Posted by Pak Lah > 2014-03-19 13:12 | Report Abuse

Ve Nom Vee. To successful in life, ones must make full use of tools made available to them. As a "crude" example, you can hit a nail with your bare hand. To achieve the same results, you can use a hammer (a tool) to complete the job in a faster and efficient way. Likewise, you must know how to ride on financial tool so that your investment objective can be attained in the fastest way possible.

Posted by Lai Yin Keat > 2014-03-19 13:47 | Report Abuse

For a normal Joe, driving an F1 car is considered dangerous and potentially fatal. To the professional, it is just another day in the office

Posted by mogul88 > 2014-03-19 15:37 | Report Abuse

Noble might the intention be, imparting financial advise that involves leveraging might do equal harm to readers... newbies need to read with pinch of salt.. just saying

Posted by Iching88 > 2014-03-19 16:22 | Report Abuse

as always,take your own risk mah....

Posted by Koon Yew Yin > 2014-03-19 16:27 | Report Abuse

Pah Lah uses the right analogy of hitting a nail with the right tool. If you do not know how to use the hammer, you must learn how to use it. You cannot continue to use your bare hand to hit the nail. To be save use only half of the allowable margin and buy shares that have profit growth more than 4.6% per year which should be easy to find.

haikeyila, obviously you did not buy JT at Rm 2.10 otherwise you would laughing all the way to your bank. Perhaps you should change your attitude so that you can start to make money from the stock market. Being a skeptic, a person habitually doubts generally accepted beliefs, will only make you poor. Open your eyes and be willing to learn.

Posted by haikeyila > 2014-03-19 16:38 | Report Abuse

No i did not pick up JT, but I did grab FResources and Wilmar which have also gone up substantially (missed out on Olam). Now imagine if i were to write about how much a 'superinvestor' I am over and over again, calling those who disagree 'poor', 'fools', etc.

Posted by axeaxe > 2014-03-19 17:26 | Report Abuse

Mr koon when will you have talk in kl area? Hope to attend your talk one day.

Posted by lucifer > 2014-03-19 17:39 | Report Abuse

haikeyila show Mr Koon your total earning from the market and prove him wrong, your attitude didn't make you poor or any annual reports that have your name in the substantial shareholders.

Posted by lucifer > 2014-03-19 17:45 | Report Abuse

Margin Financing needs a lot of self-discipline and never max out your margin of finance (mof), else kena margin call and the bank will be calling you up asking you to top-up or force sell your shares. This is not something for beginners that lack of self control.

Posted by haikeyila > 2014-03-19 17:47 | Report Abuse

get rid of this bolehland mentality of accepting what people shove down your throat without questioning, this 'idol worship' and threatening people to shut up when they disagree. is it any wonder that the whole world is laughing at us?

Posted by optimus8 > 2014-03-19 17:49 | Report Abuse

omg, haikeyila. u r damn right. bolehpeople just cut n paste peoples opinion and take it as theirs! so glad I found someone agreed with me!!


this is fantastic >>>get rid of this bolehland mentality of accepting what people shove down your throat without questioning, this 'idol worship' and threatening people to shut up when they disagree. is it any wonder that the whole world is laughing at us?

10x like

Posted by nsk82 > 2014-03-19 18:22 | Report Abuse

let time be the evidence, 3 years from now. i have faith in JTiasa

then again, there are plenty of choices around to earn money. :p

Posted by Haris Phang > 2014-03-19 18:51 | Report Abuse

Ve Nom Vee, thank you for cautioning. Agree that need to know how to use margin financing wisely. And need to know how much risk that we can take financially and psychologically. Would not want to have sleepless night and check the stock price every morning frantically.

Posted by optimus8 > 2014-03-19 18:57 | Report Abuse

I agreed with mr koon. leveraging is very powerful. lets compare walking with both legs (safer but slow) or riding on Harley (faster but more risk)

Posted by Andy Ng > 2014-03-19 20:12 | Report Abuse

I am a very particle person and a firm believer of current earning. Until recently where I attend a course on trading in US Market, I realized that majority of US Market valuation is based on Growth rather than current earning. At first it is hard to accept, after I do a self review on my past investment and reading Mr Koon Blog. I am slowly changing my approach. Hope it will improve my Investment Return.

I do used share margin to buy stocks. I believe it have different impact on different type of character. I can only share my experience. Beginning of 2013, when I know the election factor is causing uncertainty. I systematically reduce my share margin to zero before Election. Even after election over, the stocks shoot up. I did not regret as I know what am I doing. After small crisis at end of 2013, I try to buy stocks using share margin slowly. Share Margin is like water, it can float the boat, at the same time can sink the boat. Its all up to you.

Finally, I Thanks Mr Koon for selfless sharing on his Investment.

Posted by Ooi Teik Bee > 2014-03-19 20:34 |

Post removed.Why?

Posted by Rambotan > 2014-03-19 20:35 |

Post removed.Why?

Posted by Anwar120 > 2014-03-19 21:32 | Report Abuse

What is wrong with you Rambotan? OTB gave his honest views, what did you ever give beside insulting him.

Posted by Ricky Kiat > 2014-03-19 22:01 | Report Abuse

many 30 top shareholder of listed company are using margin financing .Included cold eye (Mr Fong Si ling).

Posted by davidkkw79 > 2014-03-19 22:04 | Report Abuse

coldeye said don't borrow money to invest in stock market !

Posted by Ricky Kiat > 2014-03-19 22:05 | Report Abuse

it is up to u how to learn & master margin finance as use loan from bank to expand your business.

Posted by Ricky Kiat > 2014-03-19 22:22 | Report Abuse

cold eye are not recommend newbie to borrow money buy share, but he is using margin finance,u can check Gtronic,Huayang,ECS,Prtasco,Plenitu,tambun Annual report.

RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR
FONG SILING (CEB)

Posted by Ricky Kiat > 2014-03-19 22:35 | Report Abuse

uncle Koon are not asking u to use margin finance but use it when u are really need as u want to expand your business.Keep in mind, buy share is buy business(dont use big hat if u head are small)

Posted by optimus8 > 2014-03-19 22:36 | Report Abuse

no wonder coldeye not as rich as uncle koon.

Posted by sunztzhe > 2014-03-19 22:53 | Report Abuse

Agree with the business thinking mindset of Mr Koon on professional evaluation of COST versus FUTURE BENEFITS. There will be RISKS no doubt in every stock investment but the risks can be minimized and managed very well by following Mr Koons Investment principles of seeking out companies that yield increasing PROFITS in the future years and making the decision now to Invest in these companies.

Posted by Victor Tai Yong Sheng > 2014-03-20 09:21 | Report Abuse

I hold on to my priciple, when investing never ever play with margin and contra. I prefer to be safe than sorry, just my 2 cents.

Posted by davidkkw79 > 2014-03-20 09:23 | Report Abuse

Don't forget market crash could be just coming in anytime, don't get burn by borrowing money !

Posted by KinSoon Kok > 2014-03-20 09:26 | Report Abuse

Does it works like OD. If it is not utilised no interest being charged? Any commitment fees?

Posted by KinSoon Kok > 2014-03-20 09:28 | Report Abuse

What is the difference of nominee a/c & conventional trading a/c?

Posted by susuan > 2014-03-20 09:31 | Report Abuse

I agree with Victor Tai Yong Sheng!

Posted by Koon Yew Yin > 2014-03-20 10:31 | Report Abuse

Fear is the biggest obstacle to success. In fact most professional fund managers and highly educated professional cannot out perform the market index because they are trained to look out for possible or imaginary danger. When Businessmen look at a proposal, first they consider how much profit can they make. That is why Tan Sri Yeoh Tiong Lay of YTL and Tan Sri Lim Goh Tong of Genting who do not have tertiary education, are so successful. Their companies employs hundreds of professionals to work for them.

Posted by Vam Pire > 2014-03-20 11:30 | Report Abuse

Hi uncle Koon, do u have any other good stocks to recommend? i will have huge fund available end of this month/early april.....would you mind to share here (so everybody can earn :) or i should write you personal email ?

Posted by Koon Yew Yin > 2014-03-20 12:00 | Report Abuse

As I said many a time that to be able to make more money than ordinary investors, you must buy plantation shares as soon as read my recent posting on "Palm Oil Price Trend". The average cpo price for last year was about Rm 2,500 and all the experts say that it will be Rm 3,000 by year end. It is currently at Rm 2,850 per ton. Assuming that the average price for this year is Rm 2.850, the additional profit will be Rm 600 per ton and this additional profit requires no additional effort, just pure profit for doing nothing.

You don't have to be a genius to know what shares to buy to be sure of making profit. Moreover, due to the long depressed cpo price, most plantation shares are also being depressed.

80% of my investment are on planation shares and I am very sure plantation companies will make more profit this year than last year and most of them will continue to make increasing more profit next year.

Posted by nsk82 > 2014-03-20 12:14 | Report Abuse

i think it is fair to say JTiasa base on its young tree profile. Thus, regardless of the CPO price (unless it fall to RM1500), JTiasa future earnings is somewhat guarantee.

I concur with the necessity to think like businessman when comes to investing in business (stock market), and not handicapped by fear

Posted by Koon Yew Yin > 2014-03-20 12:30 | Report Abuse

Sorry I made a small mistake in my above comment . The average CPO price for last year was Rm 2,250 per ton and not Rm 2,500 per ton.

Posted by Fung Chee Fui > 2014-03-20 16:46 | Report Abuse

Investing is an art, not science. There's no right or wrong for using margin financing in stocks investing. The biggest risk is not on the margin financing itself, but it is on not knowing what yourself is doing.

Mr Koon offers his generosity by sharing his experience. We -- the readers -- should not only read, but also think about how his experience would help us.

Posted by Ricky Kiat > 2014-03-20 22:06 | Report Abuse

nominee a/c = margin account

Posted by talkking > 2014-03-20 22:34 | Report Abuse

how many here really understand margin finance and have this account....let me guess..at least 80% dunno but pretend to know

Posted by kingleecha > 2014-03-20 23:09 | Report Abuse

High Risk, High Return? Perhaps high debt. Margin account is for the people who have confidence in earning money in stock. Let say MY economy down, you think either your profit or lost maximized?

Rethink.

Posted by kingleecha > 2014-03-20 23:12 | Report Abuse

I don't think you should introduced the margin to them, as they just began to invest, you will harm their incomes.

Posted by talkking > 2014-03-20 23:16 | Report Abuse

immediately come kingleecha who pretending to be expert...first sentence oredi know u pretend

High Risk, High Return? Perhaps high debt.

Posted by fusing79 > 2014-03-21 09:34 | Report Abuse

Can someone teach me what is margin account? Is it borrowing money? Do we need to pay installment monthly? Is the interest only 4.6% only?

Posted by stockcrazy > 2014-03-21 17:36 | Report Abuse

Dear Mr. Koon,

Do you think the palm oil windfall profit tax (WPT)will effect the profit of the planter?


For peninsula-based oil palm plantation players, a 15% WPT is imposed when the CPO price threshold reaches RM2,500 per tonne and above.

For oil palm planters in Sabah and Sarawak, a 7.5% WPT is imposed when the CPO price hits RM3,000 per tonne and above.

Posted by Alphabeta > 2014-03-21 21:12 | Report Abuse

Dear fusing79, I will try my best to explain the share margin financing arrangement.

Bursa rules stated clearly that broker must ensure client share margin of financing ratio (“SMF”) to be equal or higher than 150% at all time.

SMF ratio = Total Equities/Total loans outstanding

Total equities = discounted shares collateral value.
You to scout around for Broker that gives you better value for your shares collateral.

Total loans outstanding = outstanding purchases contracts, interest charges, debit notes and rollover fees less cash deposit less credit notes less credit interest from the cash deposit (if any).

When your SMF ratio falls below 150%, a margin call will be initiated by the broker and you will be given 3 trading days to rectify the SMF ratio.

Failing which the broker will take step to sell the shares held as collateral in the margin account. You can either top up your SMF with cash or additional ‘acceptable’ shares collateral to bring the SMF ratio above 150%.

Please take note that “acceptable share collateral” means brokers might not accept certain stock due to;
a> broker has too many of the particular stock, or
b> internal policies prohibit giving value to a particular stock as the listed company could be a major shareholder of the broker, or
c> the particular stock is listed under PN4 or PN17, or
d> it could be also due to the broker’s policy not to give value to derivatives (for example “warrants”).

For simplicity, assuming you open an SMF account with a broker and place a cash deposit of RM 100,000. You purchase 250,000 shares of company A at RM 1 per share. If the broker only accept 80% of the collateral market value, then the total equities will be 250,000 shares x RM 1.00 x 80% = RM 200,000.
Total loans outstanding will be RM 150,000 (RM 250,000 – RM 100,000).
SMF ratio = RM 200,000/RM 150,000 = 133%

Result = SMF Ratio is below 150%, therefore margin call is issued.

You will have 3 market days to rectify your position.

Posted by talkking > 2014-03-21 21:44 | Report Abuse

Another pretender alphabeta. You google well but info still wrong...so many pretenders here. Mr Koon using margin financing cater to ftse top 100 by market cap in jtiasa. Different mof product have different mfl,mof,mc and fs. Mr Koon can testify accuracy of my statemement.

anymore pretender...come come

Posted by Alphabeta > 2014-03-21 22:45 | Report Abuse

Dear talkking, i have said upfront that i will try my best to explain the share margin financing. I have not used margin financing for quite a while, Bursa could have change the rules on the ratio requirement but the principle remain the same.

Since you are an expert in this area, why don't you share with us your practical experience in this area based on the latest development. I think fusing79 will appreciate your generosity.

Posted by talkking > 2014-03-21 23:25 | Report Abuse

not only ratio is wrong. there r sooo many wrong

"I have not used margin financing for quite a while"

OR NEVER USE MOF LOH!


"You to scout around for Broker that gives you better value for your shares collateral."

WRONG. ALL BANK INTEREST RATE PA SAME AND VARY AS PER YOUR FACILITY LIMIT LOH. BORROWING LIMIT FOR CASH IS 2X& QUOTED SHARES 1.5X. LATEST RATE FROM RHB BANK LOH!


"Total loans outstanding = outstanding purchases contracts, interest charges, debit notes and rollover fees less cash deposit less credit notes less credit interest from the cash deposit (if any)."

FORMULA VERY WRONG. ROLLOVER FEE IS ZERO PER QUARTER FOR FTSE TOP 100 INDEX. NO DEBIT NOTE AND INTEREST CHARGES AND THE LESS STUFFF!


"Please take note that “acceptable share collateral” means brokers might not accept certain stock due to;
a> broker has too many of the particular stock, or

WRONG. FOR FTSE TOP 100 MOF, PLEDGED SECURITIES MUST COMPRISE ONE OR MORE SECURITIES FROM TOP 100.

EXAMPLE, TO BORROW MONEY BUY JTIASA, YOU MUST PLEDGED MAYBANK OR THOSE IN TOP100 AS COLLATERAL LOH!

b> internal policies prohibit giving value to a particular stock as the listed company could be a major shareholder of the broker, or

WRONG. EVERYTHING BASED ON MOF PRODUCTS AND SECURITIES COMPOSITION.

c> the particular stock is listed under PN4 or PN17, or

NEVER USE MOF TO BUY LOUSY STOCK LOH!

d> it could be also due to the broker’s policy not to give value to derivatives (for example “warrants”)."

WRONG. CAN BUY LOAN STOCKS AND WARRANTS USING OTHER MOF PRODUCTS EXCEPT FTSE TOP100 LOH!!!!


"If the broker only accept 80% of the collateral market value, then the total equities will be 250,000 shares x RM 1.00 x 80% = RM 200,000.
Total loans outstanding will be RM 150,000 (RM 250,000 – RM 100,000).
SMF ratio = RM 200,000/RM 150,000 = 133%"

WHAT 80% MARKET VALUE!!! REFER BACK TO MOF PRODUCTS AND SECURITIES COMPOSITION LOH!!!

Posted by talkking > 2014-03-21 23:33 | Report Abuse

come come all "expert"...let me have fun

Posted by Alphabeta > 2014-03-22 09:03 | Report Abuse

Dear talking, thanks for your reply. Correct me if I am wrong, my understanding is that all brokers must adhere to the SMF ratio set by Bursa. The current ratio may not be 150%, the latest I know is 130%.

If any of their client account’s SMF ratio breached this due to deterioration of collateral value and failed to regularize within the stipulated time, the broker will face penalty from Bursa. Naturally, the brokers would like to play safe, work around the rule and at the same time not upsetting their clients by telling them I will discount 20% of your collateral market value.

WRONG. ALL BANK INTEREST RATE PA SAME AND VARY AS PER YOUR FACILITY LIMIT LOH. BORROWING LIMIT FOR CASH IS 2X& QUOTED SHARES 1.5X. LATEST RATE FROM RHB BANK LOH!

2X or 1.5X of quoted shares is the end result after they consider all the risk profile. It means the same thing, for example 1.5X means if you give blue chips as collateral. Without discounting of your share collateral, your SMF ratio is 167% (2.5/1.5). Most probably they will discount your blue chips by say 90% and arrived at SMF ratio of 150%.

If the current Bursa SMF ratio is 130%, then they will make margin call at 150% which is much earlier than the 130% set by Bursa. This is the margin of safety they give themselves should the market collapse.

"You to scout around for Broker that gives you better value for your shares collateral."

WRONG. ALL BANK INTEREST RATE PA SAME AND VARY AS PER YOUR FACILITY LIMIT LOH. BORROWING LIMIT FOR CASH IS 2X& QUOTED SHARES 1.5X. LATEST RATE FROM RHB BANK LOH!

I do not know whether you have check with other broker whether they can offer you same facility limit with the similar but less share collateral.


"Total loans outstanding = outstanding purchases contracts, interest charges, debit notes and rollover fees less cash deposit less credit notes less credit interest from the cash deposit (if any)."

FORMULA VERY WRONG. ROLLOVER FEE IS ZERO PER QUARTER FOR FTSE TOP 100 INDEX. NO DEBIT NOTE AND INTEREST CHARGES AND THE LESS STUFFF!

If you put in cash, they will pay you a nominal interest income. Maybe you are use to put in quoted shares as collateral.

"Please take note that “acceptable share collateral” means brokers might not accept certain stock due to;
a> broker has too many of the particular stock, or

Try to put in collateral that they don’t accept during margin call.

Posted by fusing79 > 2014-03-23 16:14 | Report Abuse

Thank you so much to Alphabeta, you have try to make me understand, of couse I still have some unclear points here as I am totally new. I think I should call the broker to check more.

Hi, talkking you giving nothings here but just making the conversation unhappy.
A peevish child is unhappy and makes others unhappy.

Please learn how to respect others. Thank you so much for your understand.