[The Oil Effect]

It has been an eventful month. Governments were toppled, some governments were in the process of being toppled, earthquakes, floods, oil price went over the USD100 mark and the list just goes on.

Source: http://www.oil-price.net/

Most of us can still recall what happened in 2008 when the price of crude oil went up to USD140/barrel. Yes, our government was forced to raise the petrol price by MYR0.70/litre (or was it more than that?). Then what happened right after the raise? Let's see what went down first, the amount of traffic in all major cities went down, noise and air pollution level went down, level of carbon dioxide and monoxide level went down too. But what went up? Everything else due to the rise in transportation cost. I still remember my contractor told me that I was very fortunate to have completed all my renovations before that happen. Else, she will have to revise or put in other words, raise the renovation bill by 20%-30%.
So now the big question is this going to be a déjà-vu or re-enactment of what has happened 3 years ago? I strongly feel that we as investors need to be very concerned about this. If the situation in Middle East gets worst, many economists and analysts believe that we will slide back into recession. The situation today is very delicate. The recovery is still at the infant stage with most of the developed nations recording 2-4% growth in GDP. Unemployment is still a major concern to many countries.

Country	April 2010	August 2010	December 2010
Germany	7.0%	6.7%	6.6%
Ireland	13.2%	13.7%	13.8%
Spain	19.8%	20.5%	20.2%
France	9.8%	9.7%	9.7%
Portugal	10.9%	11.1%	10.9%
UK	7.8%	7.7%	N/A
United States	9.8%	9.6%	9.4%
Japan	5.1%	5.1%	4.9%

Despite all the talks about Asia decoupling from the West, if they slide into recession, we will not escape unscathed. As an investor, we need to be aware and alert of this impeding storm. Although none of us hope that it will arrive at our shores but still we need to brace ourselves just in case it happens.

[$10 million in my hand, so what do I do now?]

Aside spending $1M on your luxury tours to all around the world, buying a speedboat and indulging yourself in caviar. Let's say all of us have $10M strictly for investment, what will we do with it?

Go get yourself a copy of "How to manage your own finance", "Invest in bonds/equities/FOREX, the failsafe way" or "Entrepreneurship 101"? Frankly speaking, what my advice is to put $9.99M into the bank and open a stock broking account with only $10k credit. Why so little? We can definitely afford to take bigger risk now with $10M in hand right? Let's put at least $1M into our stock account and start acquiring some good stocks! Well, chances are we will lose everything in a second.

I love what Robert Kiyosaki wrote in one of the investment books, you need 3Es to succeed in investment. Those 3Es are education, experience and excessive cash.

Why set the ceiling at $10k? This is the amount we are able to handle for first time investors. For seasoned investors, well the range can easily go beyond the $1M mark. $10k is really an amount we can handle comfortably. So start small then we set a realistic target to hit. After we are comfortable with $10k, we move on to a bigger portfolio of $50k which consist of 8-10 types of stocks from various sectors then move on slowly to the $100k, $250k, $500k and so on. Why do I say so? Well, it is easy to buy and sell a counter if you only plan to buy 1000 units. But the difficultly and method use to buy and sell 100,000 units of that particular counter might be very different. You need to learn dollar cost averaging up and down. Then you will be more selective with the counters you buy too. At first with $10k, you might want to invest in small cap companies which have very limited amount of liquidity. But with $1M, you might want to choose medium cap companies to avoid facing any liquidity issues.

So let's all learn how to kick start our investment by first accumulating $10k. Then we set a target what we want to achieve by middle or end of this year. It can be anything from $20k to $100k. Just set a number that we are comfortable with. Investment is a long journey with lots of ups and downs. I can still recall the first day I bought my Public Bank stock, although it wasn't really that much, maybe just $2.5k in value, it took me about 10 minutes to decide whether to commit that amount or not. Although I've spent so much time researching on that particular company and convinced myself that it is a really good counter, but at that moment, fear comes in. A lot of questions will flood your mind. Questions like, are you sure it is the right time to buy? Will it continue to go down? Is $2.5 too much or too little? What if it goes up the next hour? Then all of a sudden, I remembered what Warren Buffet said, "It is better to buy a good stock at a fair price rather than getting a fair stock at a good price!"

Back to the topic of the day, what should I do now?

1. Education: Invest heavily in our own financial IQ.
   
2. Experience: Go sign up with any brokerage firm and start small.
   
3. Excessive cash: Learn to save and side aside at least 10-20% of your income.
   

But with $10M, you can skip the last one and move along with 1 and 2. But remember, you need to act FAST because 10 years from now, with the current inflation rate, the $10M you have in the bank even if it is on FD might have shrink to less than half.

Blessed evening ;)

[Staying Focus]

"To create something exceptional, your mindset must be relentlessly focused on the smallest detail." Giorgio Armani



24 hours doesn't seem to be enough for any of us. Taking into account we need to sleep 6 hours and spending another 8-10 hours in the office. We will only be left with a mere 8 hours to do the things we love. So what's this blog all about?
Instead of spending time reading stuffs which doesn't benefit us much like entertainment and soccer news, why not spend some time on learning and sharing our investment knowledge? At least that is what I've intended to do for now.
Staying focus will be the main topic for today or this week depending on how much time I've to spare and to share. What's staying focus and what has it got to do with investing?
There are several areas I want to highlight here. One of it is from individual's perspective. Many of you might agree that with all the technological advancements and Wi-Fi availability, we tend to be distracted all the time either by SMS, MMS, latest celebrity news, soccer updates and the endless list just goes on. If we want to be successful in investing, we must stay focus on our goals. What we would like to achieve by end of this quarter, middle of this year and end of this year. It isn't just about the earnings we've gotten from equities, bonds and foreign exchange but how much we know and understand about this market. I always believed in beginner's luck. Many people might have started well in investment but complacency soon fall in and all of a sudden, they are in debt because everything turned red.
Staying focused means:

1. Maintain a lifestyle in which we always seek to be in tuned with the market.
2. Make the effort to learn more about the economy.
3. Continue to improve our investment strategy by constantly polishing our skills and knowledge.
4. Learn to be humble. Only with a humble spirit we are able to have a receiving spirit that's willing to hear, accept, admit and learn from others and our own mistakes.

From a corporation's perspective, staying focus is extremely important. Just look at what Steve Jobs did to Apple when he returned back. He immediately terminated a number of projects and steered Apple to focus only on delivering 4 types of computer (2 types of desktop and 2 types of laptop). Alan Mulally did the same thing as well when he was first hired from Boeing to Ford. He stayed focused on recreating Ford as a world class brand. Instead of trying to focus on creating Aston Martins, Jaguars, Land Rovers and all other types of vehicles, he decided that Ford should only concentrate on creating small, medium and large size cars and trucks that is the best in their class in terms of safety, quality, fuel efficiency and design. From my perspective, in order for a corporation to grow healthily, it cannot be too diversified. We must be able to identify what's their core business. Which sector are they really involved in? Is it oil and gas, technology, property management, food, agricultural products (palm oil/rubber)? If we are able to associate these companies with their respective sectors and if they have a strong balance sheet with good leadership in place, then the company is in very safe hands and if the time is right, it will definitely grow leaps and bounds.
In summary, staying focused for a company means:

1. >90% of their revenue/earnings were generated from a particular sector/industry.
2. Leaders in those areas.
3. Has a solid balance sheet. If it doesn't, does it mean that they've been using their cash or selling their asset to invest or expand their core business?