My answer is rather simple.

• Currency trading is trading and not investing. Just like day trading for stocks, you are trying to gain as much profit as possible within a short period of time.
  

  Source: http://forexarbitrage.eu

• You need to be lucky since luck plays an important role in any speculation. It’s not gambling, since you do observe the history of the currency and play by the rule “whatever that went down will go back up”.
• I never like to speculate too much since I’ve burnt myself pretty badly with stock’s day trading in the past.
• You need to pay extra attention to the global economy since the currency you are holding might be affected.
• I’m bad with timing the market which is quite essential for currency trading. You merely time the buy and sell time.
• The total return is not much unless you are willing to pump in A LOT of money, which I don’t have.
• Unless you are talking about engaging a real agent or actually playing with the index (I remember someone told me about this before but I’m not very sure), you will have to hold those foreign $$$ yourselves. And considering the fact that the amount can be rather big, you will need to keep them in the safe deposit box in banks. Those require you to pay a certain amount of money to maintain.
• Also, if you’re not using an agent or getting someone licensed to help you with the trading, you might not be able to react quick enough. For example, my friends mostly exchange the foreign currencies with money changer by themselves. The advantage is that they can trade anytime and in many places, but the disadvantage is that it is not very convenient especially if they keep those currencies in banks.
• Due to the current economy, the currency rate might not change much for another 6 – 12 months. It might further actually. And for trading, holding on to the currencies for too long kinda defeat the purpose. Remember that this is not investing.

But the most important reason why I am not into currency trading has to be the luck factor. I hate relying > 80% on luck factor because I can be quite unlucky at times. I rather spend my time doing analysis on the stocks of certain companies. That way, I will know whether I can invest in those stocks. I doubt there’s anything I can study for currency trading, except for the history of the currencies.

True, I still need to rely on luck factor when it comes to stock investing. But it’s not as critical and significant.

Still, it doesn’t take away the fact that there are people out there who are making big bucks with currency trading. Just that it’s not my cup of tea.

My advice to you is to understand it well before dumping your money in. Don’t do it just because Tom, Dick and Harry are doing it. Do it because it’s suitable for you. Oh, and stop buying those currencies by yourselves. It’s too troublesome and dangerous. Get some qualified agents to do that for you.

Here’s a useful link I found – Currency trading versus investing.

Hope it helps.

• IOICorp
• Tan Chong
• AirAsia
• PPB Group
• Petronas Dagangan
• Petronas Gas
• Fraser & Neave
• Resorts
• Public Bank

Other stocks mentioned in other magazines/articles:

• Bumiputra-Commerce
• Dialog
• IGB
• Tanjong
• KPJ

I personally feel that the above stocks have pretty good fundamentals with pretty good prospects especially IOICorp, AirAsia, Resorts and KPJ. But again, it is up to you to decide and for you to do your own homework. Remember not to over-relying on such stock picks since these stocks CAN BE quite volatile. Why? Because the list is being made public and everyone will most probably flock to them without doing any proper research. This was what happened to IOI few months ago. Popular stocks tend to have their price fluctuate a LOT.

As for me, I will not touch banking stocks for the most of 2009 even though Public Bank does seem to be the best (or the only good one) among the rest. I just don’t feel it is the right time to go in yet. But who knows, I might be wrong just like what happened in the last market crash. In 2009, I will concentrate on few defensive stocks and also focus on few sectors which will still do well during recession period – gaming and health. But we’ll see how it goes.

Good luck and hope this list helps.

NOTE: I wrote this article last week, on January 3rd. The stock market has since went up by quite a lot especially Bumi-Commerce. Unfortunately, I’ve sold mine at a 4k loss just few weeks ago. Didn’t expect 1 China-related news to be able to cause the price to go skyrocket within few days.

NOTE: Spelled Burse instead of Bursa. =_= Corrected it. Sorry for the mistake

NOTE: The links to the stock will not show the updated price since The Star’s web site doesn’t allow that. You need to go and find the stocks manually in The Star Online : Business – Market Watch – Bursa Malaysia Stock Exchange

When times are bad, people will become more desperate for money and are more willing to try out their luck in lottery such as Magnum, 1+3D and Toto. For the second quarter ended Oct 31, Berjaya Sports Toto Bhd or BTOTO (1562) posted a 27% increase in net profit and EPS (earnings per share) improved from 7.09 sen to 9.06 sen. That is quite a significant jump considering the fact that most listed companies are posting worse quarterly results nowadays.

Prices 1 month - HIGH: 4.800 (3-Dec-2008), LOW: 4.380 (17-Nov-2008)

Prices 3 months - HIGH: 4.800 (3-Dec-2008), LOW: 4.040 (28-Oct-2008)

Prices 12 months – HIGH: 5.500 (21-Feb-2008), LOW: 4.040 (28-Oct-2008)

If you’re looking for a good defensive stock which will weather the recession, you might want to consider this. It is quite affordable now at around RM 4.54 (as of Friday, 12-Dec-2008) and with the coming festive seasons (Chinese people love to try their luck during Chinese New Year), I believe the profit for the next quarter will be even better.

As for me, I will wait for a little while longer and if it falls to around RM 4.30-4.40 range, I might consider getting one for myself and keep for the long run, provided I have enough cash.

Otherwise, I’ll just keep the money for the next “big drop” in the market.

NOTE: Please bear in mind, the above is based on my research while the facts are based on the article HERE. If it doesn’t end up as I’ve mentioned here, please don’t blame me. I’m still a newbie.

For example, online money making. There are a lot of sites which require you to work hard in order to earn a few cents. Don’t worry, just subscribe to their “platinum” or “gold” or “silver” or anything program, you will earn few dollars for the same amount of work! But you need to pay in advance. Most of them don’t work out in the end. So don’t fall for their traps.

Another thing is those marketing program which requires you to pay a certain amount of money in order to join their ‘elite’ membership. To me, another nonsense.

I personally will not fall for such traps. I will try my best not to ‘lose’ money before actually earning anything. The next thing you want is to hand over your hard-earned cash, and rewarded with blank promises.

So better be careful with your money. It’s easy to fall trap to all those get-rich-quick investment or money earning scams. But as long as you don’t commit anything first, it will still be okay for you.

Courtesy of http://www.freefoto.com

Do remember that dividend payouts are normally associated with the quaterly reports or annual reports, and these reports are released (usually) at the same time each year. That’s why you can somehow predict the payout period, though it is still a risky business. Prediction can go wrong anytime if you’re unlucky.

By the way, always look only at FINAL or INTERIM dividend, and not at SPECIAL dividend.

And if you’re lucky enough to go in before they announce the dividend payout, you might be in for some short term gain, provided you are able to sell before the EX-DATE. But if the stock price has already gone up significantly before the dividend announcement, then you might want to wait it out or look at other options.

Please bear in mind that this method can be quite risky. So make sure you do the regular checks – EPS, PE, annual reports, industry performance, charts, etc. If the company is sound and good, then you can try.

KLSE Chart - 4 Nov 2008

I personally feel that the stock might rebound for maybe 2-3 days before falling down again. The trend is still pointing downwards and people are getting poorer – weaker buying power. Companies are having sales and stuff to promote consumer spending but it cannot hide the fact that consumers are indeed getting poorer.

If things get worse, we might end up like US and Europe.

For now, you can go in for some bargain stocks but only if you are willing to hold for very long – maybe more than 1 year. Otherwise, just wait it out.

As for me, I’m going to monitor closely. I’ve sold few shares the other day at a loss, just to get back my capital to go in again in the future.

NOTE: I wrote this post 2 days ago. It rebounded yesterday and dropped again today. Whether or not it will go down/up will depend on the US market and the confidence of the investors (the main population). For now, I still prefer to wait it out. You can see that the stock market might go down again by following the trend shown in the chart.

About 2 months ago, I wanted to move my high-risk equity fund to bond fund but my uncle told me not to do so since China is still quite stable. Now, the bond fund which I was looking at has gone up and my equity fund has gone wayyyy down. Too late to sell or to convert to bond fund.

Then I decided to call up my agent and told her to help me stop the auto-debit. My plan is to stop the auto-debit, take the money and save it up, and then buy in again (with lump sum) once it drops further. I expect most equity funds to drop further in the months to come.

Just sharing with you my decision. I could be wrong and this might be a beginner’s mistake. I don’t know. But I feel it’s worth a try.

We’re in for a big mess (I’m already in it, waist-deep).

On the contrary, there are still a lot of companies who are earning money and some even recorded record profits, and yet, their share prices have been plummeting like nobody’s business due to selling pressure.

Enter the realm of the panic sellers and be prepared to feel their wrath.

So who are the panic sellers?

One of them is the fund managers. Unlike normal investors like us, they do not have the luxury to “wait it out”. We can put our investment in there for 1 year or maybe 5 years, we certainly have that holding power (if you don’t have that holding power, you shouldn’t be in the market now. You still have time to bail out before it drops further). For them, good performance is needed even though the market is bad. The pressure to minimize losses and increasing the value of the funds, is definitely there. They just cannot wait that long and thus resorted to sell, to regain their money (perhaps to buy in again later, at a lower price). Supposedly, we should be following their trend, but the issue here is, they always move one step faster than us (the smart investors have already pulled out before the fund managers. Only newbies like me are stuck). By the time we realized the actual situation, it’s already too late, the price has already dropped.

But most people don’t think so. They started to panic, and they sell. In the end, the scenario is like this.

Fund manager panics -> sell -> price drops -> causing panic to main population -> sell -> price drops further.

So a stock price of RM 5, after selling pressure from the fund manager might end up in RM 4.50 range, but further selling pressure from the main population will pull it down even more to RM 3.50 – RM 4 range.

The main problem here is, this cycle will not end anytime soon.

Take a look at the current market and at the price of some blue chip counters, they are ridiculously cheap. True, the cycle never ends here, but now is actually the time to enter the market if you have extra cash. However, do bear in mind that you need to do proper evaluation and you MUST have the power to hold for at least 1 year. Else, don’t enter the market. Or worse, don’t even think of going into stock investing.

For now, keep your eyes open WIDE. Don’t panic, and don’t fall into the trap of panic selling. Be patience and observe. Whenever the main population sees a problem, the smart investors will see an opportunity. All the best (to you and to myself).

NOTE: The above is just my opinion. Do correct me if I’m wrong since I’m still a beginner.

Panic selling will cause oversell which will then pull the market down. Along with other “bad signs” (such as some irresponsible comments from our politicians or some signs on the credit crisis getting worse), it will definitely make the stock market drops further than expected. After the drop, the population will not be brave enough to re-enter the market unless there are some good news (US central bank to pump in 700 billion, for example).

Similarly, when there ARE some good news such as the government announcing a new Budget plan, or our inflation rate is actually much lower than expected, the population will be encouraged by the good news and rush in to buy – hoping that they are there for the profit taking. But sad to disappoint them, when the news are out, it also means it’s already too late for profit taking.

What smart investors need to do is to make a move 1 step before the population in terms of selling, and 1 step after them in terms of buying. When the population is reacting to “bad signs”, they will oversell and the market will drop. You should be there after that, to buy the good stocks which are priced at an affordable rate. On the other hand, when you know there are some good news coming in (prior to the press release), be sure to sell before the population comes into the picture.

No point for us to move WITH the population because you will suffer together with them and if there’s any profit, it’s not much. That’s why Warren Buffett always encourage investors to be greedy when others are fearful.

I’ve been following this advice with mixed results. But I still think it’s a good advice.

So, start doing research, study the companies’ financial statement, and shortlist some of the better ones. When the market crash and people are overselling, go in to grab some, and keep them.

However, there ARE some investors who prefer to focus on putting their eggs in 1 or 2 baskets. Both has their own pros and cons. For those who prefer focus than diversification, it actually saves them more time. Rather than doing analysis and monitor many different companies and industries, they only need to pay full attention to few. They might not be jack of all trades, but they are the experts in those few industries.

On the other hand, if you’re diversifying your stock investment across multiple different industries, then you will likely spend a lot of time and efforts trying to keep up to date with the data and the news. As a result, you might miss out some important details.

So what should you do? If you don’t diversify, what if you make that one big mistake while analyzing your industry? You might end up suffering heavy losses. But if you do diversify, you might take too much efforts and energy to keep up to date with all the industries.

For me, I will definitely diversify but only to the few sectors which I know quite well and also to the few companies which I know. I will not invest in a company which I hardly know. I normally invest in Finance, Plantation and Trading/Services. Lately, the Finance and Plantation sectors have been hit quite hard and I’ve lost a lot. But if I did not diversify some of my investment to Trading/Services, I would’ve been hit even harder.

So my suggestion is to choose few industries to focus – maybe 2 or 3 at most. At then, choose few companies out of those selected industries. Unless you got A LOT of time, then maybe you can focus more than that.

Hope it helps.

p/s…. but do bear in mind that the current economy situation is quite volatile. All the industries might be hit quite badly so do your selection and analysis properly. Plan for at least 6 – 12 months. If you cannot hold that long, then don’t invest now.

p/s….. on another note, it is also a good idea to diversify your overall investment portfolio to other investment types such as real estate, bonds, unit trusts, commodities or Fixed Deposits.