Early worm catches the worm

A friend of mine in the funds management industry recently told me that its not a good time to buy shares now. Comments in the forums were pretty unforgiving to the stock analysts for having no guts to recommend any good and value stocks.

It is no doubt good to be prudent in uncertain times but in the market any situation provides opportunities, depending on how many managed to find and take it up.

Opportunities to buy and and sell or shorting will evaporate as soon as more and more participants start buying the 'opportunity' found. The trick is to be early in the game. And in this sea of red, somehow someone will be making the money.

So I beg to differ with my friend and I think its a good time to scout for good undervalued stocks. David Merkel, drawing on the advise by Ken Fisher, summarised and simplified my thoughts into the following line:

"If something true is relied upon by many investors, it is not valuable for smart investors. If something false is relied upon by many investors, it is valuable for smart investors to bet against that.”

Well I think the above could be simplified further using the universal proverb:

'Early Bird Catches The Worm'

Do you get it now?

Nothing short of a full reform - part 2

It has been a hectic week for me leaving me no time to even put a short line but it also gave me a window of opportunity to catch up with the latest political developments in Malaysia especially the first 100-days after the election and Sabah's SAPP move to break ranks from BN.

Although reflecting the past 100 days since March 8th and observing the on-going politicking are certainly interesting which provides a great debating/conversation topic but at the end of the day it is still politics and just will not stop here.

Of course politics are needed to run a country, complement and assist economic development but at the end of the day what did the people received in terms of their wallets and bank accounts as a result from politicians politicking?

Politicians should be the ones to be reformed if Malaysia wants to move forward. Many of the current mindsets of Malaysian politicians belong to the 60s and has no place for them in 21st century.

Despite the opposition winning five states in the federation I have failed to see any of the parties in PR, that can offer strong credibility in building the nation forward other than sloganeering and eloquent speeches. Of course, time and faith must be given to allow them to have a chance in fulfilling their election promises which won over nearly half of the people in the country.

But the reality is that any political parties can draw up feel-good and hell of a promising manifesto. The BN did it in 2004 riding on the back of a so-called 'reformation' agenda which in the end did not materialise and slided backwards instead. People are skeptical and if given the choice of two evils, why not choose the lesser of the two evils?

Most politicians are like chameleons and they have to be as this is the game. While they can play the game all the want, I want to ask them and to know whether they really subscribe to nation-building as their goal or just merely to serve their constituency and survive the elections as they come?

The hint of looking at the larger picture was revealed by the opposition parties in the run-up to the election. Tony Pua and Jeff Ooi mentioned that Members of Parliaments are not just tasked to solving local problems such as drainage which comes under the responsibility of the local councils. For a very long time the majority of Malaysians thought that MPs are just 'lonkang' solvers. At the very least we now have new lawmakers that recognise the larger picture.

100 days after the election is a very short time and the new MPs who promised the people to reveal the details of the larger picture goal is a bit far fetched as they have yet to settle down comfortably in their role as MPs.

Politicians as the forefront 'advocate' of the masses should lead by example. After all they are like the captain of the ship and can you imagine what will happen if the captain is drunk in the rough high seas?

Perhaps all politicians before serving as MPs or intending to should be thoroughly educated in 'serving the people'. For a start in reforming the MPs and assemblymen, they can start studying the philosophies of Han Fei-zi, and hopefully subscribe to it.

Nothing short of a full reform - part 1

If anything, as echoed by many recently, the Malaysian government should practice what it preach and lead by example which unfortunately is not the case. Telling people to change their spending habits and expectations in view of the rising impact of the global inflation is of no use if the leaders don't do what they say. Eventually people will change their lifestyle and spending patterns because it is just natural to do so - simple economics, even without government persuasion.

Arthur Shelly, an organizational behavior expert from RMIT University said in the context of a corporation that unless the management believe and practice what they preach the overall organizational culture and practice will not change very much what the management actually desire. Likewise, the same could be said for a country.

Dues of praises should be given to the Penang State government for leading by example which even in the event of an economic downturn, at the very least the people have confidence in the government in riding out of the downturn together. They will know the government is there and doing something to protect them which is what a government should do - love and protect its people. The contrast becomes more prominent when compared to the federal government.

Yearnings for improvements on the current state of political and economic affairs in Malaysia will literally be a no-show unless there is a full comprehensive reform in all spheres. It is time for the country to embark on the real journey of development.

-Watch this space-

Ruddy Rudding It

The next time you hear about Kevin Rudd putting yet another 'half baked' proposals, especially on the international front, you can say , "Ruddy Rudding It! (again!)".

While in Japan, he announced setting up an international commission to oversee nuclear proliferation. Just last week he proposed setting up an Asian Union that resembles the EU. Those proposals are noble but there are many good ideas being dished up every week albeit going unnoticed. Even the Malaysian Prime Minister last week tabled a proposal to ban oil speculation to prevent massive fuel hike.

The question is, of course, how practical can the proposals be realised. Kevin's Asian Union idea is too idealistic to be workable in our lifetime. There is too much diversity, political, cultural, ethnic and religious blockades in the region for an EU-type union to work.

I am pretty surprised that Kevin, being a China-expert, can dish out such a proposal as he would very well understand in North-East Asia already there are barriers for China, the Koreas and Japan to come and work together as one. There is too much conflict of interests. Even the idea of getting these countries together to form a Confucian Union, based on their similar cultural values, won't be able to see much light for the next half a century.

With the benefit of doubt, perhaps he is suggesting a framework to work towards that goal for the benefit of the future generation. And if that is the case, I say aye. What Kevin really needs to do and focus now is the economy. Yes, it is the economy and so please rudd your way back home to battle any possible economic downturns. Asian Union or nuclear disarmament won't protect the worth of the dollar we have now.

Unsettling but is there a silver lining?

With elections in many countries looming around the corner and the irresponsible remarks by Israel with plans to attack Iran, it is not too much to say uncertainty is very much in the air. The biggest question is where is the economy heading to? The consensus to that answer is stay out in the sidelines and watch out for the coming 'big' storm.

As the oil price shot to $150 per barrel everyone is feeling the chill that could be even more bitting when the oil price hike trickle down to other prices. But will the hike last?

Without any professional or substantial research, my gut feeling tells me that the oil price will eventually fall as we inch closer to the second half of the year. Things will look better until the end of northern summer. Despite being told many times that this is not the time to get into the stock market but I believe that if you are a long term investor, there are many value stocks now that trade below their fundamentals. But the of course there is this oil price hike looming over many industries that could cut a big chunk of profits away. We return again to the air of uncertainty.

The US credit crunch now looks painfully adolescent to the oil price hike affecting global economies. Nonetheless there are opportunities in the mess if you are willing to venture out of your storm shelter.

Fruits of a poisoned tree

Although it is a global phenomenon, Malaysians' wallets took a really hard from inflation today. With wages remaining stagnant while the price of daily necessities already at sky high and the latest being petrol effective today, the current inflation trend is morphing a wealth deflation at an unprecedented pace.

I can see the validity of increasing the price of petrol to reflect closer to its market value and an attempt to unwind the already highly distorted economy but to the laymen they couldn't care more than protecting their worth of a dollar earned to exchange for something more but not less. A notion that is valid for the common people after all we all try to maximize our marginal utility, which is recognized as one of the pillar of economics.

Understandably the government does not have much apparatus to tinkle around as this is much of an imported inflation. The cash rebate is necessary but it is a flawed one from the very start. A maximum rebate of $625 only translates into $1.71 offset per day - by doing the math, this is not very much. In addition, there is the power hike as well and on top of that the already hiked prices of items such as rice, pork, flour, cooking oil and sugar. All of which are daily necessities.

It is not too much for the government to ask the people to change their spending habits and energy use but it doesn't really make sense when budgets are already tight in the first place. How much can one go further with all the cuts? Stop eating? Light the candles?

Another farce is the comparison of petrol prices with non-oil producing countries like Singapore and Thailand when it should actually be compared to oil-producing countries like Saudi Arabia and Venezuela. After all, Malaysia is a net exporter of oil and it got the benchmark wrong.

I have long recognized that Malaysia's economic development is haphazardly ad hoc, responding to problems and crisis when they arise by taking short term flawed and distorted solutions. Not to the discredit the government but its long term economic plan is also on the same basis. All but cheap sweets that will eventually cause economic diabetes.

It is time that Malaysia needs capable economic visionaries and managers to chart the nation's development by liberalizing the economy, remove flawed and outdated polices and embark on a comprehensive tax and social security reform. At the very least the government could provide a better cushion for the people to ride out the rough journey of an imported inflation.

When there is a good system in place with sound risk management polices and practice, we wouldn't have what we have today - to eat the fruits reaped from a poisoned tree.

Is Malaysia still a British Colony?

I find it bewildering. First it was the Hindraf that took its cause to the British Government and now Sabah's Consumer Association of Sabah and Labuan (CASH) is following the Hindu rights group footstep in seriously considering a petition on the illegal immigrants issue to the British Government instead of the Federal Government or the King.

It is understandable that the present Malaysian government is just good at giving lip service, childish politicking and sleeping, but recent events have shown that our Royalty can play a balance and wise role in the country and as such I believe that groups like Hindraf and CASH should take their petition to the King directly like what BERSIH did last year.

How can we be accorded respect by foreign governments when we don't even pay respect to our government and monarch in the first place? Let's take a short break from the negative elements of the government of the day, at the very least it is essential that we should follow the right steps - take the cause to the government and the opposition parties. And if all means failed, sought the King for help, if not Sultans. What if everything fails? - People Power.

While it is true that Malaysia is part of the Commonwealth but we are not a dominion in the club. It is essentially being a 2nd class club member while the former dominions of the British Empire holds first class privileges when it comes to accessing the British Government and Monarch. Who are the dominions? Australia, New Zealand, Canada and some nations in the Pacific and Caribbean, and these countries recognize the British Monarch as their head of state. The citizens of these countries are also accorded citizen rights in the UK with the right to vote and stand for elections. Whereas Malaysians don't enjoy such rights except for visa-free travel and we don't call Queen Elizabeth II as our Agong.

So think. It is time to really stand up on our own. After all, do you think the British Government will intervene? Think. The answer is no. Malaysia is not Myanmar enough for them to be critical of us. It is high time for groups mentioned above to form a confederation of NGOs and demand the inept and myopic government of the day to buck up, shut up its nonsense and comical farce, and do the right and real thing. March 8th showed us that it is possible if the rakyat stands up for themselves.

Rise up people!