What is the greatest mathematical discovery? For me, i think it is the "Rule of 72" discovered by Albert Einstein.
If you divide 72 with the compound interest, you will know approximatively how long you will able to obtain 100% return. Example with the compound interest of 9%, you will need ~8 years (72/8) to get a 100% return.
This is the secret discovered by Albert Einstein long time ago, and Warren Buffett is the one that practice it for >69 years, and making him the third richest man in the world!
So by applying Rule of 72 properly, i believe there's no doubt that anyone will be able to build your wealth and achieve your financial goal easily!
Sunday, 13 March 2011
SUCCESS (KLSE 7207) - Success Transformer Corporation Berhad - Part I
Success Transformer Corporation Berhad (SUCCESS) was listed on Bursa Malaysia’s Second Board in January 2005 and subsequently transferred into Main Board in March 2007.
SUCCESS is principally an investment holding company whilst the principal activities of its subsidiary companies are that of manufacturing and trading of electrical apparatus and industrial lighting and fittings, metal stamping parts, metal castings as well as property holdings.
I bought in this stock with the price at RM1.02. With the unaudited Q4 2010 income statement, the EPS (Earning per share) is RM0.2104, which make the PE=4.85 (Price/EPS = RM1.02/0.2104). Meaning that with the amount that I invest today, the company is able to earn back the same amount within 4.85 years.
The revenue of SUCCESS is growing in an uptrend from RM80m to RM207m. However the profit margin is not look like a good sign to me. Looking at the profit margin, they are going down trend for the past 4 years. This might showing a sign that SUCCESS is facing some challenge from competition. Or it might be due to some strategic acquisition of the company that might somehow lower down the profit margin for short term. I will pose this question to the investor relations officer and hope there is a good answer.
Also the dropping of the net profit for year 2010 compare to year 2009 is also a question that I will need to check.
Looking at the dividend, is RM0.03 for year 2009 and proposing RM0.035 for year 2010. With buying price of RM1.02, is ~3% return in term of dividend every year. It might be a bit little, but good thing is SUCCESS is expanding the company to ensure the company will continue to grow. You can check the company website to obtain the acquisition plan.
With the green technology concept and commitment on product development, and continuous expand on the export markets. I believe that the company will continue to grow.
I’ll stop at here for now today; will continue writing on this topic tomorrow.
I bought in this stock with the price at RM1.02. With the unaudited Q4 2010 income statement, the EPS (Earning per share) is RM0.2104, which make the PE=4.85 (Price/EPS = RM1.02/0.2104). Meaning that with the amount that I invest today, the company is able to earn back the same amount within 4.85 years.
The revenue of SUCCESS is growing in an uptrend from RM80m to RM207m. However the profit margin is not look like a good sign to me. Looking at the profit margin, they are going down trend for the past 4 years. This might showing a sign that SUCCESS is facing some challenge from competition. Or it might be due to some strategic acquisition of the company that might somehow lower down the profit margin for short term. I will pose this question to the investor relations officer and hope there is a good answer.
Also the dropping of the net profit for year 2010 compare to year 2009 is also a question that I will need to check.
Looking at the dividend, is RM0.03 for year 2009 and proposing RM0.035 for year 2010. With buying price of RM1.02, is ~3% return in term of dividend every year. It might be a bit little, but good thing is SUCCESS is expanding the company to ensure the company will continue to grow. You can check the company website to obtain the acquisition plan.
With the green technology concept and commitment on product development, and continuous expand on the export markets. I believe that the company will continue to grow.
I’ll stop at here for now today; will continue writing on this topic tomorrow.
Saturday, 12 March 2011
The Snowball - easiest step to be very rich!
There are so many books that i'd read before, that teach you how to be rich. Well, this is the book that i think provided the simplest yet powerful solution! "The Snowball: Warren Buffett and the Business of Life
" is the one that make me realize to become a rich guy, you do not need to be an extra ordinary guy, or come out with an extra ordinary product or idea.
What you need to know is the power of compound interest! Compound interest referring to the interest will be added back to the principal. This is the secret how Warren Buffett become the 3rd richest man is the world, by reinvest all his earning back into the capital with average return of >20% annually.
An easy question, roughly guess how much your RM20k be after 25 years with 20% compound interest? I posted this question to many of my friends. And only 10% of them might get near to the rough amount!
Well, i hope you are among the 10%, the answer is ~RM1.9 million. I was shock when i get this answer actually, as I'm among the 90%. :) Well, my friend, this is the beauty of compound interest! Any by applying it in the right way, you will become very rich!
" is the one that make me realize to become a rich guy, you do not need to be an extra ordinary guy, or come out with an extra ordinary product or idea. What you need to know is the power of compound interest! Compound interest referring to the interest will be added back to the principal. This is the secret how Warren Buffett become the 3rd richest man is the world, by reinvest all his earning back into the capital with average return of >20% annually.
An easy question, roughly guess how much your RM20k be after 25 years with 20% compound interest? I posted this question to many of my friends. And only 10% of them might get near to the rough amount!
Well, i hope you are among the 10%, the answer is ~RM1.9 million. I was shock when i get this answer actually, as I'm among the 90%. :) Well, my friend, this is the beauty of compound interest! Any by applying it in the right way, you will become very rich!
Will earthquake & tsunami in Japan attack the stock market?
Firstly, my sincere sympathy and condolences to the all the victims in the giant earthquake & tsunami. The 8.9 magnitude quake and tsunami had killed hundreds of people. When i first heard that news, i felt that natural disaster happen more and more often now, and is hardly for human kind to avoid. And as a human being, i felt the sympathy for Japan. At that moment, there is no difference between races, countries & etc.
When the earthquake news out, KLSE stock market started to going down ~1.5%. And there was one stock that i eyed for sometimes dropped ~6%. With the tempting price, i bought in immediately with the asking price. Why? Don't i worry of the world economy? Won't the earthquake impact on the stock market?
For me, Japan government is an expert in disaster control and relief mission, especially in earthquake. I believe it will impact Japan economy, but not for long term and it won't be a major impact. And is not an incident that will pull down the global economy.
Considering above factors, i didn't hesitate to buy in the stock that eyed for some times. With the reasonable price, and buying in a good stock which i think is undervalue, is the strategy that can been used no matter what market it is.
Even that the market will crash next Monday, I'm not really worry with the stock on hand, as i know they are good stock that already under value. However, probably is a good chance for me to buy in more of those good stocks. :)
I didn't update any news about stock picking this week. Initially i planned to write today, but this morning I'm not able to access some websites. So stay tune, i will update about one good stock that i already bought it tomorrow.
When the earthquake news out, KLSE stock market started to going down ~1.5%. And there was one stock that i eyed for sometimes dropped ~6%. With the tempting price, i bought in immediately with the asking price. Why? Don't i worry of the world economy? Won't the earthquake impact on the stock market?
For me, Japan government is an expert in disaster control and relief mission, especially in earthquake. I believe it will impact Japan economy, but not for long term and it won't be a major impact. And is not an incident that will pull down the global economy.
Considering above factors, i didn't hesitate to buy in the stock that eyed for some times. With the reasonable price, and buying in a good stock which i think is undervalue, is the strategy that can been used no matter what market it is.
Even that the market will crash next Monday, I'm not really worry with the stock on hand, as i know they are good stock that already under value. However, probably is a good chance for me to buy in more of those good stocks. :)
I didn't update any news about stock picking this week. Initially i planned to write today, but this morning I'm not able to access some websites. So stay tune, i will update about one good stock that i already bought it tomorrow.
Tuesday, 8 March 2011
Property Investment
Yesterday, there was a good friend that told me she was queuing to book a condominium. I was a bit surprise at first. As I never imagine that she would be so desperate to get a house.
And then she told me the main purpose is for investment. Wow! I think is great! As what I know she was not aggressive in investment previously, probably influenced by me who urge people around to me to go invest. Hehe! I want to give her a big round of applause. Is a really good start for her!
Personally, I think 99% she will earn money from her first property investment. Because the down payment is only RM17k compare to the buying price of RM441k. The RM30k is early bird discount from developer, which is tactic to sell the property like a hot cake. With RM337 psf, it beat down another newly launched condominium next to it which is RM355 psf. So I think there is still room for it to rise, probably she will earn RM50-60k after 3 years during sub sale. Is a good profit, which is >300% return within 3 years.
For me, I don’t think there is any different investment in property and stock. If I'm going to buy a house for investment, I will need to go and search around, looking at the environment, check on the developer background and comment and etc. So i didn't go and invest in the project though the return is tempting, as i got the news too last minute and i don't have time to do some research. There is one of my friend that looked over >100 apartments before he bought one. Actually, Peter Lynch recommends that stock investor to buy a house first before they get started in stock market. If you buy a house, meaning that you will work hard to research in and out of it, and most probably you planning to stay there if the price is not yet hitting your target price yet, as you like the house when you bought it.
So if you buy in a stock like the way that you buy in a house for own stay, you are going to become a great stock investor!
Anyway, there will be a seminar by a famous property investor, Milan Doshi will be coming to my company to give a talk next 2 weeks. I will be joining to see if there is anything I can learn from him. I guess the same investment methodology will be able to be applied to stock market as well.
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