We previously shared the following stocks as our favourite :


ARBB
AGESON
RCE Capital
DKSH
Riverstone Holdings
GCB
MFCB

Now, you may say by entering this 8 counters, it has fallen also since the time we shared out article. Indeed, however, similarly the valuation you entered is way cheaper than its FV am I right? So if you should hold it for 12 months, would it still concern you? That is what you should ask yourself.

We are looking at these few more :
Scicom
RHB Bank
Pentamaster
Public Bank
QL Resources

Now if you compare the major dips from the peak to the bottom in 1997 - (1250 to 500), 2008 - (1400 to 800), & today 2020 - (1900 to 1219), it would appear there may be still some down side. On average each crisis, it falls close to or more than 50% from the peak of the market. Also you will notice the timeframe of recovery is between 6 months - 12 months from the bottom. 2008 was more of a V shape rebound compared to U shape rebound for 1997. Would 2020 crisis be a V or U shaped? In my view, it would be a U-shaped if the vaccine is not created sooner than later. After all, since the explosion of epidemic in Wuhan, China till today, it has been almost 4 months.


The important difference is this, so far there is no mass layoff yet and no street protest or unrest for Malaysia. Also, BNM is still solid and fundamentally sound compared to back in 1997. However, all this will get out of control if the new Government do not get their actions together to formulate a proper way out for the country. Remember, there is still shortfall from GST, shortfall from oil plunge income for the national coffers, increasing budget deficit, high debt outstanding from 1MDB amongst the many other issues we have yet to resolve. With limited fiscal room for the Government to manoeuvre, there is a risk our MGS will become less attractive for foreign funds especially with this global sell down, foreign funds as more choice than before where the global markets having lofty valuations compared to Malaysia.


2. Statesmanship to Lead the Country out of Turmoil :

One of the most notable effort by our country leaders during the 1997 crisis was to implement capital control to help us out. Shortly in 1 year, Malaysia was back on growth track. Till today, many dispute this decision by our Govt then. It wasn't until much later that international community praised Malaysia government in rejecting IMF money by pegging Ringgit against USD.

The fact of that matter is today, we do not have the leader of comparable calibre to lead us, be it in terms of government policy or economic policy. The backdoor government only cares about their own position and power and in the midst of the Covid-19 played a terrible political play for their own personal interest leading to the spike in cases due to lapse in supervision and control measures implement.

Many things could have been prevented and many rescue plans could have been formulated if the government was still operating, not a window of 2 week coupled with further effort spent on politicking, trade bartering and on boarding for new / old but incompetent ministers. This is my biggest concern as I believe the international community will find a resolution to the virus but the aftermath will have long lasting effect on the country whereby the economy will take a long time to rebound due to poor leadership.

Recession is finally here? Or is it an Opportunity of A Lifetime?


The Covid-19 news cycle seems be on 24 hours a day and that seems to be the most information i received every day in my WhatsApp or telegram group. In fact, it would seem to be the most dominating headline of our every day life. The question in my mind was why now? Why finally after so many long months only we are at this point? Was it ignorance, optimism, or wilful blindness?

But enough of Covid-19, I am sure most are sick and tired of this. Let me focus on what matters, how to make the most of the current situation. When Malaysia was a tiger economy in the 1990s until end of the millennium, the crisis hit us hard due to the Asian financial crisis. It took Southeast Asia economy almost 20 years to be on a sound footing.



Many have said, finally, this is it, recession. The recession they have predicted finally arrived. Some predicted it to arrive since 2013. I remember a very big fund listed on our share market was one of those. Well, surely a broken clock may be right once a day. The question is not about being right but if you are right, what are you going to do about it? This is the same thing I ask myself every single night before going to bed (second last thing is observing global markets indicators). Are we willing to pull the trigger?


The reason why heroes are so well loved because there are few and hard to come by. I believe once this whole entire episode is over, there will be only a handful that people will sing about. Specifically about their success in making the most of this frightening times. So let me share few simple viewpoints and of course some of our actions taken in this climate. I do not believe we will be right but if anything, history have taught us well and we should always head back to history to guide us especially in the times of uncertainty and great crisis. I believe this is a major crisis and especially so unexpected to the start of a new decade.

1. What rises will fall & similarly what has fallen will rise :

With the triple whammy of political instability, oil plunge and Covid-19, the perfect storm has come to the shores of Malaysia. None can escape unscathed. Now when the market is on a bull run, we think it will keep going up. Ex: At 15x PE, analysts say its cheap comparing to global peers which valuations stands at 25x. Today, those so-called cheap laggard counters are actually down to a valuation of only 4-6x PE valuation. True it is unfair to generalise as it is a downtrodden market affected even the best investors in the world. However this is a reflection of the market sentiment and investor confidence.

hi guys, today Arb had a technical rebound. Will have another rebound up once QR out.By the way, Most importantly is that the economic still unclear and covid still a big threat to the economic. Play safe.

oct is a good month, stay tune

As you can tell, despite the recent crash in prices, Apple’s P/E is still above its historical average — because it was overpriced to begin with — and you may prefer to wait some more to see if Apple’s stock price corrects further.

5. Investing bit by bit
A black swan event in COVID-19 has sent the market spiralling downwards. Even if I invest with a margin of safety, the market could still be southward bound. In other words, I catch a falling knife. But it’s also hubristic to think I can anticipate when the market has bottomed.

So don’t invest all your capital at one go; deploy your capital in tranches. I’ll illustrate this point here:

Let’s say I have S$10,000 to invest and choose to allocate my capital equally among 10 stocks. That would mean I have $1,000 set aside for a single stock.

We can first invest 40% of our capital ($400) in a stock when it trades 10% below its intrinsic value. If the stock price falls another 10%, we deploy half of our remaining capital ($300). If the stock price falls another 10%, we deploy the rest of our remaining capital ($300).

However, unlike SGX-listed dividend stocks which can trade below S$1 per share, some U.S. companies like Amazon and Alphabet trade in excess of US$1,000 per share. In this case, given our limited capital, there’s no way we can deploy our investment using all three tranches, so you may have to make do with one or two.

Using lower cost brokerages like Interactive Brokers, Saxo Markets or FSMOne can also help to reduce fees when you’re deploying multiple tranches. For example, Saxo Markets charges a minimum of US$4 per trade for U.S. stocks (compared to US$20 for brokerages in Singapore), and FSMOne charges a minimum of S$10 per trade for Singapore stocks (compared to S$25 normally). You can compare the fees among brokerages when investing in Singapore, Malaysia, and the U.S. here.

The fifth perspective
It’s understandable why we are fearful in these uncertain times, but it’s also during these moments where the best opportunities arise. As long as you do your due diligence and pick high-quality companies to invest in during this market crash, you’ll be able to ride out the volatility and set your portfolio up for sizeable gains down the road.

In the immortal words of Warren Buffett:

‘Be fearful when others are greedy and greedy when others are fearful.’

5 things to consider before you invest during this COVID-19 crash

The coronavirus has plunged the stock market over the past weeks. Stock valuations are nearing lows last seen since the Global Financial Crisis. While others panic, the successful investor would seize onto this great opportunity to buy great businesses at a cheap price.

First, we recognise that great businesses are resilient and will start reaping handsome profits once the economic downturn ceases. So identify high-quality businesses to invest in, never mind the prevailing fearful economic mood. But before investing during this COVID-19 crash, here are five things an investor should consider.

Note: This is neither a recommendation to purchase or sell any of the shares mentioned in this article, and the information here is for educational purposes and/or for study or research only.

1. Income vs growth
An important consideration before investing in the stock market is to decide whether you are investing for growth or income.

If you are investing for income, a number of Singapore stocks and REITs pay out pretty decent dividends. For example, if you invest in Netlink NBN Trust or Ascendas REIT, you can expect to reap an annual dividend yield of around 5.5% and 6.3% respectively (as of 20 March 2020). In fact, the recent comedown in Singapore REITs have seen their average yields rise as high as 10.5%. And unlike U.S. stocks, the dividends you receive from investing in SGX-listed stocks are tax free.

However, it is important to remember that a high dividend yield stock doesn’t necessarily mean it’s a good business. The plunging share price of a stock due to poor fundamentals can cause its dividend yield to look deceptively high.

If you are investing for growth, U.S. stocks like Amazon, Alphabet, and Facebook are fundamentally good businesses that would be resilient enough to bounce back even stronger from the COVID-19 crisis. Their room for growth is huge given their global reach and the economic moats they have established for themselves.

2. Home or foreign stocks
Another aspect you need to consider is your comfort level towards investing in overseas markets. While investing in your home market gives one the added advantage of localised knowledge, investing in foreign markets like the U.S. gives you huge growth opportunities that may not be possible in your home market.

For example, if you are going for capital gains rather than dividends, investing in U.S. stocks like Amazon gives one a lot more potential upside. The potential capital upside of Singapore companies is limited given the small domestic consumer base which they predominantly serve.

It’s fair enough to say that the choice between investing in the local and overseas market need not be a binary one, and you can always invest in both.

3. Capital allocation
If you prefer a dividend-leaning portfolio as opposed to a growth-oriented one, you could allocate 70% of your capital to dividend stocks and the rest to growth. The reverse is true if you prefer a growth-oriented portfolio. Keep in mind that which way you lean depends on your personal financial situation, investment goals, and risk profile.

You’d also want to diversify your portfolio across 10 stocks. In the book Modern Portfolio Theory and Investment Analysis, authors Edwin J. Elton and Martin J. Gruber concluded that portfolio volatility is reduced by 70% by owning six stocks in your portfolio, by 76% with 10 stocks, and by 81% with 20 stocks.

4. Stock valuation
Assuming you have done your due diligence and identified some great companies to invest in, the question is: When do you go in?

Remember, a low stock price does not always mean that the stock is undervalued. To find out, we need to have a look at a stock’s valuation. One way of valuing a stock is to compare its price-to-earnings (P/E) ratio with its long-term historical average. It reflects how the market, as a collective, prices the stock with regards to its earnings.

For example, Apple’s historical average P/E over the last 10 years is 15.8. (Based on Apple’s latest annual earnings per share of US$12.66, that would give Apple an ‘intrinsic value’ of US$200.03.) As a value investor, we prefer to invest in Apple if it trades below its historical average; and especially when there’s a significant margin of safety. In Apple’s case, that would be near one standard deviation below the historical P/E average (12.3).

all bull and bear are difference,but bull always came after serious oversold.