KEY STRATEGIES FOR INVESTING IN UNCERTAIN MARKETS

In an uncertain market, one thing is certain: market declines are an inevitable part of investing. Here are five strategies for riding out the bumps: 

 1) Stay Calm and Get Professional Advice 

 • Don’t make any quick moves on your own. Instead, meet with your unit trust consultant. 

 • Don’t act on the basis of single events. 

 • Re-examine with your consultant your investment goals, time horizon, risk tolerance and financial circumstances to make sure they remain appropriate. 

2) Maintain a Diversified Investment Portfolio 

 • Work with your consultant to spread your risks. 

 • Consider selecting a mix of unit trust funds that invests in stocks and bonds. Additionally, keeping an appropriate amount of your portfolio in money market funds and other liquid investments can help you meet short-term needs. 

 • Include funds that invest outside Malaysia. Various countries still tend to move in different cycles than the Malaysian market. 

 3) Invest Regularly – In Good and Bad Times 

 • Avoid moving everything into stocks at the hint of good news – or everything into cash following bad news. 

 • Consider investing a fixed amount every month or quarter, also known as dollar cost averaging. This way, you don’t have to guess which way the market is going. You also won’t risk the possibility of investing all of your money at the top of the market. (Please note that this strategy of regular investing does not ensure a profit or protect against loss). 

4) Invest for Income 

 • Consider unit trust funds that stress the role of dividends – or bond funds that produce a steady stream of interest payments. 

 • Income-producing investments can function as a cushion during a down stock market. After all, a dividend is yours whether the stock price is rising or falling. 

5) Avoid Jumping In and Out of the Market 

 • Successful market timing during a bear market is extremely difficult because it requires two near-perfect actions: getting out at the right time and getting back in at the right time. As a result, investors typically end up buying high and selling low. 

 • One reason it’s difficult: A bear market is not usually characterised by a straight-line decline in stock prices. Instead, the market’s downward trend tends to be jagged – showing bursts of stock price increases and then declines that bring with them corresponding feelings of euphoria and concern.

Definisi Unit Trust

Sebelum kita melabur dalam skim unit trust ni, lebih baik kita faham dulu apa itu unit trust?. Dari segi bahasa, dalam Bahasa Malaysia disebut “Amanah Saham” ataupun sekarang disebut “Unit Amanah”. Kalau English disebut “Unit Trust”. Ada di sesetengah negara unit trust ni juga disebut “Mutual Fund”. Contohnya macam di US dan Canada. Di Australia dan New Zealand pulak diorang panggil “Managed Fund”. Dari segi definisi, menurut Persekutuan Pengurus Unit Amanah Malaysia atau lebih dikenali FMUTM (Federation of Malaysian Unit Trust Managers) : Skim unit amanah atau “unit trust scheme - UTS” merupakan suatu bentuk pelaburan kolektif yang membolehkan pelabur-pelabur yang mempunyai ojektif pelaburan yang sama mengumpulkan wang mereka, dan kemudian dilaburkan ke dalam portfolio sekuriti atau aset lain yang diuruskan oleh profesional pelaburan.

Secara mudahnya, kita ramai-ramai masukkan duit kita dalam satu dana yang diuruskan oleh suatu syarikat pengurusan dana yang dipanggil “Syarikat Pengurusan Unit Amanah” atau ringkasnya UTMC (Unit Trust Management Company). UTMC ini pula akan laburkan duit kita dalam pelbagai portfolio yang diluluskan seperti sekuriti, bond ataupun aset-aset lain dalam syarikat-syarikat yang tersenarai di Bursa Malaysia atau pasaran ekuiti di luar negara. UTMC ini mestilah yang diluluskan oleh Suruhanjaya Sekuriti (Securities Commission - SC) dan terikat dengan beberapa akta perundangan. Selain daripada SC, beberapa pihak lain juga terlibat dalam mengawal-selia industri skim unit trust ini demi menjaga kepentingan para pelabur, antaranya ialah Pemegang Amanah (Trustees), Juruaudit (Auditors), FMUTM dan Kementerian Kewangan. Yang penting kat sini, syarikat-syarikat tersebut “diluluskan”. Kalau yang tak lulus tu kita panggil skim cepat kaya, Pak Man Telo(80an),swisscash(90an), meccafund(sekarang ni) dan macam-macam lagi.. ..yang ni jangan cuba-cuba nak masuk le… 

Dalam skim unit trust, para pelabur tidak membeli sekuriti/stocks secara terus dalam portfolio. Pemilikan dana (portfolio) akan dibahagikan kepada unit dan para pelabur dikenali sebagai ‘pemegang unit’ (unit-holders).Pelabur-pelabur bukannya pemegang saham dalam sesuatu syarikat yang dilaburkan, sebaliknya merupakan benefisiari di bawah amanah yang diwujudkan oleh UTMC. Mengikut perlembagaan atau ’surat ikatan’ (the deed) skim unit trust, mesti terdapat pemegang amanah (trustee) untuk menjaga kepentingan pelabur. Trustee adalah pemilik sah ke atas semua aset dalam skim unit trust bagi pihak pemegang unit. 

Nilai atau harga satu unit dalam skim unit trust dikenali sebagai “Nilai Aset Bersih” atau “Net Asset Value - NAV” per share. Satu unit dalam skim unit trust merupakan ‘bahagian’ berkadar daripada jumlah pelaburan yang terkumpul. Jadi, apabila nilai pelaburan dalam portfolio skim unit trust meningkat atau menurun, maka NAV juga akan turut meningkat atau menurun. Dalam beberapa skim yang ditaja oleh kerajaan (contohnya ASB) di mana portfolio tidak tertakluk kepada perubahan nilai, NAV ditetapkan pada RM1.00. Tak seperti dalam stocks, di mana harga boleh berubah-ubah pada setiap kali urusniaga, NAV bagi sesuatu unit trust fund hanya dikira pada setiap penutup hari urusniaga. Jadi NAV sesuatu fund akan disebutharga/disiarkan di media cetak utama atau halaman web UTMC berkenaan pada keesokan hari urusniaga. 

Pulangan atau ‘returns’ pelaburan adalah gabungan pembayaran pendapatan tetap dipanggil ‘agihan’ (cash distribution) dan tambahan nilai modal (capital gains) melalui pecahan unit (unit split). Pernah dengar perkataan ‘dividen’?… dividen tu ‘Agihan’ lah.. 

Skim unit trust memberi peluang pelaburan untuk pelabur kecil mengakses dengan mudah pelbagai jenis pelaburan yang pada kebiasaannya sukar diakses. Bayangkan kalau kita nak labur secara langsung atau membeli stock dalam sesuatu syarikat ‘blue-chip’ yang besar seperti TNB, Telekom, Maxis dan yang sewaktu dengannya, berapa puluh ribu ringgit kita kena ada untuk membeli satu lot stock. Itu belum kira kos broker saham dan lain-lain lagi. Tapi dengan skim unit trust, kita berpeluang melabur dalam stock-stock ni, bukan setakat satu syarikat malah dalam pelbagai syarikat. Inilah yg dipanggil kepelbagaian atau “diversification’ yang mana ianya dapat mengurangkan risiko kalau melabur dalam satu portfolio sahaja. 

Dengan risiko yang agak berpatutan, kebanyakan pulangan pelaburan untuk jangka masa sederhana dan panjang (lebih dari 5 tahun) dalam skim unit trust adalah lebih tinggi daripada pulangan daripada akaun biasa dan deposit tetap (fixed deposit - FD).

Blog Berwajah Baru

Setelah beberapa lama dalam diam dan dalam keadaan hampir hilang, saya kembali semula di arena unit amanah ini. Timbul banyak masalah dalam hidup yang terpaksa diuruskan satu persatu dan kekuatan untuk kembali akhirnya tiba.

Walaupun hampir beberapa tahun menghilang, sebenarnya saya masih mengambil tahu tentang keadaan semasa pasaran unit amanah di Malaysia ini. Ini kerana saya tetap percaya bahawa unit amanah adalah salah satu cara terbaik untuk anda melaburkan wang anda untuk jangkamasa panjang. Dalam keadaan saya 'menghilang' dari dunia unit amanah, rakan-rakan masih menjadikan saya sebagai rujukan jika ada perkara berkaitan dengan pelaburan yang terbaik dan saya tetap mencadangkan mereka supaya melabur di dalam unit amanah.

Apa yang saya suka ingatkan rakan-rakan saya adalah supaya melabur dengan konsisten dan amalkan Dollar Cost Averaging / Ringgit Cost Averaging. Lakukan semakan bersama perunding unit amanah kalau boleh setiap bulan untuk melihat aliran prestasi dana anda.

Jika ingin mengetahui lebih lanjut tentang unit amanah, jangan lupa hubungi saya dan jangan lupa untuk share posting-posting saya di blog ini. :D

6 Tips Unit Trust Untuk Beginner

Beberapa tips yang saya ingin kongsikan berkaitan pelaburan dalam unit trust. 

1. Ringgit Cost Averaging. Katakan anda ada RM10,000 tunai. Jangan masukkan RM10,000 tu sekaligus ke dalam 1 portfolio unit trust. Pecahkan kepada beberapa jenis portfolio.

Hal ini adalah kerana harga unit trust ni berubah-ubah macam saham dan kalau kita terperangkap dalam keadaan market yang sedang menurun, at least harga purata unit kita dapat diturunkan.

2. Biasanya yang buat Ringgit Cost Averaging ni akan buat dalam tempoh masa tiga tahun. Dan disebabkan simpanan unit trust ni untuk jangkamasa panjang, tiga tahun adalah dianggap normal atau jangka masa sederhana.

3. Pemilihan fund. Untuk yang tak tau apa-apa, memang susah. Kalau dengar cakap agen yang tak tau apa-apa pun susah. Jadi kita serahkan kepada pakar. Pergi laman Morningstar ni, pilih fund dengan rating 4 atau 5 bintang. Settle.

4. Pemilihan fund. Selain Morningstar, boleh guna data dari Lipper Leaders. Cross check top fund antara dua ni untuk dapatkan fund yang terbaik berdasarkan recommendation daripada pakar.

5. Pemilihan fund. Elakkan new fund sebab performance dia masih lagi tak diketahui. Berdasarkan pengalaman orang lain dalam forum, ada je new fund yang tak perform sangat. Agent unit trust biasa akan promote new fund all out untuk kejar sales dan performance bonus.

6. Berapa lama nak simpan? Unit trust ni adalah instrumen pelaburan medium term iaitu bermula dari 3 tahun dan ke atas. Kurang daripada tu maka adalah susah untuk korang masyuk. Kalau ada pun, sikit je.

Kenapa unit trust?

Bukan semua orang mampu baca chart atau faham dengan pergerakan ekonomi semasa untuk melabur dalam saham, jadi untuk golongan ni, eloklah duit lebih tu diletakkan dalam instrumen pelaburan seperti unit trust kalau nak pulangan lebih berbanding ASB, Tabung Haji.

Bila Masa Sesuai Untuk Melabur?

Ramai yang takut untuk bermula dalam pelaburan. Tak kira la apa jua pelaburan, unit trust, pelaburan emas, hartanah atau melabur dalam perniagaan yang dijalankan oleh diri sendiri. 

Ketakutan untuk bermula kebiasaanya adalah datangnya dari:

1. Keraguan tentang kesahihan pelaburan itu sendiri 

2. Keadaan ekonomi semasa Malaysia dan dunia. 

Memang amat penting untuk memeriksa samada pelaburan yang kita sertai itu sah di sisi undang-undang. Perkara ini boleh disemak dengan Suruhanjaya Sekuriti. Suatu masa dahulu kita pernah dengar banyak Skim Pelaburan Emas yang menyalahi peraturan Bank Negara dan Suruhanjaya Sekuriti. 

Bercerita tentang unit trust, amat mudah untuk memeriksa kesahihan Syarikat yang menguruskan Dana Unit Trust, dan ianya boleh dilihat dalam Product Highlight Sheet serta Master Prospectus yang disediakan oleh Consultant Unit Trust. 

Bercerita tentang Unit trust, dalam keadaan ketidaktentuan pasaran saham Bursa Malaysia dan serantau, ramai takut nak beli unit amanah.Perlu ke anda

risau untuk beli unit trust bila keadaan pasaran Bursa Malaysia tidak menentu?

Saya nak tanya anda, agak-agak siapakah Pak Nujum yang boleh meramalkan dengan tepat apa yang akan berlaku tentang pasaran saham? Kita hanya boleh membuat ramalan berdasarkan keadaan ekonomi semasa dan suntikan dari kerajaan, namun agak sukar untuk kita elakkan kejadian luar dugaan seperti wabak penyakit SARS serta kejatuhan ekonomi satu dunia pada tahun 1998.

Jadi, saya nak share info tentang bilakah waktu yang terbaik untuk Anda beli unit trust.

Hakikat sebenarnya, dalam unit trust, tiada panduan yang tetap dan tepat mengenai waktu yang terbaik untuk membeli unit (samada membeli untuk tabung/fund baru atau membeli untuk menambah unit yang sedia ada). Ini kerana harga unit sentiasa naik-turun (fluctuates) mengikut keadaan ekonomi semasa, pasaran saham dan
perubahan dalam nilai unit tabung itu sendiri.

Anda tahu kenapa saya berpandangan sedemikian? Ada 3 senario yang saya ingin nyatakan:

(1)Membeli unit ketika harga unit tidak berubah (atau hanya perubahan kecil) memberikan pelabur rasa tenang dengan kestabilan harga unit. Namun begitu, untuk jangka masa pendek, pelabur hanya menikmati sedikit saja keuntungan dari segi kenaikan modal jika ingin menjual balik unit-unit yang telah dibeli.

(2) Membeli unit ketika pasaran sedang naik menjadi favourite ramai pelabur kerana mereka boleh mendapat pulangan tunai dengan cepat dari pelaburan mereka. Tetapi perlu di ingat, mereka akan kerugian dari segi bilangan unit jika lambat untuk membeli.

Persoalannya, bilakah kita tahu harga pasaran naik atau menurun? Ikut trend? Susah nak cakap gak kan?

(3) Membeli unit ketika pasaran sedang menurun juga menjadi favourite ramai. Sebab dengan harga lebih rendah, semakin banyak unit yang kita perolehi. Dan dengan unit yang banyak ini, untuk jangka masa panjang, semakin banyaklah jumlah unit diperolehi bila ada dividen yang dilabur semula atau jika ada unit split.

Kesimpulannya, membeli ketika harga paling rendah  dan menjual ketika harga paling tinggi adalah teori asas dalam pelaburan.

Namun, tiada siapa dapat meramalnya. Pasaran saham mungkin jatuh lebih rendah daripada rekod yang pernah dicatat dan mungkin mencatat rekod tertinggi baru.

Jadi, realitinya tiada waktu terbaik untuk membeli unit. Pelabur boleh membeli unit bila-bila masa. Namun begitu dalam pelaburan unit amanah, pelabur hendaklah tahu asas-asas strategi yang boleh diambil (samada untuk membeli atau untuk menjual unit) apabila harga unit tidak banyak bergerak, harga mula bergerak naik ataupun
ketika harga mula menurun supaya dapat memaksimumkan keuntungan.

Pelaburan tetap secara berkala juga sering dikatakan cara terbaik melabur dalam unit amanah kerana pelabur dapat membuat pemurataan kos (cost averaging).

ok lah, setakat ini dulu perkongsian saya hari ini, harapan saya agar dapat dimanfaatkan sepenuhnya oleh anda.

Will Be Back Soon...

Risk and Reward in Mutual Fund Investing

By Amy E. Buttell 

Investing in mutual funds and common stocks has its risks and rewards. Generally speaking, when investing in mutual funds, risk and reward are directly related. 

The more risk you're willing to take, the greater your potential reward. The less risky the investment, the less return you will receive. In a very real sense, the risk is not so much that you will lose money; it's more that you will not make the return you should with a reasonable risk. 

The least risky type of mutual fund investment is the money market fund, which pays a varying rate of interest on your money. You generally know about how much your fund will return, and there isn't a lot of risk.

There is less risk involved in a money market fund than in just about any other type. However, while you don't have to worry so much about losing money in a money market fund (the recent financial crisis being an exception), the fund may not produce enough reward for you to meet your long-term financial goals.

To receive a higher financial reward for investing your money, you need to take on additional risk.

Short- and intermediate-term bond funds offer more reward, but with slightly more risk than money market funds. Long-term bond funds and balanced funds are moderately risky and offer more rewards than short and intermediate bond funds.

Moving up to a higher risk and higher reward are growth and income stock funds followed by growth stock funds and aggressive-growth stock funds. History has shown that investing in stocks whether directly or through mutual funds has rewarded investors with higher returns than investments in bonds, money market funds, or cash.

Before you invest, determine how much risk you are willing to take to reach your objectives. The further away those objectives are in time, the more risk you can assume in your investments.

If, for example, you're investing for retirement and have 10, 20, or more years to go, you can choose more aggressive investments with potential high returns over time. Volatility is not a risk to the long-term investor. The market's bias toward growth overcomes volatility with time.

Risk and Fund Types 

Your appetite for risk should directly correlate with the types of mutual funds that you invest in. It wouldn't make sense for conservative investors to put all their savings in an aggressive-growth fund.

Also, because the distinctions between types of funds have become increasingly blurred over the past few years, you can't assume that a fund is actually what it bills itself to be.

That is, a fund with the word "balanced" in its name may or may not actually be a balanced fund in the truest sense of the term. Therefore, you need to carefully examine the fund's prospectus and record before investing.

We recommend that you research the basic data of funds to learn more about ones that interest you. Perhaps check out a mutual fund newsletter to gather more information. By examining a fund's portfolio and the division of its assets between stocks, bonds, and cash, you can usually determine whether a fund is following its stated objective.

If the balanced fund you are interested in actually invests 50% of its assets in small-cap foreign stocks, you'll know that it isn't truly a balanced fund, but rather a small-cap global aggressive-growth fund.

As far as stock funds go, choices between the two extremes of safety and risk, in ascending risk order, include: 

• Fixed-income funds, offering yield and price stability.
• Stock income funds, primarily dedicated to producing a relatively steady stream of income.
• Growth and income funds, which give almost equal attention to both growth and income.
• Growth funds, with an orientation toward long-term capital appreciation. 

Source: http://EzineArticles.com/7504090

PUBLIC MUTUAL ONLINE REGISTRATION THROUGH PBB ATM

We wish to inform that unitholders who are Public Bank ATM customers can now

register for Public Mutual Online Services through PBB ATMs.

At the PBB ATM Main Services Screen (Please Select Transaction), unitholders

have to:

Step 1 – Select ‘Other Services’

Step 2 – More Services

Step 3 – Register for Public Mutual Online

Step 4 – Key in local mobile no.

Step 5 – Confirm mobile no.

Once the registration is completed, the ATM advice slip will be printed.

The docket mailer will then be sent to unitholders’s mailing address. Please be informed that you need to log in and change the User ID and Password within 30 days of the date of issuance of the docket mailer.

Please let me know should you require further information.

Brighter Future Ahead

Your success as a unit trust consultant depends upon your desire to excel.
Fast track consultant can achieve the highest rank of an agent as Mutual Fund Group Agency Manager (MFGAM) in one year and three months. It took many years to become a General Manager or a CEO of a company.

I knew many companies out there, that many if not all of their management staff struggle to become a CEO of the company, but unfortunately the CEO would normally will be picked up from outside of the company. Very true right! Here you don’t have to worry on that.

If you work smart enough, you will be the MFGAM. No one from nowhere will come and become your boss. For those who hate traffic jam, you can even have your office right in front of your house if you want. Other CEOs don’t have this privilege.

Furthermore, besides your sales commission, your staff’s performance will also contribute to your income directly. You will also get indirect commissions that consist of 5 levels i.e.

1. Year-end bonus
2. Breakaway bonus
3. Equalisation bonus
4. Career benefits
5. Profit sharing.

So far, I knew only 2 levels of extra benefits that you will get if you work for company (in general) i.e. yearly bonus and Employee Share Option Scheme if any. So, don’t wait for too long.

There are more to come. You can fly to Dubai or Seoul for FREE if your sales is greater than RM2.875m or RM850k (RM650k for new agent) respectively by the end of Dec 2009.

So hurry up. The faster you become a consultant, the easier and longer period for you to achieve the sales target.

New Unit Trust Consultant Campaign 2009 (Jan to Dec 2009)

Join us today and enjoy the great benefits we can offer you. Full and part-time positions available.

Incentive 1: Joining Incentive Refund
Achieve RM50, 000 in total personal sales within six month from the date of joining and we will refund your Computerised Unit Trust Exam (CUTE) and Joining Fees.
So, basically your investment is zero.

Incentive 2: Incentive Trip
Achieve a minimum total personal sales of RM650, 000, you will book yourself a seat to Seoul! As compared to the standard National Sales Convention (NSC) Incentive Trip qualification requirement of RM850,000, a low RM650,000 qualification to the NSC is our wonderful way of saying welcome to all our new UTCs.

Don’t miss the boat! Join us today and enjoy these amazing benefits.
So, to grab this offer,

Why No.1 Malaysian Unit Trust Company?

If you are married and have a son or daughter in school, will you say, “Son, go to school and get no. 6, 7 or 10 etc in class”? Surely you will say “study smart and hard and get no. 1 in class”. Thus, why choose no. 2, 3, 4 etc when the no.1 is waiting and open for you.

Consistent performance and proven track record are there. If you want to buy durian, don’t choose the bad one. Choose the good one and you won’t regret. So don’t buy fund that are not performing*.

On top of that, we’ll support you with a suite of financial planning and sales tools as well as best-in-class training. The company will also subsidise you for pursuing Chartered Financial Planning (CFP) programme, if you meet certain sales target.

Start Buying Now. Seriously. Part II

Let’s look back at the Asian Crisis. The Asian Crisis bottomed in the year 1998 for Singapore. Which month was the bottom?

Before I tell you the answer, let me ask you another question. If I gave you the chance to buy at any point in 1998, would you?

You would, and you should, because no matter which month you bought in 1998, you would have made from +60% to +200% by the end of 1999, the year of recovery.

Let me give you another example. The economic slowdown associated with the bursting of the tech bubble, Iraq war and SARS bottomed in 2004. If I gave you the opportunity to buy at any point in time in 2004, would you? Of course you would, because you would have made up to +200% over the next three years to end 2007.

This is my point about investor psychology. When you look back in time, the difference of a few months means very little. But when you are living in and experiencing a recession or a financial crisis at the moment, the feeling is very different. Day-in, day-out, you are bombarded by the doom and gloom, and even one month of seeing the market go down feels like an eternity.

It’s like a kid who hates school. Six weeks of school could feel like six months, and six weeks of holidays feels like six days to him. It’s actually the same amount of time, it just feels different.

Now we are in an economic crisis. I don’t know when the exact month of the bottom is. For all we know, it could be over, in early March 09, or it could be ahead of us.

If you have the money to invest over the next few years, it comes down to this question: do you think the economy and the markets will recover? Your answer should be yes, because they always do. It’s no magic that they always do, it’s just that human beings want economic growth, and work very hard to attain it. Any kind of problems that crop up are dealt with in time so that we can increase our consumption and improve our way of life.

Already we are seeing some signs of economic improvements. This crisis started in the housing market in the U.S., and the latest numbers show an unexpected increase in housing starts and existing home sales. The banks, who were amongst the worst hit, are also variously reporting that they will make profits in 2009.

On 23 March 2009, various key markets around the world jumped 6 to 7 percent, including Japan, Hong Kong, Singapore and the U.S., reflecting some of these improvements in economic numbers.

Where is the absolute bottom? Did we miss it? Now that we are past the lows in March, and markets have jumped significantly, will you refuse to buy and wait for the same lows in March to come back again? What if it doesn’t come back?

You have to realise that it is a fool’s game to try to look for the absolute bottom.

There’s no way to catch it, and there’s no way to be faster than the market when the turn comes. The only way is to buy when valuations are low enough, and then hold till the recovery comes.

Some years down the road, when you look back at late 2008 or the whole of the year 2009, it’s going to be a blur to you which month it was that the market actually bottomed and turned.

You are going to wish that you have invested around this time.

Start Buying Now. Seriously.

Start buying equities now. I have.

So have investment legends like Warren Buffett, who bought in October, John Bogle, who said in this month that equity markets are too low and Bill Miller, who recently said that he sees great value in equities. (I am nowhere near an investment legend, but I am following their lead).

This is opposed to the doomsayers who say that the worst is yet to come. These doomsayers are … who are they again?

It’s interesting for me that there are always “investment experts” who criticise Warren Buffett. They say he was irrelevant to the new economy in 1999, when he refused to buy technology shares. They say he didn’t understand the situation when he said that financial derivatives were “financial weapons of mass destruction” back in 2002. And now they say that he is simply trying to talk up his own investments, when he said recently to “Buy America”. These things they say of the world’s most successful investor, the world’s richest man. Nobody remembers these “they”, but Warren Buffet continues to make loads of money from his investments.

Let’s look at the reasons why “they” say things will get worse.

“This time it’s different”

You’ve heard this one. “They” say this time it’s different because it’s an unprecedented global economic slowdown not seen since the Great Depression. To this I have two responses:

1. It’s always different. If it wasn’t different, no one would panic, and no one would sell their shares, and stock markets wouldn’t fall. For example, if a plane slams into a major building somewhere tomorrow, (it would be a tragedy, but) world stock markets would not crash the way it did in the aftermath of September 11th. The Asian financial crisis, tech bubble bursting, Iraq and Afghanistan wars, SARS, sub-prime crisis, they were all different.

2. It’s never different. What doesn’t change is that the human race has always been able to find solutions to these problems and emerge stronger. This is a unique trait that human beings have. If we did not have this trait, we wouldn’t have evolved as a species. This is one of the reasons world stock markets grow over the long term; we always grow and thrive as a species, and we always find solutions to problems.

“We don’t have clear signs yet that a recovery is in sight”

This is what many analysts say. Again, I have two responses:

1. If we had clear signs, the stock markets would have gone up a lot, and you would have missed the opportunity to make inordinate profits. Stock markets always anticipate economic recoveries. By the time the analysts are able to report clear signs, we would be more than halfway to the top.

2. We do have some clear signs of action. We know that these actions are being taken.

1. Monetary policy actions: We have seen governments across the globe cut interest rates and increase money supply. In recent weeks, we have announcements coming out of the U.S., the E.U., the U.K, Australia, China, Korea and others. These are extremely expansionary.

2. Fiscal policy actions: More and more governments are injecting billions into their economies. Usually they will do this by funding infrastructure projects, reducing taxes, and so on. This will increase overall demand and stimulate the economy.

In a short time, the global economy will feel the effects of these actions. So yes, we do have a recession. But a lot of smart people at governments all over the world are working frantically to address it.

The fiscal policy actions are easy to understand, but if you always wondered why interest rates have such a big impact, the reason is this: private companies always have expansion plans. They may be reluctant to borrow funds to expand if borrowing costs are high. They will be particularly cautious in a recessionary environment. But when rates decline, many will start borrowing, start hiring and start expanding.

“The recession will extend for another 3 quarters”

This seems to be the consensus economic forecasts. But let’s say this is true. Three quarters means the last quarter of 08 and the first two quarters of 09. Let’s budget another quarter and say it goes on till the end of 3Q 09.

I don’t want to forecast when the economy or the stock markets will recover. But I can say this: the stock markets always recover before the economy does.

So if stock investors all thought that the global economy would recover by end of 3Q 09, they would …

“I wish I had bought …”

If you are old enough, I bet that you have said this phrase “I wish I had bought equities” during any of the points below. We are now at point no. 7, and the Malaysia market is trading at a very low PE.

I am bullish on Malaysia because:

1. The population is growing. This means that the domestic economy will be growing.

2. Top blue-chips have successfully regionalised. Sime Darby, Genting, Gamuda, Public Bank, YTL Corporation, these are no longer just local companies. They have tremendous presence in the region and the world.

Do not regret again and say “I wished I had bought …”

Conclusion

Has the market reached a bottom? I feel strongly that either:

1. We have passed it. October could have been the bottom.
2. We are very near it. A lot of the bad news has been priced in. Given the very low valuations now, there’s not much downside, which makes the upside over the next two years very interesting.

Do not “punt”. Make sure you invest with money you can set aside for at least three years. This is because:

1. You don’t want to be caught having to sell at the wrong time.
2. You need time for the markets to realise its full recovery potential.

This is the time to invest profitably. Seriously.