Why Buy & Hold Strategy Don't Really Work For S&P500

Posted by Kris | Sunday, October 30, 2011 | , | 0 comments »

I saw this chart while cleaning up my laptop. S&P 500 is a broad stock holding across industry. From the chart, it clearly shows that the buy & hold strategy don't really work if your investment is very diversified.

Diversification & buy/hold strategy which is once always touted by stock gurus don't really can out-perform selective sectorial stock picks. P.S please don't quote Warren Buffet's buy & hold strategy that made him the legendary investor. He do get a lot of lucrative and very profitable terms each time he "rescues" a company from financial distress when he became very famous. (although at the beginning, he picked very defensive companies and avoid growth companies such as the technology stocks) And which his reputation, alot of people will rush in to buy the stocks and hence indirectly causing the stock price to go up.

P.S , I just realized that this post is just there sitting in my draft.. Not sure why it did not get published.

DJIA Reaches New Height 2011; Strong Earnings & No More European Crisis?!

Posted by Kris | Friday, October 28, 2011 | | 2 comments »


Dow Jones really had a very super duper good week. Most major earnings come out good hence boosting the overall market. (with a few exception namely Netflix). Even Amazon & Google whom reached new high before the earnings where announced succumbed to profit taking is now soaring to new highs prior to their earnings announcement.

Tech stocks are alarming strong although their evidence of slowing consumer demand. Heck, this is a bull rally, everything goes. Looks like everyday is a GREEN day. A very bad week if you are bearish, this rally really squeezes your shorts/puts

If you notice, some of the stocks are reaching their 52 week high, something very very bullish. Now even the S&P is reaching the 1,300 once seems to be unbelievable due to the Greece crisis. 

In bullish market, any negative news is disregarded. Greece bondholder had to take a hair cut of 50% which were once the rumor triggered huge down-sells prior to this bull rally. Now taking a cut of 50% seems okey to everybody.

Here are the charts for a very bullish period of the US stock market.

NFLX & FLSR Tanking Big Time

Posted by Kris | Wednesday, October 26, 2011 | | 2 comments »

NFLX aka Netflix dropped a whooping -35% to close at USD77.37 after they missed earnings and also mentioned that they lost around 8 million subscribers. This company is the one that bankrupted Blockbuster. This company was once a USD304++ stock.

And FSLR aka First Solar the world leading solar panel manufacturer also lost -25% to USD43.27. This company was once a USD175++ stock.  They even have a factory in Malaysia, i think somewhere in Kulim. Not sure about that.

I was watching over both this stock, but FSLR tanked when I went to sleep earlier :(

KnowThyMoney's Pick: Miss Charity 2011

Posted by Kris | Sunday, October 23, 2011 | | 2 comments »

Since this is a weekend again. Here is another eye candy. Since there is only 15 contestants, then I only will pick my top 3 to win this contest. This is a competition organized by Hair Impression Salon & Academy, based in Penang, i think. For Penang-nite, you guys/gals can really see from the photos below that their workmanship is really impressive and go check them out :P

Without further ado, there is my 3 picks. Here is the link for you to vote for them.

Junice Chong

Cammy Yeoh

Vicky Khor - Looks familiar, perhaps an avid contestant

See the rest of the contestants, to see whether my top 3 picks matches yours or not. Beauty lies in the eye of the beholder.

DJIA on 3rd Quarter Earnings

Posted by Kris | Tuesday, October 18, 2011 | | 2 comments »

The 3rd Quarter reporting has started last week, and propelled Wall Street to near high compared to the EU crisis. Suddenly, there is no much news headline on the EU problem. There are bound to be more time-bombs waiting to erupt on the PIGS countries once the earning season ends.

So 3Q 2011 is very bullish with tech stocks propelling to new high namely GOOG and IBM & APPL.

Nasdaq is extremely strong compared to DJIA & S&P500 even during the Greece EU crisis.

3 Reasons I Will Avoid Capital Protected Funds

Posted by Kris | Tuesday, October 11, 2011 | | 5 comments »

There no such thing as low risk but high return investments!! Except scams!
I bought this capital protected fund investing in commodities at the height of the 2008 bear market. I bought it because, i expected that the commodities will eventually rise with the recovery and also gold aka precious metal will rise as the dollar loses its value because of the quantitative easing by the FEDs. 

Below is the performance of my fund that I bought. I thought it will at least yield me 5% annualized returns. (Heck even my govt SUKUK yielded me 5% and no service charge!!) Commodities aka precious metals, palm oil were on the rise!! Heck this year alone, gold has risen like 20-30%!! And yet i still get fixed deposit returns.

3 Reasons why I will avoid capital protected fund in the future are:

1. I am bounded to stay vested in the fund for 3 long years!! If i withdraw or sell prematurely, i will get penalized around ~1% if i am not mistaken for the 1st year, and lesser amount as we reach the 3yr maturity. ~1% is alot considering that it only yielded 3% returns per year.

2. When the market recovers, this fund did not managed to capture the rise and hence the dismal performance. The main reason is that to do a capital protected fund, ~90-95% of the fund is invested in zero coupon bonds. (something like very low yielding fixed deposit. This is designed to protect the erosion of the value of money due to inflation. More detail from Wikipedia: zero-coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity.[1]). So only the remaining ~5% is used to invest in commodities.  That is why the fund cannot performed good enough compared to equity type funds.

3. There is a 3.5% service fee when i buy into the fund. Ouch..with this low return, it really ate into my returns. I better put my money into fixed deposit or sukuk funds by the government. I expect more sukuk issuance as the economic condition worsens. Remember that government is too dependent on income taxes as a source of income. (around 41%). Lower wages, or higher unemployment will hurt their revenue.

P.S I am recalling the figures above by memory. (This was 3 years ago!!) But I think i am right to a certain extent. 

So my learning for 2011 is to AVOID Capital Protected Fund types NO MATTER what exciting sector it invests in. I will tell you next time what are the types that I like and will buy in the coming future when the market tanks. I was a mistake on my part even ( I think i could not find any pure commodity funds at that time) though I picked the correct sectorial play that is commodities.

Good thing is that the fund has matured, and I will withdraw my money from this under-performing fund (at least to my expectation) soon this month :)

Performance History
Growth of $10,000 (MYR)
  •  Fund
  • -
  • 11.01
  • -0.04
  • 0.40
  •  +/-Cat
  • -
  • 1.60
  • 11.42
  • 0.45
  •  +/-Idx
  • -
  • -
  • -
  • -
Category: Capital Protected
  • Trailing Returns(%)
  • 2011-10-07
  • YTD Return
  • 0.12
  • 1 Year
  • 3.35
  • 3 Years Annualised
  • 3.14
  • 5 Years Annualised
  • -
Fund Benchmark
Maybank 12-month Fixed Deposit Rate
Morningstar Benchmark

Key Stats
  • Morningstar Qualitative Rating™
  • Morningstar Category
  • Morningstar Rating™
  • Capital Protected
  • GIFS
  • -
  • ISIN
  • Inception Date
  • -
  • 2008-09-02
  • NAV(2011-10-07)
  • Day Change
  • MYR 1.03
  • 0.18%
  • Bid Price
  • Offer Price
  • -
  • -
  • Total Net Assets (Mil)
  • Total Expense Ratio
  • USD 4.86
  • 0.18 %
  • Front Load Fee(Max)
  • Redemption Fee
  • 3.50 %
  • 1.50 %
  • Employee Provident Fund
  • No

DJIA Bounces Back To 50D Moving Average Line

Posted by Kris | Monday, October 10, 2011 | | 0 comments »

Here is some chart since the Euro crisis seems to subside as Belgium bails Dexia. And Greece say no bailout or the taboo word "NATIONALIZE" their local banks.

As the earning month looms, good news is cheering up Wall Street.

Malaysia Budget 2012 Summary

Posted by Kris | Saturday, October 08, 2011 | | 12 comments »

Here is the summary for budget 2012, which is certainly a foretaste of the goodies that we will receive as the general election looms next year. The stock market is not so bright and an upcoming recession really gives the incentive for the ruling government to give out more good news.

Most goodies impact the civil servant which actually make up a huge percentage of the Malaysian populace. (With 1.3 million civil servants to a population of 26 million, Malaysia has one of the highest civil servants-to-population ratio in the world) I wonder why is there no tax relief targeted for the middle income people like me and also perhaps a Buffet tax on the rich.

Highlighted bold what i am interested at.

Private schools registered with the Ministry of Education will be given incentives including an Investment Tax Allowance.
We will abolish payments for primary and secondary education, making these free for the first time in our history
RM1bn will be provided through a special fund for the construction, improvement and maintenance of schools.
RM50.2bn will be allocated to the education sector so that it can continue to develop talented, creative and innovative people.
To enable SMEs to commercialise research products a Commercialisation Innovation Fund totalling RM500mln will be established.
The Govt has allocated RM100mln promote innovation including the 1Malaysia Award (C1PTA) for innovative student inventions.
Budget focuses on developing human capital, creativity and innovation and 2012 will be the National Innovation Movement year.
The real property gains tax will be reviewed so it doesn’t jeopardise the ability of low- and middle-income groups to buy homes. (Kris: Another attempt to boost the sagging property bubble in Malaysia?)
The Malaysia Healthcare Travel Council will be privatised to promote and develop Malaysia as a healthcare destination.
To promote tourism the Langkawi Five Year Tourism Development Master Plan will be launched with an allocation of RM420mln.
Full exemption of import duty and excise duty on hybrid cars and electric cars will continue to be given until 2013.
A RM2bn shariah-compliant SME Financing Fund managed by selected Islamic banks will be established in 2012.
FELDA settlers are expected to receive a windfall, and the amount will be announced before listing.
FELDA GVH will be listed on Bursa Malaysia by mid-2012 to raise funds for the company to become a global conglomerate.
To promote the development of Exchange Traded Funds products I-VCAP will provide RM200mln for Shariah-compliant ETFs.
Income tax exemptions for non-ringgit sukuk issuance and transactions will be extended for another 3 years. (As the economy weakens, expect more sukuk issuance from the government to solicit more money)
RM3,000 will be given to ex-members of the special constable and auxiliary police as well as widows and widowers.
A special programme will be introduced for 175,000 army personnel who are not eligible for pensions.
Civil servants will be offered tuition fee assistance for part-time studies, including 5,000 masters & 500 doctoral scholarships.
The Government will extend the compulsory retirement age from 58 to 60 years old to optimise civil servants’ contribution.
600,000 Government pensioners will benefit from an additional annual pension increment of 2%.
For the Orang Asli affected by the landslides at Sungai Ruil, RM20 mln is provided for their relocation to new homes.
RM90mln will be provided to the Orang Asli for basic necessities, including the expansion of the clean water supply project.
To provide greater access to bank services for the rural population, Bank Simpanan Nasional will appoint agents in rural areas.
The Government will provide RM400mln to upgrade the water supply infrastructure in selected FELDA areas.
The Government will expand the programme to supply clean water to the rural community in Sabah by RM50mln.
RM5bn will be given to develop rural infrastructure, including RM1.8bn to the Rural Road Programme & Village-Link Road Project.
Budget introduces a Rural Transformation Programme, so that rural areas can attract private investment and create employment.
To encourage private sector human capital development incentives including a double deduction on scholarships will be offered.
The Government will expedite tax exemption approvals for educational institutions and all places of worship.
SARA 1Malaysia will benefit 100,000 households with income below RM3,000 per month.
Hospital Kuala Lumpur – the oldest in Malaysia – will be upgraded to be the country’s premier hospital.
Hospitals will be upgraded and constructed as well 81 rural health clinics upgraded and 50 new 1Malaysia clinics launched.
Healthcare will be allocated RM15bn operating expenditure and RM1.8bn development expenditure.
The Government will establish the Special Housing Fund for Fishermen to build and refurbish houses.
The Government will continue to implement the Program Perumahan Rakyat by building 75,000 units of affordable houses.
The Government will identify areas in the vicinity of MRT, LRT and other public transport to be developed by PR1MA.
The My First Home Scheme will be expanded to increase the limit of house prices from a maximum of RM220,000 to RM400,000. (This will solely depend on the banks discretion although there is a direction from the government. Not sure what is the maximum income allowed for a person to apply this loan. If the ceiling is not raised, I don't think the banks will want to loan out RM400K for a person that only has a gross income of RM3,000. (The person still need to eat after all)
500,000 will benefit from KAR1SMA, which provides assistance to poor senior citizens and children and disabled people.
In the spirit of “People First,” all subsidies, incentives and assistance totalling RM33.2bn will be continued.”
The National Agro-Food Policy 2011-2020 will be launched and RM1.1bn allocated for the development of the agriculture sector. ( I think this is the correct move, we need to go back to agriculture to reduce imports and control the food prices)
The Government is mindful of the plight of the rakyat due to rising food prices and will take measures to address this.
Civil servants will be given an additional bonus of half-month salary and pensioners RM500.
Book voucher worth RM200 will be given to Malaysian students in all private and public institutions of higher learning.
One-off assistance of RM500 to households with a monthly income of RM3,000 and below will be provided. (Free money!! Not sure how is this going to be implemented!?. I think a tax rebate will be easier :P)
A Flood Mitigation Plan will be implemented in Perlis, Perak and Johor to help 4 million rakyat residing in flood-prone areas.
To ensure the welfare of retirees measures including a tax relief on Private Retirement Schemes contributions are introduced.
Senior citizens aged 60 years & above will be exempted from outpatient registration fees in Govt hospitals & health clinics.
RM15mln will be allocated to build 150 futsal courts to achieve the “One Court for One Mukim” target.
The Government will establish MyCreative Venture Capital with an initial fund of RM200mln.
To prevent cervical cancer, the Government will provide free Human Papilloma Virus immunisation nationwide. (Good!)
A training allocation of RM10mln will be provided for women to develop leadership and managerial skills.
To assist the homeless the Government established a social assistance centre known as Anjung Singgah.
The National Legal Aid Foundation will ensure that every individual who is charged in court will be given free legal aid.
To assist taxi owners facing increased operating costs, measures will be introduced including tax exemptions on taxi purchases.
TERAJU will coordinate and drive the transformation and strengthen Bumiputera’s participation in business.