E-MoneyMarketing &#187; Finance

Random Finance Tip #2

Jag Foo — Fri, 13 Apr 2007 08:01:54 +0000

This post is sort of inspired by the Blue Chip stock entry by my friend Robin, of FortuneWatch.com.

I left a comment on it, and I thought I reproduce it here.

Without further ado, the second tip of this series is

“In times of sudden crisis, buy blue chip stocks”

Just in case you are wondering what the heck are blue chip stocks, let me first clarify. Nope they are not potato chips that are blue in color (Sounds yucky to me).

Blue chip companies are generally defined as big, safe, fundamentally strong companies with a market capitalization in excess of billions.

Blue chip stocks are good if you want to add some balance and diversification into your portfolio, but don’t expect any extraordinary gains. They are as safe (some people say boring which is a good thing actually) as can be. If you are looking for wild fluctuations, gyrations and excitement, you gotta look elsewhere.

So why buy in times of sudden crisis?

By sudden crisis, I mean a terrorist attack like 9/11, tsunami or hurricane devastation, death of a leading political figure or outbreak of disease like bird flu or SARS.

Such incidents usually spark off wild panic and indiscriminate selling. People are abandoning ship like nobody’s business.

You might be tempted to jump too, or stay off the market, but hold on a second!

Warren Buffett once said, “Be fearful when others are greedy and be greedy when others are fearful.”

How apt!

When everyone is panicking and selling like crazy, now it is time for you to pick up stocks like a crazed greedy mad man who seemed like he had never eaten in years! Not just any stock, but fundamentally strong blue chip companies with a solid balance sheet.

Now we are talking!

You can be assured that that the price of these companies will drop due to the mad sell off and this will represent a fantastic chance to scoop them all up at a bargain price. You probably won’t get such a good deal at the annual great sale by your nearest shopping mall.

If you think long term, and am willing to look past the short term downward spiral, the price will definitely correct itself in due time when the market has stabilized and regain it’s lost head.

Better still, look at government-linked companies like banks. The government won’t allow them to fall, so it’s a pretty sure bet in this scenario.

Blue chips have never tasted this tasty.

This strategy has worked in the past and will work in future. Just that, do you dare to go against the emotional mass crowd and walk the road less traveled? That is the question.

[tags]random finance tips, blue chap stocks, Warren Buffett[/tags]

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Random Finance Quotes #1

Random Finance Tips #1

Random Finance Quotes #1

Jag Foo — Mon, 02 Apr 2007 12:21:23 +0000

Okay, I didn’t blog for the last 2 days, and here I am coming out with an unprecedented number of 3 posts in one day! What’s going on with me? Am I over-compensating or what? Well, who cares! If you guys continue coming to my blog, I will continue sussing out good information, resources, tips and tricks for your benefit!

Anyway I came across this finance-related quote today and I just can’t stop sniggering. Suddenly I thought, why not have a ‘Random Finance Quotes’ to complement the ‘Random Finance Tips’ section that I came up with not long ago? I thought that will be cool, so here it is – the birth of ‘Random Finance Quotes’.

Today’s Random Finance Quote is

“A Bank is a place where they lend you an umbrella in fair weather and asks for it back when it begins to rain.”

by Robert Frost

Fair or harsh comment?

You be the judge.

If you ask me, I will say that they can be very sneaky at times, especially when it comes to advertising their products. Always look at the fine prints! You may discover the actual picture may turn out to be vastly different from what is being advertised and promoted. Now I think I know why bankers are renowned for their sense of humor. They always laugh all the way to the bank! Damn it, I want to be a banker! (Just kidding!)

[tags]Random Finance Quotes, Robert Frost, Random Finance Tips[/tags]

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Random Finance Tips #1

Hugh Chou’s Mortgage and Financial Calculators

A mind-boggling array of Financial calculators for your benefit

Jag Foo — Mon, 02 Apr 2007 10:25:57 +0000

Let me ask you a question. Do you like math and finance? If you do, you will love what I am going to introduce to you. If you don’t, you should still check this out anyway. Cos’ it’s good stuff! Plus it will come in handy for you in future. That, I’m pretty sure.

To me, a calculator is always a must have tool, not because my maths sux (I got an ‘A’ for my maths back in college! Don’t be fooled by my ramblings!), but because I’m simply not adept at mental calculation.

When it comes to finance, calculators can save you loads of time and help you look at the big picture. A picture that may be hazy and uncertain upon first sight, but is abundantly clear when everything is laid out bare on the table.

What exactly am I talking about?

Let me paint a scenario for you.

You have a wad of cash. You are contemplating whether to invest this sum of money or to pay off a loan. However there are many factors involved. To come to an informed decision, you need to consider factors such as the monthly loan payment, annual loan interest rate, loan balance, investment type, investment rate of return, loan interest deductibility and the tax rate, after which you will then have to weigh the odds, and determine which action will tip the scale towards your advantage.

Phew! Sounds complicated? Sure it does! I’m having a splitting headache already!

Do-able? Yes, you can with a spreadsheet, but you still have to input all the formulae yourself. Even when that is done, you will need to analyze and make sense of the result that comes out.

Now if I tell you, I can give you a resource site, in which all you need to do is simply to just key in the values and it will interpret the result for you, does it sound good?

It definitely does to me!

You know what? It feels like I’m writing a sales pitch for some products, but NO! This is a 100% free resource site that I stumble upon some time back. Absolutely useful and handy if you ask me, and I want to give you a heads up on it.

Introducing Hugh Chou’s Mortgage and Financial Calculators.

This guy is a GENIUS! He made a whole comprehensive list of financial calculators that can work out virtually everything (okay..almost) for you from home loan payment to retirement sums.

Here is a sneak peak of what calculators are available. There are even some non-finance tools that are quirky and fun to play around with!

Savings Comparison Calculator
Medical Savings Account Calculator
Effective Rate of Multiple Loan Calculator
Conventional Loan with Initial Only Payments Calculator
Interest Only vs Amortized Loan Comparison Calculator
Generic Loan Amortization Calculator
Income Qualification Calculator
Lease Calculator
Mortgage Duration Calculator
Investment Savings Comparison Calculator
Compounded Interest Calculator
Nominal and Effective Interest Rate Calculator
Wealth Calculator
Gas Guzzling Calculator
Password Generator
MathSolver
Break the Starbucks Habit Calculator
Save a Fortune by not Smoking Calculator

I can honestly tell you that I was so impressed with the calculators that I even emailed Hugh to discuss the possibility of purchasing the calculator scripts for a finance site that I’ll be coming out with.

This is truly a good useful resource site, to not only help you calculate your finances, but also allows you to understand how the whole financial number crunching computation works and what it means. First rate financial resource in my view!

You absolutely have to check this out!

[tags]Financial calculators, Financial resource, Loan Calculator, Mortgage Calculator, Investment calculator, Investment[/tags]

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Educational Blogs That Are Worth My (And Most Probably Your) Time

Jag Foo — Thu, 29 Mar 2007 16:38:11 +0000

Image Credit: research.soe.purdue.edu

There are billions of blogs out there, and to differentiate from the crowd, we have to really provide good useful educational content that readers are seeking.

Yep, sometimes all readers want are just some plain good O fashioned blogs with no fluff solid content. I like to think I’m moving towards that direction. At least that is my aim, which is to offer some value back to the readers here who take the time to drop by (THANK YOU!).

I’ve looked around and found some blogs that are definitely worth taking a peek. As usual, since this site is mainly about Business, Finance and Internet Marketing, I shall keep my recommendations confined to within these few areas. They may not be the best known blogs out there for now but the quality that is present in all of them merits a mention.

Finance and Investment

FortuneWatch

A nice place to read and learn about financial literacy, from debt management to investment. Very honest take on finance with a touch of humour. I like it. My kind of site.

I read Robin’s latest blog post about ‘Shocking Revelation About Big Lottery Winners‘ and that kinda struck a chord with me. It reminds me of the entry I wrote about a student who wiped out his family savings due to a crushing loss the stock market. It just reinforce to me the importance of a sound financial education, which is something I feel should be taught in schools here as a compulsory subject but isn’t. Well at least, I hope to do my bit on this blog, and of course, we also have FortuneWatch as well.

SmartWealthyRich

I’ve gotta say that I’m amazed by the guy behind this blog. He is one hell of a prolific blogger. Perhaps that is an understatement. Within 3 months, he has amassed at least 100+ posts. The actual post count is probably way more than that.

It’s good to see that he also shares the same passion and interest (online marketing, finance, personal development) as me. Niceee. This is a blog site with a combination of quantity and quality. Rare indeed. You have to check this site out.

The Big Picture

Well, I’m not a US citizen, but I’m interested in reading about what is going on over there, especially on the financial scene. This blog is so informative, I just want to spend my whole time there to read!

The blog talks mainly about financial and economical issues. It also covers technological news. It is interesting to note that the author of this blog is a fund manager of a hedge fund. No wonder he has such intimate knowledge about the stuffs he is talking about.

Online Marketing

Make Money Online with Henry Gold’s Tips

It’s a shame I did not notice this blog earlier. The quality and information he is giving out in his posts are literally worth their weight in GOLD. Maybe that’s why his name is henry GOLD. Maybe I should change my name to GOLD, or PLATINUM. Hmmm…

Anyway I’ve learnt a great deal just by reading a few of his entries. Tips on driving traffic, making readers love your blog and how to make money online are just some of the stuffs he dish out. Absolutely SOLID content. I’m a big fan!

Hope you will enjoy these few sites as much as I do.

Special mention goes out to My Journey to One million Dollars. This is one ambitious lady that is not afraid to dream big and take action. I can take a leaf out of this. Let’s join her on her journey shall we? All of us have our own dreams. If we display enough focus, perseverance and determination, we will all reach there one day. That I’m sure.

Rock on! Education never ends!

[tags]Henry Gold, Make Money online with Henry Gold’s Tips, The Big Picture, SmartWealthyRich, FortuneWatch, educational blogs, finance, investment, finance and investment, online marketing[/tags]

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Random Finance Tips #1

Jag Foo — Sun, 25 Mar 2007 10:50:06 +0000

I’ve been wanting to have a section which will go something like ‘Finance Tip of the Day’ or ‘Finance Tip of the Week’, but as each title implies an action that will be carried out on an consistent basis (everyday or everyweek), which is one that I cannot guarantee, I decided a ‘Random Finance Tips’ would be suffice.

So welcome to the inaugural edition!

The first tip in this series is

“Don’t spend more than you can earn.“

Yes I can probably hear a few people going, “yeah but this is common sense!”

Precisely! It is common sense but yet many people continue to commit this same mistake.

In fact, if your spending is almost equivalent to your income, you are already standing dangerously at the edge. Needless to say, once your spending exceed what you earn, your financial picture is definitely not going to look pretty.

If you are one of those that spend much more than you earn, you probably need to take a look hard look at yourself and ask some questions:

1. Are these spendings just needs or wants?

2. Are they absolutely necessary?

3. Will I survive in one year time if I continue spending the way I’m doing now?

It’s not uncommon to get people complaining that they don’t earn enough, and they barely have enough money to spend. While some of these concerns are indeed valid, quite a fair bit of them are facing such problems because they are just spending on some stuffs that are unnecessarily putting a burden on their net income.

Let me give you an example. In Singapore, it is notoriously expensive to buy and maintain a car. Settling the downpayment and certificate of entitlement (COE) of the car is probably the easiest part of the process, but the upkeeping of the car is the KILLER.

If we ignore the monthly installment plus interest that car owners have to pay, they still have to pay for the road tax, car insurance, parking fees, weekly petrol top up not to mention, workshop maintenance as well. These expenses can accumulate to quite a fair bit.

Fair enough if you earn adequately or a car is really a necessity in your line of work, but quite often, I see people buying car for the sake of ‘face’, and then struggling to pay the bills. They then end up being neck deep in water. With no extra cash, there won’t even be savings to speak of, or money to invest for the future. Precarious outlook if you ask me.

There are also many people that overspend using credit just because they don’t really feel the pinch since it is on credit, not cold hard cash. However at the end of the day, you cannot escape the fact that you still have to pay the bank back. If you don’t pay by the due date, you will end up forking out even more as there will be interest charged. And don’t let me get started on credit card interest rates. Sky high if you ask me! Of course, the banks will be happily awaiting all the extra income for them.

Though that is not to say that credit cards are entirely bad. It has its benefits as well and can be a great saving tool if utilized well. I’ll save that for another day.

I’m sure you have often heard your mum nagging at you to spend within your means. Mum knows best indeed! If you are not earning much, then don’t spend so much on things you can do without!

Try this today. Record every single expenses you have, as detailed as possible, and tally it at the end of the month.This will serve as a reality check for you, on whether you are spending within your means or going over the edge. I warn you – you might be in for a shock!

[tags]Random finance tips, credit card spending, credit card interest rates, car spending, spend within your means, don’t spend more than you can earn[/tags]

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Unbreakable Solid Rules To Winning In The Online Marketing WAR!

Some market rules to look out for

Jag Foo — Wed, 21 Mar 2007 05:38:40 +0000

I wrote this in a forum about two years ago. While searching for inspiration on what to write today, I thought I will just reproduce the whole piece for your reading pleasure. Do note, I’m an advocate of marrying both fundamental and technical aspect of investing together, but what I’m going to highlight here are rules from a technical perspective. So here goes:

The market is quite an unforgiving yet fascinating and challenging place. It rewards handsomely when one is right, and dishes out stern punishments when one is careless and underestimates it. Quite like the principal in school ain’t it?

It can be indeed a humbling experience. Don’t despair if you make mistakes and make losses. No one can make money all the time. Not even Warren Buffett if that is a consolation.

Taking this into perspective, even institutional fund managers, floor traders and professionals make mistakes too. You are not alone in this challenge. Important thing is to not focus on how much you make, but rather on how much you don’t lose. Capital preservation should be your no. 1 priority. After all, you need to make 100% just to break even from a 50% loss.

Don’t be too anxious to cash in on your winners too early. So long as the chart is showing a series of higher highs and higher lows, everything is well, fine and good. Sell off your losers as soon as the market proves you wrong.

Sure danger signs are failure to break to a new high and inability to hold above a prior low. In another words, think of getting the hell out when it shows a series of lower highs and lower lows. An appropriate stop loss order will help protect profits.

Buy intelligently. Safest time to buy is always at the end of a selling climax, when pessimism is at the most extreme. Look for formation of long base at bottom. It’s a good sign of a possible market turn-around. With a strong base as support, we can then look out for any breakout, and when it comes, make sure the volume is high, which is an indication of strength. If we can limit our buying to such situations, sure you may miss some odd winners, but among such purchases there will be almost some which will show definite significant gains, and far less mistakes.

Be wary of buying tempting stocks that are already well in progress upwards. You may just be buying near the top. Majority are bullish near the top. The later the purchase, the greater the odds against you. Of course, price could still go higher, but maybe its better to let someone have the last few gains. Market will always fluctuates back down again, and a time will come when it is safe to enter. Patience is the key.

Look at news objectively. It’s not the news that matter but rather how the stock reacts to it. Generally, buy on bad news, sell on good.

Don’t try to rationalize market movements. Accept it. If market indicates nothing, do nothing. No good buy, don’t buy. Curb the temptations. Responsibility is to your capital. Not to your broker or the person beside you giving you the next hottest stock ‘tip’.

Don’t bottom fish. Let others have the luck. You are not a fisherman. So let it stay that way. Don’t buy more stocks than you can watch. It’s no good having your hands too full. Follow big volume on breakouts and low volume on dips. In bear market, low volume is dangerous, as high volume declines could lie ahead. Low volume is only bullish when the stock is able to hold at a support.

You can always buy a stock back. So don’t get married to it. A free falling stock won’t give you any love back. Stay faithful only to your wife (or mistress). Lastly, Mr Market is an elusive unpredictable egomaniac. Let him tell you. Don’t try to tell him. Heck, I don’t even know who he is even if I could!

[tags]stock market, Mr market, trading, stock investment, speculating, market top, market bottom, bull market, bear market, Warren Buffett, stop loss[/tags]

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Crazy day at the Market! You want some?

Jag Foo — Tue, 20 Mar 2007 04:45:24 +0000

One of the most interesting and fascinating part of investment to me is standing at the sidelines to observe just how irrational investors and market as a whole can be.

Sometimes, at the lure of fast gains, they can get sucked into a trading frenzy, only to have the whole action dying down just as fast. I never fail to be amazed at such cases of mad crowd behavior.

One instance that reminds me of a crazy day in the market, will have to be the first day China Aviation Oil (CAO) re-opened for trading after a long suspension. For those unfamiliar with the Singapore market, CAO is a Singapore Stock Exchange (SGX) listed company based in Beijing, that supplies jet fuel.

It got it’s ass busted for illegal insider trading and crimes linking to risky oil derivatives speculation which resulted in massive losses of US500 million! To cut the long story short, the director, once hailed as a high flyer in the industry, was sent packing to jail, while the company went through a long painful restructuring process, which also saw the two knights in shining armour, Temasek Holdings (the investment arm of the Singapore government) and British Petroleum (BP) coming to it’s rescue.

Of course, in exchange for saving the company which was on the verge of meltdown, these white knights were able to buy the shares at the rock bottom price of 51.5 cents! And boy, were they in for some reaaaaaaaally BIG gains!

Price movement of CAO on the opening day. Note the huge surge in volume on that day compared to the teeny weeny average volume on subsequent days.

CAO was a very hot stock before it got suspended, and naturally it drew a lot of publicity during the whole saga. When it was finally primed to make a long awaited return to the Singapore market, everyone was anticipating and guessing how CAO will perform.

I knew that the first day was going to be field day for punters and speculators. I remembered vividly the day it re-opened on the Singapore market. The date was 29 March 2006.

Before the market was even opened, there were queues forming up to put in their bid for their lots of shares. Needless to say, the share price was being jacked upwards continuously.

Financial analysts were estimating beforehand that CAO will open trading in the market at a fair valuation of 50 cents. Lets bear in mind that Temasek Holdings and BP bought their share at 51.5 cents. With all the crazy punts and people who were jumping into the ride, guess what the price it opened at?

$1.30!

That an excess of 160% above what the analysts thought was a reasonable opening price! At the start of the day, Temasek Holdings and BP were already staring at a whopping 152% profit!

On that day, I was in the laboratory conducting some experiments (I was still a student then). I decided that I shall just turn on the computer to sneak a look at CAO’s price. When I saw the opening price, you can say that I was surprised, though I kinda expected this would happen. Still, I was a little taken aback by the mass interest the market was taking in that stock.

So the price just continued to climb and climb and climb, till it reached a climax of $1.85 before a mad sell off to take profit commenced. When the dust has settled, the stock closed at $1.64. Had Temasek or BP sold off that day, it will be a massive 218% profit in the pocket, all in a day’s work!

To put it in perspective, the black Monday stock market crash in 1987 dropped by 22% in a single day. Here, even though it wasn’t a crash, we have a stock that moved 42% from the opening to the high, and then plunging back by 11%. If you look it at another way, the closing price registered a 26% jump from the opening price.

If you are wondering, the price is now at $1.14 per share. Looks like the market has corrected itself and only rightly so.

So there you go! How wild, crazy and irrational can a market get? It can be exhilarating and also damn scary at times!

Looking to go into investment? Be prepared for a long ride! Not for the faintest of heart!

[tags]crazy, stock market, speculation, punters, investment, finance, singapore stock exchange, china aviation oil, black Monday, stock market crash, Temasek, British petroleum[/tags]

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