MARK MOBIUS STORY

Mark Mobius is a "bottom up" long term investor (i.e. with a horizon of 5-10 years).  And, he likes Emerging Markets.

I have read somewhere, he bought KSL about 5 years ago at say RM1.00 (3%) and today is about RM4.22. The first 3-4 years, the price of KSL hardly move, only lately it went up as high as RM4.70.  For this stock, it underperform for the first 3-4 years, but on the 5th year, it outperform many other stocks or the market index.  He is a bottom up investor, looking at the past profits, land banks, management competency, etc.  He saw value in this stock 5 years ago doing PE4-6x.  Today, with profits increased and market giving it a PE of 8x. So, if he put in RM1million, today if he sell, he will get RM4.22million.  

Of course, I am sure he has some lemons in his portfolio.  With his stock picking ability, say his success rate is good, he get 7 out of 10 are value stocks, he already outperform many others funds in the market.  Of course, we cannot use only ONE stock to represent his capability.  I can also use TTB, our local 'hero' on certain counters.  A good fund manager can only be identified with 10 years or more track record.

As at August 31, 2013, Franklin Templeton Investment's asset under management is USD922.2 billion.  They have 60 years of history.  The size of AUM speaks for itself.

At that point of investment, he do not expect his investment to double within one or two years.  He saw the value, but, the timing, not him or anybody can see it.  Don't let timing be our enemy.  Say, today, he saw another value stock in Bursa and is available (at decent size he wanted), you think he will wait until the right time to buy.  He saw the VALUE, again not the timing, why do he has to worry.  Let's just say for discussion sake,  he sees WELLCALL as a value stock, due to great margin, ROE, DY, capacity growth and great management, do you think he is effected if NYSE loss USD800 billion over the last one week? Btw, WELLCALL exports 80% of its products to USA.  

Assuming, the price drop another 30% over the next one year due to market correction or external environment (lack of confidence) while the fundamental of this company remains, do you think he will SELL or BUY more?  Time is at his side, he already see the VALUE, when is the VALUE realised he does not know. So, a rational investor should BUY more.

VIX

In short it is the investor fear indicator.  Lately, VIX S&P500 went up 40%, during this peirod, USD800 billion was wipe out from the NSYE market capitalisation

Talk about FEAR.  Or SENTIMENT.  Sentiment of a share market can change OVERNIGHT.  It has nothing got to do with fundamental, suddendly the majority of the investors turn from CONFIDENT to FEAR.  Then, they will dig up 10 indicators to show that the market is OVERVALUED and the FEAR is well justified.  Well justified, the market continue to drop, say another 10%.  More FEAR about the market.  FEAR feeds on FEAR.  So the FEAR factor grows.  Some indicators may be positive, but somehow interpreted as NEGATIVE.  So, what happen?  First of all, most investors already know that the financial market (EUROPE or USA) no longer represent their real economy.  It has his own life.  But when FEAR sets in, they will realign with the real market.

One of the way to overcome FEAR is to invest more during market downturn (20-30%).  Let me give you some FEAR statistics, private and public debt over GDP of USA (364%), Europe (400-450%), UK is higher than Europe, Japan (more than 600%) and most of these debts are not productive.  Over the last 5 years, trillions of injected into the systems via QEs, it has been proven it is not effective, what it brought back is confident (a kind of self deceptive 'perception') that the market has stablised.  Of course, when the whole world is doing QEs at the same time, we do not feel the adverse effects.  Let just say if USA goes on austerity drive and Europe goes on QEs drive, the whole landscape of both economy will change drastically.  Let us not waste so muct time debating over the "what if"

WHAT CURRENCY SHOULD YOU PUT YOUR WEALTH?

Not sure why, after asking around, where do billionaires kept their money (excess CASH) and in what currency, you may not be suprise that more then 50% of their wealth is in USD currency or some other international currency.  Ever wonder why?

Say, you can bring RM1 million overseas to UK, and do you think you can use the money?  Unfortunately, no one wants to change it for you into sterling or USD.  

So, this is not a myth, that Ringgit has no value outside Malaysia (other than SEA region).  Isn't it a FACT that ringgit is not internationally recognised?

So, say when you retire say with RM4 million, would you like to have all RM4 million in Ringgit.  Or would you rather have RM3.0million & USD700K.  What you can do is to invest say monthly USD2,000 for 15 years, or USD360k.  By the end year 15, you will get around USD700k (a 10% return or a guarantee of USD500k).  

Rationally, I will will choose RM3m + USD700k.  Do we remember in 1997, those who studying in USA will be sent home.  Ringgit Malaysia drop from USD1 to RM2.50 to RM4.50.  Later on, capital control was implemented in 1998 at RM3.80.  So, it is rational to keep some in internationally traded currency?  

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