My Share Investment

Penny Dreadful Stocks

2011-12-12T12:25:00.000+10:00

Year 2008, the year of the great downturn in the stock market around the world, has left my stock portfolio halved from the where it started. Looking back of what happened, I guess one of my biggest mistakes before the crisis was to invest on few penny stocks. Penny stocks are stocks that are traded in a low price, usually speculative stocks from very small companies. Penny stocks looks appealing because of the low price and the potential for a rapid growth.

In 2007-2008, you can see many mining stocks in this category on the ASX (Australian Stock Exchange). Mining boom helped the stocks grow like mushrooms in the rainy season. They usually had a great run for a while, make you greedy and want more profit, when it was suddenly experiencing a freefall. Worse thing was, even then, I still hoped that the price would go up again. I was waiting for an announcement that might lift the stock price. You might have guessed that when the long awaited announcement came, the price wasn't even move.I paid dearly for the mistakes, but I guess it's all come down to learn by experiences.

As a new investor who do not subscribed to any paid broker, I relied my research on the chart and story of the fundamentals. What I didn't realise, was that in some speculative cheap stocks, there are so many manipulative actions taking place. Of course not all cheap stocks are bound to be manipulated, but it does not hurt to check everything before we buy. Bad decision could cause a good damage in our investment.

There are risks with any investment. But certain risks are greater with penny stocks. One of them is the risk of manipulation. Because of their nature, penny stock is easy to manipulate. After the brokerage firms acquire a large number of shares at a low price, they can manipulate the stock by creating an artificial demand to drive up the price. When manipulation occurs, the stock's price may not reflect the true value of the company, but rather the artificial demand created by aggressive marketing. The price may then collapse after the broker and other persons involved in the manipulation sell their shares.

Another risk is caused by lack of information about the investment. Unlike most large, well established companies, many companies that issue penny stock do not provide a sound data/ reports to the public. This lack of information about the company's operating history and financial health increases the risk to the investor.

The market price of such stock can be based more on the aggressive marketing of the selling broker than on the real value of the company. This sort of marketing can be found easily on the Internet listings or report on TV -- The fact that a stock is mentioned or even recommended on television or on an Internet Website is no guarantee that the investment opportunity is legitimate. Moreover, some television programs or reports are actually advertisements paid for by brokerage firms.

Books

2011-11-02T08:00:00.000+10:00

A quick visit to a local library last week resulted in a winning trade for me. Just by chance I picked this book and reading it really is a time well spent. Very well spent.

To be honest, I have heard about this book from some of my other reading before. A quite famous book for trader, although in my ignorance I was not interested in seriously finding it to read. The book is called 'Trade Your Way to Financial Freedom' by Van K Tharp.

I recently bought, 'Trading in the Zone' and enjoy it very much, but I have to stop reading it temporarily and switch to Van Tharp's book due to the nature of library book. I have to return it in 2 weeks time!!

Alan Joyce

2011-10-31T11:15:00.000+10:00

I do not own Qantas shares, and barely know its CEO until this weekend. The industrial action that led to the grounding of Qantas' entire fleet sort of forced people to look at him. Who's Alan Joyce, and do you think he is worth his pay?

I kind of almost like Alan Joyce (..fyi I detest most directors..). I think he's worth every cent they pay him.

Locating the Exit

2011-10-28T12:23:00.003+10:00

Everything is rosy on the headlines.. The stock market poised for the biggest monthly gain since 1988, The RBA 'might' cut the interest rate, The authority said that housing prices are not falling in Australia, Euro zone and Greek problems are solved, US GDP increase by a lot and Pharmaxis won positive opinion for their Bronchitol in Europe (this probably only applied to its shareholders).

Then again, things just does not seems 100% right. Close at home unemployment is creeping up, some says that housing price fall are accelerating, and Greek..? Do you think their problem is solved by Euro bailout? US housing and debt problem..?

And China.. how many doubts about their health we have heard lately? Hard landing is coming in China, warned Dr Doom, Nouriel Roubini.

Technically, it's probably we have enough market rally recently. Heading for the exit?

More Drama for Sundance Resources Shareholders

2011-10-11T10:16:00.000+10:00

Sundance Resources has been placed in a trading halt again this morning.
The company requested the trading halt in response to media speculation that Hanlong Mining's takeover offer is being held up by Australian FRIB due to investigation into Hanlong's executives insider trading.
More drama to come?
Meanwhile, a stock forum that actively discussing this takeover offer and market manipulation of SDL stock prices at this time of writing is also down, with only error message displayed.

What is Happening with Sundance Resources Share Price?

2011-10-07T10:45:00.002+10:00

Sundance Resources was on the news quite often lately. Most of the news are related to the takeover bid by China's Hanlong. A few months ago, Sundance was approach by Hanlong (who's already one of its biggest shareholder) of a takeover. Hanlong offered $AUD 0.50 per share and was declined by Sundance's management.

About three weeks ago, Sundance was on the news again. This time was about insider trading. Top executive of Hanlong Mining in Australia was alleged of trading Sundance's stocks with the possession of material information. While ASIC is doing its investigation, Sundance and Hanlong said that they still doing negotiation regarding the takeover.

Few days ago, Hanlong increased its original $0.50 per share offer to $0.57 per share. This offer wins the board approval. Sundance Resources board has endorsed an improved $1.65 billion takeover from the Chinese.

Hurray..NOT.

I do not know what happen, but despite $0.57 on the table and over 600 points rally in the Dow (and probably 5% rally in ASX), Sundance Resources' share price continue to slide on a depressing $0.445. No rally, and definitely no jump. When the whole ASX market up by 3.5%, Sundance down 2%. To make matter worse, the sell side of the depth always over 100 millions more than the buy side.

Market manipulation perhaps?

And what about the chinese media that already published the takeover price of $0.57 one day before it announced officially in Australia? Is that why the share price climbed up quickly to $0.43 few days before it announced?

Obviously a lot of shareholders are not very happy with the offer. But over 120 millions of shares are offered for sale is a bit ridiculous to say the least. I wonder if Hanlong is permitted to buy from the market at this level. This will give them a chance to mop huge chunks of the company for a lot less than what they are offering. But if they are not allowed, are they allowed to buy through proxy and using their long arm related companies to buy..?

With this (sort of) market manipulation theory, can anybody do something about it..?
Or should we buy more of Sundance shares and hold it tight until next year for $0.57 per share cash?

Tips from Market Falls

2011-09-17T07:17:00.000+10:00

These are tips from Wespac Financial Planner David Simon and HLB Mann Judd partner in wealth management Jonathan Philpot on how to weather the market during volatile times:

Block out the noise
Make tweaks, no wholesale changes
Keep an eye for your income
Look out for dollar cost averaging
Difersity

Billabong (BBG.AX)

2011-09-15T11:29:00.000+10:00

I took a small dip on Billabong today at $3.22. Feels a bit gingery already :)
Nobody knows what is going to happen in the near future. Billabong share price has been hammered by many events lately. Negative sentiments on retail, euro debt crisis, broader economic slowdown, etc..etc.. to name a few. My aim in owning BBG shares is mainly for dividend purpose. It will go ex dividend on the 19th September, with dividend payout of 13 cents per share. It will make a nice 4% return.. IF the share price is not going to tumble.

According to an article in Sydney Morning Herald, Analyst at Macquarie have an outperform recommendation on Billabong with a 12 month target price of $7.50. This means, that if they are correct, I will double my money in a year time. That sounds good, but then again.. How little we know.. Those analysts are too often making mistakes.

Job Cut

2011-08-16T12:19:00.000+10:00

Strong Australian dollar and poor business environment keeps creating a havoc in many Australian companies. Apart from the mining industry, many businesses in Australia are suffering. Manufacturing sectors has shrunk dramatically and continue in the struggle street. Most recently, this has been accompanied by job loses.
Last week, Australian employment rate increased to 5.1% from 4.9%. While the number is still very low, this has just shown that things are not as good as what Wayne Swan wants us to believe.

In recent weeks, you can hardly read the news without noticing a job cut announcement in the business news section. Here are some of them:

Qantas is planning for 1000 jobs cut.
One steel cuts 400 jobs from manufacturing
BlueScope may cut 300-500 job direct and maybe twice or even thrice indirect from Port Kembla.
SPC Ardmona will cut 150 jobs in the Goulburn Valley over the next 12 months
Penrice Soda announced it would axe 25 of its 265 workers
Channel Ten (TV) cuts 170 jobs from its news and sales division.
ABC Television, job cuts number unknown.
Tasmanian government announced 25 middle management position in Health job will go
Heinz Factory at nearby Girgarre - 140 job loses
ACL Bearing, car part manufacturer from Launceston is sacking up to 35 workers over the next two weeks after more than 100 redundancies in 2009
Brisbane City Council to cut 50 development jobs
How many from construction industry?
How many from retail?
And the list going on and on.

The Big Falls

2011-05-30T12:54:00.000+10:00

This post has little thing to do with my ASX investment, but I've just read an article about housing in Australia and love the image they put on it.
Here's the link to the article:
http://www.news.com.au/money/david-and-libby-koch/koch-beware-of-property-porkies/story-fn7kicty-1226065440533

Pharmaxis Run

2011-05-30T10:51:00.003+10:00

Pharmaxis - What can You Make from this?

2011-05-27T12:22:00.001+10:00

Honestly, it surprised me. To a great degree. There are so much money to make these few days and I am in the middle of it, petrified. Pharmaxis shareholder, woke up on the 26 of May in a bloodbath. Pharmaxis reported that the European Union officials indicated that they would refuse the company's application to market its Bronchitol treatment for Cystic fibrosis. The European Committee for Medicinal Products for Human Use (CMPH) informally voted down Bronchitol in a meeting with Pharmaxis last week. Note, this announcement came a day after Pharmaxis CEO sold 500,000 shares for $2.95 each (do you think SEC should look at this?)

Share price went down from 2.81 to as low as $0.76. I know nothing much about Pharmaxis, but I could not resist to nibble a small bite of the company. I bought a few on low $0.80, which got me nervous as the stock closed the day at $0.76. Yes, I should have had a stop loss, and to be honest I do have (an imaginary) stop loss. But I did not touch the sell button, partly because I don't like being wrong and losing money at the same time (sounds like a Mark Douglas' line from his book - Trading in the Zone, doesn't it?)

Anyway, the next morning, in the first hour, the stock price went back up to $0.845. I was feeling a bit better, until an hour later, the selling was very intensive, and saw the price reached $0.71. That was 15% swing in one and half hour. Somebody making heaps of money there.

And then this morning, 27 May, PXS went back up again to as high as $0.93 or 30%. The depth look quite healthy too. A director of the company also bought a nice chunk this morning at $0.80..
Now, big question...should I sell it or keep it.. I can't count on my luck too many times, can I..

Do you have the Ability to Ruthlessly Cut Your Loss?

2011-05-22T08:30:00.001+10:00

There are few large losing trades that I did not cut, and it just too painful to watch. I know the drill, let your profit run and cut short your loss, BUT..for me it's easier to say than to do it. Luckily, I am also lucky enough to make up from other trades, which at the end left me with no loss, but also not too much of a gain or profit. Things have to change.
According to Mark Douglas, the pain of losing money (by cutting short your loss) is intensify by the fact that you are making a mistake.

Trading in the Zone by Mark Douglas

2011-05-20T11:44:00.002+10:00

I am currently reading a book by Mark Douglas, Trading in the Zone. It's a trading book dedicated to review psychological sides of a stock trader.
I think it's a great read!!

Hastie Ltd (and my trading mistake)

2011-04-22T21:13:00.001+10:00

I made another trading mistake few days ago by buying Hastie Ltd (HST.AX). I am not sure why I did it, other than a prove that my emotion still get in the mids of my trading. I started watching Hastie few weeks ago, when I searched for a high dividend yield stocks. Hastie caught my attention as it supposedly yields 7.5% fully franked, with payout ratio of 54%. When I checked on the stock, it was in a state of trading halt/suspension. You guess it right, debt, without the mean to service it.

The watching continued, and fast forward, it dropped to 24.5 cents just after the suspension. I thought it worth a punt, I mean how much more can you loose? So I bought a small amount of Hasty at the (dead cat) bounce, and the minutes after the transaction went through, I had these feelings of (uneasy and guilty) for not following my trading principal. NO RUSH, the stock market will still be there tomorrow!! And I didn't do a proper check of the company before I bought, to realise that most assets are in the form of goodwill. Nothing much real except the debt.

Ok, that's a mistake, but worse than that, when the price started to go down, I ignore it and did not follow my stop. I basically let the lose running. It was just a pure bad trading.

Moly Mines ltd

2011-02-12T11:31:00.000+10:00

Little did I know that when I sold my Moly holding on the 17th January 2011, a day later the company issued a company update regarding (partly and most importantly) the financing of the Spinifex Ridge Project.

Essentially there would be a delay in the financing, hence raised doubts about the future of Moly's molybdenum project. The announcement resulted in a drop of Moly's share price by 22% to $1.10 by the time the ASX close. What a near miss, as I am not in the habit to put a stop loss on my share holding.

Looking back at the chart, I should have bought back in at $1.02-1.03, and then sold again around $1.20 for a quick profit, but unfortunately I did not. The uncertainty was putting me off a little bit, and while I still believe that the future still might be great for MOL, I would just sit back and wait for the cloud to clear out.

Charting wise, MOL is in the downtrend at this moment, sliding back to $1.14 yesterday. With the uncertainty and lack of good news, I expect it still drifting down from here. Another issue to consider is the amount of funding that Moly need. The company needs around $1.2 billion to build the whole mine. Hanlong funding of $500 million is not enough, so we should expect another right issue to top it up.

Oz Mineral Reward?

2011-02-10T10:12:00.002+10:00

I stuck with Oz Mineral through the dark days of the GFC, and it was a nerve breaking experience. It followed by the class action (which turned out that I am not eligible, as I bought before their timeline) and a great recovery, if I may say so.

Yesterday, Oz announced a $587 millions of profit and cash on hand of approximately $1.33 billion. No debt!. It is followed by the news about rewarding the shareholders with a fat payout of higher dividend, capital return, consolidation of shares and a buyback.

It's all good, I suppose, but when Oz concern, there's always a question in my mind about the action of Australian Government at the height of the GFC. I am not an expert in public finance, so my question is why the Aussie government did not help those mining companies that had trouble with their finance then? Instead, many of those companies are forced to sell their assets at very cheap price to Chinese companies which were backed by the Chinese Government. I realise that mining companies are private entity, but the Government could still help them by buying their assets, or shares in their companies. That would be a great investment, and if they would have done that, they will sit in a very nice profit, and saving Australian mining assets at the same time.

But apparently, everyone's a winner from Oz Minerals' Chinese transaction. Minmetals (chinese) got a good deal, so did Oz

Anyway, back to Oz results:

Final dividend of 4c a share (7c for the full year)
Subject to shareholders approvals:
a capital return of 12c per share
a share consolidation in the ratio of 10 to 1
On market buyback of up to $200m

Those would see a return of more than $600m to shareholders for the next 12 months.

Picking Up Pennies in front of a Steamroller

2011-02-09T13:41:00.001+10:00

Finally, I've got the hold of Nassem Taleb's book, The Black Swan: The Impact of the Highly Improbable, and read it.

There were a lot of expectations associated with this book for me. This book is quoted so much in the wake of the GFC, that I thought it's a purely stock market or investment book. Well, I was wrong. While I think 'The Black Swan' is a good read for financial people, it's also a good read for every curious mind.

The book is well written, with some humor in it, but to be truthful, I sort of got lost in the middle of my reading. I found the book a bit repetitive, rather tedious and taking a long time to make a point.

The main point of this book is:

We can not possibly know everything
The future is uncertain and dynamic and has many possibilities.
Aftermath, there are many who tell you "I told you so", they actually had not.

Quote I like from the book:

Nobody knows what's going on
What we don't know can be more important than what we think we know.
Most financial traders are 'picking pennies in front of steamroller' exposing themselves to the high impact rare event yet sleeping like babies, unaware of it.
Information is BAD for knowledge
Don't ask the barber whether you need a haircut, and don't ask academic if what he does is relevant.
Financial analysts, experts, strategists, portfolio managers generally don't posses much knowledge about the market, but general public listens to their opinion
Many "experts", like economists, are no better at predicting than regular people.

HUBB Financial

2010-03-10T12:11:00.000+10:00

There are some series of videos and learning materials available through HUBB financial. Worth checking out for beginners.

Bloody ROC

2010-02-03T14:46:00.000+10:00

A severe and brutal resource downgrade has hit ROC.AX today. It went down 32% on the day. What was painful about it was the fact that there was sell down just two days before the announcement, AS IF, some people have already known about the downgrade. A case of insider trading??

On the interview at the boardroom radio, the management did not seem to sure how this could happen. This is a 25% downgrade of the main asset!!

BPT who is also a JV partner (owns 30% of BMG - The same proportion as ROC - 30%) did some damage control by saying that it only affect the company 2% of final asset..(BPT down 7%..)

What about ROC??? Nothing?? Zilch

My Computer Modem was Broken Yesterday!!!

2010-02-02T11:02:00.001+10:00

What a bad luck. My modem busted yesterday, when the stock market was tanked, rather badly. What made it worse was the fact that I did not have my buy order in place. Last week was such a bad week at the ASX, so I do not want to leave my orders overnight. As a result from this condition, I miss the run today...Never mind, there will be another chances, another times, I suppose.

If I can learn one thing about yesterday, was that a serious stock trader should have this sort of condition covered in her/his trading plan. The trader should consider the option when the modem or the internet connection does not work as it suppose to.

solace of the day

2010-01-28T13:07:00.000+10:00

A profit is a profit, no matter how small

Correction??

2010-01-25T01:36:00.002+10:00

The ASX seems to be heading to the fourth down days in a row tomorrow. There are few factors at this moment that have the possibility of causing a correction; a combination of policy changes in the US on banking regulation, worries in Europe about the financial strength of Greece, concern that market need a rest after several months of bull run and unease about the Chinese economy (China's moves to rein in economic growth).

Things could get even tougher with the doubts over Bernanke's Re-confirmation. This doubt added to the selling pressure on Wall Street in late trading on Friday. Seems like we'll see a sell off if the US Senate decides to show Mr Bernanke the door.

From the latest news:

Jan. 24 (Bloomberg) -- President Barack Obama received assurances from Senate leaders that Ben S. Bernanke will be confirmed for a second term as Federal Reserve chairman, an administration official said.

Sold half of MOL.AX

2010-01-13T23:30:00.001+10:00

A bit of a red flood today on my screen.. Similar to yesterday, except it's a bit better (a tiny bit!)

I ended up selling half of my MOL.AX holding, just to secure small profit. Bought them sometimes in November 09 for $0.80 and sold today at $1.025.

ROC.AX or TAP.AX

2010-01-12T12:58:00.003+10:00

I am not sure which one to choose..
I am thinking to sell some of my BPT.AX to realise some gains it made recently and plan to use the money to buy shares of another oil company.

These two companies are in my radar, but I don't know which one to choose.

OR, maybe just leave it where it was, at Beach Energy?

Post Note: I ended up buying a small parcel of ROC on Friday @$0.705/share. I still keep my BPT, and still watching TAP. TAP is still down trending, and I might buy some when it starts to show some signs of reversal.

ISoft Group Limited (ISF.AX)

2010-01-07T12:16:00.001+10:00

As I mentioned in this blog yesterday, ISF.AX is one of my very few investment that still has not performed very well in the past year.

In the past year, ISOFT, formerly IBA HEalth, have been having problems that mostly inherited from the old UK's Isoft. This includes, profit warnings, debts problems, pound sterling exchange rates, the potential scrapping of NPfIT, issues with Lorenzo implementation and some other issues regarding accounting irregularities, where the former iSoft directors are accused of conspiracy to make misleading statements. What more can you ask?

Although there are quite a few positive developments recently, including restructuring of senior debt facilities, string of new contracts, and latest one was just today when UK FSA discontinued investigation, ISF share price still going nowhere.

Share trading resources on the Net

2010-01-06T12:55:00.008+10:00

A few days ago, a friend of mine asked me about online resources for investing or share trading.
He is considering to start share trading but does not know where to start. I thought I'll post my reply in this blog as well:

There are so many resources on Stock trading in the internet. Some of them need subscription (fees), but there are also many free ones. Note: I am investing on the ASX (Australian)and I am opted for the free resources.

THEORY:

For general theory, I usually refer to: www.investopedia.com
For technical theory, there are many choices as well.

I like http://www.informedtrades.com/trades.php?page=freetradingcourses
Informed Trades also has many video resources on youtube. What you need to do is search for it on youtube with keyword: Technical Analysis.

NEWS:

For news, I like CNBC and Bloomberg, occasionally I am going to kitcometals. CNBC and Bloomberg also have live TV and Videos. I am checking pre-market data on CNBC frequently.
For regional news, I read 'The Australian' and the Australian Financial Review.

ANALYSIS:

For technical analysis, I use Yahoo finance as I am not relying heavily on technical.
For fundamental analysis, I am using data from my online trading broker platform.

BOOKS:

I read these books : I think they are good for beginners: The Intelligent Investors, by Benjamin Graham, Trading for a Living, by Dr Alexander Elder, and also few other investment books about Warren Buffet investment style.

STOCK FORUM and NEWSLETTER:

I found joining Stock Forum is useful. This is the place where we can interact with other traders or investors, exchanging informations, thoughts, issues, and rumors. Sometimes there's also a chance to learn. I join www.hotcopper.com. One thing to be aware of, though, that you can not just follow what other people say or suggest in the forum. There are many people with different agendas in the forum, and most probably has nothing to do or intent to help you in your trades. You really have to DO YOUR OWN RESEARCH!!
I subscribe to a few free investing/stock newsletter.. But in my opinion, this kind of newsletter is only serve as to 'broad our mind'.

Start the New Year with a New Hope

2010-01-06T12:16:00.000+10:00

Farewell 2009!
I have to say I had a good time with my investment in 2009. I bought a reasonable amount of shares in between December 2008- April 2009, and they are doing really well. I managed to cover my loss in 2007/8 Global Financial Crisis, and actually start to make profit again, which is a good thing.

2010, first five days was good!
Commodities and oil prices are recovering well, and for me (who invested mostly in mining and energy company) these are translated as good gains. I am sitting on a nice profit for BPT.AX; AWE; IDL; AIO; AWC; MGX, PNA, MOL, and even REX (which is an airline co)

From my current holding, it's only ISF.AX and ROC.AX who haven't perform well.

If I to learn something from the past GFC, is that I have to set aside emotion in investing. Yes, I know the rule, and it seems easy to follow. BUT in reality, it is NOT!! It need a strict self disciplines and control, and it certainly need a lot of practice!

First Lesson in Investment (and the hardest one for me to practice..)

2009-10-13T12:13:00.004+10:00

PATIENCE..!! Provided you picked the right stock, Good things DO come to those who wait.

I am doing fine..BUT..

2009-10-08T22:55:00.002+10:00

I could have done better!! I made few mistakes, and the worst one lately was with MOL.AX.

I still manage to get out with around 90% profit, but it went up much-much more than that!

Today, my best performer is AWC.AX

I love Alcoa, and I'm keeping Alumina

Friday 14

2009-08-14T16:45:00.003+10:00

Another green day today, with with IPL.AX and MOL.AX (again) running high.

I sold MGX.AX from one of my husband's account this morning at $1.185. I bought them a while back for $0.88. MGX reported its result yesterday. Revenue and profit was down as expected. I will look again to enter if the price dip sometime in the future. A great little company, just I thought that it has gone a long way from $0.20 just a year ago.

I sold a THIRD of MOL.AX at $1.87!!! I'm getting a bit jittery, and I thought it's wise to take profit, although I had a feeling that the price appreciation will still going to continue until the news of offtake agreement (this is my deduction, anyway, so don't take it seriously). I am still happy to hold the rest (2/3 of my original holding). Bought them in not long ago for $0.36. Praise be to GOD!!!

Industrea Ltd (IDL.AX)

2009-08-13T10:05:00.003+10:00

Industrea is another little runner in my portfolio. Bought at $0.145 and top up at $0.185, IDL is currently trading at $0.43. I have been in and out IDL since 1996, and it's been good for me.

Short term strategy is to wait and enjoy the run until they reporting the result, which is sometime next week (I've got to check the exact date again...)

Moly Mines Ltd (MOL.AX)

2009-08-12T21:21:00.003+10:00

Holly Molly..!!!

MOL.AX is one of my best buy. Bought them at $0.36 just a few months ago (mid May 2009), Moly is now sitting at $1.43. Things seem to be coming for the next few weeks, still wondering what they are. I hope I won't misjudge the movement, and that whatever is coming is going to put a rocket to the flying machine.

In the short term, well.. just enjoy the ride!!

From the goss:

Moly Mines Ltd., seeking to build a A$604 million ($511 million) molybdenum mine in Australia, is in talks with Chinese groups for iron ore sales accords from an adjoining deposit amid surging demand.

“We are getting a knock on the door from a Chinese party about once a week now,” Derek Fisher, managing director of the Perth-based company, said today by phone from Kalgoorlie, Western Australia. “We are getting a fair amount of attention particularly from the smaller to intermediate mills.”

Aug. 4 (Bloomberg)

The miner is seeking to sign an off-take agreement to secure sales from its Spinifex Ridge iron ore project, which is expected to begin production in early 2010.
Under such a deal a buyer agrees to purchase output from a particular project at predetermined prices and conditions over a number of years. (Reuter)

Learning and learning

2009-07-22T11:28:00.002+10:00

There are so many things to study! I have come to realise that I know very little (or close to nothing) about trading and investing as a professional should have. To be fair, I am not a professional (yet), just an amateur trying to invest and trade better.

With three kids, husband and home to care for, I don't have as much a time nor concentration when it comes to study or reading (non fictional) books. I haven't finished my Benjamin Graham's book, the Intelligent Investor, that I started to read a while ago.

In the meantime, I picked another book which I found very interesting. The book is called 'Trading for a Living' by Dr Alexander Elder. I found this book easy to read and understand. The book gives a good coverage on the psychological aspect on stock trading.

Spudding

2009-07-17T10:42:00.002+10:00

In a drilling report of an oil company, we often come accross a term called 'spud', as in this statement:

"Well 1 spudded on June 200X"

What does it mean?

In petroleum/oil industry:

"spudding" means the very start of drilling on a new well.
"Spudding in", or to "spud" a well, means to inniciate drilling operations.

Bluescope steel

2009-07-17T10:19:00.002+10:00

I think it was a mistake to sell Bluescope Steel (BSL). I sold too early, but then again I was stopped out of my trailing stop. I wonder how to avoid this thing to happen.

Australia

2009-07-02T12:38:00.002+10:00

Some recent data from Australian economy :

Consumer spending UP - thanks to the cash handout
Interest rate very LOW
House Price UP - thanks to the government first home buyer grant
House buiding DOWN - a lot; more than 12% for May period.
Job Vacancies DOWN
Unemployement UP

New Year!

2009-07-01T18:27:00.004+10:00

I wished for a new year with a new hope, but today the ASX had a new year with a rout! I am still wondering why the big drop, while around the world weren't doing too bad today.

Is Australia going to experience the 'US and Europe economy experience' soon? Today's local economic data does not look pretty. In the year to May, building approvals fell by 22.4 per cent. What will it mean to the housing price?

Asciano

2009-06-17T11:51:00.004+10:00

I made a few trades this morning. This includes sold Bluescope (BSL.AX) and bought Asciano (AIO.AX). I am not sure if selling BSL is the best idea, but it has already hit my trailing stop, so I better sell it without ifs or buts. It would be nicer to sell BSL four days ago when the price was a lot higher, but at $2.48 I still made a small profit.

Asciano has just emerged from trading halt this morning, down approximately 30% on the back of capital raising. Will see if it's a good idea to buy now in a couple of months. I just read an article from The Australian this morning. It was actually dated yesterday, http://www.theaustralian.news.com.au/story/0,25197,25641593-5013408,00.html.

The article mentioned that if retail investors are not buying up deeply discounted deals for well run assets like asciano, then they should hand over their money to someone else to manage.

Asciano is a rail and port company, and it's stock was priced at $10.65 a share when spun off from Toll two years ago, and it is now raising nearly twice its existing market capitalisation at a deeply discounted price of $1.10 a share.I am in at $1.29

Deep Yellow Limited (DYL.AX)

2009-06-15T10:48:00.002+10:00

I am currently sitting on 344% profit on DYL. By far, it is one of the most profitable investments in my short investing career. I made a mistake a while ago for selling 25% of my holding, but then, I make mistake loads of times, so big deal (as long as I don't repeat it again, which I am trying hard to!)

I am still not sure what happened out there, but I bet they have a big gigantic of resource in the ground (Namibia). Dr Pretorius has been stationed there for some reason. Wondering if it will be a Paladin in the future. Untill then, I'll hold.

What to do?

2009-06-12T15:20:00.002+10:00

The last couple of weeks saw my holding increased by at least 11%. Sweet (unrealised) profit. Especially when you spent those days holidaying with your family. Back from holidays, I have been thinking what to do with them. So far I haven't done anything, but my fingers are close to the sell trigger. It could be a long continuous rally, but what if it's not?

I have three share trading accounts from different brokers, so at this moment, I decided to use one of them as my short term trading account and use the other two as my long-term hold. We'll see how it goes.

Bluescope Steel

2009-05-13T13:20:00.003+10:00

I bought a small parcell of BSL.AX this morning at $2.26 per share. I did a bit of research on BSL, and actually the outlook forward seems to be a little bleak (or so said the researchers and brokers). I'll give it a go, anyway, with a stop loss planned at 15% underneath purchase price.

Last Week of April

2009-05-01T18:49:00.002+10:00

Over all, this week is a quite good week. I did make a few mistakes, however, when I sold few stocks prematurely. It was a good gain, nonetheless, but I could have let it stay for more profit.

I misjudge a few things this weeks, and I suppose it's a good lesson to take.

DYL, I sold a quarter of my holding at 0.23. I thought it was a good price, as I bought them at 0.099. So it was like 150% profit, but then the share price went up to 0.31!

GIR, I sold out at 0.55 (bought them at 0.365), but the next day, it went up to 0.60.

PNA, I set my buying price at 0.29, but when it down to 0.29, I was a bit unsure and thinking that I could get it cheaper tommorrow. It never looked back since then, and now is sitting at 0.34.

MOL, same story as PNA

SDL, I had a chance to buy it on offer at 0.08, but did not take it. It went up to 0.11 on the next three days.

Lessons:

Cut the loss, but let the profit go as much as it could.
Stick with your trading plan, as nobody knows what's in store in the morrow.

Never Catch a Falling Knife

2009-04-28T12:07:00.002+10:00

And never try to catch a rocket!

While the knives don't seem to fall badly this time around, the other challenge is to try to not too anxious and panic if you think you missed the boats, or rockets in this case.

The past few weeks, has witnesed some resource stocks prices soared. Copper price rebound, nice lead from overseas, etc. They have caused a big jump in some resources stocks, but then the price eased again, to an oversold terrritory. Now if we bought in the high, as we scare of missing out, we will be in trouble.

Tide is Turning?

2009-04-14T12:00:00.006+10:00

Of all the shares I bought recently, only a couple of them that is currently below my purchase prices. Of course this doesn't count of my old holding, although it seems that they have also started to creep back up; baby step.

I am putting a buy order of 18000 pcs, still has not filled, on MOL.ASX (Moly Mines), a couple days ago. Moly Mines is a resource company that is focused on development of base metals projects including the world class Spinifex Ridge Molybdenum Project.

Biggest Mistake

2009-03-11T11:47:00.003+10:00

In the latest Your Trading Edge magazine there is an interview with Dan Zanger, possibly one of the best traders in the last 10 years. Dan is known to turn $10,000 into $ 42 million.

He was asked what are the biggest mistakes traders make ?

" Believing in a stock is number one. Never believe in a stock."

I Reckon...

2009-02-27T18:22:00.001+10:00

RUL.AX is the best kept secret in town..

Great Co.

No Seller.

Big Dividend.

Have a look!

BPT Half Yearly Report

2009-02-24T11:36:00.002+10:00

We picked up a smallish parcel of BPT yesterday at $0.735. I was a bit nervous this morning when it went straight down to $0.71 before they announced their half year report. I think it's not a bad result. To summarize:

BEACH PETROLEUM MORE THAN DOUBLES FIRST HALF PROFIT CONFIRMING UNDERLYING EARNINGS STRENGTH --

Beach's net profit after tax jumped 117% to a record $127.5 million from $58.8 million in the previous corresponding opening half.
By excluding the gains from commodity hedging and write-off adjustments from the latest first half profit, the strength of Beach's normalised profit is further highlighted – up 142% to $52 million compared with the previous corresponding period.
The profit hike was achieved with further strong growth in total revenue, up 41% from $340 million to a record $480 million, while higher oil and gas sales of 5.5 million barrels of oil equivalent (mmboe) and surging oil and gas production of 5.0 mmboe were also first half records for Beach.
The Company's shareholders registered on 31 March 2009 will be paid a steady interim dividend of 0.75 cents per share by late April 2009.

BPT is sitting at 0.765 at the time I write this.

Half Year Results

2009-02-24T11:15:00.005+10:00

All goods.. Including RUL, REX, BPT, AWE, IBA, IDL.

Technically, RUL looks very strong at this moment.

Tassal Group (TGR), I am not sure what is happening there. The last 10 transactions today only trades either 1 or 2 shares in quantity, and pulling the share price down misserably:

Tassal Group Limited (TGR)
Date	Time	Price ($)	Quantity	Value ($)	Conditions
24-02-2009	12:10 PM	$1.885	2	$3.770
24-02-2009	12:08 PM	$1.870	1	$1.870
24-02-2009	12:03 PM	$1.970	1	$1.970
24-02-2009	12:03 PM	$1.975	2	$3.950
24-02-2009	12:00 PM	$1.980	2	$3.960
24-02-2009	11:57 AM	$1.980	2	$3.960
24-02-2009	11:55 AM	$1.980	2	$3.960
24-02-2009	11:39 AM	$1.980	1	$1.980
24-02-2009	11:39 AM	$1.985	1	$1.985
24-02-2009	11:38 AM	$1.990	1	$1.990

TGR is now on preopen...

And it's a good result - with a 4 cents dividend.

Crikey, they're manipulating the price before my eyes, and I can not do anything..:(

Anyway, I hope it will be a good day today afterall

IDL- What's the Catch?

2009-02-19T13:44:00.003+10:00

A while ago, I would falling over myself to get in.

Consider this statistics:

IDL is trading at 1.5 Price Earning (P/E) Ratio

15% Dividend.

Sure it is creeping forward, but I just can't understand the masive sellers under 10 cents.

Update on Half Year Results to 31 December 2008

First half Adjusted net profit after tax* $24.65 million – up 106% on prior comparative period.
Impairment on Customer Contract, $17.18 million, recognised in first half reflecting previously announced termination of Handlebar Hill contract.
Reported Net Profit $3.7 million (2007: $9.5 million), inclusive of non-cash amortisation and impairment charges.
Confirms Adjusted NPAT* guidance range for FY2009 of $42 - $47 million.

In the course of finalising the audit review of half-year results to 31 December 2008, Industrea Limited has become aware that the half-year result is likely to be materially different from the prior comparative period.

Full disclosure and commentary on the half-year result will be released in due course however, in accordance with the continuous disclosure requirements of Listing Rule 3.1, the company is providing this market update.

Industrea is expecting to report an adjusted net profit after tax* for the half of $24.65 million, up 106% on the prior comparative period. The increase in adjusted net profit after tax* reflects improved financial results across Industrea’s businesses and the inclusion of trading results from the Huddy’s Mining Services business for the full period (2 months trading in the prior comparative period).

Reported net profit after tax for the period, of $3.7 million, is inclusive of a non-cash impairment charge on customer contract intangible assets, of $17.18 million. The impairment has arisen from the termination of the Handlebar Hill Open Cut contract, advised to the market on 14 January 2009 and, in consultation with the company’s auditors, is expected to be recognised in the first half results.

The first half result is in line with directors expectations and the company reaffirms its full year guidance for FY2009 of adjusted net profit after tax* in a range of $42 - $47 million.

* Net profit after tax prior to non-cash accounting adjustments to recognise the amortisation and impairment of customer contract intangible assets and the equity component of convertible bonds.

What Next??

2009-02-19T13:27:00.004+10:00

Some more news on OZ asset sale:

The battle for control of the struggling OZ Minerals is about to heat up.

Chinese group, Minmetals has made an agreed $2.6 billion offer at 82.5 cents a share, but investors are not taking it seriously, keeping the OZ share price well under the offer price. OZ shares traded at 66.5 cents late this morning.

Tomorrow, Oz Minerals will try and up the price by revealing several deals designed to get the Minmetals offer higher.

The offer allows for a higher price if OZ manages to sell assets before the deal is done. Some assets such as Avebury in Tasmania, a nickel mine and the Martabe gold project in Indonesia, have been on the market. Now some buyers have appeared, but not for all.

They will feature in tomorrow's announcement, according to a source who writes: "Oz Minerals will announce on Friday the sale of two assets which will result in slight increase to current Minmetals takeover offer price: the Martabe gold project in Indonesia will be sold to Owen Hegarty-led consortium (Tiger) for $US 200 million."

"Evidence of reduced asset values in mining industry is the OZ nickel mine (on care and maintenance) at Avebury in Tasmania. The exclusive preferred bidder is (Hegarty associated) Range River Gold Ltd, as previously advised. The offer price of $US 80 million is a fraction of book value and as a consequence, the operation may be retained by Minmetals rather than sold."

"The Golden Grove mining operation in Western Australia will be sold to a consortium headed by Kerry Harminis, the former executive Chairman of Jubilee Mines Ltd, which was taken over by Xstrata at the top of the mining boom in late 2007. He wants to return to mining and is familiar with the project and has an affinity to the general area."

Thanks to Samizdat1 of Hot Copper

It's Just a Bad Management

2009-02-16T22:18:00.002+10:00

I still can not get over it. It only took them less than a year to destroy a company. Yes, I am talking about THEM on the Oz Mineral Board. For goodness sake, its 82.5 whole cents, and they called it as the best outcome, the same people who said that the company worth $4 only a few months earlier.

The Deal is a Joke

2009-02-16T16:08:00.004+10:00

Just on the news, another RIO style transaction. Another MGX, and PPX, PEM, MIS, GBG and who's next?.

The deal is a joke..to say the least.

Luckily, I still have some time to sign the IMF lawsuit re: OZL.

OZ Minerals agrees to Chinese takeover

February 16, 2009 - 4:25PM

Debt-laden copper and gold producer OZ Minerals has recommended a $2.6 billion takeover offer from China Minmetals Non-ferrous Metals Company, in what would be the second major investment by a Chinese company in Australia within a week.

The Chinese trading company is offering 82.5 cents for each share in OZ Minerals, which is seeking to refinance $1 billion of debt by February 27, with the proposed acquisition to be completed via a scheme of arrangement.

OZ Minerals said the offer is unanimously recommended by its board in the absence of a superior one.

"The board has determined that Minmetals' cash proposal is in the best interests of OZ Minerals' shareholders and believes this is the best outcome for shareholders compared with any of the other options available to us,'' chairman Barry Cusack said in a statement.

Shares in OZ Minerals - which was formed through the merger of Oxiana and Zinifex last year - last traded at 55 cents before the company entered a voluntary suspension in December.

OZ Minerals has been pursuing asset sales and other cost-reduction measures including, job and production cuts and placing its Avebury nickel mine in Tasmania on care and maintenance.

The company said it would continue to pursue the sale of the Martabe gold and silver project in Indonesia and the Golden Grove polymetallic mine in Western Australia.

OZ Minerals said its outstanding debt facilities would be repaid by Minmetals upon completion of the transaction, which would solve its "present financial issues''.

"Minmetals has confirmed that it intends to continue to operate current OZ Minerals operations, which, in turn, will benefit employees and relevant local communities and also provide certainty to businesses beyond those operated by OZ Minerals,'' managing director Andrew Michelmore said in a statement on Monday.

The transaction is subject to regulatory approvals, completion of due diligence by Minmetals, OZ Minerals banking syndicate agreeing to extend the term of their debt arrangements and shareholder approval.

OZ Minerals said the company would continue to be domiciled in Australia with its staff retained.

"Minmetals will provide a robust platform for OZ Minerals to realise its growth potential when market conditions permit,'' Minmetals chairman Zhou Zhongshu said in a statement.

The proposal follows Rio Tinto's $US19.5 million ($30 million) deal with major shareholder and China's state-backed company Chinalco.

BusinessDay, with AAP

Buy Orders

2009-02-16T14:43:00.003+10:00

I have been trying to buy some more shares these days, but most of my buy orders have not been filled yet (except one or two). ASX seems to be picking up, for the short term at least. I put my buy orders on IBA, RUL, IDL, PNA, and BPT last week, with a very conservative bid price. I have been thinking that I might have to amend the bid price higher, but I am not sure

Industrea Ltd (2)

2009-01-20T10:57:00.002+10:00

I came very close to exercise my stop loss on IDL yesterday. The share price went down close to 15%, on top of the dropped on the day before (when I bought on the dip). I do not wish to catch a falling knife (again!). Industrea today, however, announced that they secure a new contract worth US$9.5 M, including first South Africa sale.

So, despite the ASX big drop of 119 points, IDL was actually on the green by as much as 13%. Looks like I am going to hold Industrea shares that I bought yesterday for a little longer.

Out of my three short termers, by the time I write this post, all of them are not too bad. Girallia is so far unchanged, and Deep Yellow is up by 3%

Industrea Ltd

2009-01-16T21:59:00.004+10:00

Managed to get some Industrea's shares today at $0.14 per share. The share price dropped as much as 30% from $0.195 today on the announcement that IDL lowers its NPAT guidance. I intended to treat this purchase as a short time trade. Stop loss at 25% lower than purchase price.

From the news today:

Industrea lowers NPAT guidance

Marcus Berghouse

16/01/2009 12:00:00 AM.

Industrea Limited (IDL) said the termination of its contract with Xstrata, combined with unseasonably high rainfall, had lowered expectations for FY09 revenue and NPAT. The company said NPAT would be between $42 million and $47 million, down from the $55 million to $60 million forecast last October.

The company said revenue would drop by 12% to between $290 million and $310 million.

On Wednesday, Industrea requested a trading halt indicating it had received notice from Xstrata plc's Mt Isa Mines that it was placing its Handlebar mine on care and maintenance and as such would be terminating its contract with Industrea for the provisioning of mining services. The company said the termination would be effective from 10 February 2009.

Investors reacted poorly to the news with Industrea's shares coming out of trading halt down around 26% down.

Industrea said its other mining services contracts in the wider Mt Isa region, including those with Xstrata at the Blackstar and Ernest Henry mines, remained operative. The company noted that at Blackstar there were plans to increase production by 38%.

The mining services company said it was in negotiations with various partners to replace the lost contract.

CEO Robin Levison said that aside from the disappointment at losing the Handlebar contract, the other business units of the company continued to perform in line with forecasts.

"While the termination of the Handlebar Hill contract was disappointing, Industrea remains in a strong financial position," he said.

"Industrea also continues to explore new avenues for growth across its diverse client base and geographical markets with particular emphasis on the Chinese market in order to meet the Chinese Government's long term goal of increasing coal production to satisfy increased energy requirements over the next decade," Mr Levison said.

http://www.livenews.com.au/Articles/2009/01/16/Industrea_lowers_NPAT_guidance

Trading Plan - Work in Progress

2009-01-12T11:40:00.003+10:00

I started to re write my trading plan yesterday. It still a work in progress now, and to be modified continually. Readers may use it as a trading plan sample and post their comments on the plan.

MY TRADING PLAN

I understand that I cannot predict and control the markets. I will control myself by adhering strictly to my trading plan.
The only factor to be taken into account during trading should be the facts and not any preconceived ideas no matter how well-founded, nor other people's opinions.
I will only trade on days when I am rested, relaxed and not distracted. I will stick to my trading plan, as it will help to prevent me from making trades that are poorly conceived and executed. I will not trade on days when I am feeling sick, tired or when I am distracted by other events in my life.
My daily trading goal is to trade according to my plan.
The instruments that I will trade are Australian Stocks listed on the ASX.
I will start my trading at 09.00 and finish at 11.30 every trading day.
I will ensure that of the 15 hours per week devoted to trading.
Each day, I will ensure that yesterday’s trades are analysed and that my trading journal is updated.
I am a a risk averse trader and always seeking to minimise risk wherever possible. I will achieve this via diversification and risk management regime.
My maximum exposure in the market will not exceed a combined total of 10% of my capital at any one time.
My maximum exposure in any one sector will not exceed a combined total of 5% of my capital at any one time.
For every trade I enter, I will decide in advance where to place my stop loss. Full exit to be taken when stop loss is reached without exception
When my trading equity exceeds the amount I need to trade my strategies, I will withdraw the surplus and transfer it back to my bank account.
I will utilise a trailing stop which I will position10% below the lower high in an uptrend or 10% points above a higher low in a downtrend.
I will close my whole position immediately upon the price crossing the moving average.
I will close half my position upon a 50% increase/decrease in volume compared with the previous price bar.
In addition to recording all my trades, I check to confirm that all trades are executed in accordance with my plan.
I will update my trading journal regularly with my thoughts about each trade and my conclusions about the day as a whole.
If I break one of the rules detailed in my trading plan I will stop trading for a full day and focus on the reasons why there was a breach of discipline.
After a winning trade I will guard against over confidence and ensure that my attitude remains consistent, and remind myself that executing the trade in accordance with my plan is more important than the outcome of the trade.
After a losing trade I will examine the trade and learn what I can from it, check to ensure that I executed all aspects of the trade in accordance with my plan, and professionally unemotional with the loss.

Re-writting My Trading Plan

2009-01-11T10:03:00.003+10:00

This week I will focus on re-writting my trading plan. There are many things that I missed on my previous trading plan, and the fact that I haven't been very discipline on it, does not help either. This lack of discipline, has caused me a lot of unnecessary loss in profit.

For those who are interested in writing their trading plans, or rewrite them, I found a good article and trading plan sample at:

http://www.trade2win.com/media/knowledge/tim-wilcox/T2W_Trading_Plan_Template_2005.pdf

Portfolio Update

2009-01-05T11:54:00.005+10:00

I saw a few big gains today on my battered holding. PNA gained as much as 100% from the price befor the (trading) halt, CBH gained as much as 66% and SDL of 14%. Few stocks made small gains and few others are falling. Apart from the gains, the whole thing still looks so misserable.

Post Note:

Bought Giralia (GIR) on Thursday, 8 January 2009, at $0.365 per share. Technically, I think it looks ok. The share price line was crossing the 20 days moving average. At this moment GIR is trading bellow its cash back up. Good and sound management, and hopefully there will be a recovery on the iron ore price.

Mark to Market Accounting

2009-01-02T14:37:00.001+10:00

Mark to market (MTM) accounting has recently received a lot of attention. Current global financial crisis has put this set of technical accounting rule into the spotlight. Some argue that mark to market accounting rule has put banks and financial institutions on their feet and should be suspended immediately. Are their arguments valid?

Mark to Market accounting (MTM) or fair value accounting means that companies must value their assets on their balance sheets based on the latest market price.

MTM is great for financial institutions when markets are booming, but when the economy is in the midst of a severe downturn, the use of MTM will reinforce the downward cycle. It adds momentum to a destructive downside.

Banks and other financial institutions argued that MTM rules have contributed to current financial problems because they are required to value distressed assets at fire-sale prices. Current credit crisis left Banks and other financial institution loaded up with bad debt and mortgage related security that was valued to next to nothing in the market. As the assets value plummeted, trouble and bankruptcy arises. As a result, banks and financial institutions demanded a suspension of the MTM.

On the newer development of this issue, Accounting bodies in the US and Europe are changing a few MTM rules.

The International Accounting Standards Board (IASB) has confirmed a change to its rules allowing some assets to be reclassified and avoid be subject to a fair value calculation.

The changes allow some assets to be moved from 'held for sale' or trade, which means using a fair value calculation, to 'held for investment' which does not. Last year, Deutsche Bank took advantage of new accounting rules, and shifted the income statement into a profit instead of a loss.

In the US, after so much discussion and deliberation, recent report from the SEC suggested that mark to market has its merits in determining assets and said it was not to blame for the financial troubles or credit crunch that has hit banks and lenders.

Is MTM to blame for the credit crisis?

Among the supporters of MTM are accountants and investors. They firmly believe that the crisis is not happening because of the accounting issues.

Furthermore, they argue that MTM ensures a decent amount of transparency for investors, and it requires a close look at the risks in order to assess value. If institutions were accurately marking the books, they would have seen the problems they were experiencing months in advance and could have made the necessary adjustments. All MTM does is require companies to reveal more information about the reliability of their reported fair value.

Companies have been practicing MTM for decades, and nobody complained when banks and others were recording large profit. The difference under SFAS 157 is that public can see the extent to which the fair-value results of a company are based on estimates.

It is an irony that many of the companies that complained about the MTM have only adopted MTM recently, partly because of a provision that let them count the decline of their publicly traded debt as ‘profit’.

MTM is not perfect, of course. There is a flaw on the assumption that securities could always be sold and converted to cash, and the claim that the market value is arbitrary.

Despite the flaws, however, in my opinion, MTM is not to blame for the credit crisis. The flaws were exaggerated.

MTM is not the problem, it is the banks that made poor decision and lost credibility with investor. It is easier to blame accounting rule for the problems than to admit the mistakes that the banks made. Suspending the MTM and move back to the historical cost accounting would not solve the crisis. If we are using historical cost accounting today, there are still few assets that aren’t marked to market such as goodwill and inventory (lower of cost or market method). All the housing, mortgage and mortgage related assets would also have to be written down accordingly, as the value has been plummeted too much. Not to mention the goodwill that has been tarnished.

As an investor myself, I believe that most investors are smart enough to understand that values do change overtime. To be kept in the dark with the company’s financial condition, it’s a big no.

Holiday

2008-12-05T20:40:00.001+10:00

On holiday until the end of the year. Hopefully the stock market gets better when I come back :))

Press the Ignore Button!

2008-11-28T17:05:00.006+10:00

I found more and more media and analysts/brokers spurting a lot of garbage in this time of financial uncertainty. Well, maybe I am a little harsh, or probably I should just say that they need to go to their training again.

I suppose I have to realise that media make their money from a 'fantastic' breath taking stories and brokers make their money by encouraging frequent trades. But I have to say again for my peace of mind: Brokers or Stock Analyst recommendations and their price targets are useless! (Ok, I feel better now *smile*)

Another thing for us to put in our mind is that majority of analysts are highly compromise by the companies they cover, make them reluctant to report a 'sell' recommendation for fear of their access to the companies info and documents being revoked. It is said that 'hold' is a new 'sell', because the company will react badly if analysts produce sell recommendation.

We, as investors, have to realise that everyone has motivation when they're making recommendation, and part of our job is to determine or understand just what that motivation might be. Investor can listen, but we have to filter.

In Australia, the actions of financial analysts came under scrutiny after a Citigroup analyst downgraded the target share of Asciano from $6.08 to a meagre $0.82. This is the same analysts who had issued 20 reports of 'buy' recommendation before, with target price as high as $13.79a few months ago. How, why, had they have compromise before?

Another case worth mentioning is the one involved BrisConnections (please see my earlier post). Shares in the company slide rapidly from $1 on July IPO price to 0.1c, the lowest value a share can trade on the ASX. There are three analysts covering the company; Credit Suisse, JP Morgan, and Macquarie. In the week when BrisConnections fell to $0.05, those analyst posted target prices of $1.91, $2.10 and $0.93. What can we make of that? And of course the research houses claimed that they're completely independent of their broking arm.

So why we would read and listen to Broker or Analyst at all?

It's always a good thing to listen to any individual who have knowledge of a particular industry or company. It will increase our understanding of the business. But make sure you shield yourself from the 'buy/hold/sell' recommendation, or even from their number when they make their calculation. Instead, investor should get a good understanding of the long term picture of the company, their profitability and their position in the industry.

Is It Worth the Paper It's Written On?

2008-11-24T11:02:00.014+10:00

Just came across this Unit Trust recently.

Brisconnections Unit Trust (BCSCA) was listed on the mid of 2008 at $3.00 per stappled unit (payable in 3 instalments of $1.00). The first day of the listing saw it dropped to $0.41 cents. It is currently the cheapest share on the ASX at the lowest price possible, 0.1 cent.

Source: ASX website

According to Brisconnection website, Brisconnection is dedicated to the successful delivery of Airport Link, Australia's largest infrastructure project. When completed in June 2012 it will be the first major motorway linking Brisbane CBD to the northers suburbs, the Airport and the Australia Trade Coast, a project that was valued at $4.8 billion.

It's certainly tempting for many investor to buy a stock at 0.1c and doubling their investment if it goes up even just 0.1 cent. However, here's the catcth. As I mention at the start, BCSCA is a $3.00 stappled stock. Anyone who purchase the share will also be buying a liability of $1 per share due to April 2009, and another $1 on January 29, 2010 for the shares to become fully paid. This is to say that for every $1 worth of shares an investor is buying now, she or he will be liable for $1000 repayment in April 2009 and another $1000 on January 2010.

An Australian housewife from Victoria, recently become a second largest shareholder (Queensland Investment Corporation is the largest with 10% stake) for a mere AUD 32,300. However, for this purchase, she has to cover a huge $64.6 millions in installment payments.

I suppose investor can always sell the stake before the installment due, asuming there are buyers. This is what I can see from the market depth this morning:

Source: Suncorp Share Trade website

There are currently NO buyers on the screen, and around 84 million shares are offered by 172 sellers at 0.1 cent. From 390 million shares on issue, that's accounted for more that 20%.

What happen if you can not pay your installment? Any investor who fails to pay the installment will be charged daily interest until the full sum is paid. If the company determines this amount can never be paid, it can retake and sell the shares.

And the Management isn't going to help either, here's some excerpts from Allan Kohler's interview with Brisconnection Chairman Trevor Rowe, on ABC's Inside Business:

ALAN KOHLER: And so you’ll sue them next April if they don’t pay, is that right?
TREVOR ROWE: We will if they don’t pay in April we have an obligation under the underwriting agreement that we need to pursue the collection of any outstanding instalments, but we get the money anyway because it’s underwritten by Deutsche Bank and Macquarie Bank.
ALAN KOHLER: But you are obliged to pursue the people.
TREVOR ROWE: We are obliged to pursue people.
ALAN KOHLER: And so are you going to do that? Is in there any alternative that you’re looking at? Is there any possible alternative?
TREVOR ROWE: We have an obligation to use best efforts to recover those funds. So in a balanced way we will have to do that.
ALAN KOHLER: What will that involve? Will you put the debt collectors on to them?
TREVOR ROWE: We’ll probably have debt collectors go out and endeavour to collect it, yes.

The Cycle of Market Emotions

2008-11-22T09:14:00.007+10:00

It is fascinating to watch the cycle of market emotions, and as any other investors, I certainly can relate it to my own experiences.

Basically, we start at optimism, which builds in bull markets to Euphoria, then turn all the way down through anxiety and denial to fear and panic before capitulation and despondency set in. And then, after the storms clearing up, there will be some hope and relief, hence optimism starts again once more.

But as the ASX has now officially fallen 51% since it reached a closing all time high of 6828.7 in November last year, the question is: where are we now in the cycle?

The good news is, I do think we passed anxiety, denial, fear, desperation, or even panic. From my own experience, I guess not many things in the market could shock me anymore. We are possibly somewhere between capitulation, despondency and depression. For a contrarian, probably the bottom is very near, if it's not in. We are nearing the point of maximum financial opportunity!!

Sympathy does not seem appropriate

2008-11-14T12:35:00.005+10:00

Interesting article, I guess it served the hedge funds and short seller their right, please enjoy:

BY PHILIP DELVES BROUGHTON

FIRST POSTED NOVEMBER 5, 2008

The geniuses at Porsche have just done what half the civilised world has been thinking of doing these past few weeks and stuffed it to hedge funds and banks. The numbers are still all over the place as people try to unravel the great Stuttgart Sting. But what appears to have happened is this.

Porsche had been itching to buy Volkswagen for years. But it was struggling to raise the money. So instead of getting a traditional bank loan or issuing equity, it decided to pick the pockets of British and American hedge funds, the very funds, in fact, which have belittled stodgy old German enterprise and called it out of date. The funds which one leading German politician called "locusts" for preying on businesses while adding no value.

These funds thought VW was overpriced and reckoned Porsche was insane trying to buy it. It was nothing but a quixotic fantasy of Ferdinand Piech, the grandson of Porsche's founder and a former chief executive of VW. Porsche, after all, had annual revenues of just £5.2bn to VW's £83bn. Its market cap was around a third of its takeover target.

British and American hedge funds have belittled stodgy old German enterprise and called it out of date

But Piech's intimate knowledge of VW had allowed Porsche to make enormous profits trading options on VW stock. What occurred over the weekend was the climax of this strategy. Hedge funds such as SAC and Greenlight in the US and Odey and Marshall Wace in London were eagerly shorting VW stock; borrowing, selling it and promising to return it later. They reckoned the stock price would fall and they could buy it back cheaply and pocket the difference.

What Porsche appears to have known, however, is that the volume of available shares was quickly dwindling. They knew this because they had been quietly building their own position in VW, through shares and derivatives, to 74 per cent of the firm. A further 20 per cent was owned by the government of Lower Saxony, and another five per cent owned by index tracking funds, leaving a tiny number of shares floating freely on the market.

It is conceivable that Porsche and its banks were the ones lending the hedge funds the shares and then buying them back through proxies. So while the hedge funds thought there was a large and liquid market in VW shares, Porsche knew otherwise.

On Sunday afternoon, Porsche played its hand. It announced that it controlled 74.1 per cent of VW. German law had not required it to disclose this information beforehand. The hedge funds did their calculations and freaked out. They had borrowed 15 per cent of VW and now it turned out Porsche may have lent them most of that.

They immediately began scrambling for what little stock was out there to close out their short position. Some were reported to be sobbing on the phone to their brokers. Too many traders chasing too little stock sent the price of VW soaring, pushing the company at one point on Monday past Exxon to make it the most valuable in the world. All Porsche needed to do at this point was sit back and smile. It had made billions in paper profits.

‘The chaos around VW overwhelmingly hit professional gamblers. Sympathy does not seem appropriate’

Then came the reckoning. On Wednesday Porsche announced it would release five per cent of VW's stock to ease pressure on the short sellers. The share price of VW is still around two-and-a-half times where it was last week and Porsche could make around £5bn on this portion of its manoeuvre alone.

But even better, Porsche owned cash-settlement call options on 31.5 per cent of VW which, according to the New York Times, matured yesterday. If true, this earned them the difference in cash between 31.5 per cent of VW valued around last Friday's closing price of 210 Euros per share and yesterday’s price of 517 Euros, an astonishing return. When VW's price returns to normal, Porsche should have more than enough cash to buy control.

Germany seems to be on Porsche's side in all this. Die Tageszeitung, a liberal newspaper, wrote on Wednesday: "As opposed to previous speculative bubbles that cost a lot of small investors their money in the stock exchange casino, the chaos around VW shares overwhelmingly hits professional gamblers. Sympathy does not seem appropriate."

http://www.thefirstpost.co.uk/45766,features,how-porsche-stung-the-hedge-funds-philip-delves-broughton

Naked short selling

2008-11-14T11:56:00.003+10:00

In a move to restore confidence into the market, the Australian government yesterday moved to ban naked short selling and require that other short sales be adequately disclosed.

Australian regulators banned covered and naked short selling in September in an immediate response to the global financial meltdown, and this ban is due to expire on Tuesday, with the exception for financial stocks, which run unti January 27 next year.

According to wikipedia, naked short selling or naked shorting is the practice of selling a stock short, without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. When the seller does not obtain the shares within the required time frame, the result is known as a 'fail to deliver'. Naked short selling can be used to manipulate the stock price by bringing it down.

Critics for short selling have savaged short selling for hurting the value of the companies/share prices. However, supporters argue that short selling facilitates better price recovery, deeper markets, closer bid/ask spreads, and over time, less volatility.

John Templeton

2008-11-13T12:53:00.004+10:00

If you have some cash laying around somewhere, not earning interest money (really, I don't like interest based financial - read my old posts), and inflation is killing you, you might want to consider investing in the ASX now. Share price has never been this cheap for some years, some might even consider to rename ASX as Crazy Clark!

Talking about investing cash in a crunch time, one might take lesson from John Templeton, one of the greatest investor known.

John Templeton was most famous for buying $100 of every stock trading below $1 on the New York and American Stock Exchanges. That was in 1939. His trade got him a junk pile of some 104 companies, 34 of which were bankrupt, for a total investment of roughly $10,400. Four years later he sold these stock for more that $40,000. In 1999, Money Magazine called him 'arguably the greatest global stock picker in the century'.

This is his investment style, for a 'John Simpleton' like me to learn:

He is one of the past century's top contrarian.
Looking for value investments, he called it 'bargain hunting'
Search for companies that offered low prices and an excellent long term outlook.
As a value-contrarian investor, he believed that the best bargains were in stocks that were completely neglected, those that other investors were not even studying.

Valuation of Stocks

2008-11-12T11:24:00.006+10:00

What is a value of a stock?

Accounting wise, apparently it depends on how you calculate it. All the hype about the ‘Mark to market accounting’, which is the accused culprit of our current financial crisis. Well again, of course nobody made a mistake in dealing their business. It’s all about accounting. Right? Wrong!

Mark to market accounting, or also known as fair value accounting requires a close look at the risks in order to assess value. Did the trouble banks and financial institution looking closely at the risks? If institutions were accurately marking the books, they would have seen the problems they were experiencing months in advance and could have made the necessary adjustments, and we could have avoided the current crisis

Anyway, on the new development of this issue, Accounting bodies in the US and Europe responded by changing a few rules.

The International Accounting Standards Board (IASB) has confirmed a change to its rules allowing some assets to be reclassified and avoid be subject to a fair value calculation. The changes allow some assets to be moved from ‘held for sale’ or trade, which means using a fair value calculation, to ‘held for investment’ which does not. Deutsche Bank took advantage of new accounting rules, and shifted the income statement into a profit instead of a loss

SEC and the Financial Accounting Standards Board issued a clarification of the rules to say that “when an active market for a security does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable.” It added that “the results of disorderly transactions are not determinative when measuring fair value,” which could mollify concerns about assets being marked down to fire-sale prices.

Whatever the accounting bodies decide, I hope it’s for the interest of everybody, especially investor, and I am not going into detail about the issue in this post.

Now, Back to the question: What is a value of the stock?

In accounting, there are several alternative in valuing the stock: It might be slightly different in some textbook, but basically one of the well known methods is a discounted cash flow (DCF)..

How does DCF analysis work? In simple terms a business is worth the present value of the cash flows that it will generate into the future. Those are the after tax cash flows available to shareholders – from today to forever. To calculate the after tax cash flows available to shareholders you will start with the revenues a business generates and deduct all the cash-based expenses that are incurred in obtaining those revenues (including taxes and capital expenditures).

Most corporate finance professionals are using this method.

However, apparently, Citigroup analysts have recently shifted from a discounted cash flow model of valuation to an enterprise value model.

The Enterprise value (EV) represents a company's economic value -- the MINIMUM amount someone would have to pay to buy it outright. An enterprise value model adds up the market cap and debt a company has, and then subtracts cash and cash equivalents.

It's an important number to consider when you're valuing a stock, because although it’s not quite the liquidation value of a firm, it basically is.

This valuation model could suggest a much lower share price than the other, if a company has a big debt. Yes, the D word.

Using an enterprise value model for a company shares could means, well, the end of the business itself. It means the analysts thinks that the company has a zero earning power, hence kaput!!

Lorenzo

2008-11-11T11:24:00.002+10:00

IBA Health Ltd launched Lorenzo in Sydney today. It is said that its revenue will increase more than double after the launch of the new healthcare IT platform. LORENZO is a unique solution that will revolutionise the way healthcare is deliveered around the individual.

IBA Chief Executive, Gary Cohen said that the market for Lorenzo is in the billions of dollars.

Lorenzo is an iSoft product, a UK based company that was taken over by IBA a few years ago. There was always some concern about this takeover and the ability of IBA -iSoft to launch Lorenzo succesfully.

Well, I gues they made it!

A Glance on IBA:

IBA aims to become a global provider of healyh IT solutions. The acquisition of iSOFT saw it expanding its scope to 35 countries. Healthcare spending is driven by the increased demand for access to healthcare services and an ageing population.

Five analysts are covering IBA at this moment (FORESIGHT SECURITIES, ABN AMRO, BBY LTD., MACQUARIE RESEARCH EQUITIES), two of them recommended 'strong buy' and three others recommended 'hold'. If only their recommendation worth anything these days.

China Story

2008-11-10T14:02:00.002+10:00

Can we still buy China story? Great trading partner or a ruthless one? We know how much cash the chinese hold, but do we know their ethics of doing business? Living in Malaysia and dealing a fair bit with chinese businessmen, I found most of them are very tough and a lot of times annoyingly crafty.

Recent incident with Mount Gibson Iron, was a very interesting bad experience. First, the Chinese customers reneging the sale contracts with MGX, forced MGX into a tight situation, and then having another chinese group 'rescuing' Mount Gibson by offering a very low price that MGX could not refuse. If this happen to MGX, do you think the chinese will let other junior iron producers away? I have the feeling that chinese central authorities support this kind of practice.

Seems like Chinese contracts are not worth the paper they are written on.

Directors Buy - Runge LTd (RUL)

2008-11-10T12:13:00.006+10:00

Post Note: Ian Runge bought some more shares, 25000 on market on November 5 for $17500.

Runge director Ian Charles Runge indirectly bought 93,000 shares for $68,064 on-market on October 31. He indirectly holds 15,903,389 shares.

Ian was one of three or four Runge Directors who bought more into the company recently. Since October 2008, there are five notices of change in the directors ownership.

Among them were Anthony Kinnane who directly and indirectly bought 25000 shares for $18000 on market on 24 October 2008, Christian Larsen (bought 100000 shares worth $93500 on September 1, and Vince Gauci

Good sign and a vote of confidence.

RUL's vision is to be the leading global supplier of mine technical and business planning products and services. The company continues to strengthen its position globally, with demand for projects in new regions of the world. Demand from regions such as Russia, Brazil and China provide a solid foundation for the growth of its business globally. In terms of products and services, the company has been working on increasing the scope and size of the training business to handle a higher volume of recruits, and secondly, to reduce the complexity of its software products.

Runge reported NPAT up 6.2% to $5.94m for the year ended 30 June 2008. Revenues from ordinary activities were $63.41m, up 62.8% from last year. Basic EPS was 5.3 cents compared to 3.3 cents last year. Net operating cash flow was $5.9m compared to $6.35m last year. The final dividend declared was 1.5 cents.

Stock Chart

2008-11-09T20:22:00.002+10:00

I found a great stock chart site for TA newbies like me:

http://stockcharts.com/school/doku.php?id=chart_school

Investing Tip 1: Don't Try to Catch a Falling Knife

2008-11-07T00:19:00.003+10:00

Start looking for value plays
Tomas J. O'Loughlin, CFA, of Investment Portfolio Management, suggests that the best investment decisions in hard economic times are counterintuitive.

"Sectors or companies that you liked in good times but have been hit in today's markets may represent buying opportunities."

Buying the best of breed in these sectors can position investors to take advantage of the next bull market.

His checklist in evaluating these firms includes:

•	Are they going to go out of business in the next three to five years?
•	Does the company have a strong management team?
•	Does the company have both strong financials and access to capital?
•	Is the company expected to continue to lead in its field?

An investor can't be in a hurry to buy or sell, says O'Laughlin.

"Don't try to catch falling knives," says O'Laughlin, and "try to get a measure of the firm's downside risk."

By looking at the downside risk of firms and by taking an investor's perspective, looking over a three- to five-year investment horizon, versus a trader's point of view, the investor can identify firms with value, O'Laughlin says.

From: http://www.bankrate.com/cnbc/news/investingadvice/tips-for-investing-a3.asp?caret=2a

White Knight Vs Red Dragon

2008-11-06T15:35:00.003+10:00

This is from The Daily Reckoning in its newsletter yesterday:

The West Australian reports that Mt. Gibson Iron ore (ASX:MGX) is entertaining an offer from China's Shougang Concord and China's APAC Resources which would see those firms raise their equity stakes in MGX to 40.5% AND secure discounted ore for the life of the mine. Now that is a deal you could only make from a position of strength.

Are these Chinese firms white knights or red dragons? Does it really make a difference? We're back to the same question of who benefits the most from the long-term demand for the ore. The Chinese steel producers have the chance of a lifetime to secure off-take from Australian mines at bottom-of-the-barrel prices. But what does it mean for current or future shareholders in the juniors?

Here's what Al says, "In short, the steel sector will huddle together for warmth over the next six months. We're going to see demand for steel and steel-making ingredients move down slowly. Then the recovery will come from developing countries later in 2009."

"But right now, the balance of power has definitely shifted. You'll see more of these iron-steel project equity agreements in late 2008 and early 2009. It's a way for both parties to get some security. It's a way to wring some risk out of the contracts. And it's yet another step towards where we see the iron industry inevitably heading: Chinese firms owning a lot more of Australia's iron mines."

"Shareholders in the juniors will be in for volatility. It still isn't clear in the long run who will control the Pilbara. But right now Australian iron ore shares are factoring in a global depression. The buyers are completely ignoring the growth in the developing world that'll come in the next decade. Better yet, our favourite iron play is still sitting on the sidelines - making cash every quarter regardless of who owns the mines."

Ansell Limited

2008-11-06T12:06:00.003+10:00

Ansell's principle activities involve the development, manufacturing and sourcing, distribution and sale of gloves and protective products in the Professional Healthcare, Occupational Healthcare and Consumer Healthcare markets. Ansell is one of the companies in the Healthcare industries that has doing pretty well in the current financial crisis.

Ansell's share price today is $13.03, not far from it's 52 weeks high of $14.10 (52 weeks low was $9.16 - sometimes in June/July 2008)

Currently, there are 10 brokers covering the stocks. Out of 10, 2 recommended a strong buy, 2 moderate buy, and 6 Hold. The latest recommendation is from ABN AMRO. ABN Amro likes the look of Ansell (ANN) and reiterate Buy recommendation, saying it remains an excellent defensive stock. Target price increased from $13.45 to $14.84.

Telstra today - 5 Nov 2008

2008-11-05T13:40:00.006+10:00

Citigroup maintain their HOLD recommendation on Telstra (TLS) and 465c target price saying they don’t expect any earnings upgrade at the TLS Investor Briefing tomorrow.

GSJBWere maintain their BUY recommendation and 545c target price say highlights at tomorrow’s Investor Day are likely to be: “(1) review and discussion of company strategy; (2) update on business transformation program; (3) imminent network/product launches and (4) September Q trading update”.

Fundamental Analisys (I)

2008-11-05T11:20:00.004+10:00

Fundamental Analysis looks into the basic financial condition of the company or business. Usually, all the information we need to do the analysis are publicly available, because all the public companies are required to report their operation and financial condition to the market/investors.

There are different of aspects that we can look into, but there are few basic things that we can start to look into:

1. Earning,

Arguably one of the most important aspect of any business. Stock investors are focus on the future earning. However, since future is difficult to predict, they use the historical earning as a gauge to predict the future.
Although looking at earning figures seems to be relatively easy, unfortunately there are few of different ways to look at a company's earning. This include the time of earning and the quality of earning. We will go into more detail of this earning in another post.

2. R/E Ratio

P/E Ratio is calculated by dividing a stock price by its per share earning for a given years. Usually, we calculated the P/E based on a company expected earning ( this is what is called Forward P/E).
It is a good place to start to determine the value of a stock, and it certainly most helpful to compare it against other P/E Ratios
We might first compare it with the company's P/E ratio in the past, how high and how low it could go. Other than that we can also compare it with other similar company in the industry or the stock market index.
Just because a stock has a relatively low P/E ratio, does not always mean it's worth purchasing. Others maybe aware of a looming problems and discounted the stock price accordingly. It can either good or a bad sign, always do your reasearch first.

3. to be continued...

What a Misjudgement!

2008-11-03T08:50:00.004+10:00

Or should we call it a fiasco?

Mount Gibson Iron (MGX) is back on the trade floor today, ending a week long suspension. It announced an offtake agreement, right issue and placement of 110m shares at 60c.

At least the company did not go to the darker place, but this is the same (or not the same) company who fought against the bought out at $3+ few months ago. The same predator is now getting 110 million shares at a 90% discount!!

I suppose this is as good as you can hope for.

Bank and the Borrowed Money!

2008-11-02T17:27:00.003+10:00

I detest the interest based financial system, making money on money is not the best way for the society. For that reason, I keep my stock portfolio clean of financial institutes or banks. I am still suffer from the decrease of the stock price and asset, but at least I hold on to what I believe, and it will safe me.

Debt or borrowed money, became a huge industry around the world. The world turn away from manufacturing and toward an economy based on moving and managing money.

In the US itself, the sectors of finance, insurance and real estate sector swelled to 20% of GDP, ahead of manufacturing at 12%. Banks and insurers are dealing with obsecure instruments, debt papers, CDO. What a nightmare!

I Don't Think It Can Get Much Worse

2008-10-28T19:40:00.005+10:00

God, I'm feeling numb now..! After months of heart broken, some panic and a close shave from despair.. this is what I've come with. Yet, I'm survived. Gee..!

I am looking at an over 500 point loss in the Dow without feeling a thing, a 15% down in Hongkong felt like watching something amusing and a circuit breaker suspension at Nikkei just like a heartbeat.

Watching AUD

2008-10-16T12:47:00.004+10:00

It's partly panic, that's what the expert says, investors just trying to get hold of cash above everything! And at some stage everybody is going to reasses their ballance and portfolio, and hopefully things will start to change.

I'll put it in capital letters : HOPEFULLY! (as investor seems to have priced in nearly all worst case scenarios).

Just Stay on the Beach, Out of the Water!!

2008-10-16T12:39:00.002+10:00

This won't go down well with my boys, I assure you, but of course we're not talking about a real white sandy beach at Surfers.

In the current stock market's condition, probably is best to do nothing at this moment.

Capitaling and holding on to the cash is not a good idea for some reason and putting your toe in the water is probably not the best action either.

Best thing is to be cautious, unlike what I have done last week, when I put a stack of cash from my husband's account into MGX (Mount Gibson Iron). I got MGX reasonably cheap, I think, but then turn out that I was catching a fallen knife. Ouch!!

I am Witnessing a History

2008-10-15T11:14:00.004+10:00

History, at least for me, myself.

The facts that the index went up and down in a huge range everyday has left me astonished, bewildered, or whatever you call it. For a few moments I forget about the mounting of paper loss, and just left the opportunity to trade untouched.

Gee, how many people make a fortune from this condition (and of course, how many people got burned)

As for now, I am watching the movement of USD$, AUD$ and MYR.

RUL.ASX is fine.. (for now)

Survivors - Australia

2008-10-13T10:44:00.003+10:00

I am still here, surviving the crash, or barely.. only with my portfolio worth 60-70 % less than two or three months ago. Lucky thing is that it's all mine, no debt or margin involved in it. So no, I am not capitulating.

The fact that Australian dollar is one of the worst performer, having lost around 40% of its value compare to USD, even make it harder for me to swallow. This makes our saving in AUD down 40% of its worth as we speak. To make thing worse, we live overseas with Australian dollars income.

Suppose it useless to try to go against the stream, when we can not change anything of what happen in the world.

So thanks God we still here.. safe and sound.. surviving the crash, God willing..

PanAust (PNA.ASX)

2008-08-29T10:54:00.005+10:00

Change of director's ownership, 8 September 2008 – Garry Arthur Hounsell bought 500,000 of PNA shares (average price $0.7015 - hence total consideration of $350.750)

----

PNA reported yesterday a half year (1st) net loss of US$389,000. This result was better than expected.

From the broker:

GSJB Were keep a BUY recommendation with a target price of $1.40. JB Were still like the PNA story, and said the next 6-18 months is a great period of opportunity for PNA due to its work in the Phu Kham project in driving it to become a profitable and cash generating business.
RBC Capital Market (before the above report):
Outperform recommendation, share price target of $1.40
A LIFT in its long-term price forecast for copper has meant a change in the recommendation for Pan Australian Resources by RBC, moving from sector perform to outperform. RBC's new copper price forecast is now US25c-50c per pound higher for all years while its long-term price forecast has moved US20c per pound higher to $US1.50 per pound.
Credit Suisse Outperform recommendation 12-month target price of $1.50. PANAUST has delivered a maiden resource for its Ban Houayxai deposit in Laos of 19 million tonnes at 1.7 grams per tonne of gold and 10 grams per tonne of silver. PNA is looking to build a reserve to support a 100,000 ounce per annum gold operation with first production in 2011. The analysts said the asset, while a modest grade, had many advantages, including cheap power, installed infrastructure, low strip ratios and good recoveries. It is expected further drilling is likely to increase resources, given that the asset is open to the north and at depth.
"In common with ASX-listed copper peer EQN we think PNA is outstandingly inexpensive," Credit Suisse said. "Pan Australian offers quality exposure to copper leverage and a wide open register makes it vulnerable to takeover."

Reporting Season Update

2008-08-27T10:15:00.005+10:00

Industrea reported a record profit of $41.3 Million, up 122%. Revenue from ordinary activities up 192% from 65.6M to 192M. IDL also reported a fully franked dividend of $0.01 per share, record date 3 October 2008.
Tassal Group has also posted another impresive result, with NPAT of $21.200 Million for the full year, an increase of 32.6%. TGR declared an unfranked final dividend of 3.5 cents per share, brought the total dividend for the year to 6.5 cents per share. Record date: 2nd October 2008.
REX airlines reported an increase of 15.7 % in revenue, and a modest 3% increase in NPAT. Profit after tax increased as a result of higher revenue, cost containment measures via productivity commitee, Pel-Air, and Australian Airline Pilot Academy impact. REX also reported a fully franked dividend of $0.066 per share, record date 31 October 2008.
IBA Health reported a net profit of $14.6 million for the year ended 2008, down from $22.9 million last year. EBITDA was $105.6 M, up from $32.3M (above guidance range), yet revenue at $360.9 M was below guidance. No dividend declared.
OZ Mineral declared an interim dividend of $0.05 per share, unfranked. Ex dividend date is 28 August 2008, record date 03 September 2008.
Mount Gibson Iron (MGX), reported a record full year NPAT of $113.3 M, up 137% from previous year. Cash on hand $48.7 M, debt drawn on June 2008 $ 105 M. No dividend declared.
Runge Limited, reported an NPAT of $8.0M, an 11% increase to the forecast proforma NPAT in Runge IPO's prospectus. RUL declared a fully franked dividend of 1.5 cents per share (payable on 6 October 2008).

How to 'Bear' a Bear Market

2008-08-26T15:34:00.004+10:00

Found this article today, good reading..

Adapt To A Bear Market
Wednesday June 25, 7:40 pm ET

Ryan Barnes

Witnessing a bear market for stocks doesn't have to be about suffering and loss, even though some cash losses may be unavoidable. Instead, investors should always try to see what is presented to them as an opportunity, a chance to learn about how markets respond to the events surrounding a bear market or any other extended period of dull returns.

Read on to learn about how to weather a downturn.

What is a Bear Market?

The boilerplate definition says that any time broad stock market indexes fall more than 20% from a previous high, a bear market is in effect. Most economists will tell you that bear markets simply need to occur from time to time to "keep everyone honest". In other words, they are a natural way to regulate the occasional imbalances that sprout up between corporate earnings, consumer demand and the combination of legislative and regulatory changes in the marketplace.

Cyclical patterns of stock returns are just as evident in our past as the cyclical patterns of economic growth and unemployment that have been around for hundreds of years.

Bear markets can take a big bite out of the returns of long-term stockholders. If an investor could, by some miracle, avoid the downturns altogether while participating in all the upswings (bull markets), their returns would be spectacular - even better than Warren Buffet or Peter Lynch.

While that kind of perfection is simply beyond reach, savvy investors can see far enough around the corner to make adjustments to their portfolios and spare themselves some losses.
These adjustments are a combination of asset allocation changes (moving out of stocks and into fixed income products) and switches within a stock portfolio itself.

When the Bear Comes Knocking

If it appears that a bear market could be around the corner, get your portfolio in order by identifying the relative risks of each holding, whether it's a single security, a mutual fund, or even hard assets like real estate and gold.

In bear markets, the stocks most susceptible to falling are those that are richly valued based on current or future profits. This often translates into growth stocks (stocks with price-earnings ratios(P/E ratios) and earnings growth higher than market averages) falling in price.

Value stocks, meanwhile, may outperform the broad market indexes because of their lower P/E ratios and the perceived stability of earnings. Value stocks also often come with dividends, and this income becomes more precious in a downturn when equity growth disappears.

Because value stocks tend to get ignored during bull runs in the market, there is often an influx of investor capital and general interest in these stodgy companies when markets turn sour.

Many young investors tend to focus on companies that have outsized earnings growth (and associated high valuations), operate in high-profile industries, or sell products with which they are personally familiar. There is absolutely nothing wrong with this strategy, but when markets begin to fall broadly, it is an excellent time to explore some lesser-known industries, companies and products.

They may be stodgy, but the very traits that make them boring during the good times turn them into gems when the rain comes.

Seek Out Defensive Investments

In working to identify the potential risks in your portfolio, focus on company earnings as a barometer of risk. Companies that have been growing earnings at a fast clip probably have high P/Es to go with it. Also, companies that compete for consumers' discretionary income may have a harder time meeting earnings targets if the economy is turning south. Some industries that commonly fit the bill here include entertainment, travel, retailers and media companies.

You may decide to sell or trim some positions that have performed especially well compared to the market or its competitors in the industry. This would be a good time to do so; even though the company's prospects may remain intact, markets tend to drop regardless of merit. Even that "favorite stock" of yours deserves a strong look from the devil's advocate point of view.

Identify the Root Causes of Weakness

It may take some time for a consensus to form, but eventually there will be evidence of what ended up causing the bear market to occur. Rarely is one specific event to blame, but a core theme should start to appear; identifying that theme can help identify when the bear market might be at an end. Armed with the experience of a bear market, you may find yourself wiser and better-prepared when the next one arrives.

A Case Study: 2000-2002 Bear Market

Consider the bear market that occurred between the spring of 2000 and the fall of 2002, often referred to as the "tech bubble" or dotcom bubble. As the monikers suggest, the problems in this market began with technology stocks, as evidenced by the more than 60% drop in the tech-laden Nasdaq index. But weakness in a few sectors quickly spread, eventually dragging down all corners of the equity map. Even the blue-chip Dow Jones Industrial Average (DJIA) fell over 25% during the period.

Leading up to the year 2000, the explosion of the internet led to dramatic innovations in all areas of technology, including data servers, personal computers, software and broadband transmission systems like fiber optics and cable. By the late 1990s, any company remotely involved in the internet had a sky-high market cap, giving it access to very cheap capital.

Stocks with little or no earnings were suddenly worth billions, and used their stock currency to buy other companies, obtain bank credit and expand operations.

Meanwhile, non-tech based companies felt the need to get caught up technologically, and spent billions on equipment as well as activities related to "Y2K" preparation, further inflating demand for tech products, but it was an artificial demand that could not be supported over time.

The Snowball Effect

As always happens near the peak of a bubble or bull market, confidence turned to hubris, and stock valuations got well above historical norms. Some analysts even felt the internet was enough of a paradigm shift that traditional methods of valuing stocks could be thrown out altogether.

But this was certainly not the case, and the first evidence came from the companies that had been some of the darlings of the stock race upward – the large suppliers of internet trafficking equipment, such as fiber optic cabling, routers and server hardware.

After rising meteorically, sales began to fall sharply by 2000, and this sales drought was then felt by those companies' suppliers, and so on across the supply chain. Pretty soon the corporate customers realized that they had all the technology equipment they needed, and the big orders stopped coming in. A massive glut of production capacity and inventory had been created, so prices dropped hard and fast. In the end, many companies that were worth billions as little as three years earlier went belly-up, never having earned more than a few million dollars in revenue.

The only thing that allowed the market to recover from bear territory was when all that excess capacity and supply got either written off the books, or eaten up by true demand growth. This finally showed up in the growth of net earnings for the core technology suppliers in late 2002, right around when the broad market indexes finally resumed their historical upward trend.

Start Looking at the Macro Data

Some people follow specific pieces of macroeconomic data, such as gross domestic product (GDP) or the recent unemployment figure, but more important are what the numbers can tell us about the current state of affairs.

Bear markets are largely driven by negative expectations, so it stands to reason that it won't turn around until expectations are more positive than negative.

For most investors - especially the large institutional ones, which control trillions of investment dollars - positive expectations are most driven by the anticipation of strong GDP growth, low inflation and low unemployment.

So if these types of economic indicators have been reporting weak for several quarters, a turnaround or a reversal of the trend could have a big effect on perceptions. A more in-depth study of these economic indicators will teach you which ones affect the markets a lot, or which ones may be smaller in scope but apply more to your own investments.

Position Yourself For the Future

You may find yourself at your most weary and battle-scarred at the tail end of the bear market, when prices have stabilized to the downside and positive signs of growth or reform can be seen throughout the market.

This is the time to shed your fear and start dipping your toes back into the markets, rotating your way back into sectors or industries that you had shied away from.

Before jumping back to your old favorite stocks, look closely to see how well they navigated the downturn; make sure their end markets are still strong and that management is proving responsive to market events.

Parting Thoughts

Bear markets are inevitable, but so are their recoveries. If you have to suffer through the misfortune of investing through one, give yourself the gift of learning everything you can about the markets, as well as your own temperament, biases and strengths.

It will pay off down the road, because another bear market is always on the horizon. Don't be afraid to chart your own course, despite what the mass media outlets say. Most of them are in the business of telling you how things are today, but investors have time frames of 5, 15 or even 50 years from now, and how they finish the race is much more important than the day-to-day machinations of the market.

From: http://biz.yahoo.com/investopedia/080625/3333.html

Analyst Review : REX Airlines

2008-08-26T15:22:00.004+10:00

Aequs Securities on the 4th of June report:

Stock to watch: REX
Recommendation: BUY -- Share price at the moment of the report was $1.08

Comment:

Strong Growth Outlook
In addition to strong fundamentals of the company, REX also in the market buying back 12 million shares. This is a good indication that REX is undervalued.
Management interest - Directors increased stake in the company

------

Disclosure: I own REX, bought in at $1.055

So, I am Calming Down

2008-08-26T10:31:00.002+10:00

Have just come back from a week holidays at a Malaysian tiny tropical island, I definitely feel more relax now. Water was good, and everybody was enjoying snorkeling. Best of all, away from computer and share trading!

Not that we can do anything about current condition of the ASX, anyway :) so why bother too much..

Back on the real life, here we are, start looking at the stock again.

All the stocks in my portfolio are looking just the same as where it was, despite the reporting season. The composition of my holding are mainly growth stock, from the resource/ mining company. Hence, not many will declare dividend this year.

MGX, OXR.. (I mean OZL), IBA has reported their results, and so did RUL. Great results for most, but you can guess what's happening to their share price, unchange much. OZL and RUL declared dividend, and for the first time, me and my husband decided to participate on ozl's DRP.

I guess, the best lesson for me on this trying time is just to keep calm, and focus in the long run, God knows, maybe I'll get the money back in two years time or so :)

Daily Investment Checking

2008-08-06T13:28:00.003+10:00

It is apparently dangerous, yet I am doing it everyday... or worse, every hour :( Oh God...
And I thought I knew that too, but somehow I just can't help it..

Anyway, I am sure it's not too late to start :)

So this is what they say:

In Why Smart People Make Big Money Mistakes, the authors note that it's
dangerous to watch your investments every day. When you pay close attention, you
tend to become emotionally invested in even small movements. You lose sight of
the long-term and make decisions based on short-term events. Peek in every month
or so, but don't constantly check your investments.
Also:
In conjunction with the idea that you should be long in the stock market, you shouldn’t watch the market every single day. Since a stock, depending on its volatility, is likely to jump and drop at essentially random, if you watch the performance of your stock every single day then you’re likely to read into those moves when there’s nothing to read. This may cause you to make a decision based on random events and not on the fundamentals, what should’ve caused you to purchase the stock in the first place.

Bank's Trouble in Our Yard

2008-07-28T12:53:00.002+10:00

As a relatively new investor, I have been annoyed for some time (heck.. more or less for a year?) with the behaviour of the Australian Stock Exchange. Fair enough, it's a global meltdown, it's affecting everybody in the world. But down here, where (almost) everything is booming, we're experiencing stock market downturn even more than the US. Have been trying to understand, and seems like things are slowly revealing themselves.

NAB warned on Friday it had made an additional provision of $830 million for its exposure to complex credit derivatives, known as collateralised debt obligations, or CDOs.
ANZ profit warning - said its cash earnings per share for the year to September 30 were expected to fall by 20-25 per cent from the previous year. Bad debt provisions in the second half would likely be around $1.2 billion due to sour loans to commercial property groups and margin lenders, up from $980 million in the first half.
In the past - involvement (masive exposure) of ANZ banking group with Opes Prime, Tricom.
More pain to come?

Mount Gibson Iron (MGX.ASX)

2008-07-23T13:24:00.003+10:00

Fair enough, there are heaps of shares on the ASX, who are currently oversold. But have a closer look on MGX. This is an iron producer who secured nearly 90% of price increase recently and have no problem with their production (or doesn't seem to be from my bare eye..). Current share price is $2.60, this is after an increase of 12% yesterday.

A quick peek from FN Arena Broker Call:

MOUNT GIBSON IRON LIMITED - 23 July,2008

Macquarie rates MGX as Outperform - The quarterly production result came in as expected. The broker notes Mt Gibson is "drilling madly" and organic growth is timed well for the peak of the iron ore price cycle.

Oxiana

2008-07-14T13:46:00.002+10:00

Well, it looks like I have made a big mistake on OXR. Fish for the bottom is not really my thing, I have to admit that. I bought some more oxiana on $2.75, thinking that the price was low enough. Wrong! It went downward to $2.10 at some stage, before it creeping back up. slowly.
This is Oxiana, made of OXR, Zinifex and AGM. It has Martabe and Prominent Hills, also more than a billion in cash. Commodity price is also higher.
The price now is the price of Oxiana some years ago, before all that I mentioned above.

REX Airlines

2008-06-25T12:59:00.002+10:00

I put a buy order on REX this morning, at $1.055 per share. My paper loss on the ASX is mounting and no island is on sight whatsoever. However I can't leave the money stay in our non- interest based account either, inflation is terrifying.

Why, REX?

Well, as I wrote few days/weeks ago, REX does have a lot of good qualities. It share price has been slammed to the low side for a while now, and I think it's enough bad news already. The fact that REX's share price hold, despite an ever increasing fuel price and other things, is a bit reassuring.

Oil price can't go up forefer (or can it?), so I guess it's my way of hedging my portfolio against the oil stock. I hold ARQ and BPT.

OXR/ZFX – Say Hello to OZ MINERALS

2008-06-17T11:09:00.004+10:00

From Macquarie Trading Pick of the Day:

17 June 2008

OXR/ZFX – Say Hello to OZ MINERALS

Zinifex (ZFX) shareholders have now voted in favour of the proposed scheme of arrangement to merge with Oxiana (OXR) to create Australia’s fifth largest mining company. Renamed OZ Minerals (OZM) and with a market cap of circa A$8.4bn, the scheme was approved with by an astounding 97% of ZFX shareholders.

Macquarie Research Equities (MRE) provide some very interesting analysis on the deal and deliberate their guidance on the new global diversified miner…

The Deal Drivers
MRE believe the real catalyst for the merger is the ability to leverage ZFX’s balance sheet into OXR’s growth pipeline. In addition to this, the deal will further facilitate an aggressive acquisition strategy. OZM will essentially become the second largest global zinc producer and following the commission of Prominent Hill will be close to the top fifteen global copper producers

Global “Targetting” or Global Target
MRE believe that OZM will be aggressive in their growth strategy underpinned by brownfield expansions – i.e the development at Prominent Hill and Greenfield projects incl. Dugald River and acquisitions. However MRE also indicate that the merger will likely position the firm as a target for even bigger suitors, namely Teck Cominco and Xstrata.

Recommendation

MRE state that OZM is well placed to enter the ranks of the global diversified base metal miners. And in line with a strong balance sheet, there is also the expectation of an aggressive organic and acquisition growth strategy.

The complexity of market activity over the last 12 months has certainly caused considerable investment uncertainty. With many investors feeling the pinch in their margin lending accounts, perhaps a protected lending strategy in the mining sector would provide some comfort for investors still looking for Australian equity exposure.

Oxiana

2008-06-14T16:11:00.002+10:00

It's just my opinion. I think OXR is oversold and severely undervalued.
Clear Buy at around $ 2.75 - 2.85.
A concern on Zinc price on the upcoming merger with Zinifex.

Cross Trade

2008-06-13T16:36:00.002+10:00

What does it mean?

A practice where buy and sell orders for the same stock are offset without recording the trade on the exchange, which is outlawed on most major stock exchanges. This also occurs when a broker executes both a buy and a sell for the same security from one client account to another where both accounts are managed by the same portfolio manager.

Typically, this is yet another way for a broker to rip you off. When the trade doesn't get recorded through the exchange, there is a good chance that one client didn't get the best price. However, cross trades are permitted in very selective situations such as when both the buyer and the seller are clients of the same asset manager. The portfolio manager can effectively “swap out” a bond or other fixed income product from one client to another and eliminate the spreads on both the bid and ask side of the trade.

The broker and manager must prove a fair market price for the transaction and record the trade as a cross for proper regulatory classification. The key point is that the asset manager must be able to prove to the SEC that the trade was beneficial to both parties before executing a cross trade.

(source: investopedia)

REX Airlines

2008-06-13T10:44:00.002+10:00

I was talking to my husband last night about choosing stocks to buy- apart from my trading account. Talking here and there, I came about REX Airlines. I have made lost on REX, but somehow I have the urge to buy some more. I decided to look at it again this morning, and here are my findings:

Fact:

Airline business is very risky. It is not for the faint hearted.
Small, very high pilot turnover.
Even Warren Buffet lost money in his 1989 investment on USAir.
Massive fixed costs, strong labor union, skyrocketing oil price.
Revenue is very sensitive to the change of demand among other things.

Considerations:

Share price had been on sideways for quite a long time
Not too many competitors, REX is the only option on 33 of its 39 routes
No debt!! Owning 22 of its 38 passenger plane.
There's been Share Buy Back recently
Directors buying
Own its own pilot training academy (expected to produce 80 graduates a year)

Re-Post: War, Oil Prices and Stock Market

2008-06-12T10:46:00.004+10:00

(This was originally posted on 3/27/07, the oil price graph was taken from http://www.wtrg.com/oil_graphs/oilprice1947.gif )

THIS morning, news reported that world oil prices overnight hit new highs for 2007 as the market fretted over rising tensions between the West and major crude producer Iran.

Iran, OPEC's second largest producer and the world's fourth-biggest producer of oil, certainly plays a considerable part on the world oil supply.

How far will it go? Will it head to oil crisis again?

Looking back at the history, there were several events that trigger the oil crisis:

First Oil Crisis, 1973-4

Arab countries’ retaliation for US support of Israel in Yom-Kippur war 1973.

Triggered sharp recession around world.

1973-4 is second sharpest stock market crash in US history.

S&P Composite lost 53% of its real value between Dec. 1972 and Dec. 1974. (Only worse two-year experience was June 1930 to June 1932.)

Second Oil Crisis, 1979-80

Iranian revolution, expulsion of the Shah of Iran, Ayatollah, capture of US Embassy hostages in Teheran Nov. 1979.

Iran-Iraq war erupts 1980, disrupts oil supplies. US CPI inflation reaches 18%/year in March, 1980. The “great recession”of 1981-82 is the worst recession since Depression of the 1930s.

Collapse of OPEC Cartel, 1986

After suffering bombing by Iraq, Iran demands that Iraq be given the same oil export quota as everyone else.

Other arguments about the disproportionate share of some OPEC states.

Persian Gulf War, 1990-1991

August 2, 1990, Surprise invasion of Kuwait by IraqUN Security Council deadline for Iraq to withdraw by January 15 1991.

January 16, 1991 Air bombardment of Iraq and its Kuwaiti positions begins.

February 24, 1991 Allied ground invasion begins. War is over February 26, 1991.Brief interruption of oil supplies mark recession: NBER dates July 1990-March 1991.

Oil Price Collapse 1997

Nov. 1997 OPEC Meeting, the “disaster in Jakarta” involved bitter disputes among OPEC nations about market share. Fuming about widespread cheating in limiting exports to quotas. Asian financial crisis dropped demand for oil

Oil Price Spike 1999

OPEC resolve to stop cheating left supplies shorter than they expected

Erroneous data led them to underestimate how fast inventories were dropping.

Backwardation in oil futures market (futures price below spot price) began in January 1999. OPEC Increased quotas

Second Gulf War

Oil SpikeIn anticipation of war, oil rises to nearly $36 per barrel

February, 2003US invaded Iraq, March 19, 2003. Symbolic end of war: after capture of Baghdad, crowd topples Hussein stature April 8, 2003.

Oil falls to $28 per barrel by April, 2003

2008 Oil spike

Oil price spike to $135 per barrel

Inflation is high around the world

Stock Market tumble in what is said to be second worst to the 1930 Great Depression

Pump and Dump

2008-05-28T12:03:00.003+10:00

I was wondering if what happen to Cockatoo coal's share price today
is a typical of pump and dump action, cashing out on coal stock hype!

Cockatoo down as much as 8%

What is Pump and Dump?

A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already have an established position in the company's stock, sell their positions after the hype has led to a higher share price.

This practice is illegal based on securities law and can lead to heavy fines.

The victims of this scheme will often lose a considerable amount of their investment as the stock often falls back down after the process is complete.

Traditionally, this type of scheme was done through cold calling, but with the advent of the internet this illegal practice has become even more prevalent.

Pump and dump schemes usually target micro- and small-cap stocks, as they are the easiest to manipulate. Due to the small float of these types of stocks it does not take a lot of new buyers to push a stock higher.

Claims about how a stock is set to break out should be met with a considerable amount of caution. It is important to always do your own research in a stock before making an investment.

Source: investopedia