’s good time to take some money off the table though. Hence, I’m locking my AAPL Jan 95 Put and Feb 90 Put options.

On the other hand the Dow is trading dangerously at 8,000 and I smell bloodsbelow 7,000-level. So, trade or invest with care as the bear is back. Chinese New Year rally could be stop here and never recover till next year *grin*.

Other Articles That May Interest You …

• Why Recession is important and we still need it?
• More data coming, more volatility, lesser ammunition left
• The Month of Orgasm - New Year, Obama & the Sex Party

Wednesday, January 14, 2009

Muhyiddin, the newly crowned AP King of the Kings?

In case you missed this piece of classic jokes, here’s the headline whereby the bumiputra motor traders asked for APs (approve permits) system to beextended until 2020 and guess what, the International Trade and Industry Minister said “Aye”. Under the National Automotive Policy (NAP), the AP system is to be phased out by Dec 31, 2010 but I supposed those “AP Kings” knew they could just ask for extension without much hassle few years back. Now, this is not about the bumiputra making money but it’s about a handful of ruling government’s cronies making hundreds of millions or even billions of ringgit in profit while millions of other bumiputra were left to fend for themselves.

Interestingly you have this minister, Muhyiddin, who justified the extension of APs with lame excuses that a five-year plan is needed to help them (the AP Kings) improve their operations, increase their working capital and ensure sustainability of their operations. Huh? You meant the late Nasimuddin's empire that made billions of dollars of easy and pure profit from pieces of paper named APs for decades still need another 10 years to improve operations? How difficult it is to sell a piece of AP for tens of thousands of dollars in profit? What operations was Muhyiddin talking about? And just how much is enough for these AP Kings’ working capital? This is the easiest business in the world so stop crapping about the need for sustainability.

In reality these spineless parasites together with their political sugar-daddy are too complacent with the money making machine that it’s simply too difficult for them to lift a finger, let alone asking them to let go of the APs and start making a living the conventional way. Most importantly they’ve become too greedy that even if they’re a billionaire already they still want more. And if you think the year 2020 will be their final year of honeymoon, think again. Looking at the economic cycles chances are high that come 2018 there will be another round of recession and these good-for-nothing AP Kings will use the same old reason to justify another extension.

If they can’t rise to the occasion and need another 10-year to improve their pathetic operations, increase their working capital by additional billions and ensure non-existence sustainability after so many years, chances are definitely high that they will remain the same in the year 2020. Instead of insulting our intelligence as if we’re 3-year-old kid the minister might as well announced that the AP system will stay for good – hide and disguise under the name of bumiputra’s prosperity. But I suppose after the nation has seen the demise of the AP Queen (Rafidah) now you are presented with the new AP King of the King (Muhyiddin).

It’s true that it’s impossible to teach an old dog new trick. So these old dogs could do nothing but to ask for thousands of APs, sell it for handsome profits and repeat the same process again and again. Once a beggar forever a beggar and that’s precisely what define the current obsolete and flaw policies adopted by the ruling government – the assembly lines produce very low quality entrepreneurs.

Other Articles That May Interest You …

• Why Recession is important and we still need it?
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• Will Malaysians wake up to face the Economic Challenge?

Monday, January 12, 2009

Why Recession is important and we still need it?

We can argue until the cows come back and debate until we foam at the mouth why do we keep experiencing this 10-year economic cycle. If we are capable of sending spacecraft deep into Mars ever since 1960s, can’t we plug this hole called “Recession”? There should be some sort of formulas to solve this mystery so that all of us can live happily and make money endlessly *sounds like heaven huh?*. It’s painful to watch innocent people got retrenched and struggles to put foods on the table, not to mention escalating social problems such as crimes, prostitution, marriages breakdown and so on.

Let’s not get too carried away with the problems associated with economy crisis. Instead of cursing the sky and blaming the stock market we should embrace the fact that life is about cycles. From the moment we were born until we’re buried under the earth everything is about cycles. And there’re two sides to it – up and down. As a baby we were taught by our parents what we can do and what we should not do. In school we were taught what is good and what is bad. In war good generals know when to attack and when to retreat. In the world of stock investing we should know when to buy and when to sell although amazingly this is the hardest thing to do to most investors, no matter how many years he or she was exposed to the ups and downs of the stock market.

While it’s true that nobody (despite thousands of years of civilization) has thus far master the art of benefiting (or profiting) from such ups and downs, in reality we do need such cycles for simple reason – to continuously remind ourselves the existence of such rule (cycles). But why do we need such cruel economic uncertainties? Because trading and investing stocks is all about human and it was human’s emotion; namely greed and fear that determine our buying or selling price. Another reason why we need economic downturn is to do housekeeping. If not for the current economic recession we won’t know that human was so creative that a whopping $50 billion could be sucked (and lost) into a “giant Ponzi scheme”, thanks to Bernard Madoff.

Of course without this tipping point that turned the bullish into bearish cycle we won’t know that the U.S. economy is still so fragile, thanks to excessive lending by greedy financial institutions who chose to throw the risk-management book out of the window and gave away easy money to house buyers. It’s a dangerous game to have chief executives fighting to impress board of directors with fancy numbers. I bet you’ll never learn and hear the financial term “Subprime Lending” if this mortgage crisis didn’t burst. We’ll also not know how vulnerable the global economic is when the U.S. sneezes. That’s right - the BRIC (Brazil, Russia, India and China) can barely stand on their own feet.

The current economic crisis also exposed “India’s Enron” when India’s fourth biggest software services exporter, outsourcing firm Satyam Computer Services’s (NYSE: SAY, stock; BOM: 500376) founder and chairman Ramalinga Raju admitted a US$1 billion fraud inflated for years. And do I have to mention that without economic crisis we may not see the current plunging global crude oil prices from the high of $147 to $33 a barrel recently? That’s good news although in certain parts of the world, the food prices remain high but that has to do with other factors related to weak government in nation management. Needless to say employers suddenly saw their employees become super-efficient with productivity skyrocket to the roof. Funny there is still senile expired politician who is asking people to resign from their jobs just because he was paranoid about his “boycott US-made products” (he expect low-income earners to eat grass like cows?).

If you compared the tourism industry in Hong Kong pre and post 1997-1998 Economic Crisis you can definitely see the difference – the Hongkies are now less arrogant. Recession miraculously has change human’s attitude to become a better and humble person although there are exceptions. Like it or not we still have bunches of arrogant people who were spared from economic downturn and politicians who are still in power making great money but the law of cycles will come soon. Last but not least we still need recession because it provide another round of opportunity for certain group of people to buy stocks at low price but whether they can sell at high price depends on the respective individual.

Other Articles That May Interest You …

• The Month of Orgasm - New Year, Obama & the Sex Party
• Boycott US-made products? No Thanks, it won’t work
• As 2008 closes, 2009 opens another Challenging Chapter
• Stocks Investing - what you can learn from PC Fair
• Time is Tough but don’t be Silly and Commit Suicide
• Another yardstick on Economic’s Health - Starbucks

Friday, January 09, 2009

More data coming, more volatility, lesser ammunition left

What have you been doing right after the fireworks to welcome the New Year 2009? To be precise, did you rush in to the stock market – local or overseas? I did write that Jan 2009 is the month of orgasm but I also pointed out that unless you’re a swing trader, don’t try to fool around with the current bull. Unlike fast-food bull does not like to be told to have a short orgasm. It like to enjoy its’ natural way of having orgasm. Therefore if you’re a long-term stock investor then you’re not fit to play this fast-game of making money. But it’s definitely a good time for you (if you’re a long-term investor) to unload some of your stocks, if you have not already done so previously.

I’ve also said that Dow Jones 9,000 mark is an important level to be observed simply because this is a strong resistance level. Of course there’re many reasons why the bull started to kick some butts but at the same time there’re equally many data queuing to be released, not to mention the earnings season report card.Retrenched workers are having difficulties finding new jobs and people are not spending. Wal-Mart Stores Inc. slashed its forecast for fourth-quarter earnings – a bad sign as discounters should do better during current tough times. Technology stocks are taking the bitter pills with Dell Inc., Lenovo Group, IBM, Intel Corp. and even Microsoft Corp. are grumbling about poor business and will lay off its work force.

It’s amazing to watch how the Middle East’s most developed city of Dubai is feeling the heat of economic downturn and is scaling down. After the WCT Berhad and Meydan LCC joint venture to build a RM4.6 billion racecourse in Dubai was cancelled sending the WCT’s stock nose-diving, the attention is now on other players that have projects engagement in Dubai namely IJM Corp Berhad, Gamuda Berhad, Sunway Holdings and Muhibbah Engineering. The world’s second largest hard disk drive manufacturer, Western Digital, is about to sell its plant in Kuching to Hitachi, another hard disk manufacturer and the heat is definitely on Penang at a later stage. Have you wondered why the Malaysian Minister begs you to buy Malaysian-made product out of the blue (sure, the country will never enter recession)?

If unemployment figures due to be released Friday show that the U.S. lost more than the expected 500,000 jobs in December then get ready for another anxious moment. President-elect Obama has started his job earlier than the schedule when he’s already working with his team to design a new stimulus package to keep United States economy flowing. It appears that the zero to 0.25 percent interest rate currently enjoyed by the country is insufficient to pull the nation out from the mud. And now the Bank of England cut its interest rate by half-point to 1.5% - the lowest in its 315-year history. But what will the reaction from the investor communities about the American’s deficit of $1.2 trillion for the fiscal year 2009?

Other Articles That May Interest You …

• The Month of Orgasm - New Year, Obama & the Sex Party
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Tuesday, January 06, 2009

Boycott US-made products? No Thanks, it won’t work

Violence in the Middle East may just push the saggy crude oil prices higher much to the delights of the OPEC members who have been scratching their heads in disbelieve recently as to why their efforts previously didn’t work. Russia’s dispute with Ukraine (again?) over natural gas supplies will help the situation (higher prices) but it’s a dangerous game that could disrupt the Europe as the region’s one-quarter of natural gas supplies came from Ukraine’s pipelines. While both Russia and Ukraine are quarrelling about the commercial issues (Russia wants to charge $450 per 1,000 cubic meters, up from $250) the Middle East is again about territorial dispute.

Thousands of Israeli troops backed by tanks and helicopter gun-ships surrounded Gaza's largest city and bombarded Hamas militants in their attempt to stop Hamas rocket fire on southern Israel. Almost instantly the Muslim world condemned and called for various strategies to punish the so-called Zionist. Former Malaysian premier Mahathir Mohamad who was labeled as anti-Semitic immediately proposed his strategy to punish United States over the super-power’s backing of Israel. Mahathir suggested that everyone should stop drinking Coca-Cola as part of theboycott US-dollar and US-made products effort.

Sure, go ahead and stop using jumbo planes made by Boeing, stop eating fast-foods from McDonald, KFC, Burger King and exchange those billions of US-dollar in reserves to Chinese-Yuan, for example. How about those importedhealthcare and medical machines, not to mention box-office movies from United States? Like it or not the culture of the western country has been part and parcel of our life. I won’t die for not drinking Coca-Cola (I seldom consume this carbonated drink anyway for fear of diabetes) but I would be bored to death for not watching those blockbuster movies from the United States especially from Steven Spielberg.

Therefore such call to boycott American-made products is not practical and will not achieve the desire objectives. If the Arab themselves are not serious (else how could Israel survives for so many decades) about the Palestine’s welfare who is Malaysian to mind other people’s internal affairs? Well, isn’t that what Malaysian government always said when other countries criticize the ruling government’s policies? Yeah, go ahead and send troops into the Gaza and get slaughtered. The Jews are small in population but they are the smartest people in the world and there’re reasons why they control the major economic and business entities. As a matter of fact they’re too smart that the former chairman of the Nasdaq Stock Market, Bernard Madoff, scored the biggest fraud case ever with his $50 billion “giant Ponzi scheme”.

The Israel army may be cannibals for killing the civilians (poor children) but not all Israel citizens supported the invasion because Israel civilians were also killed in the process. Furthermore there’re two sides to every story and nobody knows if Israel really reacted because the Hamas was bombarding southern border of Israel. As long as both sides could not sit down and negotiate for a peaceful solution over a round-table, the region will continue to attract more conflicts and more innocent people will get killed. And Mahathir’s own Operasi Lalang that invaded basic human rights is not any better compared to the current Israel’s invasion. The only difference was nobody got killed in Operasi Lalang but if you’re confined to four-walls and mentally tortured, it’s better to get killed than to get insane. How about the case of blowing up Mongolian model with C4?

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Saturday, January 03, 2009

The Month of Orgasm - New Year, Obama & the Sex Party

Kuala Lumpur Composite Index is approaching the 900-mark when it rose a whopping 17.61 points to close at 894.36 today, the first day of the New Year 2009 *Wow!*. Stocks jumped today primarily due to gains in plantation stocks as crude palm oil futures climbed another 3% bringing the four-day gains to 11%, thanks to crude oil. Major plantation stocks such as IOI Corp, Sime Darby Berhad, Kuala Lumpur Kepong Berhad and Tradewinds Plantation Berhad were smiling from ear to ear. It seems Aseambankers Malaysia Berhad has underestimate KLCI when its prediction of 900 by end of 2009 is just inches away on the first day of the New Year trading alone.

If you’re still not convinced yet that the bottom is history and the local stocks might just have reaches its orgasm today then you’ve missed the boat *grin*. But today’s climax was caused by crude palm oil which in turns follows crude oil that istrading above $40 - $45 a barrel. So will the oil continue to lubricate and extend the black gold’s bullishness once again? Many stock investors and analysts think we have enough of bad news and the market is somehow immune to it hence there’s no reason why the stocks should not go north. At the same time they are comfortable that second half of this year (2009) should be the turning point (yeah right, who doesn’t know that?).

Analysts also are banking on historical statistic that stock markets normally started to recover around 6 months to 9 months before the economic activity data turns for the better. Therefore logically if (and only if) the U.S. economy has seen the worst and will recover on the second half of 2009 then now is the freaking good time to make your calls. But on the other hand if you rely on such historical statistic to support your decision to jump into the stock market then you have to believe that the current bull (if you can call it in the first place) may be due toChinese New Year rally that normally happens two to three weeks before the festive season starts. And with any other Chinese New Year rally it will soon evaporate thereafter.

I’ve mentioned analysts and economists will have nowhere to go but to wait and crunch the economic data from the United States. The Institute for Supply Management has just released data that the manufacturing index fell to 32.4 in December (from 36.2 in November) against Thomson Reuters’ estimation of 35.5 – the lowest in 28 years. If such data were to be released last year the Dow Jones would definitely tumble again but with investors getting immune to such data and the fact that the market pulse has entered the climax level, a gentle stroke could stimulate orgasm *grin*. So what are the magic touches that are so powerful that it is over-riding the current gloomy global economy as if the G-Spot is within reach?

We’ve touched on the New Year feel-good plus the pre Chinese New Year mini bull. The stock markets have seen steady decline without a real strong technical rebound thus we’ve every reason to believe that it should happen now. Also we’re going to see the new President of the United States, Barack Obama, taking office on 20th Jan so expect some stimulus plan (public investment program worth $1 trillion over two years?) that could push up the Dow Jones further. Simply put Obama cannot afford to see angry workers on the street lest he wish to see another episode of flying-shoes. Now you have all the reason to justify that Jan 2009 may be a bull month but the question is will it lasts?

Personally I doubt so but you can put your money against that (I may be wrong). Having said that swing traders should be able to make good money during this month so if you’re not a long-term investor, you’ve every reason to smile. But please watch your back against the the 900 (KLCI) and 9,000 (DJIA) resistance level. You could be buying at the highest at the current level *grin*. If a 22-year-old newscaster (due to be married next week) at a private television network and a 24-year-old part-time actress who also is a scriptwriter could engaged in private sex party during New Year celebration, who are we to deny the bull from having its orgasm for the month? Nevertheless I wonder why the police is so secretive about the wild sex party case that they’re now decided not to charge them. The newscaster may not be as popular as Siti Nurhaliza but I bet her soon-to-be husband must be a Datuk or Dato businessman.

Other Articles That May Interest You …

• As 2008 closes, 2009 opens another Challenging Chapter
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• Will Malaysians wake up to face the Economic Challenge?

Wednesday, December 31, 2008

As 2008 closes, 2009 opens another Challenging Chapter

Ibelieve I have wrote this and I’ll repeat this again – United States is still the world’s largest economy nation in the world and when she sneezes, every nation in this globe catches cold. With a whopping US14.3 trillion worth of GDP (gross domestic product), China is nowhere near this nation and only constitute less than one-fourth of United State’s GDP. Take away Japan and toss in European Union’s largest economy powerhouse Germany and new kid on the block India plus the Asean countries and you still can’t move this giant United States. Of course Japan’s economy goes hand-in-hand with United States’ prosperity and is now struggling not to sink.

It takes lots of courage to announce, no matter how silly it was that an export-oriented country such as Malaysia will not enter recession. And it’s amusing to hear out-dated story that Malaysia will attract foreign investors to relocate their manufacturing plants to the country because of the cheap labour cost. Heck, have they forgotten Vietnam or Cambodia? It’s sad that after so many decades all we can sell is our cheap labour, not being able to move up the value chain.Maybe that’s the reason why fresh graduates today can only command almost the same salary their father was asking decades ago. No wonder corruption is rampant, most probably because they need to put foods on the table *I think*.

The prosperous Germany is having serious problem because it depends on China of which in turn depends on United States. So U.S. feeds China which in turns feed Germany. In other words U.S. has trade-deficit of about $708 billion in 2007 and most of it went to China ($262 billion surplus) and Germany ($288 billion surplus). It was outrages to hear people screaming that everything is alright because the China and India’s economy engine is running so it’s perfectly OK for United States to go into recession. Make no mistake about it – China and India is not backup engine that could take over U.S. economy, at least not yet.

Countries such as Malaysia would be in deep trouble if the cash-cow such as EPF (Employee Provident Fund) is mismanaged. Thank God it is still in good health but it’s because private sector is generating good amount of income in terms of taxes to the coffers. Germany system was such that a whopping 45% of its people dependent on government. The country has multiple taxes ranging from 15% - 45% income taxes and social securities such as retirement, unemployment, health insurance and nursing care and this list continues. The taxes can be so high that there’s little motivation to work. Instead it’s more lucrative for Germans to rely on government benefits so if you’re unemployed then go and claim your benefits.

Did I hear people said the economy is recovering because the global oil prices went above $40 a barrel? The oil prices were up because of Gaza conflict and it’s just a temporary jump. It won’t goes beyond $45 because if it’s sensitive enough the production cuts of more than 4 million barrels per day by OPEC would have shown its magic, wouldn’t it? The fact is everybody is waiting for data to be released by various U.S. agencies going into the New Year. And this is one area that you should pay attention because the data are reflection of how U.S. economy is doing. The superstitious Chinese is predicting a recovery in 2009 simply because it’s a Bull Year. Well, there’re 12 months in 2009 so even if the stocks recover on the 12th month, they still can be right. But that would be another article for another time. For the time being forget about the stocks and prepare to celebrate the coming 2009 New Year, shall we? Happy New Year folks!

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Friday, December 26, 2008

MLM, a Pyramid Scheme? To Join or Not to Join?

Traffic was heavy almost everywhere today since everyone was celebrating the last festive season of the year – Christmas. So, wishing all StockTube readers a very Merry Christmas *I know it’s a little bit too late but still*. The sight of terrible jam with thousands of cars fighting to enter MidValley car-parks and the huge crowds at KLCC automatically put me off to these destinations. I thought I would give Curve a try and with IKEA or IKANO ample car-parks around I should not have problem with parking. I was terribly wrong because not only Curve’s parking was full; IKEA and even Tesco were filled up with shoppers so much so that I’ve been spending almost an hour driving around helplessly looking for that piece of parking lot. There were even disgruntled motorists who argued with the guards for putting barriers preventing cars from entering IKEA as well as Curve.

Surprisingly the entry into Curve’s parking on the other side of the building was opened and there were actually many free parking lots inside so I’m not sure why those guards were guarding the entry as it if was a military fortress. Anyway you would not believe that recession has reached the country judging from the number of shoppers packing the shopping malls. Maybe they’re just doing window shopping since its Malaysia Saving Sale period now. Furthermore this could be the last sale on the calendar before the coming Chinese New Year 2009 in January. Who said people are not spending and worry about current global recession *grin*? Well, as long as unemployment has not started I suppose it will be business as usual.

The speculation of automakers merger has not only circulating in United States but now Japan is mooting the same approach if situation worsen. Already vehicle production in Japan tumbled 20.4 percent in November compared to the same month a year ago – steepest drop in 40 years. U.S. Commerce Department reported consumer spending dropped by 0.6 percent in Nov while the Labor Department announced unemployment benefits claim rose to highest level in 26 years. It appears shoppers were switching to store brands and discounters such as Wal-Mart during current holiday season to save every single penny they could. Consumers are still worry about jobs and thus holding back their spending spree.

If you’re wondering if there would be window dressing in the stock market with couple of days left in the current calendar, don’t bother. While the stock markets looked gloomy there’re other sectors that is doing well and will flourish during recession. There’s a trend that whenever recession hit the MLM (multi-level-marketing) or popularly known as direct-sales will amazingly do well. With an estimated 700+ MLM licenses issued you can do the calculation of how many of us has been approached by this scheme in one way or another. Even one of the ruling government top officials has recently urged the jobless to enter the MLM industry although personally I think that is an irresponsible thing to do without educating the public.

Like it or not almost all MLM companies possessed pyramid systemcharacteristic simply because you cannot deny the fact that only the pioneers will make the fortune, well, most of them. Of course there are small cases of couple of generations down the “line” who make it to the top. Hence you can’t say that you cannot make money in MLM else they won’t have these “top earners” showing off their cheques with photos published inside their magazines, would there? It was the job of the members to convince you that their system works and your path to become millionaire depends on your commitment to sign on the dots. If only this world is so perfect and simple.

During the last economic downturn MLM was booming with products ranging from magnetic and negative ion mattress selling for thousands of ringgit to Tahitian juices. It’s amazing how these people were so innovative and creative to apply MLM system on such products and make millions of dollars from it. In such members get members system (what other ways to grow the system?) it’s simple to understand that you’ll be rewarded from the money “invested” by generations below you and the cycle continues. So as long as you’re not at the bottom of the chain you’ve the chance to recoup your investment, unless you stop developing your lines. Basically it’s like musical chair game and as long as the music continues playing with new players joining the system, it will not collapse.

It can be argue that there’re Ponzi characteristics in MLM systems as well. If you can think logically of how the members derive their extraordinary income then you should know how the game is being played. Money does not fall from the sky so someone has to pay for it. Of course there’re groups of “Old Birds” within MLM sectors who somehow command huge followers and these God-Fathers make the most money because they’re the early birds who after joined a MLM company will instruct their close buddies to build the lines (happens to be the same members from the previous MLM systems). These God-Fathers will jump from one MLM company to another and sometimes they would have arranged the “positions” beforehand so that a nice flawless pyramid structure was built before they joined a new MLM company. Instantly they make tens or even hundreds of thousands of profit and become the top earners *applause* and this serve like a magnet and attracts the newbies. When the game saturated, it’s time to migrate to another game.

That’s the fact of this MLM business. Although the system might differ from one to another the basic fundamentals are still the same. Be there as the pioneers and (hopefully) if you’ve an army of zombies you’re the millionaire. And of course the chairman of the MLM companies are Dato’ or Datuk who has the influence to ensure licenses are being issued and renewed. If you’re lucky the MLM companies might last a couple of years but if you’re not then it would be closed (or rather collapsed) before your next birthday. If you’re all fired up after the motivation training and talks and believe you’re found the Holy Grail to the lifestyle of the rich and famous, think again. You need more than hard-work to be the 5 percent who make 90 percent of the money in such pyramid system. You need all the lucky stars you can count to have your lines or generations to suddenly explode and generate the money automatically for you. But just like the economy bubble it will burst sooner or later.

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Tuesday, December 23, 2008

Will Stock sell-down follows by Property sell-down?

There were twice when real estate agents heavily advertise their services to me, if my old memory serves me well. The first time was when I moved in to my new condominium and literally my cell-phone was bombarded with SMS and calls urging me to sell my condo or least rent it out (yes, they provide such service as well). I was amused not because these SMS proved that I had bought the right property at this right place but because how various real estate groups were competing to outdo each other. Due to the attractive commissions, I guess nobody can blame these fast and furious agents.

The second time happened about 2-weeks ago when my letter box was filled with the same advertisements. Although there were agents seeking sellers every now and then it was not so frequent. They even went the extra miles to drop their business cards on my doorsteps (not sure how they managed to do so with the security features in place). The economy must be pretty bad that they thought residents in my area are equally desperate to dispose of their properties. It also means that there are still groups of rich people who are starting to accumulate properties – at cheap price. In reality you still can make good money if you’re able to patiently comb and nail the unfortunate and desperados to dispose of his / her properties at fire-sale price regardless of property locations - Mont Kiara or Kepong.

We’ve yet to see sell-down in property sector and let’s hope it won’t happen because if it does then the chances of a prolong recession is inevitable. In fact we’re lucky that people are still spending (but for how long?) as if nothing is happening when the rest of the world is facing recession *grin*. So far only an estimated 5,000 workers will be affected by retrenchment in the next three months, mostly from the manufacturing industry *applause*. The Japanese economy is worsening with record trade deficit of 223 billion yen ($2.5 billion) in Nov 2008 and a whopping 99.3 per cent of leaders at Japan's 137 major corporations believe the domestic economy is deteriorating.

It was also the first time Japan has incurred a trade deficit for two straight months since October-November 1980, when the nation was reeling from an oil crisis. November shipments of automobiles plunged 31.9 percent and electronic components plunged 29 percent. U.S. and European Union bound exports tumbled 33.8 and 30.8 percent respectively. If you think Malaysia is not affected, think again because Japan’s export to Asia fell 26.7 percent. While the Japan is struggling to stay above water let’s hope that $700 billion taxpayer bailout money will not go into dustbin. The disturbing fact is there’s no transparency and nobody knows as to where the estimated $350 billion disbursed has gone.

So, will we hear the good news – fire-sale in property sector? Unless you’ve too much money to spend sometimes it’s hard to decide where you want to park your investment, stocks or property? However at this stage we need to experience panic sell-down before the effect can drag the property sector. And we’ve yet to see that so there’re ample of time to accumulate the bullets for an assault – provided the situation will indeed turns for the worst. Of course there’re analysts or advisers who wrote that we should start buying now lest we wish to bang our head against the wall for missing the boat. But they forgot (or rather refuse) to tell the readers if the current crisis will see a recovery in V, U or L shape. What do you think?

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Saturday, December 20, 2008

Leave IJN alone you Greedy Sime and Corrupt Politician

Only the stupidest will believe that after privatization of IJN (Institute Jantung Negara or National Heart Institute) the current low fees will be maintained. Conglomerate Sime Darby Berhad (SIME: stock-code 4197) proposed to buy up to 51% stake of the institute and the ruling government whole-heartedly thought it was a freaking good idea but the incoming PM Najib flopped (after IJN’s medical consultants’ objection) today when he said in-depth review and study will be conducted instead. So does that mean Najib opened his big mouth earlier without facts and was ill-advised? Since IJN is operated by IJN Holdings Berhad and wholly owned by his own Ministry of Finance, it’s amusing to hear how “fast and furious” Najib was in “selling off meats” from his ministry in exchange for money.

If you remember other privatization projects such as the electricity, water utilities and transportation such as PLUS Expressway Berhad (KLSE: PLUS, stock-code 5052), public’s interest was never a priority. There was only one objective – to rip off people’s last cloth and make as much profit as possible. It doesn’t matter how much you pay your taxes and the fact that a caring government should provide the basic necessity such as a good transportation system. Still remember how former Works Minister Samy Vellu and his buddy former dictator Mahathir told the public to use other alternatives (right, as if there’s one in the first place) if they refused to pay tolls?

The same cycle will happen if Sime Darby is allowed to buy over IJN and soon you will hear the same excuse from Sime’s boss and Health Minister that if you cannot afford the fees then go elsewhere. You don’t believe Sime Darby has nothing better to do but to pour huge amount of money acquiring IJN with intention to do social work, do you? If there’s one sector that is recession-proof and will continue to suck your hard-earned money, that sector is obviously health-sector. Try to tell the private hospital that you need a surgery but you couldn’t afford it and the next thing you’ll get is a big kick on your butt out of the door. Try to tell government hospital that you’re sick and you’ll be made to wait for hours (if you’re lucky) or be given appointment which is weeks away, not to mention being shout at as if you’re a small kid.

So it’s all about profit and money that Sime Darby is seeking such acquisition, period. Furthermore why acquire IJN if there will be zero changes to IJN current business model? IJN is a self-sustain entity with RM20 million a year profitcompany hence the greedy corporate wolves couldn't leave it alone. After numerous privatizations the burdens on government shoulders have greatly be lifted and with billions of dollars in taxes collected, the government should have an easier life now managing the country. Amazingly the nation’s coffer is running out of money so much so that the government has the cheek to squeeze money from the public via high fuel price (Hey! The global crude oil is now approaching $30 a barrel for God sake) and the ingenious 3% cut in employees’ EPF contribution plan (and in the process more taxes).

For now if you were to park at IJN it’s free but I’m not sure after the acquisition. OK maybe parking is a petty issue and low fees for more than 80% of its poor patients are the main objectives. Maybe we should ask Sime Darby’s CEO Ahmad Zubir how many poor people have actually benefited from Sime’s existing SJMC (Subang Jaya Medical Center). Sime Darby is not a charitable organization mind you so sooner or later the fees will be hiked (if IJN was acquired). But then the estimatedRM400 million cash reserves is simply too tempting to let this deal goes off for good, no? Nevertheless you need more than thirty plus signatures from IJN’s medical consultants to tell Ahmad Zubir to fly kite and take his money to the Ministry of Health crying for this new IJN toy. When money is on the table it is all-right to sacrifice the healthcare of thousands of the poor, what more with these 33 skillful medical consultants. Let’s see what happens after the coming by-election.

Other Articles That May Interest You …

• SIME aborts cable, no more cheese or the Rats move it?
• Sime Darby Mini-Crisis, Two Fired and Three to Resign
• The Composite Index, Plantation Stocks and the Wolf
• IOI building muscle to become Stronger and Bigger
• Mega-Sales needed to attract Rio Tinto to revives Bakun
• Plantation Merger & Acquisition Heating Up

Thursday, December 18, 2008

Technology Stocks and Feds are running out of Steam

Besides portable hard-disk and thumb or pen drive in my shopping list at the just concluded PC Fair at Kuala Lumpur Convention Center, I was looking for some other gadgets such as GPS System or maybe Apple Inc.’s (Nasdaq: AAPL, stock) iPhone. I was particularly fascinated by my Singapore friend’s GPS device that literally could bring him to anywhere within Malaysia. It doesn’t make sense to have a Singaporean who could find Ipoh’s famous “Lou Wong” shiny chicken and juicy bean-sprouts instantly while I was struggling doing so for the first time. That’s because he has the GPS device while I don’t.

There was this RM499 promotion for GPS System at the PC Fair. At first I thought I need to pay subscription fees to gain access to the map but then I was told I don’t have to *silly me*. You just need to pay a time price but the catch is you only have access to Singapore, Malaysia and certain part of Thailand’s map. If you wish to use your device in Hong Kong, then you have to pay for the map. However the GPS system is not intelligent enough to show you the road with least traffic jam. The salesman also smiles when I asked him about the cost of repairing.Maybe I’ll get it when the cost of ownership goes down further.

I was quite excited to see that iPhone was on sale but at $2,900 a unit, I decided not to become the pig and get slaughtered. I’m not going to become the laughing stock when my friend got one for less than RM1800 in Philippine. Luckily I’ve all the patience in the world for such gadgets. And talking about Apple the stock was slaughtered today to below psychological support of $90 a share. Well, you can’t stop people from speculating after Steve Jobs was reported to be skipping the coming January 2009’s MacWorld Conference. Almost instantly his health problem (pancreas) was again highlighted as the possible cause. There was even rumor that Steve Jobs had died of a heart attack in October *naughty rumors*.

Now only will Steve Jobs not be able to give his presentation, the January event will also be Apple’s last appearance. The company said that it was scaling back participation in Macworld (Macworld New York, Macworld Tokyo and Apple Expo in Paris) because trade shows have become far less important for its marketing than its retail stores and Web site. With unlimited budget deficit during such economic crisis New York Governor David Peterson also proposed “iPod Tax” on downloaded music. I suppose desperate situation requires desperate measures.

The Bernanke’s boys might have cut the interest rate to almost zero (0.25 to 0 percent) but it couldn’t stop negativity that such drastic measure means the global financial turbulence is really serious. Also such measure does not means that people will start borrow or spend since many are watching in horror how jobs evaporate into thin air. You must be silly to think that banks will start lending without more stringent check even with such low interest rate. Bottom-line is almost everybody from every sector is still very pessimistic about the whole story of global economic crisis. With such level of confidence you need more powerful weapons to be revealed by the Feds but the question is what other goodies are left in its arsenal?

Other Articles That May Interest You …

• Fast Scalp on Apple as good news don’t stay long
• What goes up must come down? Not necessarily
• Cash is King but do you have the bullets?

Tuesday, December 16, 2008

Stocks Investing - what you can learn from PC Fair

President Bush may be one of the lousiest presidents United States ever had but you just got to give this guy the credit for his fast reaction when he ducked as a size 10 shoe was thrown but missed him, apparently by Muntadhar al-Zaidi, an Iraqi journalist with Egypt-based al-Baghdadia television network. It was hilarious and I’m not sure how President Bush would have reacted if the shoe landed on his face. But I’m pretty sure if it was PM Abdullah Badawi he won’t be so lucky judging from his great agility. Badawi might just mumble about his painful nose after being whacked by the shoe, feeling dizziness. On the other hand if it was PM-in-waiting Najib, he may immediately issue instruction to get the man “ISA”ed *grin*.

Anyway the announcement by Citigroup Inc. that Malaysia’s stock market may continue to fall for at least another quarter as earnings shrink is long overdue. Somehow the local stock market only reacts to comment by foreign research house but not the local experts *strange*. It was a nice and encouraging advice from Citigroup that investors should sell the most-admired Public Bank Berhad(KLSE: PBBANK, stock-code 1295) and biggest lender Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) stocks. Let’s hope Public Bank’s stock price will come under pressure and plunge soon (so that we can accumulate). Seriously if Public Bank tumbles the rest will follows.

The just concluded PC Fair at KL Convention Center was quite boring. Major “big names” did not take up the main booths and the whole atmosphere was as if you’re at Low Yat *yawn*. I’m not sure about the first and second day because I was there only on the third or the last day. The trick was always to pay such fair a visit only on the last day because that was when the big party starts. I’m sure most of us knew about this (the trick) as I noticed the crowd was building towards the late evening of third day. The theory was the participants would most likely dispose of their stocks at fire-sale price rather than take it back home. And this was the moment most of the hunters have been waiting for. Although it wasn’t as crazy as before nevertheless they would rather make RM1 in profit for each thumb or pen drive than to not sell any of them.

So what can you learn from the PC Fair and apply it in the stock markets? It was all about psychology warfare. It was about mind-games. It was about who blinks his or her eyes first. It was about who is the desperados. If I’m not mistaken many booths are selling portable hard-disks ranging from non-branded to Seagate, Maxtor, Western Digital, Buffalo and Imation. As I need to backup my data and my first portable hard-disk which I bought several years ago is hitting the threshold, thanks to my blogging hobby, I’ve got myself a Western Digital 320GB portable hard-disk for RM245 plus a 8GB Kingston pendrive (RM48).

Well, initially I was attracted to Imation’s Apollo portable hard-disk because the casing was quite solid and sexy looking. But I was put off by the strategy of the salesman. I was there researching all the booths (you got to break the ice with the sales persons to fish for their honest opinion) and I concluded the worst brand in terms of sales is Imation Apollo brand. You don’t need to be rocket scientist to know why Imation Apollo portable hard-disk couldn’t sell when its 320GB was selling at RM290 (one booth was even selling it for RM320) while other brands were selling for RM245 to RM260 for the same capacity.

Other brands also come with 3 years warranty with 1-to-1 swap, anti-shock resistance, backup and synchronization software and so on although nobody can guarantee they will honor such arrangement. Nowadays people are very cost-conscious, period. I don’t mind paying extra money because I really like Imation’s casing design but when the sales persons suddenly twist the fact and play dirtydeclaring that due to “over-whelming” sales (my foot) they are out of stock and if you want to buy the 320GB portable hard-disk, you need to pay down-payment first and then go to certain shop address to get the goods. Of course nobody gave them the hoot. I think this party has gone overboard and had just kill the brand.

Long story short, before you jump into the ocean please do your homework unless your intention it to burn your hard-earned money unnecessarily investing stocks. The current stock market is just like the PC Fair on the first day and second day but now is definitely not the third or last day so why the rush into the stock market? You need lots of patience to get the goods (stocks) at the lowest price possible. No doubt it’s tiring and challenging especially when the price keep dropping but you just need to know the psychology of the market (sellers and buyers). Anybody knows of freeware that can password protect my portable hard-disk?

Other Articles That May Interest You …

• Tempted to buy stocks now? Do your homework please
• When is the Right time to buy Stocks? Ask yourself
• Economic Uncertainties breed Denial Syndrome?
• Cash is King but do you have the bullets?
• Should we rejoice or mourn on Maybank-BII deal?

Friday, December 12, 2008

Tempted to buy stocks now? Do your homework please

UCLA Anderson Forecast report said U.S. recession will only worsen next year as unemployment, weak home, plunging stock prices and debt-laden businesses would reveal its true color by then. UCLA also expects the real GDP to shrink by 4.1%, 3.4% and 0.8% for fourth-quarter 2008, first-quarter 2009 and second-quarter 2009 respectively. Looking at the figures alone it seems on surface the U.S. economy could bring cheers from third or possibly fourth quarter of 2009 onwards - if we’re lucky and President-elect Obama could do wonders immediately, not to mention no-more ugly surprise factors. However the UCLA report does not talk about unemployment problem which was predicted to hit 8.5% by end of 2009. The Labor Department has just reported jobless claims hit the highest level since Nov 1982 at 573,000 for the week ending Dec 6.

Besides Europe and Japan which are already in recession the eyes are on China. China’s economy is expected to grow at 8.2 percent in 2009 compared to 9.5 percent in 2008. Inflation also dropped surprisingly to a 22-month low of 2.4% in Nov from 4% in Oct, a good sign that China’s economic is not overheating. But this also means the deflation possibility has grown. An analyst with CEB Monitor Group research firm in Beijing even predicted China’s inflation could reach negative 1.5% at the end of first-quarter 2009. As fun as it may be, investors are monitoring if the global crude oil prices could go under the psychological $40 a barrel. The fact is OPEC is fighting a losing battle to keep the oil prices high but now that Russia planned to lend its help to support the black gold prices it appears the foundation of $40 a barrel has increased in strength.

If you’ve been monitoring the Dow Jones performance lately you can’t help but to wonder if the bottom was behind us. Any investors will tell you that at this particular moment the chances of DJIA breaching below 8,000-level is history. There’re people (fund managers included) who cried that they have missed the bottom and scrambling to buy in case the stock market suddenly come charging. So, what happens to the “stocks will get worse before it gets better” trumpeted by the professional fund managers? Have we really seen the worst? I have not seen the worst yet therefore I can’t say it’s time for us to rock and roll. Has AIG suddenly recovered? Will we hear no more of companies planning to put thousands of staffs on the chopping board? Maybe the Detroit’s top three automakers bailout is the last that we’ll see. But hey, it appears the Senate refused to endorse (52-35 vote) the $14 billion rescue plan and the 3 million jobs are at risk here *scary, scary*.

So, are you tempted with the current stock market direction which is slowly forming volatility within “controllable range”? It’s neither too wild nor too mild, a heaven for swing traders. People still makes good money during such situation because the trading range is more predictable but you got to run for your life when you hit the threshold of profit. There’s no room for greed unless you wish to get slaughtered. Nevertheless you won’t know if the current nice weather is in fact another preparation for yet another fierce storm to come. Don’t get tricked that just because the local banking sector is not affected seriously (for the time being), it means 2009 will be the same. It’s not like the meteorite that hit the earth millions of years ago that wiped out the dinosaurs instantly. It's a poison that is slowly spreading. In reality, we’re still savoring the meat from last year’s hard work with only days to go before the New Year *fireworks please*.

If you must because your hands are too itchy so much so that the doctor that you consulted concluded there’s no cure for such disease then please do your homework and do some research on the company’s financial report, not to mention the dividend factor. I’m wondering how long can Public Bank Berhad (KLSE: PBBANK, stock-code 1295) take the punches because this is one of the stocks that you cannot ignore. It would be a waste not to accumulate this stock but at the current price of RM8.30, I’m not tempted (please sell down this stock so that I can accumulate please *grin*).

Other Articles That May Interest You …

• Dividend Yield Stocks (Part 3) - Carlsberg Brewery
• Ten years after 1997 Crisis, another Window of Opportunity?
• JTI Revisit – still an attractive Dividend Stock
• Dividend Yield Stocks (Part 2) – JT International
• Dividend Yield Stocks (Part 1) – Berjaya Sports Toto
• Which Stocks to Invest - GENTING OR Public Bank?
• Teh Hong Piow - Malaysian's Warren Buffett

Thursday, December 11, 2008

Reason we do not need America’s Funniest Home Videos

It seems the Bukit Antarabangsa tragedy is still the hottest news till today. No doubt most of the population within this hillside area consists of the “wealthy” group but I suppose money couldn’t buy back their loves one who perished under the rubbles. While these rich and famous can afford to buy or build another multi-million dollar mansion elsewhere, this tragedy nevertheless invited manyhorror stories especially concerning the rescue personnel. I doubt many of them have insurance coverage that included landslide because most of them thought the CF (Certificate of Fitness) was the super-guarantee-paper that their houses were as tough as M1 Abrams tank.

Just like the terrible floods in Johor two years ago during which the outgoing PM, Abdullah Badawi, somehow thought the priority was to fly to Australia to officiate Nasi Kandar Restaurant than to stay back to ensure everything was in order, this time it was more “carnival-like” (with lots of nice foods and goodies) at the Bukit Antarabangsa site. Needless to say the Selangor police chief Khalid Abu Bakar shot to fame instantly with many accusations pointed at his leadership (was there any in the first place?) especially when he defended his men for refusing to help but instead threw a spade to a victim who was digging with his bare hands trying to rescue his wife while waiting for rescue personnel. To the victim’s horror the rescue personnel asked him to dig for his wife, accountant Ng Yee Ping, himself.

That was not the end of the story. Soon, when the victim’s father (Ng Yee Ping’s father-in-law) returned to the house he almost fainted to discover several men in uniform lying on his bed smoking and apparently enjoying their newly found treasures. This bunch of thieves was drinking expensive wine and even has the cheeks to ask the owner if he still wanted the wine else they would take it away. Several branded watches worth RM180,000 and 80 bottles of expensive wine worth RM160,000 were lost. And to have the police chief Khalid justified (or rather lying?) that rescue personnel didn’t help the victim to dig and rescue his wife becausethey were untrained has again insulting your intelligence.

I bet he has just put Malaysia as the laughing stock again when he proudly said“to dig and save someone, one has to be trained and we should respect their decision not to help (the victim to dig)”. With police chief like Khalid who needs “America’s Funniest Home Videos”? At first you might think the victim made up the accusations out of frustration. But there were also reports that rescue personnel refused to help stranded victims of Johor floods unless money changed hands. Surely victims of two (actually there’re more) separate tragedy couldn’t have made up stories just to paint a bad picture on these rescue personnel.

If it was true that these rescue personnel are untrained then why let them roam the “dangerous” area in the first place? And if they are not trained than who are they and can they be called rescue personnel in the first place *scratching my head*? Most importantly do you need special training to be a certified “digger” (not grave-digger, mind you)? Maybe everyone should just exclaim “ooohh” and “aaahh” before start snapping pictures but stop of rescuing road accident victims because we did not receive proper training. Already the actual number of deaths reported was disputed with claim of higher figure of dead bodies. A local newspaper also claimed that police refused to let the victim of looting to bring in journalists to snap photos of evidence (of looting). I wonder if these wealthy families voted for the same government that breeds these scumbag rescue personnel. No wonder Malaysia police scores one of the highest points again in the Corruption Index.

Other Articles That May Interest You …

• Bukit Antarabangsa & Highland Towers - It’s Corruption
• Greed & Corruption turn the country into Gangster-State?
• Tiger at Home but Useless and Hopeless against Outsiders
• An island for Singapore, rocks for Malaysia – Amazing!
• The Chain-Reaction of Government’s Vengeance Policy

Tuesday, December 09, 2008

The re-badging and new breed of Proton-volution X?

Ford Motor Co. has declared it does not need rescue money as it claimed its cash-flow is alright. General Motors Corp. and Chrysler LLC however threaten bankruptcy is inevitable if their demand of US$15 billion is not given by early 2009. The question was would the top management from both ailing GM and Chrysler put the billions of dollars to good use if not supervised? Just like small kids you can’t expect these people to behave and serious enough about reinvent the company to become stronger, unless there’s a supervisor with a cane walking around. We’re talking about a huge amount of $15 billion here, mind you.

The automobile industry is getting so bad that Japanese giant Honda Motor Co. has decided to quit Formula-1 – the £300 million a year expenses is simply too much to chew. Malaysian former F-1 driver, Alex Yoong, found the race was too much for him and has decided to settle for A-1 but not before squeezing millions of dollars from lottery company Magnum for sponsorship. Of course people in the circle said if not for his father’s connection in the political arena Alex would still be driving go-kart. Even the money-making machine Magnum couldn’t continue to bleeds and it was the end of the sponsorship after three Formula-1 races in 2001.

Proton Holdings Berhad (KLSE: PROTON, stock-code 5304), famously known for defective power-windows, has recently found out that it has fall in love again with its previous partner – Mitsubishi Motors Corp. (TYO: 7211). The agreements signed were to re-badging a Mitsubishi to replace the Waja as well as to make available Mitsubishi technology to Proton. Instantly there were rounds of applause because Proton was started with the injection of Mitsubishi technology more than two decades ago. And it was Mitsubishi engine that jump-started Proton to capture the major domestic automobile market.

On paper the latest re-marriage was a win-win situation. Proton is dying for new technology to which Mitsubishi can provide while the latter is desperate for market shares. While it’s true that it will cost Proton very little money to gain access to Mitsubishi technology, the most important factor is the fact that Proton do not have to give up its equity stake unlike the failed partnership talks with both Germany's Volkswagen (FRA: VOW) and US-based General Motors Corp. (NYSE: GM,stock). Frankly it doesn’t matter if Waja maintains its current engine and interior as long as there’re changes to the exterior to have “Mitsubishi” face plus the three-diamond logo. People will be flocking to buy the cars. Until now nobody really knows why Proton has such quality problem after so many years in business, not to mention thousands of complaints.

Maybe it was the arrogance curse that Proton was invincible. Maybe the company itself was too huge in size locally that changes are hard to be implemented. Maybe it was too political to focus in getting the right person with the right acumen to drive the company ahead. Maybe it’s time to drain the bad blood and replace it with new fresh blood. But with Japanese automakers being selfish and share only out-dated technology, could Proton-Mitsubishi blinds the consumers once again? Who cares as long as the consumers feel good about the whole partnership and thought they were actually driving a Proton-volution breed of car.

Other Articles That May Interest You …

• U.S. auto sales tumbled, Proton to develop hybrid car?
• Perdana V6, Mercedes Benz, Camry or Accord?
• King of AP Kings Nasimuddin dies, Proton to beg VW?
• Meritocracy & Judicial Independence in doing business
• New Proton Saga express review and photos
• Move aside iPod Nano, here come Tata Nano

Monday, December 08, 2008

Bukit Antarabangsa & Highland Towers - It’s Corruption

The Highland Towers tragedy in 1993 that killed about 48 innocent lives including former Deputy Prime Minister Musa Hitam’s son was almost forgotten until now. If you remembered correctly when the Highland Towers tragedy occurred about 15-years ago the nation was not prepared to handle it and most of the precious time was wasted thinking what to do next. The SMART (Special Malaysia Disaster Assistance and Rescue) Team, mirroring Singapore’s DART Team was formed. Right after Highland Towers’ sad incident the federal government, state government, local authorities and dozens of politicians almost swear on their mothers’ grave that there would be no more hillside development.

Just like stock markets the greed soon caused the excessive hillside construction to retaliate and punish these greedy people. The balance of nature has been disturbed and it’s no surprise that mother nature decided that enough is enough. Ironically the death of many high profile politicians’ very close family members failed to stop the greed or to be precise “corruption”. You don’t think the greedy developers can just build without the green right from the local authorities and other corrupt agencies, do you? But then the local authorities might argue that if the top ministers are equally corrupt why can’t they?

Therefore you can’t blame entirely opinions by certain people that those politicians who lost their loves one actually deserve it because they never did anything in their power to preserve and respect the geographical landscape and Mother Nature. Surprisingly even after they lost their loves one, they still have the cheeks to go about with their normal routine as if there’s nothing happen. Without political willthe greedy developers will continue to show the corrupt politicians the money and the next hillside development will be granted in no time. Hence people like Prime Minister, deputy PM, Ministers, politicians etc should stop showing their crocodiles’ tears whenever such tragedy happens.

The fact is even if the PM was somehow buried alive by a landslide his successor will not issue permanent instruction to stop such hillside development simply because the “profit” is too lucrative to be given the “pass”. That’s the depth of corruption culture in Malaysia. Get prepare with many more nice-to-hear “freeze on hillslope projects” in the next couple of days by government agencies and authorities and take it with a pinch of salt. If you think the government has miraculously awaken from the latest landslide at Bukit Antarabangsa that killed four people then you can be forgiven for living in the caves. In Malaysia no lives are more valuable than millions of dollars to be made from hillslope projects.

Furthermore you can easily blame it on rainy season and acts of God to justify the death of innocent people. In addition, what are the chances that every hillside development will end up like Highland Towers or Bukit Antarabangsa? When tragedy happens it won’t be too late for developers (mostly are politically-linked itself) to come running to the politician(s) affected and offer some money as compensation. Almost all the time such strategy works and it’s back to business as usual. Will the government and developers ever learn from 1993 Highland Towers and 2008 Bukit Antarabangsa tragedies? Over my dead body!

Other Articles That May Interest You …

• Economic Uncertainties breed Denial Syndrome?
• Arrogance, Greed & Corruption – Will We Ever Learn?
• The RM5 billion, shouldn’t the Government seek approval?
• Cycle and the desire for Power, Money, Sex and Glamour
• Greed & Corruption turn the country into Gangster-State?

Saturday, December 06, 2008

Only half a Million Job Losses, for now

Jobs, retrenchment, bonus, layoff and money could easily become the coffee-shop most talked-about subject these days. Popular radio channels suddenly found new topic of discussion and it was not surprise that many unfortunate victims of economic crisis called in to release their tension and seek advices from DJs. Other influential government-controlled channels such as the print-media and television are still reluctant to report about retrenchment which is already happening especially to the MNCs (multi-national-company). It is taboo to report such negativity during such fragile time but it’s better to prepare for the worst mentally than to sweep such issue under the carpet.

Sure, during good time job-seekers were seen flocking to find a job or career with MNCs simply because they can pay great money with lists of benefits much to the jealousy of others. I’ve been there and I can tell you that while it’s prestigious to flash your name-card with the MNC logo and having fun watching all the “ooohh” and “aaahh”, there’re black-sides to it. The fact is they can pay you top money together with fancy gadgets but they do not think twice about axing you especially during economic uncertainty. That was why when the MNCs want you, you better demand the maximum and don’t feel sorry for them. Don’t ever think that since you’ve contributed much to the organization so much so that you’ve spent most of your life in the office and in the process ignored your loves one these MNCs will feel gratitude and may give you the axe a miss.

In reality, local companies are much better than those MNCs although they pay less. However do remember that when MNCs pay you higher salary your job normally requires double workload, not to mention ridiculous project deadlines to meet. Everything is based on KPI and if you do not perform in two-quarters especially in sales, then you’re shown the door. Personally I would rather take home RM2,000 less a month than to sell your body and soul to these MNCs. Of course you should try working at least once with them to get the “kick” of experience. Having said that doesn’t mean it was “hell” working with them. Seriously they’re professionals and value deliverables because they believe in result-oriented model.

The most secure job is definitely in the civil service. When was the last time you heard thousands of government servants were to be cut during recession? It almost never happen because the government knew once they’re retrenched, these bunch of people will not be able to find a job elsewhere. So the government servants should not get jealous because their pays are not comparable to private sector. There is risk attached working in private sector especially if you do not posses special skill(s). Therefore you deserve to earn what you’re willing to give, period.

The U.S. Labor Department has just announced deteriorating employment market with 533,000 job losses in November (6.7 percent), the most in 34 years when the great nation registered 602,000 slash in 1974. The prediction was only 320,000 job losses. AT&T also announced plans to cut 12,000 jobs this month onwards. As much as I would like to be optimistic somehow I think the worst is not over yet since the Detroit’s top three automakers are still struggling and literally begging for money to the tune of a whopping $34 billion lest the government would like to watch many thousands more to get the axe. The argument was if the government was willing to spend $2 trillion to bailout financial institutions why so stingy (and unfair) with $34 billion to save the automakers?

I believe I’ve mentioned that you can rely on global crude oil prices as another indicator to gauge how bad the situation is. Guess what, the crude oil fell to $43 a barrel today and the scary part was the prediction by Merrill Lynch & Co. Inc. (NYSE: MER, stock) that the black gold could drop further to $25 a barrel in 2009 if the current recession disease spreads to China. And we have not even start talking about credit-card problems. Let’s see if unemployment rate could climb to 2-digit figure.

Other Articles That May Interest You …

• Take your pick – Yoga, Beer, Jobless or Corruption
• When is the Right time to buy Stocks? Ask yourself
• Economic Uncertainties breed Denial Syndrome?
• Cash is King but do you have the bullets?

Wednesday, December 03, 2008

Here’s 10 cents for you beggar, I’ll take 50 cents myself

Malaysians are a bunch of hard-to-please people judging from their cold shoulder over the RM0.10 a liter cut in petrol price effective today, Wednesday 3rd Dec 2008. There were no cheers wherever you go. The kind and generous government has since cut the petrol prices for the sixth time to reduce people’s burden but strangely it was not appreciated. Sure, the government did the stupidest thing by raising the petrol price by a whopping 40.6% (RM0.78 a liter to RM2.70) on 5th June 2008. But the government has since repented and tries to make up for the hardship faced by the people.

Really, it’s not the government’s fault that the food prices and many other materials that skyrocketed to the roof couldn’t come down even when the fuel prices now are back at original level. Blame it on suppliers, transporters and whoever on the supply-chain line except the government because the government can’t be wrong this time. The government is still clueless until this hour why the people did not cheer for all the hard work done. Didn’t the people including the opposition parties screamed and demanded the fuel price be reversed to the original RM1.92 a liter? The petrol price is now RM1.90 a liter, 2 cents lower than the RM1.92 a liter requested. So what’s wrong with these people?

The people should not get so greedy. When the government raised the petrol price to RM1.92 from RM1.62 on 28th Feb 2006 the global crude price was at $61.41 a barrel. The crude oil prices are now below $50 a barrel and the government can finally eliminate the subsidy altogether. At current petrol price of RM1.90 a liter the government is actually making a cut or profit of RM0.50 a liter. Therefore it’s awin-win situation because while the people can save (RM0.10 a liter), the government is making good profit as well (RM0.50 a liter). Thus the people should rejoice and sing the songs of praise for such caring government, no?

During current global recession period, all Malaysians should come forward to help the government. Yeah, the government did announce the country will never enter the recession door but that was actually to instill feel-good-factor to the consumers. What’s wrong with such motivation talk? In fact everybody should support the government’s plan to implement a floor price mechanism for petrol and diesel mooted. The consumers should be proud to have a dedicated and smart leader like Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad. With a stroke of a genius plan, the country (ruling government) is now able to generate great amount of revenue within domestic sector. In fact the so-called developed countries such as United States and European Union should learn from Malaysia (making money from domestic fuel consumption).

Instead of borrowing money elsewhere to bailout their sickening companies, they should somehow find ways to become self-sufficient. Just take a look at Malaysian Government. Not only the ruling government can make money of over 26% profitfrom RM1.90 a liter of petrol, they are expected to make good money from theextra taxes from the 3% cut in EPF contribution for employees as well. The initial RM7 billion stimulus package (from EPF?) and RM5 billion to Valuecap (to be borrowed from EPF) are some of the marvelous plans to save the nation from recession. The cash-cow EPF is expected to lend more money disguising under stimulus packages to boost up domestic demands, all because the ruling government cares about the people. Thus, we should clap louder if the global oil prices go down further but the petrol prices remain.

Other Articles That May Interest You …

• What goes up must come down? Not necessarily
• It’s Amusing How Your Intelligence is Insulted, Again
• Out of Subsidy Mentality but into the Crocodile’s Mouth
• Hooray! Another Fuel Reduction but it’s a Little Too Late
• Flip-flop Badawi to the Exit Corridor – from Hero to Zero

Monday, December 01, 2008

Dividend Yield Stocks (Part 3) - Carlsberg Brewery

We’re not going to debate or argue whether the time is ripe to scoop some stocks at the current level because obviously different people have different risk appetite. Fund managers couldn’t help but to fill their portfolios with some battered shares with only one reason – they can’t afford to miss the boat in case miracles happen. Furthermore it was not their own money that they’re betting. Having said that sadly some fund managers such as those who were investing for their clients in the name of unit trusts are still licking their wounds, not to mention the fierce calls received from clients demanding explanations.

Amanah Saham – a Ponzi Scheme?

During such difficult time rumors, speculations and theories begun to fly around especially concerning huge funds managers. The latest being the reason why Amanah Saham Nasional Berhad is offering additional new units of 1 billion Amanah Saham Wawasan 2020 (ASW 2020). It was no-brainer that people flocked to ASW and similar scheme because of its high dividend rate. The naughty rumors were that Amanah Saham is making great losses with the current global economic havoc and this latest 1 billion new units to be offered to public was to capture new fresh money to pay dividends for old subscribers, hence the “Ponzi Scheme”. As long as investors do not withdraw all their investment plus the dividend the Ponzi-Scheme will not burst, if indeed ASW is one of such scheme.

Started by Italian immigrant Charles Ponzi, it’s hard to imagine and believe that such Amanah Saham programs could fall under such scheme. Malaysian government would not let such high-profile investment initiatives to go bust. Even if it shares some similarities or characteristic of “Ponzi Scheme” the fact that all the investors will not get panicked and start withdrawing at the same time somehow ensures the investment should be safe (I hope). Although it would be fun to see just how much monies are left in Amanah Saham’s vault, let’s don’t talk into one because the last thing we want is a new scandal or financial crisis huge enough to bring down the nation.

Dividend Stocks Continue

It’s been a while since I last wrote about dividend stocks. Regardless whether you have already entered the stock market and are punching your head now or you’re grinning from ear to ear watching the stocks continue to slide because you’re still holding to your bullets, you can’t ignore to have dividend stocks in your portfolio. So if you’ve bought some stocks and you’re recording paper-loss give yourself a round of applause if your stocks yield good dividends. Hey, that’s how you calm and motivate yourself instead of thinking of jumping from the 17th floor right? I’m still patiently waiting but my sisters are already fuming because whenever they asked me when to jump I said “just wait, have patient”.

Before I continue l would like to clarify that the following stock is not for everyone especially to Muslim readers because it’s a non-halal stock. In fact the previous write-up on Dividend Yield Stocks (Part 1) – Berjaya Sports Toto was a non-halal stock as well but I didn’t declare (kinda forgotten) it since I noticed there’re many Muslim friends who are still flocking to the 4D-outlets as if they were buying Starbucks Latte despite the warning sign displayed. So, if you’re a Muslim reader, do not proceed to read further.

Carlsberg – Safe Stock Vulnerable to Duties & Taxes

Carlsberg Brewery Malaysia Berhad (KLSE: CARLSBG, stock-code 2836) is kind of unique in the sense that the Denmark parent company Carlsberg Brewery A/S is holding the controlling 51% stake via UOBM Nominees (Asing) Sdn Bhd. Hence you won’t see fierce volatility in the stock price even during the worst time – swing traders hate this stock. Carlsberg has only one competitor – Guinness Anchor Berhad (KLSE: GUINESS, stock-code 3255), another cool dividend paying stock but that’s another story for another day. No doubt Carlsberg and Guinness Anchor are sin stocks but they’re safe bets for obvious reason. Just like its “sin brother” tobacco stocks (another addictive product) it’s hard to ask the alcohol drinkers to quit drinking, let alone the hardcore alcoholic (they are not called alcoholic for no apparent reason in the first place).

Such stocks do not really have to worry about losing consumers since there would be guaranteed new pool of youngsters born every year who would show off their drinking skills to replenish those “older hippies” who may drink lesser as their age catching up. Believe me, when you’re young and clubbing is your second nature of entertainment the beers’ prices are the last thing that would concern you. The major challenge that stubbornly attach like leeches to the alcohol industry in Malaysia is the forever rising government duties and taxes.

Besides RM7.40 per liter excise duty there is also so-called “Ad Valorem” duty of 15% on ex-brewery (introduced in 2005), not to mention sales tax of about 5 percent. The excise duty per liter has increased by a whopping 169% since 1991 from RM2.75 to current RM7.40 a liter. If the number was not enough to make you fell off the chair, maybe the fact that excise duty and Ad Valorem formed the biggest cost of Carlsberg operation – it’s a whopping 47.2%, more than double of sales, distribution and administration cost (20.8%).

Carlsberg Fundamentals

If your objective is solely to put your money into an instrument that can generate annual return higher than fixed-deposit then you might want to seriously consider Carlsberg. However you should not hope for a sudden jump in net profit since any bullish in business forecast would be followed by higher excise duty or other sin taxes (yes, the government knows what they're doing). As much as I would like to use the word “saturated”, the better word could be “market maturity”.

As of Dec 2007 Carlsberg share in the local beer market was estimated to be around 45%, second to Guinness Anchor Berhad. At this moment the newcomer, Napex Corporation, owned by Teluk Intan businessmen Kiew Yong Seang and Ng Siew Cheng had captured only about 1 percent of local beer market since it started operation in 2007. So there’s little to worry about this new kid, for the time being. When you talk about Carlsberg you can’t run away from comparing it with another banking giant, Public Bank Berhad (KLSE: PBBANK, stock-code 1295).

If somehow you inherited 1,000 Carlsberg shares in 1971 and you had keep it under your pillow all these years till now, your initial 1,000 shares would have ballooned to 33,750 shares assuming you’ve subscribed to the rights issue in 1973. Long story short, the initial investment of RM1,500 would grow to RM118,125 based on today’s closing price of RM3.50 a share excluding the RM179,569 in cumulative gross dividend received since 1971 to 2007. Technically you are amillionaire if you have 4,000 shares back in 1971.

Carlsberg Technical Analysis - on freefall

There’s nothing much to say when you look at the stock-chart except that it’s on a free-fall, thanks to the current economic uncertainty. Forget about support or resistance level but then which stocks are not affected anyway? Assuming the company will maintain net EPS at RM0.26 per share, the stock is currently trading at 13.46 times. But the greedy StockTube wants a single digit P/E before slowly scoop the stock. Please do not follow me because I’m a stingy rat who would pay only peanuts to panicked sellers. Anyway, please don’t drink and drive at the same time.

Other Articles That May Interest You …

• Take your pick – Yoga, Beer, Jobless or Corruption
• JTI Revisit – still an attractive Dividend Stock
• Dividend Yield Stocks (Part 2) – JT International
• Dividend Yield Stocks (Part 1) – Berjaya Sports Toto

Thursday, November 27, 2008

Take your pick – Yoga, Beer, Jobless or Corruption

Ever since the Sept 16 deadline to form the new government expired without any mojo de-facto opposition leader Anwar Ibrahim has been extremely quiet. The excitement died as fast as the political blogs mushroomed right after the 8th Mar 2008 general election. All you heard thereafter were some stupid and silly yet entertaining statements from the mouths of Home Minister Syed Hamid Albar and Domestic Trade and Consumer Affairs Minister Shahrir Samad. It is almost certain that Deputy PM Najib Razak will take over the premiership in another four months with outgoing PM Badawi currently racing against time to enjoy his oversea “vacations” as much as possible.

Along the line you have that fatwa (edicts) thing about yoga and tomboys that caused some sensation uproars. But it was a non-issue because whatever that fatwa was all about does not applies to non-Muslims. If they think the risk of Muslims who are “yoga-ing” will embrace other religion is high and should be “banned”, never mind that practicing yoga can improve health and there’s no prove that Muslims have leave their religion because of this sport, then let it be. It was their health and not mine (or yours) so who cares if ultimately they can no nothing except to sit inside their house watching T.V.? Hey! Even that idiot box called T.V. was developed by non-Muslim and it could influence the thinking of “Malaysian Muslims” so it’s a matter of time before another fatwa is issued banning television set from your living room *grin*.

Nevertheless another mini trouble started by Islamic-based party PAS, a component of opposition alliance PR (Pakatan Rakyat), when the Selangor PAS was trying to impose a ban on the sale of alcohol at 7-11 outlets, mini-markets and coffee shops regardless of the owners. The chance of such initiative will not go through considering that PAS only controlled 8 out of 36 state seats won by PR but it definitely raise many eyebrows with many supporters already said they will swing their votes come next general election. Already there seems to be internal fighting to remove pro-Anwar supported within PAS and again the speculation that PAS could be the traitor to PR after all re-emerges. Seriously does PAS expect the staffs at 7-11 outlets, Carrefour, Tesco where majority are Muslims to be out of job? They’re not drinking liquor but just to earn a decent living. So by holding, looking and handling liquor bottles or cans is enough to seduce them to consume alcohol? Gosh! They’re trying very hard to become more Arab than the Arab themselves huh?

If somehow the plan goes through stocks such as Guinness Anchor Berhad (KLSE: GUINESS, stock-code 3255) and Carlsberg Brewery Malaysia Berhad (KLSE: CARLSBG, stock-code 2836) will definitely come under selling pressure. However Selangor MB (Chief Minister) Khalid Ibrahim confirmed today that there will be no such ban. Seriously if a person does not have faith or will to become a “good person”, he will find the way no matter what to get it regardless if it’s yoga, alcohol, cigarettes or bribe. Where’s your faith man?

But what I’m waiting for is the explosive list of names of those who practised money politics in the mighty UMNO party promised by old fox and once invincible-dictator former premier Mahathir. It’s strange that he’s calling for a stop to such practise when in fact the corruption flourished during his 22-year iron-grip. He admitted (corruption existed during his time) with justification that the scale of corruption back then was not as what we’re seeing today. This is indeed laughable because common sense will tell you corruption will only snowballs if not tackled so why pointed the fingers elsewhere? He just needs to re-establish a brand-new anti-corruption agency which is free from Executive’s intervention or influence to solve the problem, not that there’s no example elsewhere especially from Hong Kong’s ICAC. Surely the country can manage to build more prisons if they can bailout cronies, can’t we?

The fact that UMNO might vanish from the political grip come next general election was enough to scare the old senile fox to daily nightmares. And he’s doing this for his sons, mind you. You don’t think all of a sudden this old-man realized his past mistakes and sins and trying to rectify the problems do you? Of course he’s a better economic manager and leader but that is not enough to erase the writing on the wall that he was the root of all the problems we’re facing now. His successor simply is incapable to keep the worms from crawling out. And he managed to secure his proud two-third majority without fail previously because the internet and blogs were at their infancy shadowed by government-controlled propagandas, not to mention you have young voters now. Badawi just need to add poor economic management, not to mention the mistake in raising fuel price, to set the fire ablaze. Still, corruption is still corruption regardless whether it’s RM200 or RM2 billion.

Other Articles That May Interest You …

• It’s Amusing How Your Intelligence is Insulted, Again
• MPs grill Maybank CEO – let the worms come wriggling
• Former Dictator Suharto Dies leaving huge Wealth
• Malaysia Judiciary Scandal? Don’t bet on it
  

Tuesday, November 25, 2008

Bailout of bankers is bad but Maika’s bailout is pure Stupid

At last Malaysia’s Central Bank cut its interest rate to 3.25 percent from 3.50 percent after stubbornly stay at that level for more than two years since Apr 2006. Just like U.S. Federal Reserve once the cut started more cuts are in the pipeline as it signals economic problems. The rate cut should be welcomed and in fact was long overdue. If not for clear signs that businesses began to be affected, the Central Bank would not think twice about leaving it alone. Already JPMorgan Chase & Co, HSBC Holdings Plc and Aseambankers Malaysia Bhd think the interest rate could go as low as 2.75 percent by Mar 2009.

While a lower interest rate is bad news for fix-depositors it definitely helps people who are now serving housing loans, depending on the package chosen of course. Whether it can help small businesses by lowering their borrowing cost is yet to be seen. Lower interest rate is not the silver bullet because if the economy is bad enough even an interest rate of 0.5 percent would not help much, seriously. This is the best time government show how efficient and intelligent they are in managing domestic economy, not to mention attracting foreign investors. Your capability is judged during bad time and not during the waves of good time.

The recent RM7 billion stimulus package, 3% cut in EPF contribution for employees and now the interest cut are direct admittance by the government that the country has indeed sniffed the problem brewing fast hence the measures. So the big mouth that screamed the country will not plunge into recession no matter what is no longer true. And you better calculate twice before choose the 3% cut in EPF contribution option because you might ended up paying higher income-tax, not to mention your retirement fund would be less when it matures. In short the government is really short of money and the immediate plan drafted was to suck as much money from the public as possible. Billions of dollars could be collected from income tax derived from 3% EPF cut initiative and the revenue collected from current fuel prices. Expect more stimulus packages if things get uglier.

The year 2008 can easily be the year of bailouts. Started in U.S. global bailouts could skyrocket to trillions of dollars. People on the street are still debating whether the greedy financial institutions should be rescued because it could send the wrong signals that excessive lending is alright because Uncle Sam is waiting with huge piggybanks on hand. Earlier mind-boggling multi-billion M&As (merger and acquisition) are being called off for obvious reason. Today BHP Billiton Ltd., the world's biggest mining company announced that it has abandoned a hostile $147 billion takeover bid for rival Rio Tinto Ltd. of which the bid value now shrunk to $68 billion only. Even the world’s largest carrier of LNG (liquefied natural gas) MISC Berhad has abandoned the RM3.2 billion ($882 million) takeover bid for oil services company Ramunia Holdings Berhad.

As we speak, amazingly there’re still some stupid bailout calls that does not make sense at all. It appears MIC fellow somehow found the gut to ask the government tobailout Maika by pumping RM150 million of taxpayer money to save the political party’s dying investment arm and to return 66,400 investors’ hard-earned money (cheated by Maika?) made famous by 1992 Maika-Telekom scandal. It would be very interesting if government decided to “award” the bailout much to the delight of Maika CEO Vell Paari (MIC President Samy Vellu’s eldest son). It would be another daylight robbery of your money to bailout Maika when in reality some greedy and corrupted clowns thought it was perfectly alright to steal money from estate workers who had pawned their family jewellery and withdrew their life savings to invest in the company. Shouldn’t they be in jail instead?

Other Articles That May Interest You …

• When is the Right time to buy Stocks? Ask yourself
• What goes up must come down? Not necessarily
• Out of Subsidy Mentality but into the Crocodile’s Mouth
• Poor’s Hope in MAIKA – the Last Robbery
• Mega-Sales needed to attract Rio Tinto to revives Bakun

Fast Scalp on Apple as good news don’t stay long

Looks like the Dow Jones is having a small party after the government agreed to inject $20 billion to bailout the once mighty Citigroup Inc. (NYSE:C, stock). The government doesn’t have a choice really, and Citigroup was damn sure that help was on its way. You can’t let such a massive monster collapse because the chain reaction thereafter could be disastrous – something that nobody would like to take the risk to try. But by doing so (bailout Citigroup) would it sent the wrong message to the rest of the financial institutions that it is alright to throw the risk management guidebook off the window and continue to take excessive risks knowing the government will use taxpayer money to rescue them one way or another?

Guess it would be a waste not to use the $700 billion coffer so what the heck right? Furthermore anybody including President Bush who is as clueless as PM Badawi as far as economic is concern can easily justify that you just got to rescue a huge organization which boast 200 million customers and has offices around the globe in more than 100 countries. Such tonic was all it needs to spike the stocks today. I’m not sure about the closing price of Apple Inc. (Nasdaq: AAPL, stock) today but my simple technical indicator is telling me that the resistance is at $90 a share so I’m taking money off the table for now.

It was a fast scalp on AAPL Dec 85 Call Option and I hope for more of such trade although it may not happen on daily basis. You just got to read the pulse of the market and the buyers and sellers, not to mention the stock chart. The good news nowadays fizzles out fast so don’t hold on to your trade too long.

Other Articles That May Interest You …

• When is the Right time to buy Stocks? Ask yourself
• What goes up must come down? Not necessarily
• Wild Swing to continue as long as the Worse is Not in Sight

Monday, November 24, 2008

When is the Right time to buy Stocks? Ask yourself

There were two young chaps talking about the current stock market after they finished their meals at a hawker center the other day. As much as I hoped for, it appears the price of foods never goes down and chances are it won’t no matter how much the fuel price drops. So stop believe those propaganda by government that the inflation has peaked and the prices of goods are going to come down soon. Anyway the two young chaps were very excited because they have just bought into some local stocks, believing that the stocks are already very cheap and they are on their way to make a killing this time.

Well, the young chaps could be right and should be proud that they’ve bought into the stocks now instead of early of the year. At least they can claimed they bought low and hopefully can sell high – that’s if they can hold on to their stocks until it appreciate and do not fall in love with them that they decided to hold on further only to find that the next bear cycle has started. That’s part of the stocks investment learning journey and nobody can skip the test. That was why you heard about newbies need to pay tuition fees to learn the rope. No genius is smart enough to bypass this baptism of fire. Heck, even Warren Buffett still makes mistake at his current age. Of course if you wish to show that you’re better than the Oracle of Omaha because you bought stocks at a lower price than him, you can do that anytime now *grin*.

While I don’t have (nobody has) the crystal ball to tell when is the bottom, the fact is the worst is not over and not all bad news are out from the closet yet. But if I read the above conversation by the two young chaps right, many beginners have actually used their bullets and assuming they do not have half a million in their war-chest, I (and StockTube readers) would have longer period of time to plan for the assault. I would be very worry if everybody is still holding their money and waiting for the “right time” to enter the stock market because that means the demand will suddenly skyrockets with little supply, and that's bad. So my simple question to you is: If the stocks are really cheap and it’s time to buy, why are they still going down? You do believe the Dow Jones can slides further to 6,000 (yeah, I’ve bet that it would goes down to 7,000 recently) and KLCI to 700, do you?

Ask yourself another question – do you have confidence to buy stocks now? Do your friends, relatives, brothers, sisters, colleagues, aunties and uncles have confidence on the current economic situation? Conduct this simple interview and you’re on your way to understand the simple macro-economy better than the PM Abdullah Badawi. If the stocks have not stops purging, the stocks are not cheap regardless of technical or fundamental studies, not to mention the unbelievable low P/E (price to earnings) ratio.

While the problem of American International Group Inc.’s (NYSE: AIG, stock) is taking a backseat all the eyes are on Citigroup Inc. (NYSE: C, stock), once the mightiest and largest financial institution of the United States of America and one of the components of Dow Jones Industrial Average index. It is shameful that such an empire is now worth only $20 billion in market capitalization, less than 10% of what it was worth more than two years ago when the proud U.S. financial giant’s value was at a staggering $240 billion. Citigroup has now $65 billion in losses with its stock price at a pathetic $3.77 a share after Friday’s closing. It was like Malayan Banking Berhad (KLSE: MAYBANK, stock-code 1155) is trading at below RM1.00 a share. Can you imagine that? But Citigroup will not file for bankruptcy or Chapter-11 because the U.S. government can easily take over the institution now that it’s worth peanuts, minus the toxic assets of course. Nevertheless it’s time to fire the CEO Vickram Pandit (wait, he inherited the problem from his predecessor Charles O. Prince, didn't he?), director Thomas G. Maheras, adviser Robert E. Rubin and a bunch of other lousy top management.

Other Articles That May Interest You …

• Economic Uncertainties breed Denial Syndrome?
• Wild Swing to continue as long as the Worse is Not in Sight
• Forget about rate cut, AIG may Crash the Stock Markets again
• Let’s Close the Global Stock Markets, shall we?
• Cash is King but do you have the bullets?
• Should we rejoice or mourn on Maybank-BII deal?
• Economy Meltdown – Stop being Selfish and Stubborn

Saturday, November 22, 2008

What goes up must come down? Not necessarily

Sometimes it pays to be negative provided you know what you’re pessimistic about. Sir Isaac Newton’s discovery of gravity after got bonked by an apple gave birth to the “What goes up must come down” wisdom to many stock investors. I wonder if stock markets were invented much earlier in 1687 would Isaac be able to make any money out of it. He’s a great mathematician but that doesn’t means he’s a good stock investor or trader – the same way why Warren Buffett is a billionaire but not his mentor or guru, Benjamin Graham. But the gravitational law does not apply in outer space and for that I’m proposing stock markets to be traded only in the space stations *grin* so that we can end the current miserable of economic crisis.

However even on earth there’re certain parts of the world that the gravitational law does not apply – well, to be fair it only works sometimes but not all the times. This place is Malaysia, a proud nation that will never enter the recession door regardless of what will happen to other powerhouse such as United States, European Union, Hong Kong, Singapore or Japan. Malaysia is fully insulated from recession disease because the top leaders have built a very strong fundamental layer of shield to protect the domestic needs. Frankly if not for the influence of internet and bloggers, the fuel prices would remains at RM2.70 a liter and can never retreat to the current RM2.00 a liter, thanks to the Mar 2008 general election’s result. It’s a shame that the ruling government country cannot continue to prosper by making tens of billions of ringgit in profit after the global crude oil prices tumbled from $148 to current $49 a barrel. Can you imagine the quantum of revenue losses here?

There was a time when Malaysia’s stock market defied the gravitational when it behaved the opposite way of Dow Jones. Those were the days when KLCI shot up even when Dow came down but as strange as it looks, the KLCI would retreat when the Dow shot up to the roof. That is another proof that Newton laws does not apply in this country. There’re other living testimonials that could send Sir Isaac Newton home crying because his law is flawed. Now that the ruling government has no other choice but to lower the petrol price to RM2.00 a liter (they’re still making handsome profit at this level, mind you) with more to come, amazingly the price of other goods remain stubbornly. You can be forgiven for scratching your head in disbelieve but if you’re a local then the above makes perfect sense simply because Malaysia is a very unique country which never fails to produce astounding world wonders.

Let’s go back to the topic of “What goes up must come down”. It was nice to read Warren Buffett was optimistic about stocks and advised us to not hold cash but scooped the stocks recently. I’ve wrote that you cannot and should not read Warren’s recent action as a bible simply because the mess that United States wasfacing was simply too gigantic to be neutralized by one Warren Buffett. Furthermore Warren has such a deep pocket that he can afford to be wrong while you can’t. His Berkshire Hathaway (NYSE: BRK.A, stock) has since lost more than 40% of its value and now it’s back to where it was in 2003. If you do not already know, Buffett actually sold “naked puts” option contracts worth about $5 billion to an undisclosed group of investors. The Oracle of Omaha thought he could make easy money of $5 billion because he was positive that U.S. and world equity values would be higher in 15 to 20 years back then – when DJIA was at 13,000-level.

Now rumors are flying on Wall Street that the owners of the put contracts have demanded that broker Goldman Sachs (that brokered the deal) put up collateral for the rest of the amount due. And that’s precisely why Warren pumped in $5 billion into Goldman Sachs Group Inc. (NYSE: GS, stock) recently – not because of the stock but because he need to get Goldman Sachs ready with cash in case his bet goes haywire. So, if the genius can’t be right all the time you can’t simply follow without doing your homework before jump into the sea of uncertainties. If only “Die-Hard” Bruce Willis has done his homework and knows who is Petra’s CEO Vinod B. Sekhar and Imran Ibni Tuanku Ja’afar, he would not have to deal with numerous excuses (ahem, that’s the special skills possessed only by “certain” Malaysian businessmen) over a pathetic $US900,000.

All right, here’s my reward for being negative again. Lock-in my profits on Apple Inc.’s (Nasdaq: AAPL, stock) put options, the same way those investors bought their put options as insurance against Warren Buffett.

Other Articles That May Interest You …

• It’s Amusing How Your Intelligence is Insulted, Again
• Wild Swing to continue as long as the Worse is Not in Sight
• It’s all about Stimulating the Right Way on the Right Part
• Cash is King but do you have the bullets?
• Waiting for Congress’s “Aye” but the Problem is Gigantic

Friday, November 21, 2008

It’s Amusing How Your Intelligence is Insulted, Again

Home Minister Syed Hamid Albar who has successfully attracted all the attention for the wrong reason since he was transferred from his old position as Foreign Minister may have found a new rival. No doubts Syed Hamid Albar is perhaps the silliest and most hated minister this country ever had since decades ago but similar jokers are slowly emerging and climbing the ladder to snatch the award from Hamid Albar. The person to watch out is definitely the Domestic Trade and Consumer Affairs Minister Shahrir Samad as he’s catching up very fast to rival Syed Hamid Albar.

The writing is on the wall that instead of lowering the petrol price to commercial value of RM1.64 a liter the government refused to do so as with the current RM2.00 a liter, obviously the profit of RM0.36 a liter was too good to be discarded. You just got to give a round of applause to Shahril for his guts to claim that the retail price would have to take into consideration other cost factors such as the refinery cost. Huh? You meant the commercial value of RM1.64 is unprocessed dirty crude oil that is the same quality as of what was sucked up from the bottom of the ocean? What a crap and silly justification considering the gasoline produced at $70 a barrel is at RM1.64, what more now that the crude oil is at below $55 a barrel. Do the math yourself.

Every Tom, Dick and his dog knows that almost all the petrol dealers were related to UMNO and were making huge profit when the government decided to hike to petrol price by 41% overnight – that’s 41% sudden profit literally. Strangely now they’re crying that they lose money each time the price is adjusted downwards. But that is not the reason why Shahrir is slowly threatening Syed Hamid Albar’s position as one of the silliest minister ever. The adorable Shahrir has the cheek to justify that the government has every right in earning revenue from the tumbling global oil prices as it had given out subsidies when the prices were high? Something is definitely wrong with this fellow’s brain since he’s obviously does not understand that the subsidies were peoples’ money. I expect him to claim that other factors such advertisement costs, drilling costs, transportation costs, piping and raw materials costs should be taken into consideration as well.

It’s not true that Malaysia is losing all the best brain to other countries because all the best people have joined the ruling government. Just take a look at how creative PLUS was in helping to reduce peoples’ burden with its recently announced discount plans are enough to blow your head off. Of course many people were joking that to enjoy the 10% discount at wee hour, you may actually see more Altantuya on the highway grinning with joy than Ahmad, Ah Chong or Ramasamy. It was an obvious example of treating people like beggars, not to mention how insulting it was to your intellligence. And talk about Altantuya you’ve just heard how the just acquitted Abdul Razak Baginda from the Mongolian model murder case tried to clear his boss, PM-in-waiting Najib Razak, and his wife, Rosmah, from the murder case.

Actually it would be smarter if he just keeps quiet and let things take its course because majority of the people are now more than convince that Najib Razak has something to do with Altantuya’s murder where her body was blown off with military-grade C4. Ever heard that the more you try to clear and explain the more it shows how guilty you are? Sure, we’re supposed to believe Altantuya was bored with her life so much so that she was testing her theory and bombed herself. Right, and the pig can actually fly.

Other Articles That May Interest You …

• Out of Subsidy Mentality but into the Crocodile’s Mouth
• RPK sent to detention without trial, FCUK you Big Bully
• An island for Singapore, rocks for Malaysia – Amazing!
• BBC HardTalk too Hard & Hot for Malaysian Syed Albar
• Economic Uncertainties breed Denial Syndrome?
• Stimulus Plans, to be spent Wisely or ended up Elsewhere?

Wednesday, November 19, 2008

Out of Subsidy Mentality but into the Crocodile’s Mouth

Can you believe it? Malaysians have finally shed the image of beggars who depends heavily on subsidy. After decades of subsidy mentality, today Malaysian can stand tall and declare that they do not need fuel subsidy to continue their life. You people who criticized the noble intention of PM Abdullah Badawi in raising fuel price of petrol by 41% to RM2.70 from RM1.92 back in June 2008 should apologize to the Mr. flip-flop. What former premier and dictator Mahathir failed to achieve in his 22-year rule, Badawi a.k.a. sleeping-beauty has successfully accomplished it in 5-years. That’s right, Badawi’s grand plan has managed to move the people’s mentality away from fuel subsidy and for that he should be applauded.

Domestic Trade and Consumer Affairs Minister Shahrir Samad today said proudly that the government has stopped paying subsidies for petrol since the beginning of this month, Nov 2008. He further claimed that the government would not be paying subsidies at all if the global crude oil remains at $65 a barrel. In fact the government is expected to save about RM10 billion next year on petrol subsidies. I think this minister who was infected by flip-flop disease from his boss, PM Badawi, began to feel guilty when he said actually the government was not paying a single cent even with the latest fuel price drop from RM2.15 to RM2.00 a liter for petrol. He even hinted that the government can actually revert back to the original RM1.92 a liter of petrol.

Of course the government is not paying any more subsidies stupid because the global oil price is now at $55 a barrel. Instead of subsidizing petrol the government has actually quietly making profit (from the people on the street). Heck, the $10 bucks a barrel difference being the $65 breaking-point an $55 current price should have generate many millions, if not billions, of dollars of profit. Now we know why this idiot Shahrir was so protective and defensive about letting the petrol price goes down further to reflect the true value based on current crude oil prices. Instead of subsidizing to reduce the burden from poor men on the street, the government actually saw this as a way to make a round(s) of cool profits from the people.

If making handsome profits is not enough, the ruling government seems to be getting greedier when Shahrir openly declared that the government might even set a floor price or other methods in order for the government to enjoy greater income (from the suffering of people?). So prepare for RM1.92 a liter of petrol even if the global oil prices plunge to $30 a barrel. Can you imagine what type of government you’ve voted into the office? A smart one obviously (so, who’s the suckers on the opposite site?).

The writing is on the wall. In reality the ruling government is in a dilemma because while it does not have to carry the bag of fuel subsidy with the current weak oil prices, it also means the tax or dividend paid by state-owned Petronas to the government shrunk as well. And since the total of direct and indirect contribution from Petronas was about RM75 billion, a lower crude oil prices means less money for the coffers. What do you do when you can’t get foreign funds money? You rob your own peoples’ money but if it’s done carefully and creatively nobody will ever realize it.

Other Articles That May Interest You …

• Japan’s Recession and Cheaper Fuel Prices
• In time of Cheap Lobster, Peoples Money are Robbed
• Hooray! Another Fuel Reduction but it’s a Little Too Late
• Fuel prices set to be revised but the Damage is done
• Forget about oil prices, it’s the Inflation you should worry

Monday, November 17, 2008

Japan’s Recession and Cheaper Fuel Prices

One of the scary parts about recession is the fact that it does not infect only a certain sector. It is just like a virus or worm and it will not stop infecting until the right antivirus signature is used to uniquely identifies and quarantine or clean the specific virus. For this same reason people in the I.T. field somehow got suspicious that it could be the fellows from the anti-virus companies that wrote or design the virus, spread it and claimed overnight after the release of the virus or worms that their antivirus software was the first in the world that could contain the virus. The catch – you need to buy their antivirus software to clean up thousands of your organization’s workstations, servers or notebooks.

I’ve wrote why this time around the recession is for real because it infected the banking system so i'm not going to elaborate on it. From here onwards it will spread to other sectors and it appears the automakers are screaming for bail-out. While President-elect Barack Obama urged outgoing President Bush to rescue the auto-makers, some said it should be left to survive on its own. Frankly, how many more companies and how much money more do you plan to dump into this black-hole in the name of bail-out? You can only do so much with the taxpayer money although personally I don’t think some of the greedy banks should be rescued. I’m not going to scream again that the bad time will stay for a little bit longer than expected so go and read previous articles if you’re still not sure what I’m talking about.

Now the bad news – Japan‘s economy officially entered the technical recession for the first time since 2001 when its economy shrank at an annual pace of 0.4 percent in the July-September period after a declining an annualized 3.7 percent in the second quarter. With two straight quarters of contraction, Japan has joined the recession club together with 15 other Euro nations. But Japan should know and well-prepared on what to do after facing recessions before. Being the world’s second largest economy powerhouse, such recession announcement also means it is bad news to the Gulf countries because it means the demand for crude oil is worsening. Seriously I doubt the call by Iran or any country for that matter to cut production by 1.5 million barrels a day can have any effect on the black gold’s price.

However lower crude oil prices also means country such as Malaysia has no choice but to cut the fuel prices accordingly after the ruling government hiked it by almost 41 percent not many months ago. So here’s the good news – petrol and diesel will be 15 sen cheaper per liter from Tuesday onwards. The pump prices of RON97 petrol will be RM2 a liter from RM2.15 while the retail price of RON92 petrol and diesel is RM1.90 a liter. Of course don’t expect the prices of other goods such as foods to be reduced accordingly because it would be an uphill task to get the whole supply-demand chain to pass down the benefits to the consumers. Hmm, is PM-in-waiting Najib plans to call for a snap election soon?

Other Articles That May Interest You …

• Wild Swing to continue as long as the Worse is Not in Sight
• It’s all about Stimulating the Right Way on the Right Part
• Hooray! Another Fuel Reduction but it’s a Little Too Late
• Forget about oil prices, it’s the Inflation you should worry

Saturday, November 15, 2008

Wild Swing to continue as long as the Worse is Not in Sight

By now you should know why stimulus package or rescue plan is not the magic bullet that could solve any economic problems created by greedy top management. I’ve wrote four basic “for dummy” initiatives that a country could take in the event of or about to enter a recession. Announcing or launching stimulus or rather rescue plan involving billions or trillions of dollars is easy. You can even ask your grandma to announce it instead of Treasury Secretary Henry Paulson or Fed Chairman Ben Bernanke or President Bush for that matter. The best part was you don’t have to justify the figures and nobody asks how the U.S. economic experts arrived at the $700 billion bailout figure. Probably it was just a figure plucked from the sky, who knows.

If you’re a certified project manager in your own field you would understand that the success of a project depends very much on planning, project management and execution. That was why experienced project managers are in great demand. Well, this stimulus package announced by U.S. and later spread like wildfire to the rest of the world from European Union to Malaysia can be equate to a secured project. Now what you need to do is to have an experienced project manager to ensure the $700 billion taxpayer monies are spent wisely to achieve the objectives. You’re bound to face obstacles and probably discover new problems or challenges along the way. Just like a project over-run, stimulus package may need extra injections if the problem(s) was more serious (or locked inside closet on purpose) than first thought.

U.S. Treasury has pumped in more than $300 billion last month into 40 financial institutions including the risky American International Group Inc. (NYSE: AIG, stock) but it appears nothing has improves. Sadly ordinary people (inclusive of investors) are still pessimistic and wonder if the plan was working. At the moment only the banks were given the privilege to maul the meat while others were made to queue (and it’s getting longer). Even with Treasury latest plan not to buy toxic assets of banks the stock markets were not impressed as the writing is already on the wall that U.S. problems could only be solved with trillion(s) of dollars of rescue. Now the giant, Citigroup Inc. is speculated to be the next company to drop a bombshell. Citigroup’s stock has lost more than 60 percent of its value this year alone and the staffs’ morale is spectacularly low with 40,000 jobs confirmed to be cut with another 9,000 jobs to be axed at the next batch. If things do not improve, Citigroup planned to cut additional 88,000 jobs by end of 2009 to reduce the employee force to 264,000 from 352,000.

We’re now seeing wild swing on the Wall Street's DJIA almost on daily basiswith three-digit gains or losses. Ready or not such wild party is expected to continue. Besides futures traders another group of people who are simply delighted with this newly found jewel is swing traders. Unlike the dot-com bubble’s burst that only affected mostly technology stocks, the current situation is worse simply because it involves the heartbeat of all economies – the financial sectors. So a fast recovery is out of the question, not to mention the slow pace of “actions” from U.S. and how clueless some countries are in tackling the issue. The effect of current crisis is taking its toll on technology stocks now. Sun Microsystems Inc. couldn’t take the heat anymore and is set to axe 5,000 to 6,000 which represent 15 to 18 percent of its workforce in order to save $700 to $800 million annually. Instead of struggling maybe Sun should just put the “For Sale” sign and let either Hewlett-Packard Co., IBM Corp., Fujitsu Ltd., or even EMC Corp to take it over. But it was Intel that slashed its fourth quarter outlook by a whopping $1 billion that set the ball-rolling, flagging its technology stocks turn to be slaughtered. Things need to get worse before it gets better.

Other Articles That May Interest You …

• Economic Uncertainties breed Denial Syndrome?
• It’s all about Stimulating the Right Way on the Right Part
• Let’s Close the Global Stock Markets, shall we?
• Panic again, $700 billion is insufficient to treat disease

Thursday, November 13, 2008

Economic Uncertainties breed Denial Syndrome?

Readers who thought that I was being negative with the so-called RM7 billion stimulus plan announced by de-facto PM Najib recently obviously do not have a clue about the global stock markets mechanism. These readers are still hiding behind the closet and preferred to adopt the “hear no evil, see no evil” attitude. And who can blame me for being pessimistic that our hard-earned money (you don’t think Najib is spending his own money, do you?) will be spent wisely and not ended up inside someone’s pocket considering thatcronyism, corruption and nepotism are still very much alive else why even these readers’ hero, Mahathir, had to voice his concern over excessive money politics? And you don’t think the stocks would recover immediately with this RM7 billion, do you?

Malaysia’s biggest lender, Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) reported a 22 percent decline in quarterly profit while the country’s largest fixed-line phone operator, Telekom Malaysia Berhad (KLSE: TM, stock-code 4863), made a net loss of RM165.8 million in the third quarter ended Sept 2008. You can blame it on foreign exchange loss of RM195.7 million but losses are still losses. Merrill Lynch immediately cut TM’s rating from “neutral” to “under-perform” and a lower target stock price of RM2.95 from RM3.20. TM’s current stock price of RM2.79 a share is dirt cheap but it’s still not attractive enough, at least to me. Those readers mentioned above should spend their monies supporting such GLCs stocks, no? As much as these readers hate StockTube, they still come back to pay a visit (weird). *Beware! This is another StockTube’s SEO experiment *grin*.

The fact is the knife is still falling and you’re a fool trying to catch it. Former great dictator Mahathir had tried that (supporting local stocks and currency) during 1997-1998 Asia Crisis but failed miserably to the extend that he has to beg the rich to pawn their jewelry overseas and bring back the money to the country in order to replenish the treasury. He also begged average-Joe to donate their jewelry to help the country’s economy but of course nobody gave a hoot about it. Where were you during that time? I’ve mentioned the current quarter’s earnings will be the yardstick for the rest of the year’s stock market direction. And I’ve also mentioned you can short the Ringgit all you want because chances are the currency will goes down the drain against the dollar.

You still want to know more? Well how about this. This year’s good time was the result of last year’s economy so you should know what to expect next year. Am I spreading all the negative news for the fun of it? The truth is I’m enjoying myself to the fullest with the current fears on the trading floor, not to mention my delight in seeing people trying to catch the falling knife and to chase the stocks whenever the stock index jumped during very short-term technical rebound – with the exception of the swing traders, of course. I hope I was wrong and the recession will not reach our shores because the sight of unemployment, retrenchment, broken marriages, flourishing of Mat Rempits etc is both dreadful and cruel. But we have toprepare ourselves mentally to accept the worst moment possible and not hiding under denial syndrome.

Do you still want to have another yardstick of how bad the economy is heading?Monitor the price of crude oil. And if the OPEC is scratching their heads, who are you to deny the current economy situation? Get a life StockTube! What can you gain from being so negative? Again, it was you who have negative mentality in the first place to think that I’m negative because I’m actually accepting the reality and swim along with it. In doing so, I’m taking my money off the table today onAAPL Nov 105 Put Option (for being negative about the stock market *grin*) because the 300-points plunge in Dow Jones is enough for the day. Nobody knows if the technical rebound is around the corner so I’m not greedy. At this moment (of writing) even the cash-rich Apple Inc. (Nasdaq: AAPL, stock) is having difficulty keeping its nose above $93 with $90 being the immediate support level.

Other Articles That May Interest You …

• It’s all about Stimulating the Right Way on the Right Part
• It Ain’t Over Yet – China and Unemployment are Next
• Stimulus Plans, to be spent Wisely or ended up Elsewhere?
• Time is Tough but don’t be Silly and Commit Suicide
• Arrogance, Greed & Corruption – Will We Ever Learn?
• Currency Traders prepare to dump Malaysia Ringgit
• External and internal factors point to gloomy economy

Monday, November 10, 2008

It’s all about Stimulating the Right Way on the Right Part

China has announced 4 trillion yuan or $586 billion stimulus package (does it have a choice?) - the largest so far to prevent a real disaster from wiping out all the wealth and prosperity built over the decades. That was a lot of money and immediately investors cheer the plan to cushion the world’s fastest growing economy from a sudden collapse (well, it can happen). On surface the massive dollars will be used in domestic spending especially on roads, railways, airports, health & education, low cost housing, tax deduction and infrastructure. Well, that’s the only way to boost economy during such trying time. In fact there’re four basic things a nation can do to prolong its survivability.

First you have to excite the domestic economy with similar stimulus package and the amount has to be huge enough to generate the “oooh” and “aaah” amongst investment community. This includes bailout or rescue plan, whatever you wish to call it. This is also the most controversial because it may involve building the unnecessary just to create the artificial demands. Political cronies love this method. Second, you have no other choice but to cut interest rate continuously even if it means rock bottom zero percent (this can happen if the situation desire so). Third, it’s time for you to put your marketing skills to test – convince “main street” people and local companies to spend like mad and if they don’t threaten them with imprisonment or execution the mafia way *grin*. Fourth, cross your finger and pray that external factors do not wreck havoc your plan to revitalize the economy. There’re of course other methods but let’s not bore us to death, shall we?

However stimulus package, no matter how much in dollars and cents, is not the magic bullet by itself and you can’t expect everything to be solved by just an announcement. You need to convince the investors how you plan to use the money, not to mention your capability to execute and see it through. I just hope this AIG troubled-kid’s problem will goes away. The U.S. government is toying with the idea of another $40 billion injection bringing the total doses for American International Group Inc.’s (NYSE: AIG, stock) to a whopping $150 billion. This will erase $40 billion from the $700 billion bailout package pool. The government simply cannot afford to see another bankruptcy lest it wants to see another round of stock markets crashes. But what if the AIG’s management dug a “hole” too deep for any rescue attempt?

Nortel announced it’s axing another 1,300 jobs while DHL said it would cut 9,500 jobs and close all of its express service centers in U.S. on top of the 4,500 job cuts announced recently. Even Singapore’s DBS Holdings is set to retrench 900 staffs despite earning S$402 million in net profits for the quarter ended September. No wonder some of Singapore’s female graduates were reported to offer theirunderwear and virginity for sale to the highest bidder. Fannie Mae reported another staggering $29 billion loss in 3Q while U.S. second largest electronics retailer, Circuit City Stores Inc., filed for bankruptcy protection under Chapter 11 to hold off its creditors such as Hewlett-Packard, Sony, Samsung, Toshiba, Lenovo, Eastman Kodak and others.

Heck, even Warren Buffett’s Berkshire Hathaway's (NYSE: BRK.A, stock) third-quarter profit fell 77 percent, the fourth straight quarterly decline. It must hurt the billionaire very much when the net income declined to $1.06 billion from $4.55 billion a year ago. But then money is not the top agenda for Warren as his latest toy is as economic adviser to President-elect Barack Obama.