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Moolah
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Posting #41: Thu Jul 24th, 2008 06:21 |
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Rather ..... errr.... what's the word to use...... 
err... err..... what are they talking about???
the following was published on star today.
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Thursday July 24, 2008
Psychological damage to US economy
While the current US housing contraction has caused plenty of fears and worries, its direct impact on the broad US economy has been rather limited. Much of the damage has been at the psychological level.
WHILE the current US housing contraction has caused plenty of fears and worries, not just in the US but throughout the world, most do not realise that the direct impact of the housing contraction on the broad US economy has been rather limited.
A lot of the damage has been at the psychological level.
This is due partly to the fact that house prices, which rose substantially, have been dropping recently.
Another factor has been the constant media attention given to scary forecasts that the current housing contraction is the worst since the 1930 Great Depression and that this time around, it could be heading that way.
Fortunately, the facts of the matter do not support such a negative view.
The chart shows that the single–family housing starts over the last 50 years, a period that covered all kinds of recessions and financial crises.
Some of these recessions and crises were as severe as the current economic situation, while some even more serious and frightening than the current global turbulence.
The 1973-75 recession was very severe and global in nature. All the major economies were very badly hit by the first oil shock. Inflation and interest rates skyrocketed globally.
The economic slump was very severe.
In fact, at that time, it was the worst economic recession since the 1930 Great Depression. Unemployment rate skyrocketed to nearly 9%. In 1973-74, the S&P 500 plunged around 50%. There were bank failures.
The 1980-82 recession was also severe and global in nature. Like the 1973-74 contraction, there were fears and panic everywhere. Mexico defaulted.
It was the start of a global disinflationary phase as the impact of then-US Federal Reserve chairman Paul Volcker’s severe monetary tightening bit. The S&P 500 plunged 30%. The US unemployment rate skyrocketed to double digits.
In contrast, i Capital thinks that what is happening at present is actually very mild.
The unemployment rate is at a healthy 5.4%. While inflation is rising, the cause is cyclical in nature. The S&P 500 cannot even stay in bear market territory.
The rise in oil price, while very substantial, has been spread over eight to 10 years. Of late, interest rate has dropped instead of rise.
US productivity growth has remained impressive unlike in the 70s and 80s.
The present decline in housing starts has been sharp but instead of fearing more declines to come, the plunge is very close to its end.
Most importantly, the recessions in 1973-74 and 1980-82 did not have a fast transforming and developing China. The world economy simply did not have any other major sources of economic growth, unlike nowadays.
i Capital is not even convinced that the US economy is in recession.
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Posting #42: Fri Jul 25th, 2008 00:56 |
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on housing, icap siad
This is due partly to the fact that house prices, which rose substantially, have been dropping recently.
Another factor has been the constant media attention given to scary forecasts that the current housing contraction is the worst since the 1930 Great Depression and that this time around, it could be heading that way.
Fortunately, the facts of the matter do not support such a negative view.
The chart shows that the single–family housing starts over the last 50 years, a period that covered all kinds of recessions and financial crises.
Some of these recessions and crises were as severe as the current economic situation, while some even more serious and frightening than the current global turbulence.
The 1973-75 recession was very severe and global in nature. All the major economies were very badly hit by the first oil shock. Inflation and interest rates skyrocketed globally.
from cnn this morning...
Sales of existing homes in June slowed more than expected and hit their lowest level in 10 years, according to an industry trade group report released on Thursday.
The National Association of Realtors reported that sales by homeowners dipped in June to an annual pace of 4.86 million, down 2.6% from a pace of 4.99 million in May.
That's the lowest rate on record since the first quarter of 1998, when existing home sales fell to an annual pace of 4.83 million, according to Walter Molony, spokesman for NAR.
The existing home sales rate - including single-family, town homes, condominiums and co-ops - is down 15.5% from the 5.75 million units sold in June 2007. ( http://money.cnn.com/2008/07/24/real_estate/existing_home/index.htm )
icap on unemployment...
The unemployment rate is at a healthy 5.4%. While inflation is rising, the cause is cyclical in nature. The S&P 500 cannot even stay in bear market territory.
healthy??
from cnn this morning...
Economic woes: A report from the U.S. Labor Department showed new unemployment claims rose much more than expected last week. New applications filed for jobless benefits rose by a seasonally adjusted 34,000 to 406,000 - a level not seen since hurricanes devastated the Gulf Coast in September 2005. (Full story)
"Investors are concerned over the weaker economic data that's coming through Thursday," said Bill Stone, chief investment strategist with PNC Wealth Management. "With more jobless claims, people can't pay their bills, which means more write-offs for companies."
http://money.cnn.com/2008/07/24/markets/markets_newyork/index.htm?postversion=2008072417
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Posting #43: Fri Jul 25th, 2008 14:10 |
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KLSE Composite Index : Market Valuation
The world remains so exciting. The nothing-else-better-to-do Malaysian politicians continue to provide high drama each day, providing useful, albeit short-lived, diversions from the confusing economic and market conditions. The highlight this week, however, has to be the surprising sharp drop in crude oil price. Within a few days, oil price plunged 15%, sending a message of great relief to central bankers, politicians and consumers.
In i Capital last week, it presented its objective analysis of the global economy and found that the situation is really not as bleak as what has been painted. While there are areas of weakness, there are also areas of strength. Whether the areas of weakness will spread or whether the areas of strength will broaden will depend on a few key factors, namely, oil and commodity prices and the monetary policy of a few major economies.
Figure 1: S&P 500
First, let us retrace the events since Jul 2007. Figure 1 shows the chart of the S & P 500 and the major events that have shaped its direction. The catalyst for the current downtrend has been attributed to the US subprime problem. After that the markets staged a rally, which was cut abruptly short by the huge losses incurred by the many large Western financial institutions. From worries over subprime, the worries shifted to the credit market and the heightened risk of a looming recession. They became more acute when Bear Stearns became the first large, high profile casualty in the widening residential mortgage fiasco. The Federal Reserve, which has been cutting US interest rate, then embarked on a more aggressive monetary policy. The Fed rescued Bear Stearns, and implemented measures to calm the credit market down. Together with economic data that were reassuring, the NYSE staged another rally, only to see it cut short by a new set of worries – global inflation - as the price of crude oil went up relentlessly and consumers everywhere protested. Even Warren Buffett changed his stance from a US recession to a US stagflation. So, what we have is essentially a cycle of worries starting from a subprime-induced recession to an oil-induced global inflation and global overheating. By mid-2008, we were already in a global confusion stage. No wonder, investors ended up feeling fearful, panicky and lost. With the turmoil and the topsy-turvy state of affairs, is there anywhere safe for investors? Where should investors hide?
In the current stage of the global economy, the price of crude oil is probably the single most important variable to watch. The reason is simple. By May, it had reached a level where pain was felt everywhere. What the subprime issue could not achieve, ie hurting economic growth everywhere, the price of crude oil did. Besides the anecdotal evidence of oily pain, economic and financial data in many countries starting from May 2008 showed that many economies, sort of, fell off the cliff. With some major exceptions, the data for Jun seems to still be heading in the same direction. The price of crude oil, after falling 15% in a few days, needs to fall further and stay there for a while, in order for the quickening inflationary pressure to subside. Fortunately, the technical indicators for crude oil are showing that the price of oil has further room to fall – see figures 2 and 3. A drop to US$100 per barrel would be most ideal. Global inflationary pressure would disappear almost immediately and this would set the stage for most economies to lower their interest rates. This would then set the stage for the global economy to regain its growth momentum, by which time the stock markets would have bottomed out and rallied.
Figure 4 shows the weekly S & P 500 and MACD. The recent drop to 1,200 brought the S & P 500 to the 50% retracement level, where major support is seen. At the same time, the weekly MACD may be forming a bullish divergence. Figure 5 illustrates the S & P 500 on a monthly basis. As can be seen, with the exception of the prolonged 2001 bear market, each time the stochastics indicator reaches an oversold level, the S & P 500 bottomed out. Currently, the S &P 500 is getting to that level and thus the bottom. By year-end, the S & P 500 should be rallying. What is interesting is that the NASDAQ Composite is trading within its uptrend channels – see figure 6 – and is currently near its major support line. For both the NYSE and NASDAQ, it would appear that the outlook is pretty sanguine. Of course, not forgetting that the Dow Jones Transportation Index is not too far from its all-time high.
The German market is shown in Figure 7. The current decline has brought the DAX index to its Fibonacci retracement target. In addition, as the weekly chart shows, the index is diverging bullishly with its MACD and Demand index.
What are the charts of the NYSE and Frankfurt telling us ? Essentially, after a long rally from 2002, the stock markets are, as part of the i Capital Long Boom, merely undergoing a correction. Give them a few more months, the next rally should start.[Mark it!]
For China, the situation is different. Most investors were expecting the Shanghai market to rally until the Aug 2008 Olympics and then plunged after that. In an interesting twist of events, it peaked in Oct 2007 and has plunged 56% since then. Figure 8, on a weekly basis, shows that the Shanghai stock market is actually in a bottoming phase. In another possible twist of events, the Shanghai market could embark on another rally after the Olympic Games. Why not ? After all, China’s economy is soft landing and is in a fine state. From a long-term perspective, the Shanghai market probably offers the most upside potential. If the Nikkei Average can reach almost 40,000 and the Japanese economy is so small, compared with China’s future size, why should the Shanghai Composite Index not reach levels higher than that ? Unfortunately, foreign investors like us have to make do with the China stocks listed in Hong Kong, Singapore and New York.
It is natural for investors to be fearful in the current environment. Like every bear market, investors only look at the negative side and forget that every bull market starts from a bear market. As a responsible investment adviser, our role at i Capital is to provide courage when others are fearful and fear when others are fearless. So, where should investors hide? It would seem that the safest place now would ironically be the stock market.
The KLSE
With the KLSE still oversold, i Capital revises its immediate-term outlook of the KLSE slightly to a range of 1,100 to 1,200. For the short-term, i Capital retains its outlook at a range of 1,100 to 1,400. For its medium and long-term outlook of the KLSE, i Capital still expects the KLSE CI to hit 2,000 points. With the 2008 election results now history but with the political comedy still being acted out, i Capital will review its medium- and long-term outlook at a relevant time.
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Don’t Try to Predict the Future / Be In Harmony with the Market / Don’t fight the Market ~Charlie Wright
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Moolah
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Posting #44: Sat Jul 26th, 2008 07:00 |
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Essentially, after a long rally from 2002, the stock markets are, as part of the i Capital Long Boom, merely undergoing a correction. Give them a few more months, the next rally should start.[Mark it!]
Er.... the long boom is a fact. Look at Global Earth Inc.
From 1960 to now... aren't we all amazed by the long boom? 
'give them a few more months'... lol .... well... given time... anything can and will happen, no? So.. a few more months... so rather vague...4, 8, 10, 12, 18 or xx months?
oh.. and while waiting for the boom to continue... what if the so-called correction corrects even more?
How?
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Posting #45: Sun Jul 27th, 2008 00:46 |
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onsumers have credit
[Updated on 26/07/2008 14:40:00]
The mass media has been hogging on the problems facing the mortgage borrowings of the US households. These are borrowings backed by real estate. As usual, reality has many facets. Besides having mortgage borrowings, US individuals also have consumer debts or credit. This covers most short- and intermediate-term credit, excluding loans secured by real estate. They can take the form of either revolving or non-revolving credit. An example of revolving debt would be credit cards while auto or student loans are examples of non-revolving credit. The total amount of consumer credit, although not grabbing the media headlines, is not small. Presently, the total amount consumer credit outstanding hovers around US$2.6 trillion. Although not as large as the real estate backed-mortgages, it is still a very important source of funds for consumers to finance their consumption. What is interesting is that despite all the talk about a recession or a protracted slump, consumer credit has been growing pretty healthily. In fact, the growth in consumer credit, as shown in figure 1, has been pretty stable for the last 5-6 years. Even though the rate of growth is not as strong as in the Nineties, consumer credit nowadays is still growing, unlike the 1991 recession. Again, it is hard to be convinced that the US economy is in a full-fledged recession.
Meanwhile, crude oil price is still dropping, as i Capital had been expecting. This drop comes at a crucial time for the US economy and the NYSE. It would certainly help to boost the battered confidence of both consumers and investors. After being wrong on the NYSE in recent months, the drop in oil price should make the optimism of i Capital correct in the coming months. i Capital retains its short-term outlook of the NYSE at a range of 1,190 to 1,500. However, i Capital retains its long-held bullish longer-term target of the NYSE at 1,900 - 2,000.
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Posting #46: Sun Jul 27th, 2008 00:48 |
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Shielded by China
[Updated on 26/07/2008 14:42:00]
As China’s inflation rate has been dropping, Hong Kong’s rate has been rising. As China’s GDP growth rate has been slowing for four quarters, Hong Kong’s economic growth rate was still rising (up to the 1st quarter of 2008). Due to her timely and advanced monetary tightening, China is soft landing and will soon be able to say for sure that her economy has soft-landed. Given the prevailing global economic conditions and the current sharp drop in crude oil price, it is only a matter of time before Hong Kong’s economic growth and inflation rates slow down. The Special Administrative Region of China will have her own soft landing in the coming quarters.
The mid-term correction in 1994 lasted for about one year and the Hang Seng index plunged 42%. The Great Asian Crisis in 1997-98 produced a one-year bear and the Hang Seng index plunged around 60%. Now, the index has dropped 34% and the correction has lasted 9 months. By the time the Hong Kong economy soft-landed, the Hang Seng index would have been much higher than what it is now. The 1994 correction coincided with the Mexican crisis and the predominantly Western- dominated foreign funds fell out of love with the emerging markets and pulled their funds out. The Great Asian Crisis was a global crisis in the making, until the US Federal Reserve stepped in aggressively to prevent an Asian flu from infecting the US economy. Now, the Hong Kong economy is in fine shape, shielded to a very large extent by China’s sound economic management and economy. The sharp correction that started in Oct 2007 was essentially due to a panic response to the massive losses at the large Western financial institutions and also due to the big spike in Hong Kong’s share prices from Aug to Oct 2007. The correction to the big spike is over and the global panic is now subsiding, thanks in part to the sharp drop in crude oil price.
Last week, i Capital advised that “the present inflationary trend is cyclical in nature” and “the rate of inflation should be peaking over the next few months”. The Hong Kong stock market should be rising gradually. i Capital retains its short-term outlook at a range of 21,000-26,000 for the Hang Seng index. i Capital is still expecting the Hang Seng index to scale greater heights with a medium-term target of 45,000-50,000.
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Posting #47: Sun Jul 27th, 2008 00:49 |
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Note From Publisher
This week marked the third anniversary of the depegging of the Ringgit and Renminbi with the US Dollar. The Ringgit and Renminbi have appreciated 14.7% and 15.8% respectively since the depegging. During the three years of floating exchange rate, Malaysia’s average monthly export growth was -0.3%, while that of China’s was +25.7%. By the same comparison, China’s real GDP growth was 10.8%, while that of Malaysia’s was 6.1%. While the inferior performance of Malaysia is due to many factors, the weak quality of Malaysia’s policymakers played a big part in it.
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Moolah
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Posting #48: Sun Jul 27th, 2008 08:56 |
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The mass media has been hogging on the problems facing the mortgage borrowings of the US households. These are borrowings backed by real estate. As usual, reality has many facets. Besides having mortgage borrowings, US individuals also have consumer debts or credit.
Hogging the mortgage problems????
Wait ... why don't they face reality and answer if the problems faced by Freddie and Fannie are real or not?
And what about the banl closures? Bank Chap-Lap lah! http://whereiszemoola.blogspot.com/2008/07/fdic-takes-over-1st-national-bank-of.html
Last week, i Capital advised that “the present inflationary trend is cyclical in nature” and “the rate of inflation should be peaking over the next few months”.
Well most of the current issues are indeed cyclical. Even the long boom theory. They are all cycles. Good times come and go. Bad times too come and go.
Being utterly dead wrong in a cycle could be damaging to one soul and wallett.
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Posting #49: Sat Aug 2nd, 2008 01:46 |
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KLSE Composite Index : Market Valuation
Is the situation getting better or worse ? Economy-wise, the plunge in oil price is fast calming nerves almost everywhere. Politics-wise, the Malaysian scene shows no hope or sign of any decisive solution soon. In the end, economics will be the predominant factor in deciding the trend of the KLSE. If the ordinary folks have decent jobs and comfortable lives, it is difficult for any country to break-up politically. Since Malaysians are still in a comfortable state, a calamity is unlikely.
In i Capital the last two weeks, it presented its objective analysis of the global economy and markets and found that the situation is really not as bleak as what has been painted. The global economy is going through a rough patch now but as prices of oil and commodities drop, investors will start looking beyond the current valley of gloom and doom. Over the next 3-5 months, stock markets globally should have bottomed out. In painting such a sanguine view, i Capital is not downplaying the size and seriousness of the housing and mortgage problems. What it is trying to do is allow subscribers to have a balanced view of the overall situation. There are prevailing at the same time, factors of gigantic magnitude that are offsetting the contractionary impact of the housing and mortgage problems. The sustained development of China is one.
Good and bad times are running parallel. It is confusing. Hence, it is important to carefully distinguish the cause and effect linkage. For example, the sudden economic slowdown in Europe starting May 2008 is not due to the US banking and mortgage problems. It is caused by crude oil price reaching painful levels. The same applies to many other economies. Once the price of oil drops substantially, confidence of consumers and businessmen in these battered economies would recover. Economic growth would revert to a robust rate again.
The KLSE
Given Malaysia’s current conditions, the state and prospects of the global economy is more important for the KLSE. With this observation and our sanguine view of the world economy, i Capital retains its immediate-term outlook of the KLSE at a range of 1,100 to 1,200. For the short-term, i Capital retains its outlook at a range of 1,100 to 1,400. For its medium and long-term outlook of the KLSE, i Capital still expects the KLSE CI to hit 2,000 points. With the 2008 election results now history but with the political comedy still being acted out, i Capital will review its medium- and long-term outlook at a relevant time.
i Capital
Next week will see the publication of Volume 20 (English edition) of i Capital. To reach this milestone has certainly been a long and very tough 19 years for Capital Dynamics and its managing director. A month after its launch in 1989, an Indian doctor called up to enquire about subscribing but did not as he was worried that i Capital and Capital Dynamics would close shop within months. In 2008, we are still around. After all these slogging years, i Capital and its managing director still subscribe to the simple philosophy of the 3 “i”s – Independence, Intelligence, and Integrity. When our managing director launched i Capital in 1989, one of his main aims was tof provide investors with objective research and analysis. The journey would have been so much easier had we been part of a large financial institution but this would certainly have meant giving up our cherished philosophy of Independence, Intelligence, and Integrity.
Some investors, without their own agenda being transparent, have asked how i Capital can remain independent when we also have a fund management arm. The sceptics and the cynics would say that our fund management arm would buy the stocks first and then recommend the same stocks to the subscribers of i Capital, who would in buying them, then push the share price up. Or we would do the reverse. That is, recommend the stocks in i Capital and then make our recommendations come true with the fund management operations buying and propping up these stocks. These cynics obviously do not understand or pretend not to understand what conflicts of interest really are.
First, we ought to reiterate the fact that we have never received any advertisement income even though numerous potential advertisers have approached us. Secondly, we do not and have not received a single cent of commission or rebate in making our investment advice or in managing the funds. Unlike others that receive all kinds of rebates and or soft commissions, i Capital and Capital Dynamics have always stayed away from these. Even when our analysts go on field trips, we pay for all our expenses even though the organising broker or investment bank were more than willing to foot our bills. Thirdly, because we do not have a stockbroking arm or provide personal and corporate loans, providing independent and objective advice becomes second nature. We do not have to churn clients’ portfolios or offend our large borrowers. Fourthly, the fact that we do not have a corporate finance business, although we could have applied for one, stacks the odds of Capital Dynamics being truly independent extremely high.
In Australia, a provider of financial services (like an investment adviser or fund manager) cannot use words such as “independent”, “impartial”, or “unbiased” if the person receives commissions or “forms of remuneration calculated on the basis of the volume of business” or if the person receives “gifts or benefits” that “may reasonably be expected to influence the person”. The Australian corporation and securities regulations have very tough standards. Yet, based on these standards, i Capital and Capital Dynamics passed them with flying colours.
There is one factor, however, that is the most effective in ensuring that any investment adviser or fund manager is truly independent and acts and thinks with integrity. This factor is always overlooked and its importance always underplayed or scorned at. This factor, which is also our favourite, is long-term investing.
Conflicts of interest arise primarily because of short-term trading or investment horizons that are short-term in nature. Short-term greed very often creates conflicts of interest. Long-term investing inevitably results in independent investment advice or investment decisions based on objective research and analysis. For example, giving a takeover tip to a long-term value investor would be of no help or benefit at all. The same applies to short-term considerations like earnings guidance, forecast, etc. If the long-term investor is going to hold the stock for years, why would a temporary rise in the share price be of any help ? A takeover may lift the share price temporarily but the share price may drop after that. The fact that we have been holding Parkson, etc for years testify to our long-term approach. A long-term value investor like i Capital and Capital Dynamics are more interested in long-term valuations, which make short-term variables irrelevant. As Warren Buffett would say, even if Greenspan were to whisper to him what he was going to do with US interest rate, it would make no difference to Buffett’s investment decisions. In our fund management side, we ACTUALLY decline clients who are keen in short-term investing. All the funds managed by Capital Dynamics are long-term in nature. Of course, if the stocks get overvalued from a long-term perspective, we would sell them. At the end of the day, the approach, the bias of i Capital and Capital Dynamics has always been long-term value investing as we believe that it results in low risk, high return investing.
Our Intelligence comes from our research driven approach. We conduct our own primary research. The section in i Capital called “China on the move” is a good example of this. Even our managing director kicks the tires and conducts his own investment research and analysis, be it on macro economics, industries or specific stocks. The i Capital Long Boom is the result of his years of researching the global economy, for example. Although many are bearish and remain bearish, our managing director views the current global economic conditions differently and sees it as only a temporary pause in a long boom. It is therefore heartening to know that even the IMF has recently revised upwards its 2008 economic growth outlook, forecasts that were only made in Apr 2008.
Our independent structure and our reliance on our primary research make us think and act with Integrity. Integrity is a funny creature. It only works in the long run. It takes a long time to build up and a lot of sincere effort to convince people of your integrity but the benefits will eventually show up. Based on any standards of comparison, the performance of i Capital and Capital Dynamics has been outstanding.
Section C, the oldest and the flagship portfolio in i Capital, has generated returns of about 20% per annum compounded since it started in 1991. Sections D and G have all beaten the KL Composite Index by a substantial margin. One of the finest examples of integrity was our decision to set up Section D2. This unique section was meant to help recover the losses made from some of the dead ducks that we have recommended over the years. By 1 Nov 2007, Section D2 had achieved its original objective of recovering RM80,000 in cost. Then, there is the 23-24% compounded annual return achieved by Capital Dynamics Asset Management since its inception 11 years ago. Again, this beats the KLSE Composite Index hands down.
Some thought that our stellar performance was due to the buying by our fund management arm and our recommendations in the advisory side. Section C2, a global investing portfolio, has also beaten the benchmark index handsomely since Jan 2007. The i Capital Global Fund, an open-end fund, has performed even better. From its start in Jul 2007, this global fund has beaten the benchmark indices by a huge 10-17 percentage points and it has also beaten many other global funds – see figures 1 and 2. Despite beating the markets globally, there will still be some cynics. Nevertheless, from not being trusted with RM300 in 1989 to raising almost a quarter billion for icapital.biz Berhad in 2005 to investing globally now, one could argue that i Capital and Capital Dynamics have made some progress in terms of establishing their integrity. However, it is a never-ending journey and the standards just get higher and higher with the passage of time.
Figure 1: i Capital Global Fund vs Other Global Equity Funds in Singapore (6 Jul 07 - 30 Jun 08)
Figure 2: i Capital Global Fund vs Other Asian Focused Funds in Singapore (31 Jul 07 - 30 Jun 08)
When starting out in 1989, our managing director could never dream of publishing Volume 20, 19 years later on. During that time, there have been several recessions, 2 Gulf Wars, one huge bursting of the global technology bubble in 2000, the infamous 1990 Japan twin bubbles bursting that many feared would bring the world economy down, the 1997-98 Great Asian Crisis that threatened to bring the world economy to its knees, and now, the ongoing Western banking and credit market woes, the oil price surge, and Malaysia’s new political landscape. During that time, i Capital has grown from a mere 6-8 page weekly to the present 30-50 page weekly, combined with a comprehensive investment website, http://www.icapital.biz. During that time, Capital Dynamics Asset Management was started and icapital.biz Berhad was launched. During that struggle, we became Malaysia’s first fund manager to expand overseas by setting up Capital Dynamics (S) Pte Ltd and launching the i Capital Global Fund without any distributor or marketing agents. However, after really struggling for 19 years as a truly and totally independent investment firm, the journey ahead for Capital Dynamics will be even tougher than the first 19 years.
Our plans to set up Capital Dynamics Australia are still in the works and so far on track. We are keeping our fingers crossed that we can start Capital Dynamics Australia before a new rally begins. We will be bringing to Australia our cherished and universal philosophy of Independence, Intelligence, and Integrity. As we expand our coverage, the challenges get tougher. It cannot be any other way. Recognising this, our managing director is always constantly on the look out for more capable and trustworthy people to help build a global investment house. No wonder our journey is so long, so difficult but what we have achieved so far is a sound platform for us to build our hopes and dreams on. Perhaps the 4 Jun 2008 email from Mr Lau Tai sums it up well.
“I would like to express my sincere thanks to you and your team in i Capital for the wonderful weekly newsletter that you are producing year after year. After 8 years of subscribing to your weekly publication, I have come to conclude that i Capital is second to none. Really! I believe that not many of us (subscribers) can truly appreciate the 3 “i”s, namely; independence, intelligent, integrity, practiced by i Capital. May I call this “The 3i - the i Capital way”. Most fund managers profess to possess all three, but to me it is definitely not the i Capital way. Remember the various big brokerage houses in the US that were fined for conflicts of interest not too long ago? As for intelligence, well, remember LTCM which was supposedly managed by Nobel Prize winners? As for integrity, no hidden agenda, looking after subscribers’ interest at all times”.
“Over the years, i Capital has been providing very accurate economic forecast very consistently. The world economic scene/events which are unfolding currently, look like it is once again following the script written by i Capital many months ago. I have no doubt that i Capital will be proven right once again”.
“We all know that Warren Buffett does not share his research into companies which interested him with his share owners. Unlike i Capital, he prefers to just present you with 'a score card at the end of the golf game'”.
“Shareowners of Berkshire Hathaway basically have to be contented with just - 'In Warren We Trust', whereas, the subscribers of i Capital can get to read a world class research and stock analysis from Mr Tan with a mere RM720 per year, a steal indeed. As for online subscribers, the amount that is charged by i Capital, it is akin to ‘day-light robbery’. Once again, how many of us truly appreciate this? Maybe, i Capital should consider increasing the subscription fees ! Since it is very unlikely that the subscription fees for i Capital will be increased in the near future, may I propose some changes to the layout of the printed version, so that the cost of publication for this World Class newsletter can be reduced.
1) 'Section E : Updates' - This section can be completely or partially removed.
Subscribers can still access it via i Capital online, since it is available for FREE (for print subscribers). I normally get E.1.(i) Announcements from the KLSE website. Hence, I get updated before I received my i Capital (subscribers need to do some homework if they really want to make money). Alternatively, only features those counters found in Section C, C2, D, and D2 in the update.
2) E.1. (ii)
Ratings - only features those which has a change in ratings. For full list subscribers should access them online.
3) 'Section F:
Directors & Significant Shareholding' - can be completely removed. Subscribers should get this infomation from KLSE website or i Capital online. Or only features those counters found in Sections C, C2, D, D2.
4) Once it achieves its objectives, how about renaming Section D2, as 'The penny stocks' portfolio, meaning it will be investing in stocks which are selling below RM 1. This will be interesting!”
“I believe the above changes will make your subscribers more independent and at the same time it should help in reducing cost. For far too long i Capital have been spoon feeding its 'wheel chair' bound subscribers. Its time to remove this 'wheel chair' now and replace it with just the 'Tongkat' because the majority of us (author included) still need the 'Tongkat' (in the form of Sections C, C2, D, D2 and G) so that we can continue to invest in stock market successfully”
.
The best praises cannot be generated by ourselves; they must come unsolicited from independent parties. We thank Mr Lau Tai for his kind words and his trust in us. Meanwhile, we take note of his numerous suggestions.
2 August 2008
Sime Darby
Convention Centre
IMPORTANT DATE for
Shareowners of icapital.biz Berhad
For the convenience of its shareowners, the AGM of icapital.biz Berhad will again be held on a Saturday, 2 Aug 2008. Details can be found in the attached flyer. Again, we hope as many shareowners as possible will turn up. Tan Teng Boo, the fund manager, will be conducting an investment presentation after the AGM.
ICGF plunged 7.78% in Jun
The NAV of the i Capital Global Fund (ICGF) dived 7.78% in Jun 2008 to US$989.865 from US$1,073.42 in May 2008. The Morgan Stanley World Index plunged 8.1 % during the same period. The Morgan Stanley All Country World Index also plunged 8.34%. This index includes China, which the ICGF cannot invest in at this point in time.
Since Jul 2007, the NAV of ICGF, nett of all expenses, has fallen 1.01% and has once again beaten the Morgan Stanley indices by a huge margin. The Morgan Stanley World Index plunged 14.05% during the same period and the Morgan Stanley All Country World Index slumped 12.88%.
Table 1: i Capital Global Fund (ICGF) (click to view)
If in such turbulent and volatile conditions the ICGF can more or less maintain its asset values, imagine what it would be like when the stock markets are rallying again. The best times to invest are when most people are frightened. After all, bull markets can only start during bear markets. For those who missed investing in the ICGF earlier, the current volatility is a great time to invest or to add on to your earlier sums. However, do not forget that the Fund is a long-term global fund.
Last edited on Sat Aug 2nd, 2008 01:49 by wanderer
____________________
Don’t Try to Predict the Future / Be In Harmony with the Market / Don’t fight the Market ~Charlie Wright
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Posting #50: Tue Aug 5th, 2008 05:40 |
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Tuesday August 5, 2008
Capital Dynamics: Inflation will ease in tandem with oil
KUALA LUMPUR: Capital Dynamics Asset Management Sdn Bhd is optimistic that the current high inflation rate will fall within 12 months on the assumption the oil price drops in six to nine months.
Managing director Tan Teng Boo said once oil price dropped, inflation would subside fast because commodity prices were determined by marginal changes and were always cyclical.
“If the crude oil price drops to US$100 per barrel, we expect the CPO (crude palm oil) price to follow the downtrend (barring any adverse weather development) and push inflation down, and investors would start looking at upside again on Bursa Malaysia,” he told a media conference in conjunction with iCapital.biz's AGM yesterday.
Capital Dynamics manages iCapital.biz, a closed-end fund.
 From left: Capital Dynamics Asset Management Sdn Bhd independent non-executive director David Loo Kean Beng, Capital Dynamics Asset Management Sdn Bhd chairman Tunku Tan Sri Ahmad Tunku Yahaya and Capital Dynamics Asset Management Sdn Bhd managing director Tan Teng Boo speaking to reporters at a media conference on Monday in conjunction with iCapital.biz AGM.
Asked if the crude oil boom was over, Tan said: “The secular boom is still there and the oil price would probably be much higher than now in three to five years.”
He remained optimistic on the local stock market and expected it to perform better next year as the current negative sentiment caused by political uncertainties would likely subside rather than magnify.
According to him, investors should not be too concerned about the performance of stocks over the next six to 12 months as they should look at longer term investment.
“Investors should look at companies with financial strength and focus on management capability to deliver what is promised and the ability to repeat performance,” he said, adding that they should look at specific stocks rather than sectors.
 Tan Teng Boo
On the latest addition to its portfolio, Tan said iCapital.biz bought 1.89 million shares in AirAsia Bhd at an attractive valuation of below RM1 per share.
Additionally, it recently sold down United Malacca Bhd and UMW Holdings Bhd seeing that valuations for the plantation and automobile stocks were no longer attractive.
As at July 25, iCapital.biz's investments totalled RM137.73mil at cost, while total unrealised gains, despite the current decline on Bursa Malaysia, were RM50.9mil. The fund still has RM56.9mil cash available.
As at July 25, iCapital.biz was invested in 18 companies, with Parkson Holdings Bhd, VADS Bhd, Petronas Dagangan Bhd and Fraser & Neave Holdings Bhd topping the list in terms of unrealised profits.
Meanwhile, Tan said Malaysia and many other countries had been decoupled from the US economy.
“Although the US economy has affected some sectors of the local market, it has not affected others, such as palm oil, oil and gas and tourism. It (the US economy) would not drag Malaysia into recession,” he said.
He also noted that the country's engine growth was more balanced now.
“We are able to maintain 5% to 6% gross domestic product growth with no increase in budget deficit at present,” he said.
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