Tuesday, October 19, 2010
A good place to track the market
Yahoo Finance: http://finance.yahoo.com/charts?s=^KLSE#chart6:symbol=^dji;range=20061017,20101018;indicator=ema%2850,100%29+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Tuesday, September 14, 2010
Rights issue
If a company announces a 1-for-2 rights issue, this means the shareholder will be entitled to one new share for every 2 shares he or she is holding.
The Prince D Rule
P: Price Earning Ratio – not more than 15 or the industry average
R: Return on Equity – at least 15 for at least 3-5 years
I: Institutional Buyers – favourite among the fund managers
N: Net tangible assets – share price should not be more than net tangible assets
C: Current environmental scan – scan for any potential threats and opportunities face by the company
E: Earnings per share growth – look for significant EPF growth
D: Dividend yields – at least 5% per year
Source: I Love Stocks – Your Guide to Profitable Tracks (Author: Pauline Yong)
R: Return on Equity – at least 15 for at least 3-5 years
I: Institutional Buyers – favourite among the fund managers
N: Net tangible assets – share price should not be more than net tangible assets
C: Current environmental scan – scan for any potential threats and opportunities face by the company
E: Earnings per share growth – look for significant EPF growth
D: Dividend yields – at least 5% per year
Source: I Love Stocks – Your Guide to Profitable Tracks (Author: Pauline Yong)
Trailing stop
After buying a stock at RM 5, you immediately place a sell order at RM 4 – 20% below the purchase price.
Say, if the price rises to RM 7, you then raise sell order to RM 5.60 – 20% below the market price of RM 7.
As the price rises further, adjust your sell order accordingly. Hence, your sell order is trailing the prevailing market price.
Once the price falls to your predetermined selling price of RM 5.60, sell.
The strategy maximizes your gains and protects your principal.
Say, if the price rises to RM 7, you then raise sell order to RM 5.60 – 20% below the market price of RM 7.
As the price rises further, adjust your sell order accordingly. Hence, your sell order is trailing the prevailing market price.
Once the price falls to your predetermined selling price of RM 5.60, sell.
The strategy maximizes your gains and protects your principal.
Stop loss
Stop loss is an order placed with the broker to sell once a stock reaches a certain price.
The key is to set an appropriate stop loss percentage for a security. E.g. it would be unwise to set a 5% stop loss on a security when its average fluctuation is 10%.
The stop loss level also depends on whether you are an active trader as a long term investor.
The key is to set an appropriate stop loss percentage for a security. E.g. it would be unwise to set a 5% stop loss on a security when its average fluctuation is 10%.
The stop loss level also depends on whether you are an active trader as a long term investor.
Looking at earnings
Companies with consistent earnings per share (EPS) growth of at least 25% for the last five years are worth considering. As a rule of thumb, the EPS growth has to be supported by at least the same percentage of growth in sales.
Volume and price
Heavy volume with rising price
- Healthy sign in the market
- A lot of trading activities going on and buyers are outnumbering sellers
- When volume is heavier than yesterday’s volume, and accompanied by a price increase of at least 1%, it may be signaling a trend reversal from bearish to bullish soon
Light volume with rising price
- Price is losing steam
- Price is going to drop soon, as investors are not willing to pay for the rising price
Heavy volume with declining price
- Troubling sign (investors are bailing out)
- A possible reversal from bullish to bearish
Light volume with declining price
- Bottoming out
- Investors are holding on their stocks rather than selling for lower price
- Healthy sign in the market
- A lot of trading activities going on and buyers are outnumbering sellers
- When volume is heavier than yesterday’s volume, and accompanied by a price increase of at least 1%, it may be signaling a trend reversal from bearish to bullish soon
Light volume with rising price
- Price is losing steam
- Price is going to drop soon, as investors are not willing to pay for the rising price
Heavy volume with declining price
- Troubling sign (investors are bailing out)
- A possible reversal from bullish to bearish
Light volume with declining price
- Bottoming out
- Investors are holding on their stocks rather than selling for lower price
Sunday, September 5, 2010
Thursday, September 2, 2010
Cum Dividend
Cum dividend means "with dividend." A stock trades cum-dividend up until the ex-dividend date. On or after this point, the stock trades without its dividend rights.
Source: Investopedia
Source: Investopedia
Tuesday, August 24, 2010
How much do you have to pay in total?
If you buy 1000 shares of X at RM 4, how much do you have to pay in total?
Assuming that that brokerage fee is 0.10% or minimum RM 10
Total Commission + Fee
= Brokerage fee + Clearing fee + Stamp duty
= (RM 4 x 1000 x 0.10% or min RM 10) + (RM 4 x 1000 x 0.03%) + RM 4
= RM 10 + RM 1.2 + RM 4
= RM 15.20
Total Purchase price = RM 4000 + RM 15.20 = RM 4015.20
Assuming that that brokerage fee is 0.10% or minimum RM 10
Total Commission + Fee
= Brokerage fee + Clearing fee + Stamp duty
= (RM 4 x 1000 x 0.10% or min RM 10) + (RM 4 x 1000 x 0.03%) + RM 4
= RM 10 + RM 1.2 + RM 4
= RM 15.20
Total Purchase price = RM 4000 + RM 15.20 = RM 4015.20
Payout ratio
A stock’s payout ration measures how much of a company’s profit is paid out in dividends.
A company earning $2 per share in profits and paying out $1 share in dividends has a payout ratio of 0.5 ($1 divided by $2)
Forward-looking payout ratio:
The latest quarterly dividend payment for X is $0.50 per share.
Thus, the annual indicated dividend is $ 2 ($0.50 x 4 quarters)
The analysts’ consensus earnings estimate for the fiscal year is $4 per share
Thus, the forward-looking payout ratio would be 0.5 ($2 in per-share dividend/ $4 in per-share profits)
Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)
A company earning $2 per share in profits and paying out $1 share in dividends has a payout ratio of 0.5 ($1 divided by $2)
Forward-looking payout ratio:
The latest quarterly dividend payment for X is $0.50 per share.
Thus, the annual indicated dividend is $ 2 ($0.50 x 4 quarters)
The analysts’ consensus earnings estimate for the fiscal year is $4 per share
Thus, the forward-looking payout ratio would be 0.5 ($2 in per-share dividend/ $4 in per-share profits)
Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)
Are you entitled to the dividend?
On Nov 10, 2009, X declares a dividend payable on Dec 30, 2009 to its shareholders. X also announces that shareholders of record on the company’s books on or before Dec 1, 2009 are entitled to the dividend.
The stock would then go ex-dividend two business days before the record date.
In this example, the record date falls on a Tuesday. Excluding weekends and holidays, the ex-dividend is two business days before the record date – in this case, on the preceding Friday, Nov 27.
Anyone who bought the stock on Friday or after would not get the dividend (the dividend goes to the seller of the shares).
Those who purchase before the ex-dividend date receive the dividend.
Ex-dividend date is the date in which the stock price adjusts to reflect the next dividend payment. And, if you want the dividend payment, you have to buy the stock prior to the ex-dividend date.
Summary:
Declaration date: Nov 10, 2009
Ex-dividend date: Nov 27, 2009
Record date: Dec 1, 2009
Payable date: Dec 30, 2009
Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)
The stock would then go ex-dividend two business days before the record date.
In this example, the record date falls on a Tuesday. Excluding weekends and holidays, the ex-dividend is two business days before the record date – in this case, on the preceding Friday, Nov 27.
Anyone who bought the stock on Friday or after would not get the dividend (the dividend goes to the seller of the shares).
Those who purchase before the ex-dividend date receive the dividend.
Ex-dividend date is the date in which the stock price adjusts to reflect the next dividend payment. And, if you want the dividend payment, you have to buy the stock prior to the ex-dividend date.
Summary:
Declaration date: Nov 10, 2009
Ex-dividend date: Nov 27, 2009
Record date: Dec 1, 2009
Payable date: Dec 30, 2009
Source: The little book of Big Dividends – A safe formula for guaranteed returns (by Charles B. Carlson)
Friday, August 13, 2010
Stamp duty
The stamp duty chargeable on transactions on the stock market of Bursa Malaysia is:
RM1.00 for RM1000.00 or fractional part of value of securities (payable by both buyer and seller), and effective 17 March 2003, the stamp duty shall be remitted to the maximum of RM200. (Source: klse.com.my)
Contract value is RM 1 to RM 1,000; Stamp duty is RM 1
Contract value is RM 1,001 to RM 2,000; Stamp duty is RM 2
Contract value is RM 2,001 to RM 3,000; Stamp duty is RM 3
Contract value of RM 200,000 and above; Stamp duty is RM 200
RM1.00 for RM1000.00 or fractional part of value of securities (payable by both buyer and seller), and effective 17 March 2003, the stamp duty shall be remitted to the maximum of RM200. (Source: klse.com.my)
Contract value is RM 1 to RM 1,000; Stamp duty is RM 1
Contract value is RM 1,001 to RM 2,000; Stamp duty is RM 2
Contract value is RM 2,001 to RM 3,000; Stamp duty is RM 3
Contract value of RM 200,000 and above; Stamp duty is RM 200
Calculation of clearing fee
Source: http://1-million-dollar-blog.com
Clearing fee is charged by Bursa as the clearing house. The fee is 0.03% from the contract value or value of shares but subjected to a maximum of RM 1,000.
Clearing fee is charged by Bursa as the clearing house. The fee is 0.03% from the contract value or value of shares but subjected to a maximum of RM 1,000.
Thursday, August 12, 2010
Calculation of Brokerage Fee
For investors buying low volume, there is a minimum charge per counter.
For example, Jupiter's online brokerage fee is minimum RM 8 while the brokerage rate is 0.05%.
If you want to buy 100 share of stock X at RM 4, the calculation is as follow:
RM 4 x 100 x 0.05% = RM 0.20
As RM 0.20 is below RM 8, the brokerage fee is RM 8
For example, Jupiter's online brokerage fee is minimum RM 8 while the brokerage rate is 0.05%.
If you want to buy 100 share of stock X at RM 4, the calculation is as follow:
RM 4 x 100 x 0.05% = RM 0.20
As RM 0.20 is below RM 8, the brokerage fee is RM 8
Wednesday, August 11, 2010
T+3
Transaction day + 3 trading day
The due date for payment is 3 trading days after transaction.
E.g.: If you bought your stock on Tuesday, the due date for payment is on Friday, before 12.30pm.
The due date for payment is 3 trading days after transaction.
E.g.: If you bought your stock on Tuesday, the due date for payment is on Friday, before 12.30pm.
Limit and market orders
When you place a limit order, it has to be executed at the limit price or better.
When you place market order, it has to be executed at any price within the upper and lower limit price.
To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled. (Source: possibleinvestment.com)
When you place market order, it has to be executed at any price within the upper and lower limit price.
To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can't control the price at which your order will be filled. (Source: possibleinvestment.com)
Wednesday, June 16, 2010
Minimum lot size in Bursa Malaysia
Generally, the minimum lot size is 100 shares
This implies that if the share price is RM 1.20 and you wish to buy one lot, you actually pays RM 120 for 100 shares, and this has not include brokerage charges.
This implies that if the share price is RM 1.20 and you wish to buy one lot, you actually pays RM 120 for 100 shares, and this has not include brokerage charges.
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