An Important Investment lesson - Koon Yew Yin

Practically all my wealth is from share investment and I have been trying to teach people how to invest by giving investment talks and publishing articles. My method of selecting shares is based on my entrepreneurship and not purely on accounting principles as I am not an accountant. That is how I bought so much of VS Industry and Latitude Tree. As a result, I become a substantial shareholder of these two companies.

The price chart shows that Latitude has gone up from Rm 1.00 to above Rm 6.00 in less than 24 months and VS has gone up from Rm 2.50 in January 2015 to the current price level of Rm 4.20 in less than 6 months. Basing on my business instinct, I believe the prices of these two stocks should go higher when the next quarter results are announced.

What is the most important lesson?

You must frequently look at company announcements and when you see any company showing a sudden jump in profit, find out more about the company. Look at their website and its profit growth prospect. That is how I discovered Latitude and VS. I also bought Lii Hen and Poh Huat when I saw their sudden jump in profit.

Similarly I bought into Supermax a few years ago. When I saw there was a sudden jump in profit for Supermax in February 2009, I started my buying. When I saw X ray detectors installed at the airport to prevent the spread of the deadly HINI virus, I bought more aggressively.

The chart below shows the price of Supermax shooting up from Rm 1.00 to above Rm 6.00 within a period of 15 months. People were then fearful of the deadly HINI virus. The demand of gloves far exceeded the supply. As a result, all glove manufacturers were reporting increasing profit every quarter.

Supermax annual report as announced on 8th April 2010 showed that my wife and I together with my nephew and my sister in law held a total of 19, 550, 000 shares. We bought Supermax instead of Top Glove because it was trading at a lower P/E ratio. Similarly VS is now trading at a lower P/E ratio than MPI and Globetronics.

How did I make a kill?

We bought so much Supermax shares within such a short period that its Executive Chairman and CEO, Dato Seri Stanley Thai invited me to visit their factory in Sg Bulou, Selangor to reassure me of my investment. He also wanted to know how and why I bought so mush of Supermax shares within such a short time.

I told him that as soon as I saw the annual report as announced in February 2009 that there was a sudden jump in profit, I started my buying and when I saw X ray detectors at the airport, I bought even more aggressively.

In July 2010 when the HINI fever was under control, I sold just as aggressively. That is how I made such a huge profit.

When to sell?

Statistics show that almost all short term traders lose money. I have told you how and when to buy and now I will tell you when to sell to make profit.

After you have bought, you must hold and sell only when you see the company reporting reduced profit over 2 consecutive quarters.

You must also sell when the criteria for you to buy is no longer valid. For example, although Coastal Contracts and Favco are still showing good quarterly profit, the demand for offshore vessels and cranes is severely affected due to the slump in the oil prices as shown on the oil price chart below.

I sold all my Favco shares a few months ago when I saw oil prices started falling.

I hope this lesson is useful to all investors. Now what you need is some luck and wait patiently to see your profit grow.

I trust this article is an important and useful lesson to all the readers.

Source: http://klse.i3investor.com/blogs/koonyewyinblog/77571.jsp

How to Catch a Falling Knife

Buying when a stock is plummeting takes guts, but it can be exceptionally profitable when it works out.

Just look at the opportunities in the last year. Fairfax Financial (NYSE: FFH ) , Career Education (Nasdaq: CECO ) , and Champion Enterprises (NYSE: CHB ) all hit multiyear lows last summer. With Fairfax, people were worried about the insurer's exposure to hurricanes. With Career Education, the entire for-profit education industry was in the dumps amid a stream of scandals and increased competition. With Champion, investors panicked over the state of the manufactured housing market. Since then, these stocks are up an average of 90%.

The long-term returns can be even better. If you bought Royal Caribbean Cruises (NYSE:RCL ) after its sharp post-9/11 drop (when the outlook for travel looked bleak), you'd have a more than 300% gain. Elan actually provided two opportunities in the last five years, dropping from $40 to $2 over a few months in 2002, then from $27 to $3 in early 2005.

So, there's money to be made from catching falling knives. The challenge is doing it without losing a finger.

1. Accuracy over quickness

The first rule of catching falling knives is that accuracy is more important than quickness. Stocks fall because of bad news. That bad news will typically take some time to absorb, so you usually have time to evaluate the investment. And this is one time you shouldn't rush -- it's important to understand how the news will have an impact on the outlook of the company.

Is it just a one-time event that nobody will remember in a year, or does it affect the business more substantially? Is the company's competitive position affected? Or, even worse, is its liquidity? You should be looking to catch knives that result in shares being cheap, but don't substantially affect a company's long-term outlook.

An ideal knife to catch would have been Merck (NYSE: MRK ) below $30 back in October 2005 at the peak of the Vioxx uproar. Merck's competitive advantage was in its ability to create, acquire, and commercialize drugs, and this advantage was unlikely to be affected by Vioxx. Its balance sheet was solid, with $10 billion in cash. Vioxx was bad, but clearly not a company-killer, and now the stock is above $50.

2. Wear gloves

When you're catching knives, prepare for the worst. Often, a stock will continue falling after you buy it. You should plan for this scenario. One way of doing this is by dividing your money into three piles, and buying in thirds. Buy the first third at a good price. If the stock continues to fall, buy the next third. If it drops once more -- and the stock seems more attractive than ever -- buy the final third.

My rule of thumb is to buy a big enough initial position that I'm content if the stock recovers, but a small enough position that I'm even happier if it goes down and I can buy more at a cheaper price.

3. Aim for the handle

The final rule of falling knives is to be certain that the stock is cheap based on your analysis of the company's potential. Even if a stock has fallen by 70%, that doesn't make it a good buy. Historical prices have little to do with whether a stock is fairly valued right now. If a company is 300% overvalued, then even if it falls by 50%, it's still overvalued by 100%. So, before investing, make sure you calculate the company's fair value based on your current outlook, and only buy if the stock is cheap.

The Foolish bottom line

Following these strategies will help you avoid being cut while reaching for these great returns.

Source: http://www.fool.com/investing/value/2007/05/29/how-to-catch-a-falling-knife.aspx

VIDEO - SIMPLE INVESTMENT, RETURN BEYOND EXPECTATION.

Great video - perhaps we can apply it to the stock market.

How to interpret company announcements - Koon Yew Yin

According to Malaysian Securities Commission’ rules all listed companies have to make announcements of their quarterly results and other business activities that are unusual to their daily business operations.

I would like to share with you my experience on how to interpret and take advantage of the various announcements as follows:

Announcement of quarterly result: this is often a catalyst to move share price. If the profit is good, the share price will go up but if the profit is not good the price will likely come down.

Announcement of purchasing a large piece of land for development eg MRCB’s recent announcement of signing the S&P agreement to buy the German Embassy land in KL for a few hundred million Ringgit. Many investors would think that it is a wonderful deal to be able to own and develop the property right in the heart of KL. But smart investors with some imagination must consider this purchase very risky in view of the oversupply of properties in KL. Moreover, it will take about 7 years to complete the project from planning approval to construction and sale of all the properties before you can see the financial result. At the mean time, investors are exposed to 7 years of risk.

Announcement of company share buyback is tricky to interpret. It can mean that the management wants to buy back its own shares because it is undervalued. But sometimes the management wants to prop up the price to stop the price from falling because of poor quarterly result. Investors must look at the profit growth first before buying the share. You may be tempted to buy because the chart says so. Share prices can be manipulated if the daily trading volume is small. 

 
Announcement of right issues with free convertible warrants can be tempting to many investors. You must be careful to examine the true reason for calling the right issues. Do not subscribe blindly. Quite often due to poor management, the company has poor cash flow and the business has too many challenges. As a result, the company needs more cash. Moreover, this kind of announcement will push up the share price, offering you a chance to sell at a better price. You must remember that good profitable companies do not need to get money from calling for right issues.

Announcement of bonus issues is usually a good sign that the company is able to accumulate sufficient profit to issue more shares to benefit shareholders. This announcement will push up the share price. Of course the price will be adjusted soon after the bonus issue and the price will go up again if the company continues to show good result.

Announcement of share placement of not more than 10% of the total issued shares is a good sign that there is demand by fund managers to own these shares. If they buy them from the open market, it will cost more. This is reassuring to all existing shareholders because the big buyers would have studied the operation of the company in great detail before making such a big financial commitment. They should not think that their interest is being diluted. They must bear in mind that the company will have more cash for expansion which will benefit all the shareholders.

Announcement of a new substantial shareholder who bought all his shares from the open market is a good sign. According to S.C. rules, any investor who owns more than 5% of the total issued shares has to declare his interest. He has also to announce if he subsequently buys or sell the shares because his action will affect the decision making process of other investors.

Announcement of Company Directors’ buying or selling shares is a good indicator of the true value of the shares. All company directors have to make announcement when they buy or sell their shares. If they continue to buy more shares, it is a healthy sign, provided you know that the company is really doing well and that they are not buying them to simply push up the share price.

Announcement by a contractor of securing a large multi million Ringgit contract for the construction of a big project through the open competitive tender system will often encourage investors to rush in to buy the shares in anticipation of the company’s profit growth prospect. Many would think that the contractor with additional work would naturally make more profit. You must remember contracting is a very risky business because of the open tender system. The contractor has to take a lot of risk to submit the cheapest price to win the tender. That is why there are so few really successful listed contracting companies. Very often building contractors are also property developers.

Announcement of dividend is a good indicator of the company’s performance. The company that declares increasing dividend is definitely a good company. This shows that it has positive cash flow and can afford to benefit all its shareholders. This sort of company will not need to call for right issues to raise cash for expansion.

Announcement of privatization of the listed company is rare but when you see this type of announcement, you can make money if you know how to position yourself. The controlling shareholders offer to buy up all the outstanding shares that they do not already own, usually at a higher price than the current market price. As soon as you see the announcement, you can buy it before the price go up to the offered price. If you consider the offer is unreasonable, you can wait until they offer a better price. You must bear in mind that the better offer may not come and it may be more advantage to accept the cash offer and use the cash proceeds to buy other shares.

Conclusion: There are about 1200 listed companies and many of the companies are making announcements every day. It is impossible to read all the announcements. After you have read the above guidelines, you can select the useful announcements to read to save time.

Under the current condition, I will not read announcements by building contractors and property developers. I am not interested to know about huge land transactions.

I will also not read companies that have poor profit growth prospect.

As you know, our Ringgit is the lowest in the last 5 years and readers should look at announcements by companies exporting their products in US$.

Source: http://klse.i3investor.com/blogs/koonyewyinblog/

Frontkn the Flying Saucer stock (part 2)

1. Earlier on March 4, 2015 I mentioned that Frontkn was forming a base or saucer chart pattern and jokingly nicknamed it as a "Flying saucer " stock. You can see the article over here. 

2. A base pattern is a very powerful bullish chart pattern, and if one were to wait for the pattern to develop, the person will be rewarded.

3. Today 18/5 Frontkn broke out of the 2nd base pattern ...

4. I agree Target is around 35 cents in the coming days if market remain OK - 30c + 5c - diff btw lowest price of the 2nd Base 25c and high price on the right hand side of base/cup/saucer 30c. 

Malaysia Stock Market Holidays

During major festivals such as Christmas or year-end, market players would take a holiday from their daily participation in the stock market. The stock market takes a holiday. This lead to less market activity and consequently, will usually cause a correction in the price and volumes of the stocks in the market.

The stock market in Malaysia is no different; market players take a holiday during certain periods like other market around the world. Here is a list of periods when the stock market pauses and takes a break in Malaysia.

School Holidays

The annual school holidays are often the most common times when the stock market is quiet – this is the period where major market players treat themselves and their families for a holiday. It is certainly not a good time to be active in the stock market!

Schools in Malaysia are divided into two terms – so there are term 1 holidays and term 2 holidays. Other holidays that make up the full school holidays include the mid-term holidays and the end-year holidays. For 2015, the school holidays for Kuala Lumpur are -

Term 1 March 14 to March 22 (9 days)

Mid Term May 30 to June 14 (16 days)

Term 2 September 19 to September 27 (9 days)

End Year November 21 to January 3 (44 days)

TOTAL : 81 Days!

Major Sports Events

Major sporting events are periods where the stock market takes a break especially major sports events like the FIFA World Cup football tournaments, the UEFA European Championship football tournaments, Olympics Games and Commonwealth Games. Other sports events like Winter Olympics, Super Bowls (American football) and World Series (Baseball) and African Cup Football tournaments do not have much impact because they do not have a large fan base in the country.

Major Festivals

The major festivals are the Chinese New Year, Hari Raya Puasa, Deepavali and Christmas holidays. Its’ usually a time when the market is quiet. These are the periods where market players take a break from work and return to their kampungs to visit family members, relatives and friends. The duration of the festivals are -

Chinese New Year - 14 days

Hari Raya Puasa - 30 days of fasting + 30 days of celebrations

Deepavali – 1 day

Christmas – 1 day

TOTAL : 76 days!

The stock market often takes a break for Hari Raya Puasa during the 30 days fasting period and will come back after the fasting period ends (for the celebrations!). For the Chinese New Year though, the stock market is usually bullish prior to the Chinese New Year and could last up to a week after the festival started. As for Deepavali and Christmas, the effects on the stock market are negligible as it is only a 1 day holiday.

Other Events

Some natural events occurring in the last 20 years that cause the stock market to take a break is the smog or haze during dry season and the occasional H1N1 flu virus. Logic is the stock market becomes quiet if these two catastrophic events were to happen because the overall economy activity will suffer because of them. (However, glove manufacturer stocks will rally due to H1N1 flu virus because demand for rubber gloves to hospitals will increase.)

Conclusion

Major holidays like the school holidays and festivals and sporting events are known to cause the stock market to take a holiday in Malaysia. During these events, the stock market is quiet and the share prices either drop or do not move much. 

Knowing about when the stock market takes a temporary holiday could be useful if you are a trader or investor looking out for good investing and trading opportunities during these significant events in the stock market.

Is this KLCI Index Sell All Signal ? (the canary in the coal mine)

I have noticed that there are times when the KLSE drops so badly that even if you are a value investor, it makes sense to sell everything and wait till the stock market recovers.

The problem is how to detect when the drop is a major fall, or just a twinge in the market. This chart suggests that detecting this is possible:

I have observed that when the KLSE drops below the 300-day moving average, this is a SELL ALL signal. For example, if you had bought shares at the peak in 1997 and you held on to them, you can see that the KLSE only recovered to 1997 levels in 2007. It would have been better to sell those shares at a small loss in 1997, then start buying profitably when the KLSE goes above the 300 day moving average at the end of 1998.

You can see the same technique also works for the 2000 Internet Bubble fall, the 2003 Invasion of Iraq, the 2008 subprime crisis, and 2011 Greece Euro crisis.

The only time this technique is iffy is after the 9-11 terrorist attack, when the KLSE was rising above the line, then suddenly plummeted when the planes struck New York. However if you had held on till 2002, you would probably have made a profit. 9-11 is a real black swan event, as there was no prior warning signs, unlike the other major falls.

You can also consider buying on the upswing before KLSE goes over the 300 day moving average. However you need to be really confident. As you can see in the 1997 fall there was a false bottom in late 1997, and the KLSE plunged even further, reaching the real bottom in August 1998.

I have also tested this with the S&P 500 and Hang Seng Index, and confirmed it works for all of these stock market indices.


Note: 300-day moving average can be plotted using Yahoo Finance chart.

Source of this article: http://juristech.net/juristech/detecting-major-drop-stock-market/

7 Pillars of Wealth

Have you ever asked yourself the question, “How can I become rich”? You’d be surprise at the number of people that never ask the question; for fear that they may be aspiring to a goal that they may never be able to reach.

The way the rich get rich and richer, is not by working:

*for money, but by getting money to work for them.
*for people, but by getting people to work for them.
*within systems, but by creating systems that will work for them.

How a person thinks about money is a determining factor of if they will ever be wealthy or not. Once a good wealth mindset is in place, you need to erect Wealth Pillars that will support your Wealth Empire and protect it against economic and other storms of life.Most people find that wealth eludes them, only because they have not got a good wealth creation foundation in place. Programmed by the education system which inoculates them against the creation of wealth they automatically get into working for money, and find it difficult and if not impossible to escape its deceptive trap.

For your Wealth Empire to stand strong and tall, you need to employ and invest in some or all of these Pillars of Wealth. These pillars are simply wealth creation vehicles that you can use to achieve your financial goals.

Pillar #1. A Great Career

Having a great career is a good stepping stone towards building your empire of wealth; as it could supply you with the cash that you need to invest in other ventures, and help you keep your personal affairs running, while you pursue the creation of wealth.

Some people create their wealth part-time while still pursuing their career, by investing in real estate, stocks, shares and bonds, creating intellectual property, or in their own business.

Some people work at the wealth creation with the aim of eventually replacing their job, while others are happy with what they do and just want a another source of income, to help build a retirement fund, improve the quality of life for their family, save up for their children’s education, or engage in philanthropy.

If you are looking to create wealth, don’t resent having to work a job, and don’t treat you job as an all in all pursuit, treat it as a stepping stone, a vehicle to help you get to the next stop on your wealth creation journey.

Pillar #2. Real Estate – Property and Land

Real estate is one of the oldest forms of investment, practiced by peoples of all times. The land owner or the landlord was king. Wars are fought and families split up over ownership of property and land. It was known that whoever owned the title deeds of the property or the land owned the wealth.

Income generated from real estate is of twofold:


Rental Income: Income that comes from the rental of the property or land. This generally helps with the day to day management of the property, and provides a regular income from the owner to draw on.

Equity: Income that comes from the property appreciating or growing in value overtime. This generally grows over a medium to long term period, and produces substantial returns on the money originally invested. Equity was what made the landlords rich and made them kings of the land.

Pillar #3. Intellectual Property

Your intellectual property is a great asset and you must see it as that. The creations of your mind — music, books, paintings, articles, papers, ideas and inventions of all kinds, all come under this umbrella and can be given commercial value if you know how to.

Your intellectual property has the potential to continue to work for you and produce an income for you as long as you live. Some have their intellectual property grow in value even as they grow old.

Pillar #4. Building Your Own Business

When you spend your life working in someone else’s business, you walk away after 40 years or more, with no part of the business belonging to you. You’d have built skills and expertise which you can capitalize on if you really know how, you’d have also built mentor equity, knowledge and experience that could be packaged and shared at a price. But most of the value that you’ve built in the business is owned by someone else. You were earning a wage, while they were creating wealth.

By building you own business you are building value that can be tapped in to, and can be funneled into other investments or ventures. Apart from drawing an income from your business year after year, you build equity and value that can sold off at a good price, or could be handed down to your children, and even their children too.

With your own business you can leverage your earning by not only earning from your own efforts but by earning from other people’s efforts too. You can become a contractor or an agency and earn a percentage of the earnings made by other people. For example employment agencies, tutoring agencies, nursing agencies, and cleaning agencies use this way of making money from other people efforts, as a business model for leveraging their wealth.

Pillar #5. Investing in Other People’s Businesses

People invest in the same things but for different reasons.

Some people may invest in stocks, shares or bonds; because it’s a way multiply their wealth. Many people, who want to own a business, but do not want to be tied down with the chores of or running one, may choose to buy stocks, shares in a business, or several businesses.

Some people may want a quick and high return on their investments and invest in stocks and shares. While others want a hands-off approach, and want an investment can grow safely overtime, so they invest in bonds instead.

Pillar #6. The Internet

In the last decade, the latest breed of Millionaires has been created via the Internet.

With the advance of the technological age, information is king. Anyone who is willing to invest the time and effort can develop, package and market their knowledge and creative digital products and sell them at a great profit, in great quantities, over a short period of time.

Internet technology has made it easier to research and reach your target market and pre-sell to thousands of warm and ready to buy customers, at the same, without even getting out of your pajamas or leaving your bedroom.

This market is accessible to all, as the entry cost into this market is low. With a great mentor, a good and reputable training program that will give you a sound knowledge of how the internet works and an excellent tool to help build your own online business, you’d be laughing all the way to the bank.

Pillar #7 Multi Level Marketing

Multi level marketing is another great vehicle for creating wealth in the 21st Century.

It’s been dubbed by Robert Kiyosaki, as “The Business of the 21st Century” and by Robert G. Allen as “The Ultimate Money Machine”.

The reason why MLM’s have such a great income generating potential is because they employ leverage, this magnifies your efforts. Leverage allows you to earn, not only from your own efforts, but from the efforts of those in your team. MLM businesses also have the potential for making it possible to earn a residual income.

Multi level marketing is simply a marketing strategy, which any business can use to market their products or services. Many people see the business and its marketing strategy as one and the same thing; this shouldn’t really be the case.

Evaluate the business on its own merits, and not only on the basis of its strategy for marketing its wares.



Source: http://www.moolanomy.com/5774/7-pillars-of-wealth-creation/#ixzz3aBQ8VCHc

How to Make Money from Stock Pump and Dump

If you go to a popular stock forum, you've probably seen often these type of posts :


Stock ALERT!!!! ABC TECH SET TO EXPLODE!

(CODE: ABCT) is about to RALLY in price as investors discover this hidden gem!

And so on....


This is the classic "pump-and-dump" stock fraud, where the fraudsters quietly load up on the stock in advance, then promote the crap out of it, hoping to drive the price higher to make a quick profit. The company itself may have nothing to do with the promoters, but just happens to be a convenient target.

Investors are well-advised to ignore these stock touts by learning how to spot the stock pump and dump scams. In many cases the company itself is nearly worthless or loss making, and the price is likely to collapse as soon as the hypsters have sold their stock and stop promoting it.

But the capitalist part of me keeps thinking...isn't there some way to make money off these schemes?

How the Stock Pump and Dump Work

In theory, a typical stock being pumped-and-dumped should follow a specific and predictable pattern:

Step 1 – The Bait

This is the first step where the pumpers share the “good news” on a stock they bought earlier.

They spread the good news via personal emails lists, stock forums, money magazines, social media, words of mouth (via broker) or even go as far as getting the newspaper to write an article on this.

During The Bait stage, some popular sentences you always hear -

“The company is negotiating some hundreds of millions ringgit projects”

“The stock is undervalued and have huge upside potential”

“The stock is dirt cheap … you don’t want to miss out when the ‘good news” come out …. soon!”

“The stock is 20 cents with the target price (TP) of $1.20 …that’s a 500% gain!

Could this possibly be true?

Step 2 – The Rally

During this rally phase, the stock will start moving aggressively with the people who got the “good news” buying and pushing up the stock price and daily volumes 5 to 10 times higher than when the first “good news” posted as the bait was released.

And every day, for the next week, next two weeks, next month, you’ll see those same subject lines with the same calls to action: Buy, buy, buy…good news coming soon! Target price $1.50 …. jump in now!

And if you’ve already bought, the goal is to get you to buy more.

Step 3 – The Sell Off

The stock pumper generally refer to this as a “temporary profit taking.” In other words, they’re blaming a group of investors taking some profits who are driving down the stock prices.

However, the more likely culprit here is that all those pumpers who bought up million-plus share positions early on and are starting to dump their shares onto a very artificial market.

Unfortunately for the other hapless investors, most of those shares were sales executed by these pumpers as the stock plummeted below the price where most of them bought in.

Step 4 – The Rebound

Eventually, with enough work, enough spam, and enough new names pouring in thinking they are getting a bargain, the selling tide abates and the stock moves up again.

During The Rebound, popular sentences you always hear -

“The stock is a bargain at this price, buy now before it move again!”

“The stock is technically oversold and ready to resume its rally!”

“I just bought 300 lots at this cheap price.Getting ready for the bounce.”

In the next couple of days, the price does indeed recover, maybe as much as double from its sell off lows.

Step 5 – The Demise

In this stage, the stock slowly drop and keep dropping for weeks and months till all the selling dry up.

There is no more “good news” or is usually the case, no news on the stock at all.

All the stock pumpers have left the stock and they are promoting a new hot stock to new investors.

All we know, based on the pumper’s subject line, was that any chance for more gains on the stock pretty much went up in smoke the moment they came out with a new stock pick.

It is impossible to identify a pump-and-dump scheme in the first phase, but once it starts getting promoted it may be hard to miss.

In principle, there are two ways to make money once the stock is being pumped.

First by buying before the peak and selling ahead of the promoters, and second by selling the stock short at almost any time after it has appreciated. Both approaches have potential, but also significant risks.

Buying the Stock before the Peak

Buying the stock before the peak puts you in the position of trying to figure out when the scammers will stop promoting the stock and let the price crash.

From the stock price charts, you can observe that stock pump and dump usually rally from the flat base by between 5 cents to 20 cents....some could be more of course. But you don't be greedy. You go in and out quickly with a target of 5 - 10 cents profit and move to the next stock.

Shorting the Stock after the Peak

Shorting the stock is, in principle, simpler. If you short the stock, you are betting that the price will fall, and you know that it has to fall when the scammers stop promoting it. In practice, it isn't so simple.

Many of the stocks promoted in pump-and-dump schemes cannot be sold short because they are too thinly traded or because of regulation like in Malaysia.

Even if the stock can be shorted, short sales carry some unique risks: a short sale has (in theory) the potential for unlimited loss; and there's the risk that your broker might force you to buy back (cover) the stock before it falls.

Conclusion

All these ideas for profiting from pump-and-dump implicitly assume that the market for the target stock is reasonably well functioning (stock with good daily volumes, not PN17 or GN3, etc). Unfortunately, the scam artists intentionally choose companies where the stock trades very infrequently or losses making --these are the stocks which are easiest to manipulate.

However, be warned that you are inherently at a disadvantage, since the scammers are making all the decision. If you make a wrong move, either purchasing or shorting, you could be out your entire investment.

7 Lessons Fantasy Football can teach Stock Market Investors

There are a host of parallels between the world of sports and the world of investing — a wealth of performance statistics, endless predictions by brainless pundits, and superstar names that we adore one minute and ridicule the next.

Fantasy football is particularly apt for investing comparisons because you get to pick your own “portfolio” of players each week.

So as you finalize your lineup heading into Week 2, keep in mind these lessons, which can be applied to managing your money:

Do the research: The quality of your team starts and ends with how up-to-date your research is. It’s not just about who was injured last week, but also about knowing upcoming match-ups and taking advantage of them. Investors who simply step into Wall Street and start throwing money around can sometimes get lucky on gut feel, but long-term success — particularly when challenges arise — requires work and foresight.

Predictions aren’t guarantees: Of course, some of the headlines out there are simply projections of what’s expected, not hard facts. In these cases, it pays to have a healthy dose of skepticism and independent thought when crafting either your fantasy roster or your investing portfolio. The quality and trustworthiness of the information source matters, but unfortunately, even the best pundits can be wildly in error when the unexpected happens.

Be wary of fads: In fantasy football, as in the stock market, there are always bizarre breakouts that captivate the masses. For instance, in standard leagues, the No. 2 scoring receiver in week 1 was an undrafted rookie for the Jacksonville Jaguars. But look deeper and you’ll see that the team’s top receiver was injured, and that Jacksonville still is arguably the worst offense in the NFL — so what’s all the fuss about? Every once in a while you might see an unknown stock pop and start to grab headlines. But before you buy, look beyond the short-term trend and think critically about the real chance of success in the long run.

You only have so many roster spots: Along the same lines, it’s important to remember you have a fixed set of roster spots in fantasy sports, so any hot fad has to come at the expense of another position. In the same way, most investors don’t have unlimited liquidity, and choosing a new stock often means you have to cut another position or deploy the limited amount of free cash you had socked away. Economists like to call this the “opportunity cost,” or the price you pay for choosing one option above other opportunities that may serve you better. Finding new opportunities is nice, but there are always alternatives, including the option of simply doing nothing.

Protect yourself and diversify: In sports, as in the market, things never quite go as planned. That’s why it’s important to protect yourself. Some fantasy owners keep the backup to their star player on the bench too, just in case of injury. Others aren’t afraid to keep two QBs on the roster and switch back and forth based on how the season progresses. This kind of agility is an important hedge against the unexpected, and something investors should consider for their portfolio. If your success hinges on a few star stocks driving the bulk of your returns, that’s a dangerous position to be in.

Don’t make excuses for poor performance: Last year, I had Eli Manning as my fantasy quarterback for the first few games. After eight interceptions over just five TDs in the first three games, I had to kick him to the curb. Good thing, too, because later in the season he threw five picks in one game! It’s hard to admit you made a mistake, and when there are no great alternatives, it’s easy to talk yourself into sticking with a loser. But sometimes the poor performers simply don’t bounce back, and waiting patiently for stocks like Radio Shack or Lululemon to bounce back becomes an even worse mistake than simply cutting your losses and moving on.

Don’t gamble your way to retirement: At the end of the day, I’m comfortable with all my fantasy-football foibles because it’s just a game to me. Sure, I lose a hundred bucks or so each year, but I plan my budget accordingly and I’m no worse for the wear. If I treated each league as an income source, plowing in big bucks every season and relying heavily on the chance of my winning, that would be incredibly irresponsible. Investors should view the stock market in the same way because day-trading small-caps or betting on speculative penny stocks can be a fun diversion, but is no way to reliably provide for your family or plan for retirement. The sad reality is that becoming a millionaire picking stocks is much like becoming a millionaire playing fantasy football — possible in theory, but not a practical path for most people. Stick to index funds, and make sure you’re not playing for high stakes you can’t afford.

Source: http://www.marketwatch.com/story/7-lessons-fantasy-football-can-teach-investors-2014-09-11

Stock Market 4444

The local stock market has put a happy smile on many people’s faces since the last big drop back in 2008. But now, if you go online to any stock market website or see CNBC today, you will hear some influential people seriously talking about a big stock market correction - 4444 (Die) ! What is a stock market correction and how do you survive a stock market correction? Read on for all these answers and more.

What Is A Stock Market Correction?

A stock market correction is when the stock market main index (in this case the KLCI Index) drops by 10 to 20%. Throughout our short market history, stock market corrections happen fairly often. It is something to expect which relate to the stock market investing cycle.

What usually happen is some influential people or funds decided that the profits were too good to refuse and took money off the table. Some research reports that stock market corrections are to be expected every 2-3 years on average.

The most recent stock market correction was back in 2013, during the few months leading to GE13. If you remember that occasion, the stock market was very volatile. One day it was up a couple of points, then it was down 30+ points the next day. It was a crazy time.

How To Survive A Stock Market Correction

If you agree with me that corrections are part and parcel of the stock market investing cycle and happen fairly often, the next step is to be prepared for it when it does come around. Here are a handful of tips to survive a correction and come out from it with most of the eggs intact.

Always Take Profits From The Stock Market

This is the most sensible thing to do in the stock market, period. When the price of your shares hit the profit target, sell and get out from the stock.

Buy and hold is good if the stock have not move. But if the stock move a lot in a short period of time, it is probably time to take some profits as it could be priced way above the intrinsic value.

Cash Is Always King

As the stock market goes higher and higher, it is probably a good time to take profits on your stocks and go into more cash. Be smart and keep the cash intact. Don’t go chase after another stock using the available cash you have in hand.

Sometimes it is better to sit tight and do nothing. Wait until you see a real stock market correction before using the cash you stashed away for a rainy day.

Keep An “Opportunity Fund”

If you like to explore this “cash is always king” idea further, why don’t you keep some money in an “Opportunity Fund” – this is a cash account that you funnel money into over time, allowing you to take advantage of opportunities when they present themselves to you.

If the market drops by 10%, you could take some of this money and put it in the market. There are many uses for an opportunity fund, so having one for a rainy day such as this is a good idea.

Don’t Put Everything In The Market

People tend to put more money into investments that they are getting good returns over time. This happens fairly often in the stock market, especially during an extended bull run such as what we are experiencing today. In the end, they have everything they own in the stock market. And, this could be a fatal mistake.

In fact, as the stock market goes higher, it is a wise move to slowly reduce your expose to the market until things look cheaper. To survive a stock market correction, you need to keep a good balance between what you have in the stock market with your other investments so that you can come out from it with most of your eggs intact.

Drawing Up A Survival Plan

Everything starts with a plan. If you do not have a plan to prepare for a stock market correction, how are you going to be ready when it comes. But, with a plan in your hands, you will know why you are doing what you are doing and will be able to better survive a stock market correction.

Conclusion

Are we due for a stock market correction? Maybe but the fact is the stock market bull is ageing. Will one happen, for sure, but when no one knows. As a result, your best option is to get ready and be prepared when it comes. This is how you be a successful investor in the stock market. Period.