Creating Wealth The Unit Trust Way

#175. A Debt-Free Life

2009-07-15T21:01:00.003+08:00

To Be Debt-Free Or Got To Get That Loan? Why Drop A Stone On Your Foot And Then Shout "Pain, Pain"?

I was shopping at a local hypermarket and on display was a spanking new Perodua Myvi car. And a leaflet clipped on the wiper caught my attention. It said something like "Fixed for 5 Years at low payment of RM347 monthly". Can't remember the actual figure but it's around that range of RM300 plus.

I asked the sales lady what it meant. She said, you just need to pay RM347 monthly for the first five years! What happens after the fifth year I asked. "Well, after 5 years, you pay the normal price." I asked her how much would that be. And she showed me a chart that said about RM700 plus monthly for the following 4 years.

WOW!! That surely is a great way to get buyers who are low on monthly budget and yet want a spanking new car. She continued "Usually, after 5 years you can trade away the car for a new car." In my mind I am thinking, that's right, and start the 5-year thingy again at a low monthly repayment.

I also questioned whether when you trade in or sell the car after the fifth year, the selling price or market value is able to pay off the remainder of the loan outstanding.

Well, certainly not the way to get a car. That is a total of 9 years of loan! And living a 9-year life in debt to the bank for a piece of transport. Why don't people get a pre-owned (sounds better than 'used', right?) car instead? It's much cheaper that way and you don't get into debt for so long.

What are the benefits of being debt-free?

1. More disposable income for other things including investing for the future. Money makes money concept.

2. No worries of late payment for the loan and risk getting the car being repossessed.

3. No problem when you have a temporary lost in income such as when you move between jobs. I have a few friends who are being laid off from their companies and are still jobless because of the current economy situation. You certainly have one less headache to worry about. When you are out of job, bills still need to be paid and cause you sleepless nights. I have been in that situation once before, I know how it feels.

4. Not enslaved to the bank. We have discussed about this before, didn't we. He he.

I am now reading an interesting book. I don't want to list the title here, the book is not everybody's cup of tea and the content is thought to be controversial to some. Hint, you can't get this book in Malaysia. I bought it through Amazon.

Well, this book talks about how we are enslaved by the modern things. We are brainwashed into thinking how cool it is to get this and that. Look around you, the media and the advertisement are always subtlely or boldly trying to tell you, "Hey, get this new car, you'll look cool driving it."

The main culprit is the media. It's always showing us it's cool to get this kind of new gadgets even though we have been living almost our entire life previously without it. Suddenly this new invention or creation is a must-get for everyone. Suddenly, you just have to change your car even though the car is running perfectly fine.

That's where we are stuck in the slave world. When we fall into debts, we fall into slavery.

Don't be suckered in. Spend within your limit. I have a friend who budgets RM10 for his daily spending. He is in debt and earns a small package. That's surely a way to save because you limit yourself to how much you can spend a day and you know how much you can save. If RM10 is too little for you, then work on a budget. You will soon be surprised how much you can save and how much things you don't really need and can still get by with your life.

The temptations are always there to spend. I have this mantra, "Don't buy it if you don't need it." That means if it doesn't serve a good purpose that can add value or enhance my life, I won't buy it. Or if you already have something similar at home that ain't broken, don't buy a new one. Look for ways to fix up the things that are not workable, probably can save more.

Well, when you don't spend so much, you have enough money to buy certain things in cash. My friend told me he can't afford to buy a used car cash the way I could. I said, if you have only saved up and not spend so much on the spanking new car, you would be able to buy one. Even if you have already taken a loan for that new car, there is still a way.

Say, you have just taken a loan of RM45,000 (assuming it's a full loan on the new car) for the car. Just sell it off at slightly below the market price and probably you will recover RM43,000. Now, use the money to buy yourself a nice used car at say RM18,000 (you can get most decent used cars around this price range). Put that extra RM25,000 back into the loan (RM43,000 - RM18,000) and now you only have an outstanding of RM18,000. That will help you to reduce your time in debt much quicker. Or if you want, invest that RM25,000 into something that can help you generate interest more than 3% (a car loan for Myvi is now at around 3% p.a.) per annum. Hehe, I think I am giving some people an idea on how to borrow cheaply instead of the normal 10% personal loan.

Enough said, adios.

#174. Gold Investment And Tetrahedron Update 12

2009-06-16T15:49:00.003+08:00

Is The Gold Rally Still On?

Hi Everyone, it's been sometime that I write here. Have been busy with other things lately.

Anyway, straight to our discussion.

Based on the graph above, looks like there is a support now holding the price up. Some said the price is now in correction and will dip lower. Of course those long term gold bug are still bullish all the way to the tune of 'to the moon'.

There are many interesting articles on Kitco regarding the bullish trend of gold. Those writers are advising to load up on gold and if you don't do it now, don't regret when you see explosive price moving upwards of USD300 or more.

I have loaded up two days ago at Public Bank. Looking at the indicator called William's, it looks like the price has almost finished correcting and hence I loaded up. But it seems the price dip a little bit lower since then. This is a good time for those long term investors. For long term investment strategy: buy at every dip and valley, and hold it till the top of the peak.

If the price breaks below the blue support line, we might see lower price coming up with support at USD912.27. If the price moves up from here, we might see a high somewhere before the mid of July. Well, again, I might be wrong on the July target. Will just wait and see.

Somehow, I agree with some writers that once this correction is done, we will see higher upward movement. If my own Elliot Wave count is correct, once the downward move that we are currently witnessing is over, the move will be a swift up to USD1,000 and beyond. Looking at the price now, and comparing to when the price move to a thousand and beyond, there certainly is some profit to make. That's the reason it is good to load up some now even though we might not know how low more the price will go.

#173. KLCI Chart And Elliot Wave Update 4

2009-06-08T10:47:00.002+08:00

Have You Made Profit With KLCI Index Fund?

Back in December 2008, I started this KLCI chart series. Back then, the KLCI was quite low, below 900 points.

Those who have bought back then really must be smiling a little bit now! Today's KLCI is between 1070 - 1080 level.

The target of 15% - 20% profit is already met for some within the short period of 6 months.

At this point, the KLCI seems to have energy to go up further. Meanwhile, I am waiting for gold price to come down a bit before purchasing more.

Will update on gold investment when the time is right and ripe.

#172. Run Your Personal Finance Like A Business

2009-05-23T20:19:00.003+08:00

I was at a dinner, and a Manager of a big company told everyone at the table.

"There is this manager, at the end of the dinner, asked his staff, the one who organised and paid for the dinner: Will you spend this kind of money if it was your own dinner and you had to pay for it?"

I am sure most of us would gladly spend other people's money without any guilt or care, especially if it is your company's money. And some might justify by saying "Oh, I have worked so hard but I am just drawing a meagre salary. Consider this a little payback to me, what's wrong with it?"

Anyway, back to the question, would you spend your own money that way?

The title of this post is Run Your Personal Finance Like A Business.

Of course, I am talking about a responsible company. A company that always think of ways to lower its production cost. A company that won't spend unnecessarily more than it should have.

A company that has that manager mentioned above as their employee. He is a person who is always conscious of the spending. It is our personal financial matters. If we don't look after it, who will.

I was browsing at IKEA's website and read some of the wonderful stories of how the furniture designers came up with ideas to lower production cost.

Designer Maria Vinka lowered the company's production cost by using unwanted banana leaves and made it into a wonderful stackable rocking chair. Think about it, this chair was created out of waste product. Also, stackable chairs allow more of them to be shipped in one container, thus reducing shipping cost as well.

Designers Knut Hagberg and Marianne Hagberg also reduced shipping cost by creating a lightweight stackable children's stool.

Look around you to lower your cost

In this current economy situation, I have tried to do a few things to lower cost.

1. Don't buy it if you don't have space in your house for it. Sometimes we see things that we really like, but we just don't have space in our house to display it. Yes, I am talking about those cute little things that doesn't add value to our house.

2. Don't buy it if you don't need it. I was on a trip with a friend. We kept remind each other, this is a budget trip. We are here just to see the country and get to know the culture. Please remind me not to buy things that I don't need.

3. Don't buy it if it is of low quality and can't last long. That means, you probably have to replace it later and you will double your cost. Buy something that is more durable even if it might cost a little more.

4. Reuse if you can. Find ways to repair your old things and make it new again.

5. Don't buy it now if it's not urgent. You can always wait till when there is a good sale and bargain.

6. Don't buy it if it's not what you wanted. Sometimes we want only a certain type of thing or product of a certain brand. However, because we can't find that product, we buy another type or make. Later on, we find ourselves not being happy with that product and have that regret feeling. So, buy the things that you really want even if it is going to take you longer to find it.

7. If there are products that are cheaper and yet as durable as those branded ones, get the cheaper ones. For example, I have stopped buying branded t-shirts. I won't buy them anymore just simply because it has the brand name on the front. I would go for t-shirts that has no brand on the front or back. I will go for plain t-shirts that have good quality and way cheaper than branded ones.

8. I don't buy new things if I can. I will scout for used products. Find a good quality one, and also one that look as good as new. You have read that I bought a used car instead of a new one. It is following some of the philosophies and ideas above too. When you want to replace some of your car parts, see if you can buy them for used parts shops (half-cut "kereta potong" shop).

9. Be humble, always ask around for information. Or survey around first for the best place to buy and the best product to get. If it is a product that you have no knowledge on, always find out more information about it first. Make sure you are going to like it by talking to those who are already using that product. Be humble and talk to them. You will learn about the product more and whether it is worth the money spent.

10. There are times we just want to get a newer product to replace an old product that is still in good working condition. Sell off your old product once you get the new one. This is a common idea, we sell our car and buy a new car. We sell our house to buy a new house. So, why not sell of your old TV after you buy a new one. That means, buy those big ticket items (TV, washing machine, hi-fi, car, etc) of good brand name and that is popular. Buy those things that you can easily sell when you want to change them.

Only a business that has a lower overall cost than its earnings will be profitable. If you are able to lower your cost, you will have more money to invest and save.

Record your spending

Like a business that has an Accounts or Finance Department, you too must record all your spendings. Create a spreadsheet that tracks your income and spending. That will allow you a quick snapshot of how much you have and where you had spent the money.

When you track your cashflow, you will know when it is going to be tight in the coming months. You will know much earlier. You can even plan how to save for that vacation that you have been longing for.

Please share your ideas of lowering cost by leaving your comments.

#171. KLCI Chart And Elliot Wave Update 3

2009-05-05T21:30:00.003+08:00

KLCI On The Way Up?

In January this year (2009), I wrote Update 2 suggesting people to buy Index Funds or any unit trust funds that follows the KLCI trend. At that time, KLCI was around 900. Today, KLCI closed at 1008. It has broken the 1000 mark a few days ago.

Those who have bought must be smiling now.

That means if you have bought at 900, you would make about 10%. And if you have bought the KLCI Tracker Fund from Fundsupermart, you would have made 9% profit. The sales charge is only 1%!!

Happy investing.

#170. Tips On Saving Money For Your Car 2

2009-04-19T18:06:00.007+08:00

Don't Fall Into The Debt Trap

Previously, on another earlier article last year, I have mentioned about not buying new car. I have been thinking of changing my 10 year-old Proton for some time. There are a few reasons why I wanted to change it. But I won't discuss it here. Hehe.

Putting my money where my mouth is, I bought a year 1986 Mercedes-Benz 190E 2.0 Auto. The picture above is that car.

It's only at RM14,500. And I have budgeted another a few more Ringgits to make it a nicer and safer ride. I have added in a reverse sensor (very important if you have kids in your family or around the neighbourhood).

Well, I made a calculation. If I were to buy a new MyVI and take a loan, I will be paying way, way much more upon paying back the loan (7 years). Well, a used Japanese car at RM14,500 should be alright too. However, I prefer the 3 pointed star brand. Just personal preference. I did think about getting a Jap but can't get a model that has the wow factor.

Finally, my friend was selling one! I was also surprised that I can readily get the replacement parts (new parts even) without much hassle. There are two friendly forums on the net in Malaysia for Benz owners. Merzclub.org and MyBenz.org. A lot of knowledgeable and helpful people in those forums providing advice too for newbies who have just started owning the cars.

So, now I have a ride that is fantastic. I am smiling everyday when I drive it. The money that I have saved on the loan and the monthly repayment can be paid for maintaining the car and pay for the slightly higher fuel consumption. It's slightly higher fuel consumption compared to my old Proton. Perhaps I need to take it to my mechanic to see if anything can be done on the car to improve the fuel consumption.

I was told there should not be any much major repair on the car. As long as we maintain and service it regularly. Of course, the regular wear and tear parts surely need to be replaced from time to time, but are not more costly than some local cars. You just got to know which shop to go to.

Some people may say I am rich to drive a Benz. Well, not at all. On the contrary, I am driving this because I am poor. I can't afford the monthly loan installment on new cars. Just can't bear to do it again after the experience with buying a brand new Proton 10 years ago and taking out a 7-year loan.

Anyway, the point that I want to say here is, don't get into debt. Especially on buying cars. I know a lot of people are stuck in the slave game because they have loans to pay for houses and cars. The road to financial freedom is when you have set yourself free from all debts.

#169. Gold Investment And Tetrahedron Update 11

2009-04-09T15:41:00.005+08:00

Create Extra Grams From This Cut Loss Strategy
Previously from November 2008 till February 2009 we have seen a great bull run in gold price. The uptrend (line C) didn't break until recently in March 2009.

We are now in what seems like a downtrend channel between line A and B. Price might move within this channel for the time being with the immediate USD850 in sight. If we don't break above line B, we might see price trending lower in the next month or so.

What strategy to use in this downtrend?

I was having a discussion with my friend and came up with an idea. Since some of you have bought at a high price and now still holding to it, this strategy might be an alternative.

From the chart, you can see that the price is now in the middle of the downtrend channel. It might go down touching line A or go up touching line B. I am hoping it goes up touching line B. But I am not so sure if we will see it breaking above line B.

If that's the case, say if it reaches line B, I am going to sell my holding. And when it then moves down to line A, I will buy it back again.

Example, when it touches line B at USD915, I will sell it. In Public Bank price, this might be around say RM104.62 (Bank's buying price). Say I sell 100 gms, I will get back RM10,462.

I will then buy back when the price goes down lower touching line A. Possibly at USD830-850 range. That would probably be at RM99.03 to RM101.42 range (Bank's selling price). In this case, with RM10,462, I can buy back around 105 or 103 gms.

What it means is that I now have created an extra 3 or 5 gms versus the original 100 gms.

Nevertheless, this is just a theory. And it all really depends on the actual timing and price that we buy and sell.

I guess this is a good reason why we have to put a stop loss when things really go south and sour.

Also, another bright side is since we have bought at RM99.03 or RM101.42, it's a lower price now. And easier for us to recoup and make a profit when price starts to move upwards again. From my record of Public Bank price, I remember seeing the price went up as high as RM115 (Bank's buying price) during the February 20th bull run of USD1,000.

What's your thought and comment on this strategy? I guess this is a way we can play 'short' (sell at high price, and buy back at low price).

#168. Gold Investment And Tetrahedron Update 10

2009-03-14T09:12:00.004+08:00

Another Rally Soon In Gold?

The 13th of March 2009 has passed. The price rebounded from the support line and still staying bullish. In the last article (Update 9), I cautioned that the price might drop out of the channel. Well, it is now back in the channel. The 13 March date that I have been waiting for has not let me down although I expected it to be another peak close to a thousand dollars.

If the momentum continues we will see price closing higher on 20 March 2009. Hope it will be another peak like 20 February. And I and some readers can all laugh our way to the bank.

So, how high do you think the price will go this time?

Whatever it is, sell at the next peak. Buy again at the next valley. This lesson is learned when I didn't sell the next day after the high of 20 February 2009. Some profit could have been taken there and can buy again at this low.

The price now looks good as it has moved away from the support line and crossed the downtrend resistance line. Those who are thinking of buying now may have missed the train a bit when it dip slightly below USD900 a few days ago.

This article is just my thought, please make your own judgement. Knowing the next peak is surely a difficult thing. It's like all the peaks and valleys ahead of you are covered by fog. You'll never know until you move nearer to them.

Meanwhile, on the local (Malaysia) front, we are seeing the KLCI closing at 838.39 on Friday 13 March 2009. Those who are invested in Index Funds or funds that are related to the local KLCI may see their investment losing value further. Know when to cut your losses and move to a bond fund, or get into gold.

#167. Gold Investment And Tetrahedron Update 9

2009-03-10T23:16:00.004+08:00

Caution: Gold Price Is Moving Out Of The Channel

Gold price has reached the top on 20 February 2009 with the high of USD1,005.42. In the chart above, you can see it as point B. It certainly has climbed up a long way from point C (12-13 November 2008) at around USD700.

The high of USD1,005.42 is still some dollars short to beat the historic high of 17 March 2008 at USD1,032.20. Nevertheless, it has broken the important mark of 4 digits price again.

In the chart above, I measure the line from the peak of point A (15 July 2008) to point C, and found it is roughly the same length with point B to point C. In other words, AC = BC.

What does this tell you? The invisible force of tetrahedron is showing itself again? This is another reason for us to sell at point B. However, I have hold on to my purchase thinking it will go up further. Of course, if I use the buy-and-hold strategy, price will one day go up higher than point B. However, there is no certainty how long we have to hold to see the price goes back up to USD1,000. What if it takes a year? We then will lose a lot of profit opportunities along the whole year.

Now, I have to admit the greed in me has won over the technical analysis. The lesson I have learned is when the indicator shows a selling signal, we should sell. We should not hold on to it because of greed. A day after 20 February 2009, I saw the price on Public Bank Gold Investment Account reaching as high as RM115. Sigh, a lost opportunity.

I was hopeful that the price will make another peak before finally collapsing. However, the expected peak didn't materialise, and I was still hopeful. This expectation was dampened when gold price dropped and broke support line after support line. It broke USD980, USD950, USD940, USD930 and so on. It did show a brief upward move though.

However, at this moment, the price has dropped to below USD900. The gold price has now moved out from the blue-lined uptrend channel. It has reached a low of USD892.40 in today's trading.

I am afraid this may be a signal to sell and cut loss. The next barrier will be at USD880, and then USD850. And so on. If in the morning (9:00am) the gold price has broken USD880, I guess it's time to call for a sell. Since I bought on 30 January 2009 at around USD900 level, any price below USD900 is already a loss for me.

In every trade, we must learn to cut loss and humbly admit defeat.

Nevertheless, I am still thinking about the 13 March 2009 date that I have forecasted to be a peak. It's just a few more days. Perhaps I will wait till 13 March. Who knows, the price might swing back up as it has done so previously. Only time will tell now.

What do you think? Will you keep holding on? Or sell (cut loss) and wait for the next valley? Or hold the current purchase and top up more at the next valley?

#166. Predicting Market Trend

2009-03-08T23:30:00.005+08:00

This Is A Reply To Those Who Ask For Market Trend Prediction

An Anonymous left a comment on article #161. Unit Trust Agents And Your Investment 2:

it is easier to talk and suggest thru the historical chart for the point(indicator) to buy ang THE LOWEST, and sell at THE HIGHEST, however, can you tell us when is THE LOWEST, will it in 2009 or 2010?

And another one by the name of sewhong left a similar comment and question on article #133. Recession Risk In Malaysia:

You are quite well know about Public Mutual, you did quite a lot of comparison via Public Mutual fund as well, including the link, you have writen in one of the article that PBGF is not sell by agency, on the other article, you mentioned UTC need to continue promote due to their rice bolw, thus, seldom/hardly gave good advice, moreover, UTC in m'sia is tide to single UTMC, and you also mentioned UTCs should able to predict market trend well.

First, can I presume you are Public Mutual agent as well? Bcos you are recomend or compare for single UTMC

Second, can you predict market trend? Just do some sharing on 2009 and 2010, it will benefit to UTC out there, and a lot of new investor.

I think it is going to be a lengthy discussion and more prudent for me to reply on this article instead of leaving my comments on those two articles. In fact the questions are almost similar, so I will address them together here.

To the answer now.

First, it is irrelevant whether I am a unit trust agent or not. And it is of no matter whether I am with any UTMC (Unit Trust Management Company). I am just someone who is passionate about investing my money and sharing some information here.

And the information I share here is just my thought and should not be treated as an investment advice. Readers should do their own due diligence. They should make their own judgement.

Me, predicting the market?

Second, can I predict the market trend? Before I answer that, read this article from The Goldsmiths.

The market is manipulated on a global basis. And it is the global market that influences and affects our local market.

I must say I can't predict the market trend. But I can use the technical analysis to make calculated guess where the market is going to be in the next one month or two. Therefore, it's very reckless to advice an investor to invest for long term (especially in investment like unit trust that suggests long term outlook) without monitoring the trend everyday (short term).

The stock market where unit trust funds are invested in can make very sharp u-turn quickly and wipe a person's wealth out. This is clearly seen last year and this year (2008-2009). Those who have invested thinking it's for the long term may not see their investment recover back to the original level in many years to come.

If the investor have good investment advisor, the risk might be mitigated by cutting loss early. Or at least have sold when the profit was made instead of holding on to it and see the investment diminished in value.

Talking about investment advisor, I am under no obligation to share my thoughts with anyone especially on a public forum like here. I write as I please. And the thoughts and opinion here should not be treated as investment advice. Readers should do their own due diligence and make their own judgement. I am not your investment advisor.

Take your own initiative to study about the trend

Furthermore, if there is any UTC (unit trust consultant) or new investors out there looking for investment tips, they should seek their own UTC supervisor or UTC respectively.

I don't gain anything at all, why should I share my ideas here with the UTC? They should talk to their supervisors and learn from them. Ask the supervisors to share their advice on how the market is going to be. Ask the supervisors to teach them technical analysis.

If the supervisor can't teach them, perhaps they should find other ways to learn ~ from books or internet. Why can't the UTCs and investors learn on their own? I learned most of the things on my own without any teacher. I watch the market goes up and down and make me breathe faster at times. I feel happy when my forecast is right. These UTCs should go through the same experience themselves and learn. Investing is not praying for the market to go up after you have bought. There is a place for praying, but not in investment.

If there is any UTC reading this, ask yourself, have you ever learned any good technical analysis in your UTCs meeting? Why not? Isn't understanding your product and market analysis the most important thing as a UTC? Why is technical analysis not taught and discussed in the meeting? Why is the meeting always about 'sell more, sell more, how to sell in bad times, how to sell successfully, how to get your customers to say yes, and such'?

The UTCs meeting are no different from any sales meeting of any company. However, the emphasis should be placed more on understanding the product and technical trend analysis. The meeting should not be only on polishing sales skills. To be a good unit trust consultant, one has to have good knowledge on the market and technical analysis. Because the UTC is sort of a wealth protector to the investors. Think about it, the advice of the UTCs will result in the investors' wealth being augmented or diminished.

Next, if the investors want investment advice, they should seek the UTCs that have sold them the unit trust funds in the first place. If they think the UTCs are not good in market knowledge, they should not have bought from them in the first place. However, if they have bought and now think that the UTCs are not good enough for them, find a better one. Better still, learn the knowledge yourself.

People take things for granted

But, you see, the problem is many people found that their UTCs are not good enough only too late after their investment has suffered a loss. And then they write to me to ask me what to do with their investment, and ask me to share the advice on the market trend for 2009 and 2010.

Well, I try to give some advice whenever I can. Remember, I don't gain anything from doing this. And so far no one has given me anything for my advice. So I find it rather rude when people demand my thoughts (by typing in CAPS) as if I owe them some money.

Perhaps, these people (which I guess are UTCs) are offended by what I write here. Well, that's natural is it not? You tell the truth, you get someone showing you a fist. You tell more truth, and people want to ask for a fight. This is how I feel now. I feel that people want to challenge me to a fight by demanding for my prediction.

You know, you may have watched on some movies, the old man is challenged to a fight when he said to the young man, "Is that the best you can fight?" You get the idea?

Anyway, prediction is not quite the right word in my opinion. Speculation or forecasting might be more appropriate. So, that's it. Whatever my advice is on this blog, it's merely my own speculation and forecasting. And I am not obliged to share my advice with anyone here. I write whenever and whatever I please.

I am not being arrogant here. I am just revealing some truth and creating some awareness to people who invest their hard earned and 'blood-sweat' money. People want to see their investment grow. That is the simple truth of investing. If any investor is losing money, it surely is an unhappy thought. The job of a UTC is to ensure that the investors do not lose a single cent. The job can only be performed successfully by deepening the knowledge in market and technical trend analysis.

Learning through sharing

Challenging someone else to a fight won't improve your fighting skills. Sharing your fighting skill (that's why we have friendly sparring) with someone else might. Sharing through exchanging ideas and views will help us learn to improve. You share your view and I will be more opened to share and add on mine.

Recently on this blog, sharing and exchanging on gold investment have been a very rewarding experience to me and the readers. Those who have participated by leaving their comments, I thank you. You are very good people who share your views and ask in a nice way. This is what separate the men from the boys.

Hope we have continuous sharing of knowledge and increasing our wealth during this market situation.

#165. Modern Employees And Ancient Slaves

2009-02-25T11:49:00.006+08:00

Are There Any Differences Between Now And Then?

Having watch the Rome movie series by HBO, I have learned that thing has not changed much during Julius Caesar's time and today.

So, here's my observations and take on slavery. And the comparison between the Julius Caesar Roman times and our world today.

Then: A wealthy person can own many slaves.

Now: A wealthy enterprise or business owner can employ many workers.

Then: A slave served their master/owner till either of them died.

Now: An employed person works their backside off till they retire. And then their children continue to work sometimes for the same enterprise or business owner. It can go on for a few generations. This is worse than in Julius Caesar's time.

Then: The master could sell the slave off to someone else if he is not happy with the slave.

Now: A working class citizen can be fired from the company he works in. And has to look for another employment opportunity elsewhere.

Then: The slaves had to provide sexual favours to the masters when required.

Now: The employee brings the boss a cup of coffee when asked to. And other personal favours that are usually not a pleasure to perform. A survey I read somewhere said that employees dislike doing personal favours for their bosses. They don't mind doing job related favours, but not personal favours like going to the banks to pay their bosses' bills.

Then: There was usually a master slave that look after the other junior slaves. The master slave, knowing very well that he is of the slave rank, treated his fellow slaves kindly.

Now: Some managers have many subordinates reporting to them. Some know that they are salaried workers just like the rest of his subordinates and treat them kindly. Others treat their subordinates like slaves and with disrespect.

Then: The slaves' survival lied on the master providing food and lodging.

Now: The working class gets their salary month after month so that they can continue to live, eat and have a house to live in.

Then: The slaves lived in their masters' houses.

Now: Many domestic helpers lived in with the employers.

Then: Some slaves were sold off by their parents to wealthy people to pay off the debts that they had.

Now: Some people are in heavy debts, mortgages, credit card debts and so on. And they have to continue working for business owners in order to earn some money to pay off those debts.

Then: Slaves wore tags to show who they belonged to.

Now: The modern slave, I mean the working class now mostly wear a tag to access to doors in their office buildings. The tag also has their employer's name on it.

Then: When a slave met another slave, he would introduce himself as "I am Sheila of the Julii's house."

Now: People introduce themselves as "I am John, working with ABC Company."

Then: The slaves helped their masters in their businesses such as selling some fruits or goods.

Now: You see salespeople of all kinds. Even financial planners with the banks are selling you something, neh?

Can you think of more? Just would like to share the above with you. And see? Things are not much different today from 2,000 years ago. Can we still be proud to work for XYZ company today knowing that underneath we are just slaves?

Some people admire their friends who work with large multi-national companies (MNCs) saying it's a better job. Don't be, it's the same old thing ~ slavery! I know people working with large MNCs who are not happy with their jobs. Nor those in smaller companies any happier.

Take action today to break free! Have a plan.

#164. Millionaire Investment Plan 2

2009-02-21T14:17:00.003+08:00

It's A Good Plan, Where To Get That RM50,000?

Last night, over some Iced Caffe Mocha I shared the Millionaire Investment Plan with my friend.

Me: If you multiply RM50,000 by 10%, and keep going on, how many times do you think we need to reach RM1,000,000?

Friend: How many?

Me: Just 32 times. Now, if you have 5 chances of making 10% profit in a year... you just need about 6 years to be a millionaire. I have been working for 12 years now. So, I might be a millionaire now if I have known about this plan.

Friend: But where do you get this RM50,000 to begin with?

Me: After I graduated from the university, in my first job I was only riding a motorbike. I was earning RM2,000 and yet I can save RM1,000 away every month. In a year, I can save RM10,000. If I went on like that, at the end of the fifth year, I would have my RM50,000. And now on my 12th year of working life, I would have been a millionaire last year ~ on my 11th year of working life. (5 years to get RM50,000 and another 6 years to make it to RM1,000,000.)

Friend: You are right! How come no one told us this?

Me: We are all ordinary people. People always tell us to study hard, go to the university, get a good job, work hard. That kind of advice. We are surrounded by ordinary people. Even our lecturers are ordinary people who are still working from paycheque to paycheque.

Friend: Yeah.

Me: Of course then... as we progress further in our working life, we want to buy a car. We want to buy a house. We want to get married. We want to do a lot of things. So that's where I never get to save up that first RM50,000. People say buy house. We need a house.

I say we should rent. Anyhow, succumbing to the pressure of spouse and those around, I bought a house. My advice is, don't ever buy a house. Save up that money for your investment. You will be a millionaire faster.

You know what's the real meaning of real estate?

Friend: What?

Me: Have you heard of Read Madrid (the football team)?

Friend: Yeah.

Me: 'Real' is a Spanish word for Royal. In the middle ages, people had to pay the Royal Families royalty fees to own a piece of the King's estate or land. It's therefore called the Royal Estate or Real Estate.

Many people mistaken real estate for something real and tangible. That's not the original meaning. It's just bollocks. It's a fee you pay to someone just so that you can live on that land.

Friend: I see.

Me: Today, it's the same. When you buy a house, you have to pay tax to the Government and pay your mortgage to the bank.

Let me tell you what is the real meaning of mortgage. Mortgage means mort and gage. Mort as in rigor mortis. You are a doctor, you know the term. It means death. Mort ~ death. Gage means to engage in something. To pledge to do something. Mortgage therefore means 'to engage in something till your death'.

Think about it, today's mortgage of 30 years is a long time. Something you engage almost to your death.

Friend: You are right.

Me: If you buy a house or RM250,000, buy the time you finished paying your mortgage 30 years later, you would have paid more than half the price to the bank. About RM500,000 or more.

I pay about RM1,300 to the bank every month. I can save those money by renting a cheaper property and invest the extra away and be a millionaire sooner than I can. And I can take part of that million Ringgit to buy a house if I so wish for one at that time.

Friend: Yes, I have thought about it. Why would people want to pay so much for a house and pay for so long? It just doesn't make sense.

Me: Now, see here. (I was showing the price of gold to my friend on my iPod Touch using Starbucks' wifi.) Price of gold is now USD997. I bought when it was around USD901 on 30 January 2009. It's not even a month. 10% profit is achievable in investing in gold. We just need to buy at the right time. And sell at the right time.

Friend: OK. I will start to invest. My... why no one tell us this?

Me: People don't spend their time wisely to study how to invest. They rather watch TV. They surf the internet watching YouTube to get entertainment. They play Facebook. They play online games. They are wasting their time.

I use the internet to get knowledge, to learn how to invest. There are a lot of knowledge on the net. And we just need to read.

Friend: Yah, people just like to watch TV and those stupid dramas.

Me: Oh, and one more thing.

It's all bollocks. Those that still think you need to buy a house. You can just rent and still have a roof over your head. A house is for what? It's just to provide us a roof over our heads. If you have money, why worry? You can live anywhere you want. There will always be places where you can rent.

They say 'oh, if you don't have a house, it's not safe.'

If you stop paying the bank for 3 months, what will happen?

Friend: The bank will take it away.

Me: Yes, exactly. And you lose all your downpayment money, you lose all your legal fees. You lose all the years of mortgage payment.

But if you don't pay your rent for 3 months, you have saved 3 months of rental! Haha.

Friend: Yah.

Me: So, everyone. Those ordinary people continue to live their lives as slaves for the banks. They continue to be the slaves at the companies they work with.

I always tell people don't buy a house! What if you lose your job? In this kind of time we are in, where to find a job immediately? You will have a mortgage to worry about when you are jobless. Our job is never secured. The longer your mortgage is, the worse it is. You make sure you can continue to have a job to pay for your mortgage for the rest of the tenure.

Friend: Uh huh.

Me: If we are debt free, no mortgage, we can move anywhere we like. When the neighbourhood turns bad, you just move without worrying the value of the house is going to depreciate.

Speaking of that, you also have to maintain your house. Spending more money. Painting the house when the paint gets old. I would rather save it up and invest. Haha.

RM50,000 is everywhere

That first RM50,000 is always elusive. I have shown to you that I can save RM1,000 every month even while I was earning RM2,000 a month! There are people earning more than that today that can't even save a thousand every month!

You need to have discipline. Brutal discipline. No mercy for yourself. Delay all your spending if you want to live a luxurious life later. Otherwise you will just be a slave for the rest of your lives. That's why majority of the population are working class and they are what I call ~ slaves and minions.

You can have your first RM50,000 within the first 4 or 5 years of your working life if you save hard. And make real good use of the following 6 years to flip it to a million. If you start working at the age of 21, add 5 years and add another 6 years ~ you will be a millionaire at age 32!!

Most of us are above that age and are still slaving away everyday at our office proudly. Stuck in the morning jam and the evening rush hour. Where's the fork? This is not the life that we should subject ourselves to.

Now that you know this plan. Start taking action. Don't waste the rest of your life away. What do you think?

A disclaimer: Invest wisely. Don't go sell your house to get that RM50,000 and invest wrongly in some investment and then put the blame on me. This are just my thoughts. And all the writings on this blog are just personal thoughts of the respective writers. You make your own decision.

#163. Millionaire Investment Plan

2009-02-12T15:07:00.001+08:00

Buy And Hold Or Buy And Sell (Revisited)

I have written about Buying and Selling and Buying and Holding previously. Here's a relook in a different way.

Many unit trust agents will share the power of compounding with you. They will also show you a small chart that displays how many years it take to make a million with your investment at a certain X% return per annum.

One question. Can the agents promise that consistent X% return per annum every year till you make that million Ringgit/Dollars?

Nevertheless, it's good to have a plan.

Here's my plan.

If you have RM50,000 to invest. And if you make 10% profit with each buying and selling, and then reinvest that profit, how many times will it take to make you a million?

Using a spreadsheet on the computer, on the 32nd time, you will have RM1,055, 688.84. Now, if you make 10% profit per annum and compouding that earnings, you will need 32 years to reach the 1 million mark.

Now, what if we can speed this up? What if in a year, we have 5 times of these kind of opportunities to make 10% profit each time. 32 times will only take you about 6 years to be a millionaire.

I remember a friend once told me a long, long time ago: It's hard to get your RM50,000 but once you have it, making a million is easy.

Now I understand his meaning.

How can I reach that million mark? Buy and sell. Start with an investment sum of RM50,000. Make 10% profit on each trade. Do it 5 times a year. That will be 30 times in 6 years. That will make you compound close to a million in 6 years' time.

Buying and holding it for long term won't make you see 1 million. In 6 years time, your RM50,000 has to see a price jump of 2000% in whatever you invest in. In gold is now RM107, you need to see a price of RM2140 per gram 6 years later! Is that possible?

Back to the story of how do you eat an elephant (not that we really want to eat it)? You cut it up into small pieces and eat it one piece at a time. For investment, the same thing is true. If you want to make big profit, make small profits constantly rather than hoping for a big price jump!

CK posted in my comment section in post #160:

However from my perspective, I'll treat gold investment as a long term (a better alternative than FD) which could be a year or so, or even treat it as one of the retirement funds. I believe we will be surprised to see the amount at the time of withdrawal (10, 20 or even 30 years later). Of course it could be the lowest price at the time we sell them years later, then we could have blame ourselves why we didn't sell it when it is in the peak. If we are really that unlucky (like what happen in 1980s), then you may consider to pass it to your next generation because it is not the only retirement fund we have. (Can a bank do a name transfer for gold account then? Ha). But I still don't think gold will depreciate as demand will be higher after years.

Well, here's my response and I reproduce it here.

Thanks for your analysis. Your comments are valid. Sure, if I have hold on to my gold that I have bought at RM86.03 on 28 Oct 08, I will be grinning ear to ear now. A big profit.

However, we will never know what the price is going to be. I would like to take profit when I am at the top. And buy when the price is at a low.

Of course, unless you have the foresight knowing that the price will be at this level now, RM107.42, you would have kept it till now.

We never know what the price is going to be. The price may dip and go down for many months. And your money will be stuck.

I don't want my money to be stuck. That's why I rather buy and sell at a short period even if I get a lower profit.

Another thing, if you take 10,000 and multiply by 10% five times. 10,000 X 10% X 10% X 10% X 10% X 105 = you get 16,105.10.

If you hold it and make 50%, you will only get 15,000. Nevertheless, markets or gold price don't usually make a big jump of 50% in a year. However, it goes up and down and when you catch the waves at the right time, you will get that 10% five times within a year like I mentioned.

In 2008, gold price started on 2 Jan 08 at USD846.75 and ended on 30 Dec 08 at 869.75. That's a mere 2.7%. Buying and holding sure is not a good strategy here when you see the 2008 chart. You could have easily caught 5 to 6 times of 10% profit.

There is the power of compounding if you make constant small profits.

OK, let's look even longer term. Of course, provided if you hold your gold that long.

In 1979 (30 years ago), the average price was USD306.68. In 1989 (20 years), the average was USD381.44 and 1999 (10 years) was 278.98.

See? If you have bought in 1979 and hold it for 20 years till 1999, you are at a loss from USD306.68 down to USD278.98. And you have to hold it for another 10 years till 2009 to see good profit. But I doubt that you will hold another 10 years or have faith for another 10 years once you saw that your 20 years effort has gone down the drain.

And from the Elliot Waves, if you study it, you can see that once price has reached a top, it can come down to a very low. That can happen in a very long term period. That's why you see a drop in price from 1979 to 1999.

One more thing I would like to add. Gold investment does not reap any interest or dividend if you hold it long term. Your money simply doesn't compound while it sits in physical gold or PBB GIA. The only way your money can grow massively is through the power of compounding. Buying and selling. It is as simple as that. I have mentioned in a previous post. The simple true objective for any investment is to achieve a growth in wealth. The best way and fastest way is to compound your earnings. (http://www.unit-trust-investment.com/2008/12/145-philosophy-of-unit-trust-investment.html)

Again, we never know what is going to be in the future. Who knows? Perhaps one day we don't need any money any more. People will learn to live in peace and work together in a peaceful community and no money is required. What will happen to your gold then? It's going to be just a piece of metal. That's all. Read about the coming 2012 Earth change and stuff like that, Planet X, Nibiru, Pole Shift. If you believe in any of them. We'll never know.

Topping up? You mean Dollar Cost Averaging? It's a fallacy. This strategy is for those who clearly don't know about the market. It's a 'trick' in the Unit Trust industry to get people to invest constantly so that the unit trust companies have constant supply of income. Best to buy and sell. When you have more money to invest, wait till you have sold everything, and want to buy again. Then pool all your money together and buy.

If you are a businessman, would you hold your stock for long term and wait for 5, 10 years for the price to go up before selling it? Or would you sell your stock at a small profit, take the money to buy more stock and sell it and repeat the process? We have to run our personal finance the way a business runs it. That way we will see profit.

Property investors are the same. The smartest one I have seen are usually those that buy and sell. They don't hold it long term unless it generates good rental income. In gold investment, you don't get 'rental income'.

My mom-in-law bought a house to live in and still living in it after more than 30 years. So what if you tell me that the price of the property has appreciated so and so much. It's all only on paper, unrealized profit. The wiser thing to do is to sell it and invest in another better property at a better location. Price of property in Kota Damansara for instance and Bandar Utama too, appreciated a lot if you have sold your old property and bought these. The old property's price has just stop growing much after it reaches a certain age.

Your gold investment is also unrealized profit if you just keep it for long term. You don't see the money. Once in awhile, take some profit out and enjoy a holiday trip. That's what I will do.
There are many other things I can discuss with you on buy-and-sell strategy. Many more examples. I hope you understand my points. :-)

#162. Gold Rush In Turbulent Times

2009-02-08T22:23:00.004+08:00

Why Is Gold Bullish Now

You must be noticing why is this Unit-Trust-Investment.com lately talks only about gold investment. Hmmm, my interest is now fully on gold investment during this economy meltdown. Gold has always been the investment that people rush to during economy downturn.

I get more and more excited each day when news are saying that gold is forecasted to go up higher this year and next year. The recent one from Merrill Lynch is saying that gold will be up to US$1,500 per ounce in the next 12-15 months! Gold is now at US$911.40 at the time of writing this. Wow! So much profit to be made.

Now, if it is true that the gold price will be going up to those levels, when we reach there and look back, you will think the price today is cheap instead of expensive.

Eric Hommelberg has listed down all the points that show why gold is so bullish at this time. You can read his article here.

Michael St. Clair predicts even higher price for gold: "The Federal Reserve and the house of cards falls by end of 2010. Gold will trade between $1,700 and $2,000 by 2011."

An old article that I have published has said that it was predicted that gold and silver will be used as currency. This will happen after the US Dollars collapse because of the oversupply of the Dollars in the US economy system. IMHO, when that happens, countries worldwide will turn to gold and silver to calculate the exchange rates. At this moment, all the world's currencies exchange rates are still being quoted against the US Dollars. For example, Ringgit Malaysia is 3.60 against the US Dollars. Something like that.

Wait, that's not all.

Alf Field, using Elliot Waves method, has charted an even higher price prediction on gold. Can we see a US$10,000 per ounce price? Whatever price it is going to be, US$1,000 or US$1,500 or US$2,000 or US$10,000, I am all the way on gold for now as long as the economy does not recover to its previous prime health.

Alright, I hope today's article is enough to keep you busy. Please click on all the links in the article and read them. Then let us know your decision whether gold is a good buy at this moment.

#161. Unit Trust Agents And Your Investment 2

2009-01-31T09:14:00.001+08:00

Does Your Unit Trust Agent Know What Time It Is?

Following up from the previous article, here is another story.

My sister-in-law told me that she has lost money in a previous bout of unit trust investment. Tsk tsk. What a pity.

I can only sympathise with people who have put their money with 'clever' unit trust consultants. Then I moved on and said, "It's all about timing in investment. The keyword is timing."

Do you know that many unit trust agents don't really care about 'timing'?

Put yourself in their shoes. I can't blame them. They are in this profession full time and depend on the income to live their lives. Money has to go into their bank account every month. Who wants to go dry for months when the market is not conducive to buy? As such, when market is swinging downwards, they will still tell you to keep investing and buying.

Buying in a down trend disguising as dollar cost averaging technique

I know in my previous articles on dollar cost averaging, I have mentioned that it is to be used for long term investment. However, I realised that people are not always keen to invest further

when they see the market crashing down. And it takes a long time for the market to recover to the previous pristine prime level once it hits the bottom. People just lose that kind of patience and sell their investment at a loss. Thus, people like my sister-in-law says she lost money in unit trust investment. She may even vouch not to invest ever again in unit trust.

Can't really blame them. Both the unit trust agents and those like my sister-in-law.

The unit trust agents will ask you to continue buying and say that you should apply the dollar cost averaging technique. This will guarantee that income keeps pouring into their bank account. Again, timing is not a friend for them.

Now, I am not saying all unit trust agents are like that. Some really go for timing. Look for these agents if you want to be profitable in your investment.

For investors, not all of them are fond of dollar cost averaging. In fact, I don't believe in the put-your-money-in-monthly dollar cost averaging anymore. As mentioned by W.D.Gann, in a bearish trend, price can dip lower. He said it would be quite foolish to keep putting in your dollars in a losing investment. I can't agree more. When a price goes lower, there is a reason for it. And that reason can be because the whole world's economy is going down. Would you want to keep adding money to a losing investment? The better choice is to cut a quick loss and move the funds out.

Where are your unit trust agents?

Another story I heard is about a relative who is a unit trust agent. He confessed that the current troubled times have taken a toll on his income. His clients are losing money. People are scared to invest at this moment. No one to invest, no income for him. How would you sleep at night when your clients are losing money? I certainly can't sleep easy.

Well, during the last few years when times are good, unit trust agents will call you and say "See, I told you. Good thing you listened and invested. You are making yourself fat profit now."

Now the times are bad, where are your unit trust agents?

Do you hear them calling you and saying, "I am terribly sorry, it's my fault. I should have advised you to sell your investment while it is profitable." They will never admit that. They take the glory when you make profit and curse the market when you suffer a loss.

Most likely you will only hear, "Hey, don't worry. Market is down now, it is an opportunity for you to buy at a low price. Continue to do the dollar cost averaging. That is the smart thing to do. We shall see fatter profit when the market moves up. It's all a cycle."

When market is down, they will push you for more investment. Can't blame them.

A good investment consultant should be a wealth augmentor. A wealth augmentor helps you to increase the size of your funds. Because, after all that is the purpose for investing. You invest to make money.

Every Tom, Dick and Ali is now a financial advisor or investment consultant. But they are not truly a wealth augmentor. Only a wealth augmentor can still help you to make money even when the market is down. They know when to buy and when to sell. As simple as that.

Timing is crucial in investment

Most unit trust consultants don't read enough and never read at all on investment strategies. They only follow the conventional ways purported by the unit trust industry - to buy at anytime and hold for long term, the longer the better. This method may not always be a good one to follow. You may still lose money even if you hold it for a long, long time. Or make only a very small profit.

Look at the chart above for KLCI from 1.1.2000 to date (January 2009). The arrow shows that if you just listen to the unit trust agent who does not care about timing, you will be suffering a lost despite a long period of investment. The wise thing will be to buy and sell at the right time as shown.

Invest to make money. Happy investing.

#160. Gold Investment And Tetrahedron Update 8

2009-01-30T14:04:00.007+08:00

Let's Buy Gold

In the last Gold Investment Update series, I have shown as above that the gold price is going up after forming the third triangle in a tetrahedron formation. The gold price then marches in an upward direction. I ought to kick myself for not adhering to the Gold Tetrahedron Theory and bought when the price made an immediate upward swing at the base of the triangle.

Expecting the price to drop dead yesterday when the price was moving lower but it didn't. Look at the chart below.

I stayed up till 2am this morning (30 January 2009) watching the price bounced back up. Crossing my fingers and hoping that the price would cross the red line, yet it didn't. This morning I immediately decided that this bullish trend still has some oomph left and head straight to the nearest Public Bank. Price in the chart is showing USD906.50. The bank sold it to me at RM107.62.

If all the analysis are correct, we might see gold price continues to skyrocket to USD980-USD1000 region. I would be happy even if it reaches the USD980 point.

Price is not the factor to consider in investment

Now, I know the price is high at this point. Even the bank teller was telling me "Price is very high now. Do you want to buy?" People are scaring $#!t and even chickening out when I give the buy signal.

Well, shall I listen to the young bank teller (who may not have done any analysis at all and just based her judgement on price alone) or trust my own thorough analysis?

I remember the late great master trader W.D.Gann had written something like this: In a bullish trend, no price is too high. In a bearish trend, no price is too low.

If you based your investment on mere price alone without studying the charts, it is like when you hear the thunder and say "Oh, it is going to rain." But do you know when it is going to rain? It could be an hour from now, it could be two hours from now. Or never. Just hearing is not enough, you got to go out and look at the clouds, stick your thumb in the mouth and hold it up in the air, feel the wind and temperature.

Study the charts first, not just looking at the price and concluding a decision to buy or sell.

The analysis I provide here is not comprehensive. I am reserving the other information for my book. Other analysis are showing a buy signal. It's an overdue signal. The signal was a few weeks ago but the momentum is still strong and might last a while more.

Take your chances. I am not forcing you to be with me. If you do, may the force be with us.

#159. Gold Investment And Tetrahedron Update 7

2009-01-24T09:11:00.005+08:00

Learn How To Invest Profitably With Tetrahedron

In a previous article (Update 2), I have shown that after 3 triangles forming a tetrahedron shape, the price will move up. Yes, the triangle did form and the price went up. I made a profit when I sold it on 2 January 2009.

However, I have wrongly estimated the triangle. In the first chart above, the triangle seems too small compared to the other two. Not in balance. Thus, I am revising the third triangle now. Also, another wrong estimation was the expectation that the triangle base would come down lower to below USD800 price region. This didn't happen.

And I went back to Elliot Wave and analysed it again. The Elliot Waves have shown to me that the movement will be on a move up to reach quite a high price within the coming two months.

All is not gone yet. Yes, we have missed the boat at USD825 or lower level. Price has reached USD898.10 as I write this, but there is still a chance for a retracement.

I know, you could have made about 4% (after minusing the Public Bank Gold Investment Account buying and selling spread difference) within a short time! Michael will be saying "I told you so." Haha. This is one of those times, when we will humbly accept our defeat. Well, there are still opportunities.

I will enter a buy position in full power once the price retraces lower. All my analysis has now confirmed that the market is on an uptrend. Previously I was cautious of buying because the signs were not right.

Who is with me in the next buy?

#158. Best Date To Start Work For 2009

2009-01-22T11:43:00.003+08:00

Happy Chinese New Year Gong Xi Fa Cai

Every year the Chinese people are interested in which date will be the best to start work after the Chinese New Year holidays.

Many Sifus (Masters) commercialised this idea by printing books and selling them. What a wonderful way to make money. There are Masters that will even advise you not to go out at all on Day 1 of Chinese New Year. I kid you not!

I have been an avid student of Feng Shui myself. My studies on Feng Shui and Bazi (a Chinese astrology method) begins with the study of Yijing (I-Ching). The study of Yijing is a must for anyone who wants to learn Feng Shui and Bazi.

Yijing is the foundation of all Chinese astrology and geomancy. It is from Yijing that Feng Shui and Bazi theories are developed.

In the study of Yijing, there are 8 trigrams (3 lines drawing) that form the Bagua. The combination of any two of these trigrams become a hexagram (6 lines drawing). Each line is either a broken line (dash dash) or a solid line (one straight line).

When 2 trigrams are combined to become a hexagram, we can say the combination is good or not by looking at the 'elements' of each trigram.

From the 8 trigrams, they are divided into 2 Wood element trigrams (one Yang and one Ying), 1 Fire element trigram, 2 Earth element trigrams, 2 Metal element trigrams and 1 Water element trigram.

The interaction between the trigrams will determine whether it is good or not when the hexagram is formed. For example, a combination of a metal and a wood trigram denotes a clash or fight. Because metal cuts wood, therefore it's like an axe chopping wood.

Fallacy and myth of best day to start work

The practice of naming best dates to start work is fast becoming a popular one. Now, in the study of date selection, all dates consist of a combination of elements.

The year has a combination of two elements. For example in the year of Ox in 2009, it is a combination of ying Earth and ying Earth. It can be considered a favourable and peaceful combinations because both elements are alike.

When the theory of Yijing is used in dates, each of the 5 basic elements are expanded further to have ying and yang. Thus in total there are 5 times 2 (ying and yang) = 10 different elements.
The month, day and hour too have their own combinations. And between year, month, day and hour, there may be a clash in the elements. Imagine 8 different elements (2 for year, 2 for month, 2 for day and 2 for hour) combining.

Anyway, what I would like to put forward is this, yes, some Sifus may say that (for example) on day 3 all the elements are favourable because the combination is good. But do you think just because you start work on a favourable day, the whole year will be a prosperous one?

Based on my explanations above, I hope you have understood that in every 365 days of the year, there may be days that are not favourable in their combinations. You may have chosen a good day to work but that doesn't guarantee that the rest of the 364 days will be a favourable one.
Put another way, when you drive for 365 kms, just because you start well on the first km, do you think the rest of the 364 kms will be a smooth ride? You will never know. Accident can happen along the way.

There are people who chose a good date to start their business, do you think this will bring them good wealth in their business forever?

We might be born on the 'wrong' dates according to these Sifus. Do you think we will face bad luck everyday of our entire lives? Many people have been cheated by this kind of Sifus because the Sifus told them they have to pay them to do this and that to clean the ill luck.

There is a cycle of bad luck and good luck just like how the stock market is. No one have bad luck forever. If you don't do something to improve your knowledge on personal finance, then you may always be poor (bad luck).

Feng Shui is a logical study. We need to apply some common sense. Do not listen to any Sifu without questioning the logic behind the practice.

Be practical, just keep your spirits high all the time especially in this economy climate. Pray that you become healthier, happier and wealthier. Put in effort to improve your health through exercise and healthy eating habits, be cheerful at all times and improve your knowledge on personal financial management. Study some authentic Feng Shui yourself so that you won't be cheated by these scam Sifus. Most of all, improve your knowledge on invesment and trading to make you wealthier.

May you have a healthier, happier and wealthier Chinese New Year!

#157. Gold Investment And Tetrahedron Update 6

2009-01-17T11:04:00.005+08:00

Where Is The Price Heading To?

Michael Tsen made a comment on my Gold Investment and Tetrahedron article Update 5 and showed us the chart above. He added the red lines and made the comments:

"seems like could have bought at 825 and profit take at 875, could that be correct ?"

Well, I like the way you think, Michael.

To analyse whether the gold price is going up again, we have to draw the red lines differently. Also, while you may think at US$825 is a good point to buy, you also need to be able to know where the price may end up in.

It's similar to driving a car. You know where to start, and you also need to know where is your target destination.

Would it be a wise to buy at US$825 and sell at US$875? Do a quick calculation and see what's the profit. It's only about 6%. And if I invest with Public Bank Gold Investment Account, the spread is already 4.2%. That'll leave with only 1.8%. Would that be worthwhile to take a risk?

Anyway, back to the above analysis. I have seen the price going up on 16 January 2009. However, I didn't take a position because my other methods of analysis have not confirmed that it's a buying point.

I have also half expected it will go up when I compared it to the Elliot Waves. Indeed, the chart made an upturn going up. Now, I just need to have a few more confirmation on my other analysis before I call for a buy. This is one those times, when you are not certain, don't trade. Wait till the signs are clear.

Well, again, time will tell whether I am right or wrong.

As an ending note or foot note, the red lines above are not totally wrong. They are more suitable for another analysis called 'the triangle'.

#156. Gold Investment And Tetrahedron Update 5

2009-01-14T11:07:00.006+08:00

Time Your Buying And Selling To Make Profit

On my last gold investment update (Update 4), I have shown that the price of gold is coming down purely based on the above chart analysis.

Today, the price is around US$825 level. Price has dropped almost US$50.

You may ask now, when is the right time to buy? Stay posted and keep reading my blog. I will update you in the next instalment when I see the right timing. I still believe the price can drop lower this month, despite the news saying that the coming Chinese New Year will increase the demand in gold and raise price up.

Lately I have some discussions with some people in the unit trust industry on investment. Generally, the view of the unit trust industry is still on performing regular dollar cost averaging. They call for dollar cost averaging buying on a monthly basis irregardless of the price. My opinion is you should buy only when the time is right. The right time is when the price is low.

To understand when the price is already at the lowest, we need to study the charts. Most of the unit trust consultants do not study the charts the way I study it. Without the knowledge of studying charts, they brushed away technical chart analysis saying that it is impossible to know the top and bottom of a market cycle.

Coming soon, a 'Gold Investment Secrets' book from Carson Ding

I am in the midst of compiling a book on my gold investment techniques. The information in the book will discuss in detail the things I mentioned on this blog.

As Joker said in the movie Dark Knight, "If it is worth doing, it is worth doing for money." (However, I am no joker. Haha-ha-ha.) Yes, you will be able to buy the book and learn how I accurately timed the market on 2 January 2009.

You can see in the chart above that 2009 opened with the gold price at the peak and thereafter declines to the current level. I sold my gold investment on 2 January 2009 and made an 11.9% profit within 66 days.

And for the first time, you will be able to discover some techniques never seen before. What you see here on the blog is only a brief discussion on charts. There are other ways of analysing charts including timing that is not revealed here.

From my chart analysis experience, I have learned that we should ignore the news that we read on the media. We should ignore the so called views from the 'experts' that often appear on interviews on the TV. Or when the 'experts' give their views and the newspaper prints a one-liner quote - for example, you may read "In 2009, the average price of gold will be US$910."

What does that mean to you? Does that you mean you should now rush out to buy gold at US$825 level and hope to sell at US$910? Hoping and praying do not make you money. Hoping and praying that the market will move in your direction? The word 'average' means that price can go up high and reach a very low, low. And in averaging out, you get a price of US$910. Why shortchange your profit when you could buy at a low, low price and sell at the top?

Don't listen to the media. A wiser choice will be to do your own analysis and buy based on your analysis.

By the way, would you be interested in the book? Do you want to read it in ebook or hardcopy?

#155. Gold Investment And Tetrahedron Update 4

2009-01-06T10:04:00.007+08:00

Learn To Identify The Ups And Downs Of The Market

In my previous Update on 2 January 2009, I have shown that the gold price will come down. At that time, the price was US$871.08. And I have only based this analysis on using the chart alone as well as applying the Elliot Wave technique.

If you have read my previous articles on this series of Gold Investment And Tetrahedron, there is no mention at all on 'fundamental news'. Some investors are still arguing about fundamental news versus technical chart analysis. I will not go into this kind of argument. Whatever works for you, right?

Amazing isn't it, the way the price moved? Seems like there is an invisible natural force causing the gold market to move predictably. And seems like the fundamental news are just supporting the price movement, and not the other way around. It seems like the way the price has moved was not caused by any fundamental news.

Now, below is today's chart.

The price has come down to US$854.72. The price may go down further in the coming weeks. Again, I based this on the Tetrahedron theory and Elliot Wave. Price will go down further and will offer a new opportunity for investors.

The next point that the price could possibly go to will be at US$835 level. If the price breaks below the first support level, we could probably see price touching the US$820 level. At this moment though, it's too early for me to 'see' when we can have the buy opportunity again.

Using the Tetrahedron theory, do you think we will see another triangle shape forming in the chart as shown above? Time will tell and show us.

Keep on reading my blog to stay posted on new updates.

#154. 2009 Financial Plan

2009-01-05T13:28:00.003+08:00

How To Plan And Grow Your Investment In 2009

Since it is the new year, isn't it a good time to plan for something? Whether it's your new year resolution, or something more important like your investment plan. Investment is like going for a holiday. You got to have a plan. You have to know where you want to take your investment to. And to have this investment plan, you would need to draw up a map. An investment roadmap to help you stay on course and grow your money.

A Great Story

Some years ago, I was working as a mortgage sales person at a big bank. There was this lady that year in and year out, she would win the Best Salesperson Award. She was asked to reveal her secret.

She admitted that in the beginning she was a poor sales person. Every month, she fails to meet her sales quota. Then one day, things change. She discover a way to be the best.

Now, in sales, every 1st of the month your sales quota is reset to zero. Then along the month, whenever you bring in some sales, your amount begins to grow. When it comes to the mid of the month, you supposedly should have achieved half of your sales quota. If you have not, you would work hard and start making more calls to achieve your quota before the month is out.

But the above is not the way if you want to be the best sales person.

The super sales lady shared with us: Always plan for the following month.

She explained further that you have to call your prospects and clients this month for the following month's sales. Don't expect that if you call them today, you will get the sales within the same month. It hardly happens.

She planned who she wanted to call this month. And then deliver the sales results the following month. That means she planned one month ahead. She was able to know roughly by the end of this month whether she could achieve her sales quota for the following month. If she could not, she would then still have time to catch up in the first two weeks of the following month. She was always ahead of the game compared to others.

How To Plan Your Investment Growth

So now you have read the above story, how can you apply what you have learnt? If you want to see your investment grow, you got to first have a plan.

The way I plan is simple. Let's say I target to grow my wealth by 20% this year, then I got to look for the best investment tool to make that kind of return. And to break it down into smaller achievable target, I can further divide 20% into 12 months. That means, on average we need to make a return of about 1.7% to achieve our yearly target.

Now, if you have read on my gold investment, you would have seen that I have made 11.9% return within less than 3 months of investment.

In this case, if you are able to achieve a good return, you ought to set your yearly target higher. Perhaps 20% is too low. Maybe let's target higher and aim for a growth of 50% in our investment this year. That means, an investment that starts with RM20,000 will see it become RM30,000 at the end of this year. Now, this is reminding me of my work in that big bank. The boss will always set your target higher when you are able to achieve your target.

OK, now 50% return in this year means you got to achieve about 4.2% per month. Doesn't it look more achievable when you break it down to 12 monthly targets? Now if I have achieved 11.9%, that means I am ahead by a few months. I just need to continue to make 4.2% each month now to achieve my target of 50%.

Another Way

Another way to look at and plan your investment growth is to have a target sum. Say you want to go for a holiday at the end of the year and it will cost your RM10,000 for your whole family; and you also would like to have RM10,000 extra from your investment. That means you want to make RM20,000 this year. This time we are looking at the sum amount instead of percentage.

So to achieve RM20,000 return, you should check how much money you have for investment. This money will also include all the money that you are going to get throughout this year either from your employment or other work that you do. That means the money that comes later in the year will add to your capital for investment and help you grow your investment even faster.

Once you have the amount that you think you can set aside for investment, you got to work out the percentage of growth that this RM20,000 is going to be for you. For example, if you have RM20,000 for investment and you want to make another RM20,000 from your initial investment, that means that is a 100% return. That also means you want to double up your money. Maybe 100% looks like a lot. But think again, maybe in the mid of the year you might get a bonus from your employment for the sum of RM10,000. That would mean you have RM30,000 for investment from the mid of the year onwards. That would mean your percentage will change. RM20,000 of RM30,000 is 67%. So you got to divide 67% by the remaining 6 months of the year. That's about 11.2% each month for the remaining 6 months.

Stay Focused

Staying focused in your target is important. However, don't be emotional when you don't achieve the targeted return. Some months things may not work out. Revise your plan accordingly if things do not go your way. Remember to know when to take your profit even when your target is not met. Remember that the market is bigger than your target. You need to yield to the market and follow the flow. Take profit when it is time.

Market will go up and down. When it goes up, make the most out of it.

When the market goes down, look for other investment to achieve your target. For example, when gold market is down, probably the Public Index Fund is going up. Place your money with the winner. Do not stick to just one kind of investment. Best to find two different investments that move in opposite direction. That way when one is down, you still can use the other to achieve your target. A good example is US Dollars and Gold. They move in opposite directions.

Just like the super sales lady that target different customers when her regular customers could not help her achieved her target, we should constantly look for different investment products to achieve our target.

Happy planning. Tell us how you make your 2009 financial plan and investment plan.

#153. KLCI Chart And Elliot Wave Update 2

2009-01-03T17:26:00.005+08:00

Following my first article on the discussion of KLCI Chart and Elliot Waves, here is the second update.

If you remember the Elliot Waves of 5 waves up (1-2-3-4-5) and 3 waves down (A-B-C), then you can see that the we might have possibly reached the bottom of C.

As with the technique used in my discussion on gold investment, two red straight lines are drawn to indicate the upward resistance and downward support lines.

KLCI is going up!

Now, the upper red line is important to take notice here. It looks like the KLCI chart is going to breach the upper red line anytime soon. This is exciting! It is indicating an opportunity to make some good profit.

Once the KLCI breaks above 900 points (it closed just a few points shy of 900 at 894.4 on 2 January 2009), we can expect further upward movement. And then a new cycle of upward Elliot Waves will be seen ~ 1-2-3-4-and-5!

From C now to the new wave 1, we can expect around 15% to 20% of upward movement from the 900 points. In other words, if you buy Public Index Fund, you can probably make about 15% of profit within 6 months time.

You would probably make more if you have a greater risk tolerance and go for funds like Public Growth Fund and Public Aggressive Growth Fund.

Of course, here is my disclaimer, I might be wrong with the above analysis. Only time can prove whether we will see the uptrend in the KLCI chart within the next 6 months or so. So, if you dare to take a bit of risk and bet on the funds, I wish you a prosperous new year! And if you make a good profit, don't forget to send some donation my way.

Happy investing.

Updated 5 January 2009:

The KLCI has crossed the 900 level and at 2-month high.

#152. Gold Investment And Tetrahedron Update 3

2009-01-02T13:14:00.004+08:00

Learn When To Sell And When To Buy

Howdy! Happy New Year to you all!! I have promised that this blog is not just about unit trust investment when I say ~ Scoop up some valuable tips too on other investments along the way. At this moment, I am so into gold investment and would like to share with you my findings and experience.

In my first article on Gold Investment And Tetrahedron I showed that I took a long (buy) position on gold at RM86.03 per gram from Public Bank Gold Investment Account.

I showed on the second update how the price has gone up.

And now, if you have followed the gold price closely yourself, you will see that the price has rocketed quite well. At this time of writing, the gold price is at USD871.08. I took the chance to short (sell) my investment at Public Bank for the price of RM96.29 per gram. If you are reading this, you might take this as a queue to short your investment too if you have followed my advice in the first article.

Phew! A cool profit of RM10.26 per gram! That's 11.9% profit! Not bad for a short time of investment. This shows that even amidst this economy downturn, if you have the knowledge, you can still turn in a handsome profit.

Why is it time to sell?

We might not know 'when' to sell our investment, but with the demonstration below, I hope you will know 'why' it is time to sell.

You may be interested to know why is it time to sell? Well, there are ups and downs in investment. The market as I always say is cyclical. Sometimes, we must learn to take profit when the reason is right. Now, I may be wrong for selling now. Price may go up further. But at 11.9% profit, I reckon it is a handsome profit. I will wait for the next round when the price is low again. After all, price moves up and down. There will always be a chance to buy again at a low price.

Looking at the gold price chart above, you can notice two straight blue lines forming a 'triangle' and some red arrows markings.

The chart below shows a bigger zoomed in version of that part.

The form the blue straight lines, I connected the two tops of the gold price graph as shown by the two red arrows on the top (pointing downwards). And for the bottom blue straight line, I connected the two bottoms of the gold price graph. Again, those bottom points are marked by the two red arrows at the bottom (pointing upwards).

And inside the ellipse (oval red line) you can see a bigger red arrow. This arrow shows that the gold price graph has dipped below the bottom blue straight line. Following the Elliot Wave theory, the five waves up have already formed. And now will be a time for the graph to move south. Again, I might be wrong in my analysis.

Thus, when the gold price graph breaks through the bottom blue line, I take it as a signal that the price is ready to fall. The price may dipped a little to USD860 region. And would be a good time to buy again then. In the near term (next 6 months), gold price is still bullish as people turn to gold as a safe haven when the US economy is bearish.

Happy buying and selling.

#151. Question On Gold Investment And Tetrahedron

2008-12-21T00:14:00.004+08:00

Does The Theory Of Tetrahedron Work In Gold Investment?

Gold price charts for 2007 and 2008 (till 15 Dec 2008)

(click on the picture to enlarge)

After I have written two articles on gold investment trends, a reader, Caryn, wrote to me:

Hi Carson ! My name is Caryn Chiang and I have read your articles on gold investing.

I would like to thank you for sharing your thought with the rest of Malaysians and I am quite impress with your finding. Your chart shows the year 2008 have you tried your pyramid on the previous years? Do they work on those years too ?

Hope to hear from you soon. Thanks !

Well, here is my answer:

Please refer to the picture above. I can't find a good chart for 2007 and the above is the best I could find. I put it side by side with the 2008 chart.

I found that in 2007, there were three spikes toward the end of the of the year. And there after the price took off in early 2008 reaching the climax of just above USD1000 level per ounce on 17 March 2008.

So, Caryn, what do you think? Does the theory of tetrahedron work? Is there a natural force at work?

If you are able to find a better chart for 2007 or previous years charts on gold price, perhaps you can see the spikes. However, because in the earlier years, the movement were too small, the 3 spikes and tetrahedron pyramid are hard to discern.

Movements will get larger and larger in the coming years based on the Fibonacci theory. The price movmentss will get bigger and bigger. Bolder and bolder. I will see price fluctuation in a greater degree as in 2008. In 2009, the fluctuation will be even bigger. And this is good news for us. More opportunity to make profit when you are able to time and invest when the price is low.

Just an additional note

Nevertheless, please do not adopt this theory of tetrahedron as the ultimate guide in timing your investment in gold. You also need knowledge on determining the uptrend of a chart. Where will it head next? Up or down? You also need to have knowledge on Elliot Wave.