GOOD NEWS

USA reported yesterday all economic indicators is positive, or rather, growing at the right directions, hence, the Dow Jones Industrial Average Index dropped about 200 points, or 1%.  This is in anticipation of the FED going to raise its interest rate sooner than later. Finally some good news, for the economy, bad news for the stock market.  What do you mean?

BAD NEWS

It is rather bad news for Malaysia on 1MDB fiasco on corruption by the Federal Government, UMNO.  Inflation is another problem after the GST.  Not to mentioned Iskandar properties glut.  Not to mentioned, crude oil price is down about 50%, Petronas already announced, there will be less dividend for the government this year, couple with losses by Malaysia largest plantation (palm oil) FGV, make a loss and Ringgit depreciated against USD about 20%.  Fitch rating is considering to downgrade Malaysia sovereign rating.

FGV has since dropped about RM9 billion since listing at around RM4.50 per share (market cap is about RM16billion).  Today, the market cap is RM7 billion only and its share price is standing at RM1.92.  Remember Poof!!!!!  That is how paper money works, it can goes up 4-5 fold in a year and it can "disappear in less than 24 hours".  We call it the Poof effect.

So, to sum up, Malaysia economy should not have any major good news for the economy anyway.  So, Bad News is Good news?  Stock market should goes up right?  Nope, down anyway.

One consolation from all these bad news, BNM not gonna increase interest rate right? 

DEFENSIVE STOCKS 

Please accumulate the following DEFENSIVE STOCKS in priority order, DIGI, PBB, Maybank, Gamuda & Genting Plantations.  Suprisingly this is the selection from a Fund Manager, which is pretty similar to the one I posted on www.sosfinancialplanning.blogspot.com last year.

For those who likes DEFENSIVE STOCKS, time to accumulate.  Out of all the 5 selected stocks, I prefer not to have Maybank because we know GLCs sometimes become a scapegoat for national duty.  So, for me, I will buy and sell Maybank more often than others.  Not sure Maybank need to do any national duty for 1MDB.  This is the only downside about GLC and of course, the management are not as strong as the rest.  So, I will replace it for TNB? Na, still a GLC, although the biz model is fine.  

GROWTH STOCKS

Perhaps next time, when I have an idea.  So make sure, these stocks are at least 50% of your portfolio.  The rest, go for GROWTH STOCKS.  Example, Wellcal, Prestariang, Vitrox, OCK, Gadang, Padini.  These are SMALL CAP STOCKS, lately dropped like a rock because foreign players are selling.  But the biz remain uneffected.  Not sure I should include Datasonic.

UNIT TRUSTS SECRETS

Secrets that Fund Managers won't tell you.  They all admit, it is very difficult to sustain a long term annualised return of 20%.  Once the UT achieve that, you should switch to others, that should be the strategy.  Because logic tell us it is much more difficult than a new UT started with say 5% return for the next 5-10 years.

MY PERSONAL VIEW (based on today's environment)

Well, I will load 50% DEFENSIVE, 40% GROWTH & 10% MONEY MARKET (3.5%).  Growth stocks normally is less liquid and higher beta than DEFENSIVE STOCKS.

This is not a recommendation, but, just an idea.  Investment must always be INDEPENDENT, because ultimately the money is yours.  Do your own research, if lack of time, let professional run for you.

PRIVATE MANAGE ACCOUNT

Some do not have good experience with PMA managed by professionals.  The trick is to know your strategy, like UTs, if they achieve more than 20%, reduced it.  Load again later, because, I personally have not seen many that attain more than 20% for 10 years or more.  

LACK OF IDEAS

Go to www.sosfinancialpanning.blogspot.com   Some of the ideas can save many thousands of ringgit.  

Lately, I found a great Term Life protection paying premium only RM1,385 for coverage of RM500,000 (up to 70 years old).  Solve half of my protection problems and my friends as well.