One step at a time

One day a farmer's donkey fell down into a well. The animal cried piteously for hours as
the farmer tried to figure out what to do.

Finally, he decided the animal was old, and the well needed to be covered up anyway. It just wasn't worth it to retrieve the donkey.

He invited all his neighbors to come over and help him. They all grabbed a shovel and began to shovel dirt into the well. At first, the donkey realized what was happening and cried horribly. Then, to everyone's amazement he quieted down.

A few shovel loads later, the farmer finally looked down the well. He was astonished at what he saw. With each shovel of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up. As the farmer's neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up.

Pretty soon, everyone was amazed as the donkey stepped up over the edge of the well and happily trotted off!

Lesson no.1 - Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to shake it off and take a step up. Each of our troubles is a steppingstone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up.

Remember the five simple rules to be happy:

1) Free your heart from hatred - Forgive.

2) Free your mind from worries - Most never happen.

3) Live simply and appreciate what you have.

4) Give more.

5) Expect less

NOW .......... !!

Enough of that crap . . . The donkey later came back and bit the farmer who had tried to bury him. The gash from the bite got infected and the farmer eventually died in agony from septic shock.

Lesson no.2 - When you do something wrong, and try to cover your ass, it always comes back to bite you. You have two choices...smile and close this page, or pass this along to someone else to spread the fun.

World Richest

Ever heard someone saying that 90% of the wealth of the world is in the hand of 10% of the population…or something like that?

Forbes.com reported that Warren Buffett has finally climbed the ladder to be the richest man in the world, overtaking Bill Gates, the record holder for last 13 years. Thanks to the surge in Berkshire Hathaway’s share price. According to the report, Warren Buffett’s wealth swell to US$62 billion. With that kind of wealth, can you imagine how many generations need not have to work? You do the math. The following is an excerpt of the report:

Gates is now worth $58 billion and is ranked third in the world. He is up $2 billion from a year ago, but would have been perhaps as rich--or richer--than Buffett had Microsoft not made an unsolicited bid for Yahoo! (nasdaq: YHOO - news - people ) at the beginning of February.

Microsoft shares fell 15% between Jan. 31, the day before the company announced its bid for the search engine giant, and Feb. 11, the day we locked in stock prices for the 2008 World's Billionaires list.

According to the report, Berkshire Hathaway already soared 25% between July 2007 and 11 Feb 2008. The stock price hit an all-time high of $150,000 a share in December 2007. Berkshire Hathaway shares closed at US$137,100 on 12 Feb 2008. The report also gave a short account of the legendary investment guru:

Buffett delivered newspapers as a boy. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He moved on to study under value investing guru Benjamin Graham at Columbia University. Buffett began buying shares in textile firm Berkshire Hathaway in 1962 and purchased a controlling stake in 1965. He began buying insurance companies and astutely investing those companies' cash reserves.

Last but not least, the report also listed down Berkshire Hathaway’s stop holdings. If you look at those companies carefully, you will notice certain similarity, which I had mentioned many times in my sharing.

The following are Berkshire Hathaway's 10 largest publicly traded holdings. We do not include any private company holdings. (Source: Form 13-F, Dec 31, 2007, except Wells Fargo because they had an amended filing. Stock prices as of Feb 27, 2008.)

American Express - 12.8% of the company, worth $71.5 billion.

Coca-Cola - 8.6% of the company, worth $12 billion.

Burlington Northern Santa Fe - 18.3% of the company, worth $5.7 billion.

Johnson & Johnson - 2% of the company, worth $3.9 billion.

Kraft Foods - 8.6% of the company, worth $4.2 billion.

Moody's - 17.2% of the company, worth $2.0 billion.

Procter & Gamble - 3.4% of the company, worth $7.1 billion.

US Bancorp - 3.9% of the company, worth $2.3 billion.

Wells Fargo - 9.4% of the company, worth $9.9 billion.

Wesco Financial - 80.1% of the company, worth $2.2 billion.

US Is In A Recession Now!!!

I was supposed to continue my sharing titled “Should I Buy Stock Now”. And I did. I was about to finish my write-up (on MS Words) last Sunday and I was just halfway through in compiling basic data on REITs. However, I could not finish (and post) it because there is more bad news pounding all pointing towards US recession. Reported in Business Times on Monday:

“The market's fragility was on display last Friday, as the corporate news combined with more troubling economic data - the Chicago purchasing managers' index came in at 44.5, indicating the most severe contraction of the manufacturing sector in the Midwest since December 2001 - to send the Dow Jones Industrials down 315.79 points, or 2.5 per cent, to 12,266.39. The S&P 500 sank 37.05 points, or 2.7 per cent, to 1,330.63, while the Nasdaq shed 60.09 points, or 2.6 per cent, to 2,271.48………”

And we also have the oil price striking at historical high. The New York's oil futures for delivery in April surged to US$103.51 per barrel, above the previous record of US$103.05 on Friday. Is that all? No. The US dollar continued to weaken setting yet another historical low. Here in Singapore, current exchange rate with US dollar is something never seen before – S$1.393/US$1. The good news for us is that it is going to be cheaper to have a holiday in US. Weak US dollar and rising oil price propelled gold price closer to the US$1,000 an ounce mark on Monday

Is that all? No, damn!!! This morning, while I was onboard the bus to my office, I saw my mentor Mr. Warren Buffett delivering a message on the TV Mobile. He believed that the US is already in a recession. World-renowned investment guru delivering such a speech is just going to make the US recession becoming a self-fulfilled prophesy.

And the best thing is that I share the same view. Personally, I also believe that US recession had already started. The full impact will be felt soon, like in next quarter. As such, I really can’t continue writing on other possible (hidden) opportunities in equity investment. This is because if the US economy goes down, all the exporting countries will go down too and the relevant stock (or global) markets will crash like tin can. Thus no matter which company you buy during this period will only ensure that you sit on hefty unrealized losses.

To be fair to my friends reading my blog, I have to advise all to avoid the stock market for the short to medium term. And how long is this going to take? Unfortunately, nobody knows. Having said that, from now onwards, my sharing on stock investment or evaluation will be very limited until the situation turnaround. I will write more on economic issues and financial planning, which is more relevant during bad times.

Good luck!

Should I Buy Stock Now (Final)

Recently one of my colleagues casually asked my opinion about current stock market climate. According to him, he did not buy any stock. SO he asked out of curiosity. I replied that it is high uncertain now. Then he said that stock market is dangerous. And this is how I reply:

“Firstly, if you ask me whether you should learn about stock trading, then my answer is no. In fact, it will be wonderful if you never touch the stock market for this life. There are many other ways to invest or you can get a fund manager to do it for you. Notwithstanding my negative statement, the idea that stock market is dangerous is not totally correct. There are many successful investors (besides Warren Buffett) today and they don’t find stock investment in any way dangerous. Think about it. Driving a car is dangerous unless you got a license. While flying, if you get any passenger to take over the cockpit, that is dangerous. But if that passenger also happens to be a pilot, then the danger has dropped to zero! The truth is it is always the human beings that are dangerous. The tools itself is always innocent.”

You may wonder why I discourage that friend from learning about stock investment. Did I slap my own face? No I did no. I discourage him is because I had witnessed so many friends who turned greedy after they earned big bucks from the stock market. The stock market, like any gambling den, brings out greed in us. And when greed and fear took over, logic becomes malfunctioned.

Stock Recommendation

In Part I, I offered 3 options. In this part, I will share some tips if you love option 3. You choose option 3 because there isn’t any decent fixed deposit (or product of similar nature) that offers a rate that is higher than the inflation rate. In addition, you still hope that, with fingers crossed, US will resolve its economic problem and maintain its growth. Actually I hope you won’t choose option 3. But never mind about that. Firstly, to choose option 3, you must be bear the following characteristics:

1) Market may clash when US’s economic problem crystallized. You may have to wait longer than expected.
2) Stock prices may slide further but you are indifferent or you can accept that.
3) Your focus is more on securing reasonable yield rather than capital gain. Should there be any, it is a bonus.

Having said that, this will also mean that you avoid all tech stocks. Browsing through the SGX, many tech stocks are in bad shape now. This will be rule no.1. However, fortunately, there are still fundamental stocks providing reasonable returns. Personally, I recommend REITs. The reasons:

1) REITs have a mandate to distribute income.
2) The rental incomes are pre-secured, i.e. the tenants are unable to back off without paying for default. If a tenant defaulted and paid for damages, the landlord is still able to get another tenant. Price may be different but it is still secured.

The following are the performance of REITs, REITs-related funds or funds announced lately..........................................................

Should I Buy Stock Now (Final)

Recently one of my colleagues casually asked my opinion about current stock market climate. According to him, he did not buy any stock. SO he asked out of curiosity. I replied that it is high uncertain now. Then he said that stock market is dangerous. And this is how I reply:

“Firstly, if you ask me whether you should learn about stock trading, then my answer is no. In fact, it will be wonderful if you never touch the stock market for this life. There are many other ways to invest or you can get a fund manager to do it for you. Notwithstanding my negative statement, the idea that stock market is dangerous is not totally correct. There are many successful investors (besides Warren Buffett) today and they don’t find stock investment in any way dangerous. Think about it. Driving a car is dangerous unless you got a license. While flying, if you get any passenger to take over the cockpit, that is dangerous. But if that passenger also happens to be a pilot, then the danger has dropped to zero! The truth is it is always the human beings that are dangerous. The tools itself is always innocent.”

You may wonder why I discourage that friend from learning about stock investment. Did I slap my own face? No I did no. I discourage him is because I had witnessed so many friends who turned greedy after they earned big bucks from the stock market. The stock market, like any gambling den, brings out greed in us. And when greed and fear took over, logic becomes malfunctioned.

Stock Recommendation

In Part I, I offered 3 options. In this part, I will share some tips if you love option 3. You choose option 3 because there isn’t any decent fixed deposit (or product of similar nature) that offers a rate that is higher than the inflation rate. In addition, you still hope that, with fingers crossed, US will resolve its economic problem and maintain its growth. Actually I hope you won’t choose option 3. But never mind about that. Firstly, to choose option 3, you must be bear the following characteristics:

1) Market may clash when US’s economic problem crystallized. You may have to wait longer than expected.
2) Stock prices may slide further but you are indifferent or you can accept that.
3) Your focus is more on securing reasonable yield rather than capital gain. Should there be any, it is a bonus.

Having said that, this will also mean that you avoid all tech stocks. Browsing through the SGX, many tech stocks are in bad shape now. This will be rule no.1. However, fortunately, there are still fundamental stocks providing reasonable returns. Personally, I recommend REITs. The reasons:

1) REITs have a mandate to distribute income.
2) The rental incomes are pre-secured, i.e. the tenants are unable to back off without paying for default. If a tenant defaulted and paid for damages, the landlord is still able to get another tenant. Price may be different but it is still secured.

The following are the performance of REITs, REITs related funds or funds announced lately...................................................................................

九寨沟之旅

Recently, one of my colleagues invited me to join his family to 九寨沟 (成都). This is one of the places in China that attracted many tourists around the world. It is also commonly talk about when people discuss abouy holiday to China. My colleague and his wife had already booked and paid for the trip; that depart right after school holiday - cheaper price. The tour will depart on 28 Mar. When I called up CTC to enquire on this holiday package, I was told that only two customers signed up so far.... and I happened to know these two customers.

It is a great opportunity to go for holiday again, after the traumetic expereince last year to Manila. But my good friend was not to be blame though. It just happen that I am not comfortable with the adverse situation (human and nature) there then. The total damage for default? S$1,200!!!

So this time, I better do proper research and plan carefully. According to CTC, 九寨沟 weather in March is between 10 - 20 degree. To have a better understanding of the temperature level, I asked the girl what's the weather at Genting as I am more familiar with Genting. She replied that it is also about 10 - 20 degree. Still not very sure, I checked the net for China's weather. Here's the bad news. The temperature actually ranges from minimum of about 8 degree to maximum of 17 degree. I can accept 17 degree BUT 8 degree is really really cold. At 17 degree, I can just put on a coat made of cotton. But at 8 degree, I may need something like fur - something meant for winter. I like light attire and hate thick fur.

From the weather forecast, it seems that the best time (with ideal temperature) to go to 成都 is in May. I have no choice but to give this trip a miss.