The Star Global Malaysians Forum - Posted: 13 July 2006 at 6:29pm

Gentleman...watch out for NASDAQ - I predict that there will be some slight/major changes in yahoo, google and microsoft.

(All news gained into my possession are as a result of my (Nik Zafri) subscription ?I do not take any credit on any of item being displayed here. Please visit the-forbes.com ?Thank you)

COMPUTER HARDWARE AND SOFTWARE

Gates Stepping Out Of Microsoft
Forbes.com staff 06.15.06, 6:40 PM ET

Microsoft Chairman Bill Gates announced today that he will transition out of his role beginning in July 2008 and spend more time working for his foundation.

Currently, Gates works full time at Microsoft and part time at the Bill & Melinda Gates Foundation, which focuses on global health and poverty issues. Beginning two years from now, Gates said, he will work full time for the foundation and part time for Microsoft.

He announced the change two years in advance because "it gives us the time to make a strong transition and provides the full transparency we think is best."

Gates founded Microsoft in 1975 with Paul Allen. The company went public in 1986, and Gates served as chairman and CEO until 2000, when Steve Ballmer took over the position.

At the press conference at the company's Redmond, Wash., headquarters, Gates said he and Allen once dreamed of a computer in every home. Now, he said, that dream has become reality. "I have one of the best jobs in the world," Gates said. The 50-year-old, who is the world's richest man, said that he wants to return almost all of his wealth to society through his foundation.

Microsoft shares were down 0.50% in after-hours trading.

The surprise announcement comes at a pivotal time for the software giant, as its packaged-software dominance is being challenged by Google and Yahoo!

Chief Technical Officer Ray Ozzie will immediately get Gates' old job as chief software architect. The company said he would be "working side by side with Gates on all technical architecture and product oversight responsibilities."

Ballmer's role as chief executive will not change at the company, but Ozzie's ascendancy signals that his vision for remaking Microsoft is driving the agenda in Redmond.

Ozzie joined Microsoft in 2005 through an acquisition of his startup, Groove Networks, but he's been instrumental as a chief technical officer in shifting Microsoft toward a more nimble structure that involves distributing software over the Internet in frequent, seamless upgrades instead of the bulky, multiyear transition schedule the company currently wrestles with.

In a companywide e-mail in November, Gates heralded a "coming sea change" for Microsoft revolving around services. The message included a memo from Ozzie urging recognition that "a new business model has emerged in the form of advertising-supported services and software" and that "our business as we know it is at risk" if there is a failure to adequately respond.

Several months later, after Microsoft detailed yet another delay to its highly anticipated Vista operating system, an executive shuffle swept through the ranks of the software behemoth.

Jim Allchin, who had been head of the Windows unit, left the post to make room for the promotion of Steven Sinofsky, then senior vice president in charge of Office products. Sinofsky and Windows President Kevin Johnson will have full control of that unit by the end of 2006.

That was followed by financial results at the end of April that didn't do anything to lift the company's stock, but Ballmer pledged that the company's MSN unit will spend $1.1 billion in the next fiscal year on research and development, up from $700 million this year. That money and five years is all Ballmer says his company needs to catch up with Google in the lucrative realm of search.

Other changes are coming for Craig Mundie, a co-CTO along with Ozzie. He will take on the newly created position of chief research and strategy officer. Both Ozzie and Mundie reported directly to Gates, but come 2008 they will report to Ballmer.

Reported by Hannah Clark, Chris Kraeuter and Rachel Rosmarin.

This is an interesting article I've been saving for quite some time now..it's kinda like a 'guide' to me. All credits goes to the AUTHOR of course. (Travis Morien)

http://www.travismorien.com/FAQ/intro/speculate.htm

More than at any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray we have the wisdom to choose correctly. - Woody Allen

Aus.invest is, by its very name, supposed to be about investment. In practice much of the discussion is about speculation, there is no aus.speculation newsgroup so in that case it is an appropriate forum, but nonetheless it causes plenty of confusion for readers, new and more experienced.

I define a speculator as someone that seeks to buy and sell in order to take advantage of market price fluctuations. An investor is someone who holds on to securities that provide a good income or capital gain by virtue of them being based on something of real and increasing value.

Alternatively, you could say that a speculator is someone that buys something only because they think someone else will pay more for it in the near future, as opposed to an investor, who buys things because analysis confirms that the investment is of high quality and/or good value, and worth holding. A speculator buys things because they believe a less informed person will buy it off them later at a higher price, an investor buys things because they promise both a return on capital invested, as well as a return of capital invested.

Benjamin Graham, a famous investor in his own right and also notable because he is the man that taught Warren Buffett to invest, defined the difference between speculation and investment in this famous passage from his book The Intelligent Investor


"Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers to either buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr Market's daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgement and inclination. He must take cognizance of important price movements, for otherwise his judgement will have nothing to work on. Conceivably they may give him a warning signal which he will do well to heed - this in plain English means that he is to sell his shares because the price has gone down, foreboding worse things to come. In our view, such signals are misleading at least as often as they are helpful. Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell."

Another way to define investment related to the way investors value things. If you cannot value something, it is a speculation. This is a broader definition, and tends to exclude most things. The share of any company about which no information is available is speculative, the share of a company that you know enough about to be able to "value" it, even if you can't do so with any great precision, is an investment if the market price is less than or equal to your valuation.

Another quote, from "Graham and Dodd's Security Analysis, 5th edition" by Sidney Cottle, Roger Murray and Frank Block (the modern revised edition of "Security Analysis" originally written by Ben Graham and David Dodd), had this to say about "investors" that buy things without a proper valuation:


"Valuation versus Alternative Procedures for the Analyst:

Assume that a run-of-the-mill common stock is not particularly well suited to a formal valuation because there are too many uncertainties about its future to permit the analyst to estimate its earning power with any degree of confidence. Should analysts reject the valuation technique in such cases and form their opinions about the issue by some other approach? A common stock that cannot be valued with confidence cannot be analysed with confidence. In other words, buying or selling recommendations that cannot be related to a reasonably careful valuation are not based on analysis proper but on what might be called "pseudo-analysis" or "quasi-analysis". In such situations the underlying interest in both the analyst's and the investor's mind is likely to be the probable market action of the stock in some relatively short period in the future. The analytical work done, which may be quite comprehensive, will thus serve as an adjunct to an essentially speculative decision - disguised though it may be under some other name.

Another alternative is to do whatever everyone else is doing, even though the price of a stock appears high; this is the so-called greater fool theory. This theory is applied on the basis that "I know I am a fool to pay such a high price for a stock but I know that a greater fool will come along and pay me an even higher price."

The soundness of a common stock investment, in a single issue or a group of issues, may well depend on the ability of the investor or the analyst-advisor to justify the purchase by a process of formal valuation. In plainer language, a common-stock purchase may not be regarded as a proper constituent of a true investment program unless some rational calculation will show that it is worth at least as much as the price paid for it."

This definition does not mean investors are people who never sell (as many critics of the "buy and hold" philosophy claim), but there are differences between the reasons for an investor sale and a speculative sale. An investor sells when the investment no longer fulfills the criteria that prompted him to buy it in the first place, or if another investment comes along that should provide a superior opportunity to invest. Warren Buffett sells more than 10% of his portfolio every year, so much for the reputation he has for never ever selling a stock. A speculator sells because he anticipates the price is peaking or to realise a profit, usually for reasons unconnected with any notion of "intrinsic value".

"Buy and hold", a doctrine recommended by the majority of investors (in the Graham and Dodd sense of the word), means you buy something with the intention of holding it as long as possible. Therefore, analysis is done on the basis that the business being bought is to be held for quite some time, and there is more of a focus on valuation and the business operations of the company than the price action in the market. The share will be sold if it no longer fulfills the criteria that lead to its purchase in the first place, namely if it becomes so overvalued as to represent a great selling opportunity rather than a great buying opportunity, or if the business deteriorates. Since the characteristics of the business will be reflected in the valuation, overvaluation and business deterioration will be a part of the same phenomenon.

Many critics say that "buy and hold" means buying a stock and holding it for ever, without paying any attention to it. They point to the major companies in the index and note that very few of the companies that were leading lights 100 years ago are still around. Thus, say the critics, buy and hold is foolish. These critics are attacking a "straw man" (Shorter Oxford Dictionary defintion: "an imaginary adversary invented in order to be triumphantly confuted"). I know of no book on "buy and hold" investing that advocates purchasing securities and completely ignoring them, except for those that advocate index funds. Since index funds do change their composition over time as the indexes themselves change, this argument is wholly irrelevant.

Traders, in shares, futures, property, collectibles, bonds or whatever are by their nature speculators, and if they are successful through their skills and superior insights then obviously they are competent speculators. They are out there, traders who make regular profits through an intelligent and structured program of speculation, but they are always wary of risk, in fact the basis of successful speculation is always to manage risk in the most efficient manner possible.

On the other hand, there are the punters who always want a flutter. These are the incompetent speculators. Unaware of the real risks, or perhaps aware in some vague sense of them but simply ignoring them, these people buy hot tips and securities with glamour stories, getting excited about some new venture this security is associated with, and through ownership of the security hoping to make a killing.

Professional speculators are like professional gamblers. There are people out there who play blackjack or poker for a living, taking calculated risks with enormous amounts of money, seeking to maximise their edge with sophisticated techniques and a mind that is well tuned to probabilities and risks vs rewards. Some of them make millions, there is no doubt at all that by playing a game with statistical biases, and seeking over time to take profits from these biases, one can actually make a living from gambling.

On the other hand, the world is full of the social wreckage caused by gambling. The unwise and impatient litter the wayside, though there is no shortage of people willing to take their place. You can only profit from gambling when your probability of winning is greater than the probability of the other side winning, and casinos employ gifted mathematicians to make sure the rules of the game favour the house.

Professional speculators are as far above the public in terms of sheer talent, dedication and intelligence as professional gamblers are above the tipsy chain-smoking denizens of the casino floor.

To become a professional speculator you have to live and breathe the market you want to speculate in. All those people buying collectible china and antiques are up against the true connoisseurs. Those who know the market from the inside, and can spot a rare gem when it comes along, and have the cash needed to buy it, and the body of experience to know exactly what this item is worth (regardless of how aesthetically pleasing or otherwise that it may be).

Professional traders think of little else. Far from the 5-minute-a-day business that is advertised by the guru wannabes that advertise "systems", trading is a lifestyle that can be embraced by only a rare person. Traders become aware of all the pertinent fundamental information, including consensus estimates and bullish/bearish market sentiment.

Professional speculators in mining issues read all the trade journals in mining and probably know a thing or two about how to read the jargon of the analytical chemist in the labs and the geologist breaking rocks, or the meaning of the various exotic electronic sensing devices used today. A technology speculator needs to know a thing or two about science, engineering and electronics as well, so as to keep up with the state-of-the-art and separate the good ideas from the blue sky ideas.

A trader doesn't always try to forecast though. The blackjack player does not need a newsletter writer to tell him what card will be next so he just plays the probabilities and tries to control his risk, usually with some kind of mathematically based money management system. Similarly in stocks and futures, few traders know or care what the market is going to do next. They sit back, do their analysis and try to think in terms of possible upside potential and downside risk, determine where they might enter the market and where they will exit if the market should move the opposite way.

Can you do this? Well sure, there is nothing to stop someone from picking up these kinds of skills, but you won't do that by subscribing to any newsletter, or paying a thousand dollars for some kind of formula or indicator that some guy says will tell you when to buy and sell. Not that there aren't plenty of people who do sell such things though, in investment more than anything else there are plenty of people who demand such a service. Everyone wants to know what the experts think about the future direction of the market, while nothing like it appears in the newspapers, surely someone that works in an investment bank knows what is going on, or a fund manager, or some sort of pro?

To every demand there will rise a supply to meet it. Since there are no genuine and ethical people who can give an easy answer, the void can (and is) only filled with players that exploit the gullibility and ignorance of their customers.

A businessman does not seek advice on how to run his business, except in a general sense or perhaps get an expert with certain management talents who can fix a specific problem. You don't get anyone offering a service though where complete businesses are offered and you are told how to run them and it all takes only a few minutes of time per day once you pay them your money. (Except maybe for franchise businesses, but there is no parallel between a franchise and speculation, so forget it!) To those professional speculators, speculating is their business, their full time job. Most put in considerably more hours into their trading than the average person puts into their job, and unless you really love trading you certainly don't find yourself any better off as a trader.

The reality is that you can make money as a professional speculator, but it is not at all easy. No one can tell you how to do it specifically, they can only give a small amount of guidance while you have to do a huge amount of work. Traders work very hard at their trading, doing enormous amounts of research and keeping track of a huge amount of information. Don't even consider becoming a very serious trader unless that is all you want to do. Most newsletter gurus aren't traders at all, they advise on methods they have developed with only theoretical simulated testing. It is very time consuming writing a newsletter, and even more so trading. As gurus have just as many hours in their day as the rest of us, it is clear that the lifestyle they paint, with their luxury houses and heaps of free time, holidays in exotic locations and massive incomes is entirely incompatible with that of a professional trader. Not that traders haven't written books, there are a few good ones around, but one thing that is for sure is that no genuine trader would have the time to write, edit and publish a weekly newsletter.

Don't give up your day job if you aren't already a trader. You can start out with it by riding a few uptrends on some large cap stocks, despite what they say about trading being hard it doesn't take a genius to buy BHP when it has been steadily rising for a week or two on the back of improving commodity prices, and sell a week later at a 20% profit. If you did that and you really enjoyed it, and I mean REALLY enjoyed the market then maybe you might have the passion.

Traders get out of bed at 6am to see the close of a foreign market and the opening of another one, they read all the journals (not the tip sheets, I mean reputable financial newspapers) and track a number of markets. They watch out for opportunities and they are fast in taking them, and equally fast in getting out if they turn out to be wrong. They don't necessarily use the super-duper software or subscribe to a $1,000 a month data service for NASDAQ day traders, but they are in there anyway, around the newsgroups and reading all the commentary (sometimes so they can go contrarian when strong consensus is obvious).

Why do traders do this? Well of course there is the money, though not as many as you would think make a very high income, they do it because they love doing it. They find the vacillations of the market to be entirely fascinating and immersive, they gain pleasure from seeing the market move with them, but don't take it personally when it doesn't so they get out quickly. They don't trade to live, they live to trade. Far from the glamourous operator pulling up to the curb in a Maclaren F1 sports car to attend a society social event, many traders are reclusive, sometimes a little nutty and definitely obsessed. Trading is their favourite thing in the whole wide world, they would not want to take a yacht to the Bahamas, as that would drag them away from their trading.

Will you be able to buy that kind of intensity? Can a software package that scans the market for some sort of trigger signal provide you with the kind of skill and knowledge to keep up with those guys? Will a $10 a minute hotline to some guru really provide the insights you need? Bear in mind that a real trader would be too busy to talk to you during market hours, and would not welcome a bunch of whining beginners desperate for some tips. Can a few lessons turn you into a virtuoso?

At least with music you don't go broke if you don't play well at first, you have the chance to practice for many years before you get your night in the spotlight. Even paper trading isn't real practice, unless you have real money in the market you will always kid yourself, thinking as hindsight rolls in that in the real thing you would not have taken that trade at all because it was so obvious it wouldn't have worked. No!

On the other hand, investment isn't a particularly hard thing to do. Anyone, regardless of intrinsic talent can do it. The stock market has a certain long term return that beats inflation comfortably. Purchases of a conservative portfolio of leading stocks will provide returns along the same lines as the market, even better (sometimes) you could buy units in an index tracker fund. Purchasing ordinary real estate in an attractive area that has enjoyed consistent gains for decades is also a good investment, and again requires no special skill.

Is investment better than speculation? Well you won't make massive profits in a few days if you are investing, but you make respectable profits in time. Speculators don't always lose money, but the inept ones do. There is nothing inherently superior about either approach, though one thing that is for certain is that only a minute proportion of the population will ever (or could ever) be highly successful speculators, you rely on being much better than 99% of other people and you have to maintain that superiority for as long as you speculate. On the other hand, if every single person in the world was an investor, it would simply mean that wealth would be fairly and equitably shared, with all sharing in the prosperity that can be gained by living in a capitalist society.

I am not against speculation, but when I speculate I do so knowing the difference between speculation and investment. Trouble arises when people confuse the two and look for hot tips to invest. This FAQ should tell you a little bit about how to do better at both of these, but you should never ever think you are an investor if what you are doing is in fact speculation. You can be both, but not at the same time (not with the same stock anyway, though you can have two portfolios if you want to).

There are of course differing definitions of speculation. An efficient market theorist will define investment as holding a large diversified (but otherwise randomly chosen) portfolio that will give returns commensurate with the market as a whole. It defines speculation as any attempt to beat this by analysis of any form, including technical, fundamental or otherwise.

Others define speculation by the knowledgability of the investor, but this is not a very useful definition really. The dictionary defines speculation as attempting to profit from market price appreciations, this is definitely the most useful definition.

You are probably an investor if:

You are buying a portfolio of quality issues at a reasonable price.

You either content yourself with returns that are average for the investment type, or focus on the best value issues of the type for superior returns.

The portfolio is made up of issues with a strong track record, or is managed by people with a strong track record.

You can justify your purchase with reasonable projections of profits that are not out of line with historical returns for ventures of this type.

You buy something because the price has fallen so the yield (dividend, rent or otherwise) has risen to the point that it is superior to alternative investments, and you have substantial reason to believe that the investment won't completely go bust.

You buy because you notice the stock is trading at a price below fundamental valuations.

You sell because of deteriorating fundamentals in the investment, or you need the cash for something meeting your buy criteria even more closely.

Market quotations are there only for your convenience, you may choose to sell if the investment looks absurdly expensive, or to buy when you see the opposite, but other than that you ignore volatility.

You keep a close eye on those who manage your investments (including managers of the company you hold shares in), looking for prudence, logical capital allocation and conservative expansion. You would rather not invest with a high profile celebrity CEO that promises huge growth with a series of rapid takeovers.

Tax efficiency is important, and you take after-tax returns into account when weighing up various options.


You are probably a good speculator if:

You understand the risk and are taking positive measures to limit that risk. In fact risk management is your bread and butter.

You are taking steps to bring about a higher return than average by keeping a close eye on your stocks and constantly riding the ups in price but selling out and waiting for the end to the downs.

Of the many issues you are watching this one seems to have the highest probability of doing well over the time frame of your trading style.

You anticipate a price increase but have a plan in place in case it doesn't.

You track a large amount of information that may have an effect on prices, and get ready to act if this information doesn't seem to be already reflected in the price.

You are well tuned with the pulse of the market you are in, and ready to leave before the herd does.

You buy at the early signs of upturn after the price has fallen, but are ready to close your position rapidly of you turn out to be wrong.

You are mindful of the overall trend in prices.

You buy the best value investment of its type during a boom.

You buy something with the strongest upward price momentum.

You sell because you notice a trend change.

Market quotations are your bread and butter, you want the very latest information and lots of it.

You don't trust anyone else with your money, the stupid cattle on the opposite side of the trade from you don't know what they are missing and all those gurus are just crooks.

Tax effective investments probably don't interest you as they are too long term and you can make more money trading. You don't trust the promoters of these schemes anyway.


You are probably a mug speculator if:

You verbally acknowledge risk but ignore it, allocating a large proportion of your money to this one venture.

Risk management simply amounts to nodding your head saying you realise that there is of course a risk, but doing absolutely nothing to take steps to limit, or even properly identify risk.

You are trying to bring about a very high return by buying something that looks exciting, but you aren't too sure how the business works.

You are buying something because someone you know told you it was good.

You have absolutely no idea what else is out there because you haven't really checked, but this one looks good.

You think it is a sure thing to go up.

You buy something that has fallen a lot because you don't think the price can go any lower.

You find out the price crashed a week after it happens in a conversation with your friend that "understands this sort of thing".

Rene Rivkin says on TV that he "likes it a lot" so you buy it.

You don't understand how people make money in the investment.

You are trying to pick the very bottom to buy, or the exact top to sell.

You will pay anything for an investment because prices are booming.

You buy because it has gone up a lot.

You sell because you want to take a profit.

Rises in the price excite you, but as terrifying as it is to you, you don't take any action during the dips because it is just a "paper loss" and you know it isn't really a loss unless you sell. If it gets back in the black though you'll rapidly sell out and pocket the cash so you won't lose face over it.

You want someone to tell you what to buy next, and even though the last 20 newsletters you subscribed to cost you lots of money, you haven't quite given up on newsletters just yet, you also own the latest and greatest automatic software to free you from all that dull boring analysis.

You buy any investment that promises to save you tax.

The Star Global Malaysians Forum - Posted: 12 November 2006 at 8:30pm


Here's something that everyone MUST know :

I have summarised them but the original source is from :

http://www.chartpattern.com/10_golden_rules.html

1. Make sure the stock has a well formed base or pattern before considering purchase.

2. Buy the stock as it moves over the trend line of that base or pattern and make sure that volume is above recent trend shortly after this "breakout" occurs. Never pay up by more than 5% above the trend line. You should also get to know your stock's thirty day moving average volume, which you can find on most stock quote pages

3. Be very quick to sell your stock should it return back under the trend line or breakout point. Usually stops should be set about $1 below the breakout point. The more expensive the stock, the more leeway you can give it, but never have more than a $2 stop loss. Some people employ a 5% stop loss rule. This may mean selling a stock that just tried to breakout and fails in 20 minutes or 3 hours from the time it just broke out above your purchase price.

4. Sell 20 to 30% of your position as the stock moves up 15 to 20% from its breakout point.

5. Hold your strongest stocks the longest and sell stocks that stop moving up or are acting sluggish quickly. Remember stocks are only good when they are moving up.

6. Identify and follow strong groups of stocks and try to keep your selections in the these groups

7. After the market has moved for a substantial period of time, your stocks will become vulnerable to a sell off, which can happen so fast and hard you won't believe it. Learn to set new higher trend lines and learn reversal patterns to help your exit of stocks.

8. Remember it takes volume to move stocks, so start getting to know your stock's volume behavior and the how it reacts to spikes in volume. You can see these spikes on any chart. Volume is the key to your stock's movement and success or failure.

9. Many stocks are mentioned. However just because it's mentioned with a buy point does not mean it's an outright buy when a buy point is touched. One must first see the action in the stock and combine it with its volume for the day at the time that buy point is hit and take keen notice of the overall market environment before considering purchases.

10. Never go on margin until you have mastered the market, charts and your emotions. Margin can wipe you out.

Just got an e-mail (Judging by the style of query, I think the person is either 'economist' or could well be 'an investor') asking me 'what is 'asymmetry'?

Click Here for the definition on the web especially :

"Unequal distribution about one or more axes"

"a branching pattern or shape that lacks a line of symmetry on either side of a median plane"

"Irregular, uneven; without symmetry; having no center or axis where something can be divided evenly"

and on the question how asymmetrical factors relate to the stock market or in the context what we're talking now...KLCI...Click Here for a sample research....(and a very good one too)

Then I think having read these, the forumer will agree on the use of the word 'asymmetry'...

And on the final question of how to become a good 'forecaster' (like Ariffin), in theory, you should first determine 'standard deviation' (e.g. 150-200) and 'correlation efficient' (0.90++) with a typical disclaimer that the price may fall within +/- 2 or 3 times the standard deviation. Alas, this is only a theory - I'm still biased to 'empirical factors' (experience) and 'justification of figures' + 'hunch/intuition' (of course with these combined strengths, you can almost determine the deviation and correlation + tolerance)

But I sincerely wish you would talk openly in this forum as we need your inputs as well. Don't just 'peep-in' and become 'observers'.
------------------------
The Star Global Malaysians Forum - Posted : 03 January 2007 at 12:21pm

arifin34 wrote:

Oops.... sorry again. I'm apologising cos I don't want to offend anyone, esp. to you all, my dear friends. Oklah, I'm just an ordinary 'economic chartist' (Fred Tam prefers me to stake claim as a 'chartist' or 'technical analyst' - that's coming directly from him) who happens to be trained in develoment economics.... so I think I understand quite a bit on what the other forumers are talking about in this tread (most of you are really farsighted - that augurs well for this thread hey Brigitte aren't the GMN people up there thinking of awarding some kind of Awards as an added incentive?!). I said 'quite a bit' cos nobody actually knows what's going to happen in the real world. Economists are good (very good) at making simplifying assumptions in their analyses. No two economists think alike, I guess... that's why some people even make jokes about the economics profession - a dismal science they say! Why, even the famous London School of Economics placed 'Economics' under the Social Sciences. And mind you, that was George Soros' alma matter! The other irony is that not all economists are exposed to the capital markets (bourses included) even though (to me) "the stock market is the panaceae of capitalist economics"! Most economists I knew were at lost when discussing about the stock market - they knew about the theoretical objectives of having one but not of how it works, and more importantly how one can read and figure out the direction of the trends. That's FORECASTING... and I have learned it not at the universities but purely thru SHELF STUDY. I hope you people realise what I'm trying to say. You see, the good point is: You don't have to be an economist to be a stock market expert but having some economics background really helps - even though sometimes the two don't jive. And last but not least, brush up your knowledge in ICT (e.g. master the tools in the softwares) ..... and become more of a 'pakar ekonomi' & 'pakar IT' rolled up into one, as in the lyrics of 'Keranamu Malaysia'. Then you'll be unbeatable.... and with a bit of luck you can even Beat the Markets! Bye, c u next year! From an 'economic chartist' (or ist it a 'charting economist'?).

I like to agree to Fred Tam. I share the thinking that an economic chartist is also a technical analyst (not 'or' but 'and') - you're just being humble..that's all.

Lemme have the honour of 'analysing' you Bro Ariffin, I haven't done this in a long time - so you must excuse my rusty knowledge

Technical Analysis

Although in your posts, there are still conventional patterns of taking into account past investment returns/prices and relating price vs current value of expected cash flow from investment, I've also noticed some strong elements of quantitative investment analysis in almost ALL your posts which relates further to other variables (e.g. account ratio? - overpriced stocks or stocks with higher ratios of market price to equity book value may generate lower risk-adjusted returns) and there have been attempts using chaos, fractal, & neural. (am not sure about AI)

Charting

Then I'm assuming, you start plotting past prices vs time using charts to detect downward/upward trend which you have always 'predicted' to continue (trend persistence).

You're not too fast cos' it's dangerous for investors but you 'play along' with the flow of 'educating cum alerting' so that people like me can understand and absorb what you're talking about.

To all forumers, charting is not simply hypotheses but it requires a gread deal of experience cos' investors are getting more knowledgeable everyday. It's not simply depending on softwares or system that proclaimed can do everything for you.

Charting 'the bro Ariffin way' (or Fred Tam's way) can also ascertain the trend limit based on peaks/troughs connections and resistance/support levels, osciillators/schochastics - price positioning measurement vs low/high price/momentum and of course empirical factors - using your intuition to expect some 'drastic/erratic' volatilities and investor's psychology.

- that's where we (and/or 'investors') know when to buy or to sell or simply put as 'bear/bull' (also very useful to 'futures' as well)

Additionally - what johndoe said in his views on KLCI 07 is also very accurate - "The stock market is just like wheat harvesting. After a great harvest, the farm must be burned down into ashes creating a natural fertilizer for the next planting/harvest"

whereby I self-termed as the fiscal first quarterly effect - usually after December, there'll be a year-end liquidity rise & tax loss trading reduction - so you should be expecting good times for January, February (but probably not end March) unless what have been promised are being fulfilled -> implementation/performance/ transparency <- the real stuff that I like to see (This para is also self-explanatory of why in some posts, I'm a bit reserved in the KLCI future predictions - but this 'reservation' doesn't imply that I'm pessimistic)

Thus, the abovementioned JohnDoe's views should be intergrated with ariffin's charting/analysis - then investors should be safe!

On my side ; on the other hand; have always been 'picked up here & there' (multiple styles) of looking into the trend + asymetrical/psychological effects (spectral) on stock values/economy - triggered by political party assembly, elections or equivalent (depending on the chosen candidates - what they talk about/promise, economy gameplan, policies etc.), Yes...corporate good governance, delivery systems, book value, blah-blah-blah as well.

Other psychological factors may also relate to 'force majeur elements' that I've mentioned in one of my recent posts, such as war, environmental issues, natural disasters etc. Don't forget big events such as games & competitions (spurious correlation) such as World Cup, Olympic Games etc.

Other variables - currency movement (depreciate/appreciate?) vs inflation vs growth, inequilibrium in trade balances etc. Investors must also have knowledge on the industries/products/operations/core-business processes that they have interest in.

To be on safer side, Ariffin + John + Nik's modus operandi - you'll be a super knowledgeable investor..hehehehe.

Here an article I would like to share :

http://www.globalexchange.org/campaigns/rulemakers/TenWaysToDemocratize.html

10 Ways to Democratize the Global Economy

Citizens can and should play an active role in shaping the future of our global economy. Here are some of the ways in which we can work together to reform global trade rules, demand that corporations are accountable to people's needs, build strong and free labor and promote fair and environmentally sustainable alternatives.

1. No Globalization without Representation

Multilateral institutions such as the World Trade Organization, the World Bank, and the International Monetary Fund create global policy with input mainly from multinational corporations and very little input from grassroots citizens groups. We need to ensure that all global citizens must be democratically represented in the formulation, implementation, and evaluation of all global social and economic policies of the WTO, the IMF, and the WB. The WTO must immediately halt all meetings and negotiations in order for a full, fair, and public assessment to be conducted of the impacts of the WTO's policies to date. The WTO must be replaced by a body that is fully democratic, transparent, and accountable to citizens of the entire world instead of to corporations. We must build support for trade policies that protect workers, human rights, and the environment.

2. Mandate Corporate Accountability

Corporations have so heavily influenced global trade negotiations that they now have rights and representation greater than individual citizens and even governments. Under the guise of 'free trade' they advocate weakening of labor and environmental laws -- a global economy of sweatshops and environmental devastation. Corporations must be subject to the people's will; they should have to prove their worth to society or be dismantled. Corporations must be accountable to public needs, be open to public scrutiny, provide living wage jobs, abide by all environmental and labor regulations, and be subject to all laws governing them. Shareholder activism is an excellent tool for challenging corporate behavior.

3. Restructure the Global Financial Architecture

Currency speculation and the derivatives market move over $1.5 trillion daily (compared to world trade of $6 trillion annually), earning short-term profits for wealthy investors at the expense of long-term development. Many countries are beginning to implement 'capital controls' in order to regulate the influence foreign capital, and grassroots groups are advocating the restructuring and regulation of the global financial architecture. Citizens can pass local city resolutions for the Tobin Tax - a tax of .1% to .25% on currency transactions which would provide a disincentive for speculation but not affect real capital investment, and create a huge fund for building schools & clinics throughout the world.

4. Cancel all Debt, End Structural Adjustment and Defend Economic Sovereignty

Debt is crushing most poor countries' ability to develop as they spend huge amounts of their resources servicing odious debt rather than serving the needs of their populations. Structural adjustment is the tool promoted by the IMF and World Bank to keep countries on schedule with debt payments, with programs promoting export-led development at the expense of social needs. There is an international movement demanding that all debt be cancelled in the year 2000 in order for countries to prioritize health care, education, and real development. Countries must have the autonomy to pursue their own economic plans, including prioritizing social needs over the needs of multinational corporations.

5. Prioritize Human Rights - Including Economic Rights - in Trade Agreements

The United Nations must be the strongest multilateral body - not the WTO. The US must ratify all international conventions on social and political rights. Trade rules must comply with higher laws on human rights as well as economic and labor rights included in the United Nations Declaration of Human Rights. We should promote alternative trade agreements that include fair trade, debt cancellation, micro-credit, and local control over development policies.

6. Promote Sustainable Development - Not Consumption - as the Key to Progress

Global trade and investment should not be ends in themselves, but rather the instruments for achieving equitable and sustainable development, including protection for workers and the environment. Global trade agreements should not undermine the ability of each nation, state or local community to meet its citizens' social, environmental, cultural or economic needs. International development should not be export-driven, but rather should prioritize food security, sustainability, and democratic participation.

7. Integrate Womens' Needs in All Economic Restructuring

Women make up half the world but hold less than 5% of positions of power in determining global economic policy, and own an estimated 1% of global property. Family survival around the world depends on the economic independence of women. Economic policies need to take into account women's important role in nutrition, education, and development. This includes access to family planning as well as education, credit, job training, policy decision-making, and other needs.

8. Build Free and Strong Labor Unions Internationally and Domestically

As trade becomes more 'free,' labor unions are still restricted from organizing in most countries. The International Labor Organization should have the same enforcement power as the WTO. The US should ratify ILO conventions and set an example in terms of enforcing workers' rights to organize and bargain collectively. As corporations increase their multinational strength, unions are working to build bridges across borders and organize globally. Activists can support their efforts and ensure that free labor is an essential component of any 'free trade' agreements.

9. Develop Community Control Over Capital; Promote Socially Responsible Investment

Local communities should not be beholden to the IMF, international capital, multinational corporations, or any other non-local body for policy. Communities should be able to develop investment and development programs that suit local needs including passing anti-sweatshop purchasing restrictions, promoting local credit unions and local barter currency, and implementing investment policies for their city, church, and union that reflect social responsibility criteria.

10. Promote Fair Trade Not Free Trade

While we work to reform 'free trade' institutions and keep corporate chain stores out of our neighborhoods, we should also promote our own vision of Fair Trade. We need to build networks of support and education for grassroots trade and trade in environmentally sustainable goods. We can promote labeling of goods such as Fair Trade Certified, organic, and sustainably harvested. We can purchase locally made goods and locally grown foods that support local economies and cooperative forms of production and trade.

The Star Global Malaysians Forum - Posted: 19 February 2007 at 2:18pm


I was spending my whole day, watching economic/market oriented - VCDs/DVDs, reading some books and magazines, researching the internet to find good 'historical' articles for my reference. All these efforts have led me towards a bunch of interesting reminders about 'when things go wrong'. Among others :

a) 1929 - Stock market crash. - Briefly -

The stock market crash ushered in the Great Depression. Causes :

Abstract

Capital - tools to produce things of value out of raw materials e.g. Buildings and machines. A factory is a building with machines for making valued goods. Later capital was represented by stocks. A corporation owned capital. Ownership of the corporation in turn took the form of shares of stock. Each share of stock represented a proportionate share of the corporation. The stocks were bought and sold on stock exchanges i.e. NYSE located on Wall Street in Manhattan.

1920 - 1929 - a long boom took stock prices to peaks never before seen - stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market. 1929 - the bubble burst and stocks started down an even more precipitous cliff. In 1932 and 1933, they hit bottom, down about 80% from their highs in the late 1920s. This had sharp effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. New investment could not be financed through the sale of stock, because no one would buy the new stock. Also, it has created chaos in the banking system as banks recovering loans made to investors whose holdings were now worth little or nothing at all. Worse, many banks had themselves invested depositors' money in the stockmarket. When word spread that banks' assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings. Unable to raise fresh funds from the Federal Reserve System, banks began failing by the hundreds in 1932 and 1933. Franklin D. Roosevelt became president in March 1933, the US banking system had largely ceased to function. Depositors had seen $140 billion disappeared when their banks failed. Businesses could not get credit for inventory. Checks could not be used for payments because no one knew which checks were worthless and which were sound. Roosevelt closed all the banks in the United States for three days - a "bank holiday." Some banks were then cautiously re-opened with strict limits on withdrawals. Eventually, confidence returned to the system and banks were able to perform their economic function again. To prevent similar disasters, the federal government set up the Federal Deposit Insurance Corporation, which eliminated the rationale for bank "runs" - to get one's money before the bank "runs out." Backed by the FDIC, the bank could fail and go out of business, but then the government would reimburse depositors. Another crucial mechanism insulated commercial banks from stock market panics by banning banks from investing depositors' money in stocks.

b) Black Monday 1987

Black Monday is the name given to Monday, October, 19, 1987., when the DJIA fell dramatically, and on which similar enormous drops occurred across the world. By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, the UK 26.4%, the US 22.68%, and Canada 22.5%. (The terms Black Monday and Black Tuesday are also applied to October 28 and 29, 1929, which occurred after Black Thursday on October 24, which started the Stock Market Crash of 1929)

A certain degree of mystery is associated with the 1987 crash. Many have noted that no major news or events occurred prior to the Monday of the crash, the decline seeming to have come from nowhere. Important assumptions concerning human rationality, the efficient market hypothesis, and economic equilibrium were brought into question by the event. Debate as to the cause of the crash still continues many years after the event, with no firm conclusions reached.

In the wake of the crash, markets around the world were put on restricted trading primarily because sorting out the orders that had come in was beyond the computer technology of the time. This also gave the Feds and other central banks time to pump liquidity into the system to prevent a further downdraft. While pessimism reigned, the market bottomed on October 20, leading some to label Black Monday a "selling climax", where the excess value was squeezed out of the system.

Causes

In 1986, US economy began shifting from a rapidly growing recovery to a slower growing expansion, which resulted in a "soft landing" as the economy slowed and inflation dropped. As 1987 wore on, it seemed that recessionary fears were not warranted and that boom times would continue. The stock market advanced significantly, peaking in August 1987. There were a series of volatile days that caused widespread nervousness leading up to the crash, with the market ultimately sliding downward. In late August some observers warned that technical analysis indicated the market was now in a cyclical "bear" mode. However, this view was not widely subscribed to even as the market traded wildly. Potential causes for the decline include program trading, overvaluation illiquidity & market psychology.These theories might explain why the crash occurred on October 19 and not some other day, why it fell so far and fast, and why it was international in nature and not unique to American markets.

The most popular explanation for the 1987 crash was selling by program traders. Program trading is the use of computers to engage in arbitrage & portfolio insurance strategies. Through the 1970s and early 1980s, computers were becoming more important on Wall Street. They allowed instantaneous execution of orders to buy or sell large batches of stocks & futures. After the crash, many blamed program trading strategies for blindly selling stocks as markets fell, exacerbating the decline. Some economists theorized the speculative boom leading up to October was caused by program trading, while others argued that the crash was a return to normalcy. Either way, program trading ended up taking the majority of the blame in the public eye for the 1987 stock market crash. Economist Richard Roll believes that the international nature of the stock market decline contradicts the argument that program trading was to blame. Program trading strategies were used primarily in the United States, Roll writes. If program trading caused the decline, why would markets where program trading was not prevalent, such as Australia and Hong Kong, have declined as well? Although these markets might have been reacting to excessive program trading in the United States, Roll points to observations that would indicate otherwise. The crash began on October 19 in Hong Kong, spread west to Europe, and hit the United States only after Hong Kong and other markets had already declined by a significant margin.

Another common theory states that the crash was a result of a dispute in monetary policy between the G-7 industrialized nations, in which the United States, wanting to prop up the dollar and restrict inflation, tightened policy faster than the Europeans. The crash, in this view, was caused when the dollar-backed Hong Kong stock exchange collapsed, and this caused a crisis in confidence. Jude Wanniski stated that the crash happened because of the breakup of the Louvre Accord, a monetary pact between the US, Japan, and West Germany to keep currencies stable. Just prior to the crash, Alan Greespan had said that the dollar would be devalued.

Another theory is that the Great Storm of 1987, which happened on the Friday before the crash, helped contribute to it. In 1987 there was no Internet trading, and brokers had to physically get to work in the City of London in order to do their deals. On Friday, October 16, many routes into London were closed and consequently many traders were unable to reach their offices in order to close their positions at the end of the week. This made many people nervous on both sides of the Atlantic and there were certainly some traders who believed at the time that this acted as the trigger for the panic selling which took place on Black Monday. Panic selling in London and New York, the biggest stock markets in the world, then affected other markets around the world, creating a global stock market crash.

Yet another theory for the 1987 crash was the random placement of sell orders in a sufficiently small time interval as to cause a sudden decline in the indices, leading to a cascade effect of further sell orders. In the days preceding the actual Black Monday crash the markets began to sell off, beginning with a sudden 5% selloff on Wednesday, three days before the actual crash. Prior to that Wednesday, the trend for the Nasdaq/DJIA was stable, and undergoing what could be interpreted as a normal correction. If one were to zoom in on Wednesday one would notice normal trading activity and then an abrupt 1% intra-day drop. This drop could have been triggered by randomly placed sell orders that happened to all trigger at once. Although the odds of this happening are very slim, there is a probability that sufficient random sell orders placed by institutions, insiders, and the like will trigger a cascade effect should enough sell orders be placed in a small enough time interval.

The initial small 1% selloff caused by the 'clumped' random sell orders may have prompted trend traders to liquidate their positions, resulting in a larger decline that simply fed on itself like a domino effect, ultimately leading to the 26% crash of Black Monday.

-------------------------

Others were 1998 Currency Devaluation, Post 9/11 Market Effects etc.

These 'dark' events serve as great reminders for us to be extra careful of rosy events.

The question now : "What lessons have we learned?"

The Star Global Malaysians Forum - Posted: 24 February 2007 at 6:52pm

brooklyn_3p3 wrote:

Hello. I was wondering, how effective is it to set a sell limit on a stock, by that I mean, telling your broker that if the stock reaches a certain level they should sell it? I always wanted to know how to make money in the stock market - without the agonizing stress and uncertainty. Please tell me how is that possible.

------------------------------
Nik Zafri's Response

Here's an interesting article that you should be reading. I've taken part of it from the original source

1. As time goes by. If you're going to invest in stocks, keep in mind a trend is just a trend. In short, don't overreact by trying to time the market. While past performance is not a predictor of future returns, historical data shows holding stocks for the long run really cuts the risk. According to a recent study by Chicago stock research firm Ibbotson Associates, for all three-year holding periods since 1946, stock returns were positive 93 percent of the time, based on the S&P 500 Index.

Take this hypothetical illustration: If you invested $1,000 every year for the past 34 years and reinvested all dividends in the S&P 500 Index, your $34,000 investment would have earned $325,771 if, with the worst timing imaginable, you had invested at the market high of the year. Of course, if you had perfect timing, investing your $1,000 at the market low, you would have earned $365,880. The difference between the extremes? A mere 12 percent; that's less than 1 percent annually. As a long-term investor, you avoid the aggravation of trying to get out at the top and in at the bottom of the market's cycles.

2. The bears wore red; the bulls wore blue. As a rule, the blue-chip stocks of large, well-
established multinational companies are less risky than the stocks of small, little known, single-product firms. When the markets drop, investors often see a "flight to quality," with money going where investors feel safest: the stocks of big companies. No stock, large or small, guarantees investor protection, but large companies are less prone to sudden plunges and are often the first to rebound when the markets begin to turn up again.

3. Don't be misinformed. Get your research from a reliable source--crystal balls and fishing buddies don't count. In-depth research involves the big picture, including political, economic and demographic factors as well as specifics of individual companies.

Technical analysis--using charts and computer programs to identify price trends--provides other information to help you make informed decisions. Base your research on facts, not feelings, hunches or tips.

4. Round up some unusual suspects. Smart investors use overall asset allocation to ensure their portfolios include different classes of securities, such as stocks, bonds and cash. In addition, no stock portfolio should consist of just one or two companies. Diversification means building a multistock portfolio, including domestic and foreign holdings, blue-chip and OTC (over-the-counter) shares, as well as companies in different industries.

5. The start of a beautiful friendship. If you're a risk-ready investor, you keep your eye on several traditional measures of investment value, including price-to-earnings (P/E) ratios, price-to-sales ratios and book values. All other things being equal, a stock selling for 60 times earnings is riskier than a stock selling for 10 times earnings. Growth stocks come from companies experiencing accelerated earnings growth; they often sell at high P/Es because investors expect that higher earnings will result in higher share prices. Value stocks are generally shares of long-established companies, often those familiar as household names with predictable long-term earnings growth rates. As you build a diversified portfolio, emphasize both value and growth stocks to protect it from excessive risk.

6. Play it again, Sam. Ups and downs in the market make you queasy, but you still have a financial goal you'd like to reach? Dollar cost averaging is a simple strategy used by investors to add to their holdings by investing a fixed amount of money at set intervals, such as every month or every quarter. This strategy doesn't assure a profit or protect against a loss in the case of a market meltdown, but it can help smooth out the effects of stock price fluctuations. Best of all, you can start with a small initial investment and make additional small, periodic investments in managed accounts.

The principle is simple: When the price of shares is lower, your investment dollars will buy more shares. When the price is higher, you'll buy fewer shares, but the prices of the shares you bought when prices were lower will have increased. The key here is sticking with the program.

Over the long term, assuming that stock prices continue to rise, the average cost of shares purchased through a dollar cost averaging plan will usually be lower than the shares' average price. How? Say you plan to invest $500 quarterly. If you make a purchase at $10 per share, for example, your $500 investment gets you 50 shares. If the share price rises to $20 during the ensuing quarter, your next purchase gets you 25 shares. After two quarters, your hypothetical purchases would total 75 shares bought at $15 each but with a lower average cost of $13.33 per share.

Because this strategy involves periodic investments, consider your financial ability and willingness to continue buying through periods of high and low prices.

7. I came for the stop orders. A stop order is an order to buy or sell a security at the market price once the security has traded at what is known as the stop price. If you're worried about market declines, consider putting protective sell stop orders in place. A stop order to sell is always set below the current market price and is usually designed to protect a profit or limit the loss on a security that you hold at a higher price. It works like this: Say you bought a stock at $40 per share, and now its price has increased to $60 per share. A sell stop at $50 means if your shares decline to $50, your order could possibly lock in a $10 profit, not including commissions.

While this may sound like an easy strategy, there is, naturally, more to it. The risk is that this type of stop order may be executed several points below the stop price because of market orders placed before it. These market orders could radically change your order's execution price. To be more certain of the price at which your order will go off, consider a stop-limit order. This kind of stop order becomes a sell order only when the specific stop price is reached. Unfortunately, the stop-limit order carries the risk of missing the market altogether since the specific price may never occur. In our above example, say you set a sell stop-limit order of $50, which is reached but delayed because of market orders ahead of it. If these market orders cause the stock price to fall below the $50 stop-limit, your stock will not get sold and you'll still own it at whatever price it reaches.

Setting stop orders is tricky business because sell orders can be triggered by temporary volatility. Cautious investors move stop orders up as stock prices rise, but the trick is to avoid setting them too close or too far from the price of the stock in question. Consult your financial advisor for more information on how best to use stop orders.

Volatile markets are the ones that separate the investors from the speculators, those who panic from those who profit. Whatever kind of investing you decide to do, make sure you and your portfolio are risk-ready

The Star Global Malaysians Forum - Posted: 09 March 2007 at 4:30pm

Back to economics basics - The Superbull. Take into account :

a) Consumer Price Index & Inflation,
b) The volatility global crude oil price (may turn the Superbull and to a Deep Bear),
c) Bluechips - carefully/systematically plan anything to do with abroad investment,(also never forget the RM)
d) Anyone know if there are still 'safe stocks' (bear-proof)? If so, will the risk increase or decrease in owning such stocks in large numbers?
e) Closely monitor NASDAQ/DOW - gaining or not gaining? (weight)
f) WAR-WAR-WAR...no more WAR!
g) Always be reminded of the 1990s
h) Politics
i) Buying Power, Selling Pressure and Profit Taking

The superbull is real but the current volatile correction should now serve as a reminder for everyone to 'review investment plans'

Where else can I find my superbull?

Yesterday, someone told me - 'Commodities'? I said - "Huh? What investment or economics books have you been reading? "

Reply : "Yes, it's a bit conventional but it may hold the answer. Up to you Nik to take my word for granted or otherwise - remember, you brought up the subjects of improving internal mechanisms of any business entity - e.g. supply and demand, quality & productivity, find better ways of doing/improving marketing/branding and sales, improved governance, tips/rumours/data/information screening & analysis?

I didn't give any response but asked him again..."Any other 'superbullish' tips? He stood up, called the waiter, paid the bill, shake my hands and said "Mutual Funds"

and guess what, momentarily before he left, he said some 'ouching' phrases to me "And Nik, cut the craps about the 'psychological sentiment' - I know you mean well, You're an analyst - not a fortune teller" (and left with that 'unforgettable cynical smile')

Gosh...I was stunned...(the guy has been reading GMN)

Ok..my advise - it's time for us to correct our past inaccuracy, prepare a better plan when buying or selling - remember, if the superbull come charging in later (which I'm counting on it - I can almost hear the 'snorts'), all of us would be lucky...trust me!

nikzafri wrote:

I'm not really worried about what this news is telling us - but I'm 'a bit' concerned on the USD performance - read the news about USD currency - not conventional economics. Why am I worried? Read my original post here. If something is not done on USD current performance, then other currencies will be effected, when others are effected, then the pricing of everything will be effected, when pricing is effected, then economy will somehow be effected and of course all of us will feel it. Hedging can be one of the cause and the mortgage crisis may also become another - when lenders want to play too safe and not taking any risk.

nikzafri wrote:

Ask a forex trader (those who trade using USD) or a banker (esp. international banks) or local company linked (investment wise) to the US, they'll tell you how this subprime mortgage crisis effects the stock markets all over the world! It would start with the USD value getting hurt due to the too much dependance on subprime sector and housing market. The USD will start declining further as such as the lenders starting to charge higher and more borrowers couldn't afford to pay the loans and risk facing legal charges even the lenders promised refinancing (be careful, you could end up in more trouble if you refinance esp. Predatory Lenders)

nikzafri wrote:

Yes, it doesn't (the relationship between Malaysia stock market performance and the US economy) - because stock prices are a determinant of several factors operating on a given day - it's still about supply and demand. Thus it is technically wrong to assume it's due to one factor that is - concerns over US subprime market. So, we're quite clear that the market current underperformance has; in principle; nothing to do directly with sub-prime mortgate crisis in the United States. But why it is still effected? Why the concerns? Coincidence? No..it can't be as the WORLD stock markets are encountering the same thing.

It gets better....

The Star Business - 10/12/07 - Monday

US dollar woes far from over

IN PERSPECTIVE
By BALJEET GREWAL

CONSIDER this – 2000 years ago, Rome was running a trade shortfall equivalent to 3% of its total economy, one of the many factors that led to the empire’s eventual downfall.

Fifty years ago, Brazil had a massive trade deficit, which were critical to its decline – the currency was battered over and over again.

Eight years ago, the tiger economies of Asia were plunged into a currency crisis, due to big domestic and over-reliance on foreign capital.

Today, international bodies assert that if a country’s trade deficit exceeds 4.5% of its gross deficit product (GDP), it’s a sign of real and present economic danger.

And yet the US economy continues to flaunt history and economics. At 6.4% of GDP (US$58.9bil), US trade deficits are perilous and significantly exceed those of Rome, Brazil or any Asian country one decade ago.

With the recent decline of the US dollar, there are good reasons to expect its slide to continue. Weak economic numbers triggered the fall of the greenback against slower housing starts, sluggish durable goods orders and lethargic consumer confidence – all point to a correction in the economy.

Compounding this is the US’ current account and budget deficit (3.5% of GDP) as well as the narrowing interest rate differential between the US and regional Asian countries. The impact of the subprime market and the widespread repercussions on consumer and corporate consumption exacerbates the dollar woes. All these factors combined offer the possibility of a prolonged economic malaise which continues to weigh down the dollar.

On the contrary, improved economic fundamentals in Asia (reduced external debt and budget deficits, higher international reserves, potential sovereign ratings upgrades and sizeable portfolio capital flows into Asia) have further supported regional currencies.

Further appreciation is on the cards, driven by dwindling US macro dynamics and slower growth expectations. Year-to-date 2006, the Malaysian ringgit has appreciated 5.52% against the greenback, the Singapore dollar at 5.97% and the Thai baht at 16.96%. More telling will be a likely renminbi appreciation fuelling regional currencies given China’s imminent economic reforms and move towards a flexible mechanism. Increasingly, the fortunes of economies in the region are being lifted, driven in many cases by demand from China.

While a weak dollar has seen currencies rally against a weary US economy, a significant correction in US macro data and serious negatives from a bourgeoning current account deficit may flip dynamics if left unchecked. The largest threat globally remains an unruly adjustment of the US dollar which could send regional markets into a downward spiral premised on a sell off in US dollar assets. The tumbling dollar will not only halt export growth but also see a flight away from capital markets. The US is still the single largest trading partner of most East Asian economies, and the Achilles heel of emerging Asia.

To offset this, East Asian countries will need to ensure that their currencies appreciate in unison and do not fluctuate sharply in value relative to one another given the weightage of trade. East Asian economies can withstand about 20% decline in the trade-weighted value of the dollar provided their currencies appreciate together – consensus show that the US dollar will need to decline by 30% in trade weightage terms for trade deficit to look palatable.

Collectively, Asian central banks hold about US$3.2 trillion in foreign exchange reserves, most of it in dollars, and their large purchases of US dollar leading to 2006 have played a crucial role in curtailing the dollar's decline. If the US dollar is certain to fall further, central banks will sell dollar reserves or switch into other reserve currencies, which will exacerbate the dollar’s fall.

On the contrary, if Asian economies try to prevent their currencies from rising against the dollar to preserve export competitiveness, then the result could be broadbased weakness in Asian currencies and a rapid accumulation of currency reserves. Delicate balancing of foreign exchange reserves in this instance is crucial, especially given the trade impact; hence a communal appreciation will thwart any potential regional imbalance.

So, does a falling US dollar spell disaster for Asia? Not necessarily. Asian economies today are characterised by current account surpluses, large foreign exchange reserves and high rates of domestic savings. Equity markets across the region have been breaching all-time highs, reflecting the underlying strength of economies across the region and the perception that Asian stocks represent the best growth prospects at reasonable risk premium.

Thanks in part to the de-linking of Asia's capital markets from the US (more visible in the bond market), and a greater reliance in intra-regional trade (particularly with China), Asian markets seem well-placed to withstand the slowdown in the US that is expected in 2007.

These improved economic fundamentals will serve the region well over the next few years as the global economy slows and investors become more risk-averse. Nevertheless, the dip in Asian capital markets and a slide in Asian currencies against the US dollar in August this year, from the fallout of the subprime crisis serve as a reminder that the region is not immune to a change in global investor sentiment.

Meanwhile, positive overtures from an appreciating ringgit will continue to buoy domestic markets. The ringgit surged to its highest level post de-pegging, closing at 3.3177 (Nov 9) to the US dollar in line with strengthening regional currencies. The broadbased impact from a stronger ringgit is positive in general; especially in sectors which derive ringgit revenue with USD denominated costs.

Note: The author is group chief economist at Kuwait Finance House, Malaysia (KFH). KFH is one of the largest Islamic banks in the world and the first Islamic Bank with an Economic & Investment Research team.

----------------------

Since the author said "Not necessarily", this may also serves to mean as 'depends'.

Here are my personal hypotheses :

Despite it is understandable that trade surpluses could be the solution for future economic growth i.e. by means of amending policies not to be overdependent on foreign trade (only recently done), it may only work if country like US decide to run the corresponding trade deficit.

I may be wrong, but what if US decides to reduce the deficit?

Will it not create some 'not so nice' repercussions?

I'm not really being devil advocate here, but the gap of surpluses and deficits are not getting any smaller as we speak and it is foreseeable that the next issue will be misalignments in USD adjustment and definitely some 'not so nice' impact on global growth.

Of course, I'm neither suggesting that we should be adjusting exchange rates in Asian surplus counter nor pushing down demand and growth in deficit countries but rather I was kinda HOPING that Asian should assume a much bigger function in expanding their domestic demands and head towards becoming the catalyst to global growth (as soon as possible)

I am also yet to see two things : (anyone, please correct, I might have missed it)

a) EU coming in although much have been said by them and

b) adjustments on worldwide macroeconomic policies

When we deal with global financial management, we need a state-of-the art multilateral approaches to ensure a more predictable trading environment.

In global economy, every nation should not be left behind (or be put in the dark wondering what would be the future or what's next?) and they all deserve a more fair/equal treatment. IMF and UNCTAD should play more transparent roles rather than be seen as 'being used' to determine monetary policies and exchange rates.

The whole world is on the way towards interdependency, nobody should be ignored. Asia should no longer limit itself by merely quoting China as a benchmark of Asian or world growth, but other Asian nations as well.

My special thanks to Tuan Haji Ahmad bin Che Din, Taman Merdeka, Selama, Perak Darul Ridzuan, Malaysia

The 14 Golden Rules for Malaysian Business
(Version 02-May, 2006) - By : Nik Zafri (V1-2002)

(KNOWLEDGABLE) - Possess sufficient knowledge, skills/competencies, abilities, experience, exposures and qualifications. All these criterions must be geared towards developing result-oriented system.

(HELPING HAND) - A lending hand to interested parties - associates, partners, staff and general public (including competitors) related to the business. This include sharing new business methodologies through training/ briefing/ conversation/ meeting/ coaching etc. etc. with a perspective of building a better business network in the long run. Becoming responsible corporate citizens by helping the needies (social/welfare activities) and susceptible to the surroundings (including general public)

(CORRUPTION-FREE) - Free from graft of any form. Bribery destroy businesses in a short time and it is also against religious beliefs and the laws.

(EFFECTIVE MARKETING) - Approach the market ethically upon seeing prospects. Diligence and hardworking without giving up easily. Never say 'NO' to customers requests or enquiries. Form up smart partnership(s) or JV(s) with more experienced parties if required.

(NO WASTAGES) - Do not waste time/money on prospective clients/sub-contractors/suppliers at entertainment centres/nightspots or going on tour - vacation in order to win certain tenders (s) or as one of the 'implied criterons' for tender(s) award. Wastages should also be avoided in terms of quality costs (scrap, duplicate activities, wastages etc. etc.) and where practicable, recycle. Apart from the above, meetings/discussions which are time- consuming and unproductive must be minimised including to experiment or test-run a certain 'blue print' or system which is still theoritical. Finally, negative habits such as loafing, truancy, too much talking, spending too long of a time at canteens/cafeteria/stalls should be avoided.

(VISIONARY) - having long term strategic plans in the context of mission, objective and goal. All planning should consider measurement, implementation, current financial status, human resources, technology and business suitability. Expecting potential problems proactively may prevent future pitfalls.

(EXCELLENCE) - excellence and having own business branding without 'xeroxing' or too much influenced by others/competitors. Being proud of own business (even how small or how big) without inferiority.

(PRACTICAL) - Putting all effort towards achieving the objectives and goals being set-up and not simply developing hypothesis or lip-service. Having business-'ownership' feeling, leadership and ability to work independently. These include the process of critical decision making under any circumstances. Responsible, committed and accountable on duties being executed.

(TRANSPARENCY) - adopting transparency in matters/current development pertaining business that need to be made known to interested parties (client, stakeholders, general public, consumers etc. etc.)

(SUSCEPTIBLE) - caring and susceptible towards the volatile changes in the requirements (specification/trend) of interested parties.

(TENDENCY TOWARDS CHANGE) - Readiness to embrace change or upgrade the quality of services and products according to the latest trends regarding new knowledge, technology and method. These include willingness to allocate additional investment(s) aimed towards continual improvement and long term returns.

(LISTENING TO OPINIONS AND CONSTRUCTIVE CRITICISM) - becoming a good listener to views and (constructive) criticisms from interested parties as they may become catalyst to business growth.

(NOT DEPENDING ON RUMOURS) - not depending solely on rumours in the course of running business. This include unverified/unreliable tips of market shares/stocks (known to fluctuate)

(QUALITY) - OVERALL - implementation of policy, procedures, standards/codes of practice, process, product/services, resources - technology, training, development of management/staff/workers, customers, teamwork, welfare, occupational health and safety/environmental management. Instilling discipline (or self-instilled disciplines) in all aspects including subordination

The Star Business - 25/12/07

New launches to drive growth

Chief executives have lined up new products for next year. Mah Sing Group Bhd CEO Datuk Seri Leong Hoy Kum expects the company's new launches will be well received in a buoyant, domestic-driven economy. Guinness Anchor Bhd's MD Charles Ireland feels 2008 should be a better year as the market for malt liquor has started to stabilise. Prudential Assurance Malaysia Bhd's CEO Tan Kar Hor will cultivate new product lines like retirement planning and Islamic products

DATUK SERI LEONG HOY KUM
Managing director and CEO
Mah Sing Group Bhd

WHAT is your outlook for the property market next year?

We believe that the property market in 2008 will be robust, underpinned by a resilient domestic driven economy. Various pump-priming initiatives under the Ninth Malaysia Plan will provide a boost to propel the economy upwards and increase disposable incomes.

Malaysia’s young population, rising urbanisation, low unemployment rate and increasing wages, as well as a high savings rate will continue to contribute to the property market’s positive run.


Datuk Seri leong Huy Kum
The Government has been proactive in this manner, with several goodies announced for Budget 2008. EPF contributors will be allowed to make monthly withdrawals for financing one house effective Jan 1, 2008.

This could potentially unleash close to RM9.6bil annually into the property industry, allowing homebuyers to afford homes costing 20% more than previously.

The 50% waiver on stamp duty for purchase of homes under RM250,000 should boost demand for homes, and the Group has taken the initiative to ride on these incentives.

We are setting up a help desk to advise our buyers on the EPF withdrawals, as well as waiving the remaining 50% stamp duty for Mah Sing homes priced up to RM250,000, to ease the burden of home ownership.

Besides domestic demand, there has been increased foreign interest in our properties as they like the quality of our properties, boosted by the waiver of real property gains tax.

We have the most liberal landownership laws in the region, and now, foreigners are allowed to buy unlimited units of residential properties above RM250,000 without restriction of usage.

What are some of the opportunities and challenges for industry players going forward?

Growth corridors including the Iskandar Development Region (IDR) and Northern Corridor Economic Region have resulted in renewed interest in these areas, and improving infrastructure as well as strong economic and population growth will spur demand for housing there.

Malaysia’s increasing exposure as an international property market will attract more foreign participation. It is indeed an opportune time for foreign investors because whilst our properties may be world class, valuations still lag behind those of our regional peers.

Increases in raw material prices have increased construction costs, resulting in higher pricing for good housing projects in strategic locations.

Buyers will want to hedge against inflation by investing in assets that have potential upside.

Which property sector and development types offer the best potential for your company?

In terms of the residential market, we believe that medium to high-end gated and guarded residential properties should do well.

Demand for these properties is a reflection of Malaysians’ growing affluence and sophistication. These properties would need innovative concepts and practical layouts, as well as being supported by a strong brand.

For the commercial market, there is a shortage of good office space, especially Grade A offices in Kuala Lumpur. The limited number of good quality investment grade buildings available for sale in the market has driven up the capital value of prime offices.

Depending on the location, commercial retail buildings should do well.

What are the challenges faced by the industry and the impact on your company?

Prime land is increasingly scarce, especially land that fits our fast turnaround business model.

However, we have a proven landbanking track record, securing good land year on year to maintain our earnings visibility.

Sometimes, landowners also approach us either to sell land, or to propose joint ventures on their land to tap into our branding, experience and skills.

Our capability to appropriately manage cash flow is key to the company’s ability to capitalise on opportunities

Increases in raw material are inevitable, but we have taken steps to mitigate the effects, for example, by using step up pricing for new launches, bulk purchasing to enjoy discounts, and lowering our funding costs via shrewd negotiations.

Human capital, i.e being able to continuously recruit, train and retain good people who are willing to take the company to new heights amidst increasing globalisation, will be the key to success.

We have a very strong team which is striving to realise the Group’s vision.

What are some of the interesting property launches that can be expected from your company in the coming months?

We have started a registration exercise for our new commercial projects, which will be launched in 2008.

Southgate Commercial Centre offers investors the opportunity to own offices in the heart of Kuala Lumpur, as opposed to just leasing the offices in most new buildings.

There will be food and retail outlets to support the offices. Southbay City in Batu Maung, Penang will be a new “must-visit” destination, integrating leisure, commercial and retail offerings near the upcoming Second Bridge on the island.

Our existing residential projects are Perdana Residence, Kemuning Residence, Hijauan Residence and Aman Perdana in the Klang Valley, and Sierra Perdana, Austin Perdana and Sri Pulai Perdana in South Johor within the IDR.

We shall continue our sales from these projects, mainly semi-detached homes and bungalows within gated and guarded communities.

What are your expectations of project take-up rate, sales revenue and earnings for the company next year?

We believe 2008 will be another good year and we should be able to achieve another year of uninterrupted profitability and good take-up. This will be underpinned by our unbilled sales exceeding RM1bil, which is twice our revenue in 2006.

We have a remaining Gross Development Value (GDV) of RM3.042bil, representing a total GDV of RM4.119bil, which will ensure earnings visibility for seven years.

We expect another year of good sales, especially with the implementation of the Employees Provident Fund withdrawals next year. We will continue to focus on the lifestyle medium to high-end residential and commercial segments, which have given us very good results.


Charles Ireland
CHARLES IRELAND
Managing Director
Guinness Anchor Bhd

WHAT is your outlook on consumer spending for 2008?

The Malaysian economy seems to us to be in pretty good health. When the Ninth Malaysian Plan’s spending kicks in, we hope that the present growth rate of 6% will be sustainable throughout 2008.

Within the malt liquor market (MLM), we are extremely supportive of the Visit Malaysia Year initiatives and are delighted that it has been extended to 2008. This is because we know that generally, tourists enjoy relaxing with a beer at the end of the day when on holiday, and that other spending that they do will further support the Malaysian economic growth.

While we are optimistic for 2008, we are also not discounting that several other factors can impact consumer spending, such as inflationary pressures and the external environment, like high oil prices and the US subprime mortgage market as well as the accompanying credit crunch.

As for the MLM, we were spared another year of excise duty increase in the recent Budget 2008 and the market is slowly beginning to stabilise, registering a marginal growth year-on-year.

How was consumer spending in 2007?

The malt liquor industry had a tough year with a 1.4% contraction in the market.

Consumers were, not surprisingly, still careful in their spending on beer given the very high prices due to us having the second highest excise duty in the world.

I am pleased to say though that despite this, GAB performed very well. Our revenue breached the RM1bil mark to reach RM1.07bil while pre-tax profits stood at RM152.16mil.

Our success was due to our continued focus on our people, brands and performance. We launched several innovative marketing initiatives to attract consumers to our brands, increased our budget allocation for employee training and improved operational efficiency to strengthen our financial performance.

This, together with continuous support from our consumers and trade partners, has helped us open up a clear lead over the competition.

What is your expectation of spending at the higher end? Please define “higher end” in your industry.

Whilst GAB proudly boasts a full diverse portfolio of brands, we have the best “higher-end” beer brands in Malaysia. As such, a good performance in this segment is critical to our success.

Higher-end outlets for us are modern pubs and clubs, white table restaurant and hotels. We expect that this sector will continue to perform as Malaysia transitions into more of a service economy and there is further growth in middle-to-higher income jobs.

Furthermore, the Visit Malaysia Year initiatives will hopefully continue to bring additional affluent consumers to the country.

GAB is well positioned to grow in this segment. Consumers regularly choose our brands as part of their evening. Whilst we are the clear market leader overall, we have over 90% market share of this “higher-end” segment.

How have the tourism dollars helped to boost consumer spending, what further measures can be introduced to boost tourism?

Tourism is very important in bringing in tourist ringgit into the country, helping boost the economy and, consequently, consumer spending.

The price of beer and stout is one factor that tourists consider in making a choice of holiday destination. We also know that beer prices in Malaysia are the highest in the region and believe that this may lead to tourists choosing neighbouring countries over Malaysia.

To this end, we believe that it was a good decision by the Government not to increase excise duties this year to give the rest of the world a chance to catch up.

We further believe that the industry should play its part in boosting tourism. The Ministry of Tourism’s initiatives should be commended and complemented by us.

We are currently thinking of how we can support the ministry in its efforts and have started dialogues with them on how we can help.

What are the new challenges at a time when consumers are said to be spoilt for choice?

One of the wonderful things about a business is that there are always challenges and the trick is to turn these challenges into opportunities.

Over the past six years, GAB has been successful.

We believe that by working hard with our great people and fantastic portfolio of brands to deliver performance, we are able to continue to grow to deliver ahead of shareholders' expectations.

Tan Kar Hor

TAN KAR HOR
CEO Prudential Assurance Malaysia Bhd

IS your company on track toward achieving the risk-based capital (RBC) framework by 2009?

Insurance companies in Malaysia have known for a long time about the impending introduction of a risk-based capital framework. The possibility of such a framework being introduced was highlighted as early as 2001 in the Financial Sector Masterplan.

Since 2004, Bank Negara has also been working closely with the insurance industry to draw up the framework that is applicable for Malaysia, and there have been several rounds of refinement of the proposed framework following discussions between the central bank and the insurance industry.

This has allowed insurance companies, including Prudential, to test the impact of the proposed framework on their financial positions and to strategise in areas such as product development, investment decisions and efficient capital management.

As far as Prudential is concerned, we are on track to implement the RBC framework by 2009.

What are the current initiatives and processes put in place or being undertaken to achieve the RBC framework?

With the impending introduction of the RBC framework, there will be higher demand for professionals with specialised skills such as actuaries and risk managers.

This is especially so because the RBC framework uses statistical science to make explicit provisions for uncertainties in an insurer’s future financial position, for example, the amount of claims and the market view of investment return.

As a leading insurer in Malaysia, Prudential is fortunate to be able to attract and retain people with specialised skills. We focus a lot not only on attracting and retaining the right people, but also training them.

The new framework also gives insurance companies more opportunities and flexibility to demonstrate good internal governance and risk management systems and practices. We are further strengthening these areas to cope with the new framework.

Being part of a large global financial services group (UK-based Prudential plc), we are also fortunate that our group head office supports us by providing their experience on new developments in the regulatory regimes in other countries in which we have operations as well as training to update the skills of our specialised staff.

Are mergers and acquisitions (M&A) on the company’s agenda in view of the deadline for RBC compliance getting closer?

At present, we are not considering any mergers and acquisitions.

What steps are your company taking to gain a larger foothold in the sector?

The launch of our sister company, Prudential BSN Takaful, last year was a significant milestone that enabled us to widen our product range to include syariah-compliant insurance plans. We expect strong contribution from our takaful business given the huge market potential.

We will continue our efforts to expand our agency force, improve their productivity through rigorous training programmes and leverage on IT to enhance their efficiency.

We are also aggressively broadening our insurance solutions to meet our customers’ needs.

Retirement is one of the key focus areas as the market is ripe for financial solutions that can help customers proactively plan for retirement and be able to live comfortably through their golden years. We are building our strength and expertise in this area, supported by our market leadership in investment-linked products and deep understanding of the retirement space through consumer research and vast experience worldwide.

Besides retirement, healthcare remains a major concern as one gets older. We will continue to develop even more innovative insurance plans to ensure our customers are well protected against escalating medical costs.

With all these initiatives in place, Prudential is well positioned to deliver sustainable, profitable new business growth in the coming year.

Will financial advisor be one of the important distribution channels for the company going forward, judging by its success in developed countries?

Developing our agents to be financial advisors is an important step to cater for customers who are nowadays more financially-savvy and require solutions that can meet various financial needs.

Training programmes that our agents undergo increasingly emphasize on customer needs analysis, the provision of financial advisory services and proper advice to customers as a way to increase their skills and professionalism.

We will also continue to synergise the strengths and competencies of Prudential’s insurance, takaful and fund management businesses in Malaysia to deliver innovative financial solutions that cater to customers’ needs.

This synergy will further solidify our brand name and position as a significant retail financial solutions provider in the market.

What will be your investment in IT infrastructure and other expansion plans?

We have put in great efforts to transform our agents to be more receptive to technology in conducting their business.

Many of them are already using notebooks and mobile devices such as Treo smart phones and BlackBerry equipped with customised insurance solutions that give them the flexibility to conduct their business while on the move.

Besides real-time accessibility to customer information, these devices also allow our agents to prepare quotations and provide on-the-spot response to customer enquiries.

These efforts are part of our ongoing commitment to innovative services and products, and transforming our agency force into the most ‘well-connected’ in Malaysia.

Prudential will continue to leverage on technology to further improve agents’ efficiency and customer service delivery. In the pipeline is the development of Sales Force Automation (SFA), which will give our agents instant access to customer data and enable them to issue policies right in the customers’ homes.

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Here's my version of summary (Nik Zafri)

1. Property market demand will depend many factors

a. Future - Malaysia’s young population, rising urbanisation, low unemployment rate and increasing wages, as well as a high savings rate

b. Current - EPF withdrawals

2. Future - the Development Regions

Current - Volatile construction raw materials pricing ' still need further assistance'

3. Buyers are recommended to hedge against inflation by asset investments that have potential upsides

Potential upside relates to :

- spread ratio/yield result in order to get risk/return ratio. In short, take additional risk to benchmark the current risk. Only then a decision can be obtained to know if additional pick-up of yield is worth in terms for 'taking additional risk' (huh?) It's kinda 3D thinking in asset management.

Again 'potential' means 'Future'.

4. Future : Landowners should work together with Developers instead of selling land.

5. Current : Tourism is still the most popular 'profit generator'.

6. Future : Risk Based Capital to (Future) Risk Weighted Assets ratio of x%.

Current : Impact testing on Product development, investment decisions and efficient capital management.
7. Current : Competent Human Resources, Knowledge Workers etc. still being hunted.

8. Current and Future : ICT will still rule!