Sunday, March 29, 2009

We and Our Mind

Greeting folks. I wish you have an enjoyable Earth Hour event on last night. I felt great about it may be because it is special and this is not we done everyday. Perhaps we'll feel sick about it if we do it monthly, weekly or perhaps daily?

Anyway, today I'm trying to share with you what I experienced of what I've read. On last week, I saw an article about our mind and our action relation from a magazine and what impressed me is that, it really happened around me for twice a week. I've to believe what the professor wrote is true.

There is pros & cons of our brain stored 'wanted' & 'unwanted' memory.

Basically I read an article about how our mind makes sense of things and fool itself, by professor Neil Bearden, who teaches Decision Sciences at business school Insead. According to him, we normally judge the future is more predictable than it really is because our memories of our past forecasts are biased towards what has actually happened than what we though would happen. Hindsight bias fools us into thinking that we knew how the past would unfold, and tricks us into thinking we know how the future will unfold.

In fact, he talked about the implications for investors, where many people follow on technical analysis based on pattern & past history. Our memory is selective, as what we do remember is not actually what happens. If by chance, we took some investments that worked out, when we try to reconstruct it, we may think we did some significant analysis in order to come out the decision to buy. When the unpredicted happens, they got it wrong.

Are investments only suitable for people who is hardworking to think & analyze?

Just for an example, before the collapse week of Lehman Brothers, people were saying it is a safe bet since Lehman is undervalued and that it is so important, the goverment was sure to save Lehman. It was too big to fail people might think. After the bankruptcy was inevitable, and how it would have been a moral hazard to save it.

However, I'm not trying to discuss about investment for today. I would like to enlighten us for something else, where I think his theory also apply on our daily lifes. Here's 2 real life examples I experienced.
1) I was asleep this morning and I heard the house phone ringing outside my room, but the ringing tone is a little bit different. I felt pissed off because it keep ringing again and again and disturbing my rest. This is not the first time, because I encountered it on last month too. After the fifth time the phone ringing, I finally went out to the room and trying to pick up the phone. Sorry, it was not the house phone, it's another house mate's mobile phone alarm ringing which is not far from the house phone, she left it in the living hall. She sets the alarm but she forgot to bring the mobile into her room.

2) My colleague asked for my help to fix her Microsoft Outlook (Email client) 2 days ago, as she experiencing send email problem. Well, it should be a very easy job as I've been deal with this for more than 7 years. In fact, I've helped her to fix the similar problem for 3 times, and all belongs to the network settings & outgoing SMTP server issue. Right. Without basic diagnostics, I was checking on the similar issues because I thought they were came back again. Unfortunately I couldn't found what is wrong after 10 minutes, or even restart the notebook and digged into services.msc. After a while, she told me someone changed her Outlook settings on last week due to the office new policy. Then I only recalled her Outlook SMTP port were changed! Man, I should diagnose the settings from the basic instead.

Prof. Neil Bearden advised us to 'read broadly' & not believe the forecast is right.

See, due to the the past history and what had happened, they had formed a pattern for us to believe what happening is the same as what we encountered and bias toward the decision making. Perhaps that's called experience with lazy thinking? What a lesson!

The moral of the story, investigate appropriately & think properly before we make any decision, this apply also to stock/forex investment. What do you think?

Sunday, March 22, 2009

On Vacation at Island

It's recession everywhere, I believe not many people have the mood to go for vacation nowadays, especially for the time being. It's true. Now We learned to try to save as much as we can to cater for the future needs.

On the other way round, we still need to relax ourselves and go for vacation to reward our hard works done. Otherwise there is no any meaning of gaining all the money and keep it for the sake of future needs. It's also very true. Well, if we want to, we can always look and go for budgeted vacation first. Once we are rich, we can go for more luxury vacation. It's not a big deal, as long as the desire is there.

I watched a movie about people's dream to go to island for a vacation lately. It really inspired me to organize a trip to a local island which my friends and I haven't visited there before. When I shared with my friends about the plan, they are excited about it too. As a result, we plan to visit Tiga Island.

Overview of Island Tiga

What's attracted me about Tiga island? Well, I believe you've already heard about it, it was the main location of the once upon popular TV programme 'Survivor' shot in 1999. It is chosen because of it's beautiful landscape and pristine natural environment. According to my friend, the island was formed through the eruption of several mud volcanoes. The last explosion happened in 1941 and it's remaining relatively passive until now. However, we still can found several small mud vocanoes spewing cool mud near the summit of the island. I heard that mineral mud is good for our skin by making sort of mud bathing. It's a 'must-do' activity in Tiga island! Apart from mud bathing, we also can diving, play water sports, trekking, bird watching etc. I'll definitely go for mud bathing and water sports, since I don't have a diving license yet.

Mud bathing at Tiga Island

Basically Tiga Island is one of the main islands Pulau Tiga Park, which consists of another 2 mini islands namedly Pulay Kalampunian Besar and Kalampunian Damit (known as Snake Island). Most of the visitors will overnight at Tiga Island and pay a visit to Snake island in the next day. Right, Snake island has nothing much as for itself, which composed of sandstone, limestone and shale, which covered in thick vegetation. However, this island is a breeding site for the amphibious sea snake, so called sea kraits. They can be found under rocks, in cracks and on trees around the island. They stay in the island during the day time and back to the ocean at night time. But don't worry about the visit to the island, as these snakes are venom-free and timid. Perhaps we will overnight at Tiga Island so that we can take some fantastic photos with them while we are there the next day.

Water Snake in da house.

In case you haven't know, Tiga Island is located 45km far from Kota Kinabalu, Sabah. To reach there, you have to drive from Kota Kinabalu to Kuala Penyu for about 2 hours. And then take a 45 mins boat from Kuala Penyu port. Alternatively, you can also get there by speedboat from Kota Kinabalu or Labuan and take about 90 mins.

Tiga Island beach view

Well, I shall update my journey with some nice pictures at Tiga Island once it is comes true.
So, what about your vacation plan now?

Sunday, March 15, 2009

RM5000 Discount for Proton & Perodua Owners

It's pleasant to hear our country to release RM60 billions 2nd stimulus package by our deputy prime minister on few days back, to stimulate the worsen economy around the country.

Some of the interesting 2nd stimulus packages including post-graduate opportunities, government employment opportunities, various incentives for retrenched workers, and RM5,000 discount for Proton & Perodua owners.

Today I would like to compliment about one of the 2nd stimulus packages, which is RM5,000 discount for Proton and Perodua owners. The deal is a discount of RM5,000 will be given to car owners who trade in their existing cars which are older than 10 years to buy new Proton or Perodua cars. This is a good idea to support our country's automotive industry, where also to benefits those who want to change a new car with existing Proton car undervalued with RM5,000.

The new Proton Saga indeed is a 'not bad' entry car with reasonable price.

Fine. As a Malaysian, we always doubt about government decision as there are so many loop holes for a good offer from the government. Yes, I would say our suspects are always right, this stimulus package was hidden with full of silly conditions, I'm not sure whether you're aware about it. To thumb of rule is, before you can trade in, the car must be examined by Puspakom (M'sia vehicle examination center) first. If there is any condition doesn't meet the requirements, the car owners must fix it before they can trade in.

Basically the condition is 'suitable for driving on the road', which needs to fulfill the following elements:
1) The car body is in complete form.
2) Engine in good condition and it's not releasing dirty smokes.
3) The braking system is under good condition.
4) Main lights and signal lights are proper functioning.

I understand the cars will be collected and send to scrap. Before that, they might take out whatever parts and accessories which can be re-condition. But if this is the case, it shouldn't be named as stimulus package, it's a marketing plan from government instead.

I heard the latest Proton Exora (MPV) is quite ugly but consider cheap.

I have some questions for this offer, as below.
1) I suppose stimulus package is to trigger the country economy, no?
2) If I'm effort to buy a new car, I won't be driving a 10 or 20 years old car, no?
3) If I've to fix the faulty parts before I can trade-in, is it more convenient for me to trade-in with other car dealer? And may be I might get a better value than what offer by the government?
4) Even though government offering RM5,000 discount for those low income earners to change their vehicles, will they afford to buy a new local car that cost them about RM30k-60k (havent add the loan interests of 3-4%) over 5 to 9 years loan?
5) Will it be better if government just scrap this offer and think of another marketing plan, like giving a special price for low income earners to buy Proton/Perodua? Or perhaps Proton and Perodua can cut down their margin to boost up the productivity?

Well, this is just my personal opinion. I believe there are many people complaint about this plan. We will see how this plan fails soon, or how the government react on this.

Sunday, March 8, 2009

50% Discount at Restaurant

Do you visit restaurant frequently?

Perhaps it is common that you enjoy dine-in for 10% to 20% discount if you use certain credit cards and member card. But, how about 50% discount on all food and drinks?

On last month, my colleagues and I visited 2 of the 50% discount promotion's restaurant. One is mixed western-and-Chinese restaurant, and the other one is pure-western food. After 50% of discount, the price is apparently cheaper compared to the original price.

It's 50% discount at restaurant is rare?

One steak set dinner cost us about S$10 per plate, where the usual price is S$20. But it was really unsatisfied, the portion is greatly reduced and it's not so delicious. Well, I would say we won't dare to visit 50% discount promotion restaurant again. So do think twice if you notice such an advertisement on newspaper or road side.

I'm not trying to emphasize the lesson I encountered here today, but I want to highlight on why the restaurant owners want to spoil their restaurant goodwill and quality during promotion. What is the purpose of the promotion? It is to attract more people to your restaurant and trying to do a better business, right? If it is a promotion, we would expect the quality and the portion would be the same as usual, right? But if you do your promotion very badly, for sure the customers will disappointed and they might not consider to visit the same restaurant again.

I still could not figure it out why until now.

Sunday, March 1, 2009

10 Rules for Investment - Part II

Hi folks, sorry to inform you that I would be unable to update my blog as frequent as previous months, as I have plenty of company works to follow-up lately. I hope I can be more efficient in my work while spend some time to update my blog. Well, I just feel great to write a post on weekend.

Anyway, I hope you enjoy the part I of the 10 investment rules just like what Warren Buffer did. And hope they will help you to justify better on your stock pick. So here's the part 2.

Rule $5 - Analyze the situation carefully and find an achievable target, but not those target which hard to achieve.

Buffet did his stock pic very precisely, where those stocks pick were more on long term sales companies. After 20 years later, the company sales are still stable. During 1973 to 1974, when the stock market is corrupted, the giant advertisement company in US has left about US$0.76 per stock. Buffet bought as much as he can, and sold hem after many years. The yearly return for this stock is about 20%. Where else in this world you can steadily get 20% interests per year and for many years? Some more the stock was bought in bulk by Buffet.

Is technical analysis really works? Or it's just show us prediction based on past history?

Rule $4 - Don't worry about stock market and economy outcome, we want to buy a career but not stock.

Nobody can predict the stock and economy outcome in this world, not even David Brain or Buffet. If you only chose to buy a stock under certain economy condition, and you always need to switching frequently, then you will encounter lose in one day.

To buy one stock, you need to comfortable and confident with it, no matter it is unstable for one or two years. If you don't plan to hold a stock for 10 years, then don't hold it for even 10 minutes.

Rule $3 - You don't have to gain back the lose from the same stock

For a novice trader, they will keep invest and in hope the stock will regain the lose when the stock is keep falling. But thing just not happen in the way we anticipated. We need to set an affordable stop loss, and try to invest on other potential stock instead. If we discovered we are suffering from the stock lost, we can choose not to further suffer anymore.

Study the company will make us understand how much it can helps us make money.

Rule $2 - If you have sufficient internal hot tips and given capitals, then you will bankrupt within a year.

By the time you have the news, other people should have already obtained it, and acted on it of course. Buffet always said why he likes to stay in Omaha is, there will be no people provide him internal tips during lunch hour. So, we have to do the fundamental job, perform potential companies analysis and then make a good decision.

Rule $1 - Diversification is only cater for those don't know what they are doing

Buffet will only go for those companies which met his requirements, including potential management/sales, and reasonable price. He willing to spend many years to hold a stock, just like Coca-Cola. He rather concentrate on one stock and once he invested to the company, he will just wait and get his return from there.

Yes. These are the 10 rules that the richest man in the world did. Sounds great and easy, isn't it? Well, practice makes perfect. I believe now is the golden chance to buy low price stock during this recession period.

Good luck, folks.
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