Inspiration from Ratatouille

(Please do not continue reading if you intend to watch the movie before knowing the plot)

Ratatouille is the latest animated cartoon by Pixar. Remy is a young rat who grew up in the French countryside with a dream of becoming a cook. Later, he arrived in Paris, the city that was said to have the best cuisine in the world. Remy has to overcome various obstacles to become a great cook, despite Remy's family's skepticism and the rat-hating world of humans.

Someone might say "hey, c'mon, this is just a cartoon, which means everything is created from human imagination and is utterly unrealistics. The ending can go either way, based on the decision of its director." Oh well, unrealistics it might be, but I did learn something from this little mouse:

Remy, (the rat's name, in case you've forgotten) grew up in a rat colony which believes that the destiny of being a rat is to eat from what's leftover at the garbage, also known as, junk. But this particular young rat has a strong belief on the motto of his cooking idol, Chef Gasteau, that "Everyone can cook" and "Food always come to those who loves to cook". It is this belief that gave him the courage to go against the will of his father and the destiny of a rat, and to prove to the world that he too, can become a great cook.

Below are some quotes in the movie which I have copied from the IMDB website (http://www.imdb.com/) to be shared with those who understand what I am talking about:

Remy: ...I think it's apparent that I need to rethink my life a little bit. I can't help myself. I... I like good food, ok? And... good food is... hard for a rat to find!
Django: It wouldn't be so hard to find, if you weren't so picky!
Remy: I don't wanna eat garbage dad!

Remy: [observing what Emile is eating] What is that?
Emile: [pause] I don't really know.
Remy: You dunno... and you're eating it?
Emile: You know, once you muscle your way past the gag reflex, all kinds of possibilities open up.
Remy: This is what I'm talking about.
(Aren't we getting used to things that are given to us and never think whether if we like or dislike, and whether we can get something better?)

Django: [showing the exterminator shop to Remy with the dead rats in the window] The world we live in belongs to the enemy, we must live carefully. We look out for our own kind, Remy. When all is said and done, we're all we've got.
Remy: No. Dad, I don't believe it. You're telling me that the future is - can only be - more of this?
Django: This is the way things are; you can't change nature.
Remy: Change is nature, Dad. The part that we can influence. And it starts when we decide.
Django: [Remy turns to leave] Where are you going?
Remy: With luck, forward.

Similarity to our real life? Aren't we grown up in a society that keep telling us that we should always study hard in school, get a good grade so that we can get into good universities? From there, study even harder, get even better results because ultimately, these results are going to go with our resume when we apply for jobs. So, after striving for 20+ years (if you're good enough, maybe 1 or 2 years earlier than the rest) to do well in studies, some of us might be lucky (well, or unlucky) enough to get a nice and confortable job, high salary (compared to our fellow friends and students) in a big company. Although started at a low level, we are being told to work (sometimes called learn) hard, because one day, with fingers crossed, those above us will retire, resign, die or whatever, and that's our chance to climb up the corporate ladder to fill the gap. Well, work hard for another 20+ years (again, someone might be luckier with fewer years than the others), one day, we might get a higher position and a fatter salary (also fingers crossed). We will then become the star of the family, the talk at every reunions, the role model for the younger generations and etc. Big Deal!!

If you find it thrilling climbing the corporate ladder, so be it! And if you are not able to get good grades, it doesn't mean that's the end of the world, many rich people you see today have not even graduated from colleges. Get a good job isn't the only way to financial freedom, neither is getting a good grade in school. I have not done extremely well in school and have no talent in anything. However, I believe, everyone of us have the chance to achieve what we want in life, if we try hard enough! For my case, I like investing. I like to look at interesting businesses, reading financial reports and the chance to share a piece of the cakes. I get really excited when I see companies selling at discounted valuation. I believe if I learn hard and follow the right path in investing, it will ultimately lead me to what I want in life. Remember "everyone can cook"? I would like to say "everyone can invest" and "everyone can get what they want".

Fear of the Unknown

I was so amazed by the heavy sell down in the market for the past few days. Not only by the economic effects, but more towards the human reaction. I think I've read some statistics somewhere that the total market capitalisation that have been wiped out from the global capital market is more than USD4.5trillion (as at 15th Aug 2007). This figure is at last count, must be at least a few percent higher by today (note: market capitalisation is total number of shares times market price per share. So, in this context, the total value of all listed entities around the world have lost more than USD4.5trillion within days.) (2nd note: 1 trillion is 1,000,000,000,000). This amount can buy out a few times of the total sub-prime loans of the market. So? How to explain this down fall? I would rather call it the "Human Fear of the Unknown".

I have heard many people around me kept selling their holdings over the past few days. Ask them the reason? well, some are selling to limit their loses, others, because fear of the unknown future. They are afraid because they can't see the bottom of this and don't know how bad this may become. The fear to lose more.

Anyway, dear readers, let me share with you some very nice quotes:

"Humans always have fear of an unknown situation -- this is normal. The important thing is what we do about it. If fear is permitted to become a paralyzing thing that interferes with proper action, then it is harmful. The best antidote to fear is to know all we can about a situation." -- John Herschel Glenn, Jr.

Fear makes the wolf bigger than he is. -- German proverb

Nothing in life is to be feared. It is only to be understood. ~Marie Curie

The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.’ — H. P. Lovecraft

Fear is one very interesting human behavior. It leads people to make decision that they will not do during normal circumstances. This might be another interesting topic that worth further studies. Anyway, in my humble opinion, the current situation might get worse and take time to recover, but am quite confident that it will NOT go into a heavy recession from this sub prime crisis. So, it is certainly an exciting time to start accumulating undervalued stocks that have undergone some major sell-offs. Good thing is, even our great Warren Buffett has been reported to have start accumulating stocks in some Banking and Insurance stocks lately. Imagine, it's like a major discounts promotion at the shopping mall out there. Funny thing is, the stock market presents a totally opposite scenario, where people actually run away from discounts promotions. Fear, can be friends.

Happy shopping!!

Subprime Mortgage, Financial Crisis ? - Part 2

Today, 15th August 2007, marked another day of heavy downfalls for the KLCI and major stock market around the globe, except the Chinese Stock Market, which seem to have stood up quite well against the tide. This is something that have fascinated me. For the past few months, I have been imagining the next financial crisis could have been triggered from the burst of the Chinese Stock Market bubble. Ironically, my prediction had turned out to be all wrong whereby she has been one of the few survivors during the recent bloodbath, and in fact, she has turned out to be a winner!! while others have been whiner!!

So, winner or whinner, life moves on. There are people that have been stuck with handfull of investments and saw their "market" value vaporised within days and don't know what to do; there are also those that have been observing at the sideline all these while and wondering whether is it time to bargain hunt (I think these are the lucky few); and there are of course those that have decided to cut their loses and swear not to call their stock broker ever again and etc. Whichever category one is in, I think most people would like to know one thing, "How will it be going forward?", including those that have sworn and cursed. No?

There have been alots of write ups from professional analysts about how would it be going forward. You could have read lots of articles where people have been screaming that the sky is falling, and in fact, there are also a minor few that still think that this sell-off is over-reacted. I am a bit bias to the latter and would like to share some of my views (again, please be reminded that I haven't done well in economics):

Data from Moody's claimed that the subprime market is about USD600 billion (Yes, billion, I've spelled it correctly). It is a huge amount at first look. However, another source of data shows that the total U.S. household debt, including mortgage loan and consumer debt, was $11,400 billion in 2005 (roughly 5% being sub-prime). By comparison, total U.S. household assets, including real estate, equipment, and financial instruments such as mutual funds, was $62,500 billion in 2005. So, assuming ALL borrowers of Sub-prime (I mean, every single person who borrowed money from the subprime market) were to default at once, it can still be well-absorbed by the whole financial market. And secondly, as all these high risk subprime loans have already been securitised and partially sold out to other financial institutions, funds, monetary bodies around the globe like those European's and Asian's. Hence, the losses have already been well-contained and spread out. This is also the reason why we see so many European funds and banks suffered heavy losses from this.

Secondly, as one of the points being brought up times and again by Icapital, one of the leading market analysts that I like, the global economic growth we are currently experiencing is mainly contributed by China, India and the recovery of some of the European countries. The US is having a lesser influence on the global market nowadays. Of course the current jitters might stay for a while, but the effect should not be as heavy as we have gone through. Imagine, the stock market has easily wiped off Trillions worth of market capitalisation from around the globe. This is a few times heavier than the sub-prime loans, even assuming that ALL loans are defaulted at once. What I am arguing here is that the sell-offs have been over-reacted.

Thirdly, the world economy has gone through many expansions and contractions over the years. We have learnt way too many lessons than we have actually needed. The system is mature enough to handle the situation. Just look at the ways banks and government bodies pumping liquidity into the system immediately after the outbreak. Even financial institutions have taken measures to limit their loses and to cool down the selling pressures. Moreover, as mentioned before, the slow down of the housing market has already been observed since year 2005. I suspect that most of them have already preparing for these to happen.

So, back to the question "are we seeing a recession?" In my humble opinion, not at this stage. Of course, the market will need time to heal itself in a few weeks' time. Investors will also need time to lick their wounds. However, to those that have been on the sidelines, this is definitely a better (might not be the best yet, though) time to pick up some bargains compared to months ago. For myself, this is certainly an exciting opportunity.

The "Subprime Mortgage Financial Crisis" - Part 1

I like economics. But I've never done well in this subject. Hell, I haven't done well in any subjects, anyway. Probably I don't put much faith in what I was taught. Well, these are all out of topics...

Many people have blamed that the recent market meltdown across the globe was caused by this evil little thing called "subprime mortgage financial crisis" in the America. As I am somehow illiterate in econs, I have decided to find out more on what the hell is this all about. So, keyed in the phrase in wikipedia and there were a few long articles of this. For the sake of my dear readers, I have somehow summarized it into the followings, as per my understandings (words of caution though: please bear in mind that I've nearly flunk my econ test. I swear I really did):

People borrow money to buy houses. These loan from banks are called mortgages. As the credit controls in the United States are very strict, many individuals that do not fulfill certain requirements will not have access to the mortgage facilities in primary mortgage market, usually from those big and reputable banks. So, one of the alternate routes for these individuals with bad credit history is to seek out the sub-prime mortgage. These usually come with higher interest rates because of the higher risks incurred. From 2001-2005, the housing market in the US was booming, and slowed down in 2005. Coupled with rising interest rates and falling house prices, the subprime market crashed. Many borrowers defaulted and the subprime lenders were suddenly faced with huge amounts of bad loans. And the chain effects quickly spread across the banking industries and had even spilled over to investment funds across the globe. The seriousness? Below is an extract from the Wikipedia that would somehow give you an idea:

"Wall Street Investment Banks and other financial institutions around the world have also been affected. On June 20, 2007, Merrill Lynch seized $800 million in assets from two Bear Stearns hedge funds that were involved in securities backed by subprime loans... on August 9, French bank BNP Paribas stopped valuing three of its funds and suspended all withdrawals by investors after United States subprime mortgage woes had caused "a complete evaporation of liquidity". Goldman Sachs' $8 billion Global Alpha hedge fund, its largest, reportedly lost 26% in 2007. Also, Citigroup has reported taking $700 million in losses in its credit business in July and August 2007... The European Central Bank (ECB) injected €61 billion, and the Federal Reserve injected $68 billion into their respective banking systems on Friday, August 10, 2007 in order to calm their markets, on top of the €95 billion the ECB had injected on Thursday, August 9, 2007. The following day, August 10th, saw widespread volatility resulting from fears about tightening credit conditions... While U.S. stock markets ended the day relatively unchanged after extreme volatility, other indexes fell. London's FTSE 100 index fell 3.7% in its worst day in four years, while Paris' CAC 40 index lost 3.1%, and Germany's DAX index fell 1.4%. The jitters followed in Asian markets: Tokyo's Nikkei share index fell 2.4%, while Hong Kong's Hang Seng Index fell 2.8%. The Federal Reserve further injected $24 billion into the US financial system that day."

Scary eh? It's like a replay of the Asian Financial Crisis all over again, but this time it was started from the West. So, shall we be concerned with this issue? will the regional markets in our part of the world be affected? Is this the beginning of a long bear run? we shall see..

Bloody market @ August 2007

Yesterday marked one of the heaviest market correction in year 2007, AGAIN!

The earlier correction back in February was even scarier (marked by the arrow), but it rebounded quite well back then and rose into new high without looking back. Anyone who have bought in during the panic selling would have made some profits, theoritically.

Anyway, what we are more concerned now is whether the road ahead is going downhill, or is this merely a minor setbacks on a long and strong upward walk?

I had a funny thinking, I would like to make a prediction on the market and tell you what to do with your money RIGHT NOW. Listen carefully: "Sell whatever you have, this is the beginning of a big disaster! The global market is going to bust and will go into recession for years to come! DO NOT LEAVE ANYTHING BEHIND! JUST SELL!"
(wait, don't pick up the phone to call your broker, before finish reading this article or I will not be responsible for whatever action you might have taken).

Come back and thank me when it happens. And I would appreciate if you could show a journalist what I have written here as a clever prediction of what would happen before it actually does. That's going to make me famous and making me the "Golden Boy" or "Prophet" of the Stock Market, isn't it?

You want to know why I make this call?
It has been my secret weapon, but, I don't mind sharing with you since you have the patience to read until here.

Look, the chance of the market going up or down is 50-50. Of course, there are many other factors that might affect it as a whole, but they will sort of "neutralise" each other out, feel good factors will be covered by negative factors and vice versa. Of course, the probability is not exactly 50-50, but should not be far from it (pardon me, for I haven't scored well in maths). So, making a call is merely like making a head or tail call. Best thing is, if I am right, I am going to be famous, and if I am wrong (in this instance, let's say the market rebounded), I would have lose nothing anyway. Worse come to worst, I will just abandon this blogsite and start a new one elsewhere. Why bother? Why am I saying all this BS? Because I am very not happy with some articles I have read recently on market call. I agree that some of them staged some very strong claims and I totally respect the facts that being brought up. But, many of the so-called experts are merely making calls like what I have done earlier, with the "head I win, tail you lose" kind of thinking. I would prefer them to keep quiet and their crystal ball reading skill to themselves. I do ignore many of them but do like to read some occassionally for a good laugh.

So, after all these BSs, what's the right thing to do RIGHT NOW? As repeated time and again, if we are holding to good and strong companies, we should ignore what the others are doing. The panic sellings are nothing but good chance for us to buy more. Don't you like to go shopping when the market is on sale? But take note though, I am not asking you to buy everything that's on sale, only choose what you like and confortable buying. You don't want to buy a broken 40inch plasma TV, even if it is selling for RM1000, do you? Or, put it another way, you don't want to sell the Toyota Vios you have just bought for half its price, merely because your neighbour has just sold his for the same amount, do you? Same concept.

Conclusion:
Buy what you think is undervalued and sell what you think is overvalued. &

Be Fearful when others are Greedy and be Greedy when others are Fearful - Buffett

This is my story - A decision made

It was like 3 weeks since I last posted something here. It's not that I have run out of things to write, but it's because I am too busy with my things on hand. I have recently made a very big decision on my life. I quit my job!! This could be for the better or worse. Anyway, the decision has been made, and there is no turning back now, for me.. I really wanted to share this feeling with someone, but dunno who to talk to.. so well, what's a blog for if it's not something for you to release your feelings within ?

Suddenly realised that I haven't talk much about myself here. To cut the story short, I am a degree holder in Accounting and Finance. Most people thought that I would have gone into a big accounting firm or bank or stock broking firm or something like that when I graduated, back in year 2001. But I didn't. I thought those are boring jobs, so I opted for a job as a sales executive in a chemical plant. Sounds more exciting and interesting as the incomes were based on commissions, so the potential of making it big time is higher, and there were more things to learn, I so thought back then, when I was much more naive than I am now. Anyway, as the years go by, I was transferred from the sales department to project management, to build a new plant and operation head to start up a new plant and so on. Basically, I have involved from A to Z of starting a business. And without noticed, I am already getting a pay which is few times higher compared to when I first joined the company, and I will have an easy and confortable life if I stick to what I am doing, at least for another few more years. I should be happy by now. But I am not! I felt like I have to move on and away from this comfort zone in order to grow. And hence, I have tendered my resignation and I will officially unemployed from the 31st August 2007, coincided with the Independence Day of Malaysia.

Well, life's gonna be different when I am all alone out there, I think. And I also have to figure out how to make a living going forward. But I have a rough idea in mind and an ambition which I so wish to accomplish in my life. I wanted to be one great investor like Warren Buffett. So, I might want to start off my dream by setting up an investment vehicle like what Mr Buffett did back then with his Buffett Partnership. I wanted to make those people around me, who have trust in me, millionaires, like what Mr Buffett had done to his investors.. This is my target, my dream and I am going to make it happen!!

How to invest in the right business

I came across a good article in the Star today, "How to invest in the right business" by Ooi Kok Hwa. I have extracted some good points, with my comments:

Warren Buffett, in his address as chairman to Berkshire Hathaway shareholders, said he uses four main criteria to select the right business: (1) a business that he understands, (2) one with favourable long-term prospects, (3) one that is operated by honest and competent people; and (4) is available at a very attractive price.

(1) a business that we buy must be simple and have stable and predictable future cashflow. Understanding a business will allow you to make better judgement on the profitability of the business; major opportunities or threat ahead and etc. That is the reason why, most of Warren Buffett's holdings are very easily understandable businesses, like fast food, theme park, razor blades, newspaper, insurance and etc., which most, if not all of us will come across everyday. He doesn't want to touch those high tech companies that he doesn't understand. That's also why, he was not hurt during the high tech meltdown in year 2000. So, very simply, just ask yourself "will this business make money in the coming years" before you buy any stock. If you can answer it confidently, you certainly have met the first criteria.

(2) For a company to have favourable long-term prospects, it needs to have a good economic franchise (good brand name), strong long-term pricing power, and high entry barrier (difficult for a competitor to set up another similar kind of business). A company that has strong pricing power and purchasing power will enjoy handsome profit margins. One example of this kind of business is Coca Cola, one of Buffett's long term favorite. Other famous holdings of Buffett also include McDonalds, Walt Disney, Washington Post and many more. These are companies that have dominant control in their market respectively and are very difficult for someone else to enter the market overnight.

(3) Investors must choose a company with a management of unquestionable integrity. This is one criteria that Warren Buffett put alot of emphasis on. There are many cruel examples out there on the streets which have washed away hundreds of millions of hard earned money from investors. Hence, investors should always check on the integrity of these managers. Investors need to be careful when investing in companies with high expansion, high trade receivables and poor internal controls. I agree this is one field that is very difficult to justify. One of my ways is by looking into a longer past trends of the company's history. I also like to look at the Director's remuneration package compared to the company's performance. Besides, do your homework in reading more business related news from the paper or internet, where you might be able to find out a thing or two about the company's directors.

(4) Lastly, we will only buy a business if it provides a "margin of safety" These are described by Warren Buffett as the 3 most important words in Finance. According to Benjamin Graham, if a company is selling at a 33% discount to its intrinsic value, the investment is said to provide a margin of safety. One mistake that most investors made, including myself, is overpaying for a business. There are companies that meet all the 3 criterias mentioned earlier, but these do not justified them to sell at super-high valuation. This is one of my main concerns on the China's market. It is undeniable that many China's listed companies have huge potential and are growing rapidly, but, most of them are selling at "mind-blowing" valuation. These are all so similar to the IT boom few years back in the Nasdaq market, where people were chasing high the high profile internet stocks like Amazon, Yahoo and etc, not to mention those that no longer exist today. These are called "over-hyped" valuations.

Share valuation, I did it my way - Part 1

Back to the basics
When a company starts up, it needs capital to commence its business. It issues certificates known as "shares" to those people who are willing to fork out the money to start the business. In exchange, the people who paid for the shares will be known as "shareholders" of the company and they will be entitled to a portion of any profits or assets of the business, according to the percentage of shares he/she holds, or known as "part ownership". These shares will also give the owners voting rights during shareholders' meetings, as per the percentage of shares held. Fair and square.

So, as the business grows, the business will need more money to expand, like buying new machines, employing more manpower, carrying more inventory and etc. It has a few ways in getting the new fund and one of it is by issuing more shares in the company (hence, increasing the share capital). The company can either sell the new shares to existing shareholders (right issues), to new shareholders (placement) or by converting reserves fund, such as retained profit (bonus issues) into equity. Until a certain stage, when the company fulfill a certain requirement, it can opt for listing, which we call Initial Public Offering (IPO). This is by offering the shares of the company to the public. Ahhh..... this is when small timers like us have a chance to have a share on the good and bad times of the company. Well, practically, as most of our holdings are too small, what we can share are really limited. For example, as a minority shareholder, we can't use the company's car, we can't use the company's private jet, we can't fly in first class in the company's expense, we can't stay in big hotel suits with girl friends in the company's expense, we can't spend tens of thousands ringgit per night to entertain customers in the company's expense, we can't go shopping for a million ringgit paintings in the company's expense and the list goes on.. sounds familiar? you know I am not so creative in making these up, don't you?

Anyway, as a shareholder, one is entitled to a portion of assets and profits of the company, and of course, liability and losses as well. If one were to be given a choice, would he/she opts for profits or losses? assets or liabilities? Profits and assets of course, you say? nah.. certainly not everyone is as rationale thinking as you are. Haven't you seen someone chasing after companies that made heavy losses for a few consecutive years and are on the verge of bankruptcy before? How would you explain that?

Well, as a investor, logically, I prefer companies that I have a share in to be profitable, to have good management, to continually grow its business and good stuff like that, which will ultimately increase the value of my investment. Don't you? Well, naive I may be, but please tell me, if you don't analyse a share or a part ownership of a company based on its value, what the heck should your analysis based on?

Is Longer Better? (don't say "of course" just yet..)

It is a difficult task in convincing a speculator or a day trader to convert into a long term investor. Even if they tell you statements like, "Yes, I am a natural born long term investor, I can feel it from the blood in my vein.." and "of course I am a long term investor, if not, how to win money?" and such, go one step further and ask them, "How long is the average holding period of your investment?" From my past experience, their answers range from: 1 week, 1 month, 3 months, and longest 6 months. Well, if you ask me, 6 months cannot be considered as a long term investment anyway. Remember Mr Warren Buffett used to say something like, "the most ideal holding period for a stock is.. Forever" (this is not a direct quote)

But, have you heard of people still holding counters they've bought more than 10 years ago and are worth less than 10% of its cost now? Do you think these counters will go back to how much it costs 10 years ago? The holders do think so, don't they? or else, why are they still holding them?
Likewise, have you heard of statements like "it's already so low, how much lower can it goes?" of course, the worst is still zero, but isn't it better to sell something worth 10 cents for 50 cents?
Another case, "If I sell now, I am making a loss. Anyway, I am a long term investor, I will wait, I believe it will go up later.." So this is a case where short term trader become long term investor. Will the wait be worthwhile after all?
There are times when things do change for the better. So, when should we decide to cut the losses? when should we wait? How about: should we start accumulating on weaknesses, as these sell down might be an oppotunity? just like the old saying "the dawn is usually the darkest". so, how? That would be another topic later.

So, is longer better (I am referring to the holding period of shares)? My answer is: it depends.
If it is a good company, which has high quality management, good earnings and cash flow, strong growth, competitive advantage over the others and etc., hold it forever, like suggested by Mr Buffett.
But if it is a bad company, hold it for one week is still considered too long.

China again? where else?

The market is kindda stuck at the moment. Main attention is still at China. Even the almighty Superman Lee has voiced his concern on the China's market (Superman Lee is another investor that I respect beside Warren Buffett). The China market is currently trading at a PE (Price/Earnings, the ratio that compares the market price relative to earnings) that is close to 40 times, and is considered one of the highest in past histories, including those of other countries. For comparison, our own Malaysian market is currently trading below 20 times PE. This implies, the market as a whole, you have to pay over 30 dollars to earn 1 dollar annually, if everything else stays constant. Alternatively, it can be stated as an earning yield of 1/40 or around 2.5% per year. Well, lower than the FD rate in Malaysia today. So, why are there still so many people rushing to jump onto the bandwagon? (why no people rushing to the bank to earn the same yield?) Ahhh.. the key difference is the potential of "growth" of the China's market.

In fundamental analysis, it refers to the growth in market size, revenue, earnings and etc. Let's say this company Huat Chai Sdn Bhd is earning RM1 million per year for year 2005. And if the company is selling at a PE of 40 times, its market cap (total price x total number of shares) shall be worth RM40 mil. As a owner, your investment need 40 years to break even. That's an annual yield of 2.5% per year (let's forget about the compounding effect for simpler calculation). And let's say this Huat Chai is doing good business and it earns RM1.5million in year 2006. With an earnings growth of 50%, if the PE still stays, the market cap shall worth RM45mil by the end of 2006. Assuming all else remain constant, the price of the company shall already worth 50% more. Now does it sounds attractive? of course it is. Warren Buffett has become so rich by only achieving returns of 20+% per year on average. You will be twice richer than Buffett at his age if you are able to maintain that kind of returns, with his kind of initial investment. And, most probably, you will already be the richest man on earth by then.

So, again, my point is, everyone is seeing the growth potential in Chinese companies, due to its booming economy and its big population (although there are some who only buy because they believe in "the greater fool theory", a theory that believe whatever you buy today, another greater fool will come to buy from you at a higher price some time later). So are there bubble? I personally think so. I think, a correction is on its way, by then, most investors, traders, speculators or any other market players will be burnt, some very badly. And some will have to sell off most of their holdings to cover their loses, some due to panic, whatever the reason, it's going to be a bloodbath.

Some might argue that there are certainly value buys out there. Of course there are. Values are everywhere. But I believe, if we have enough patience, we will be able to buy them cheaper and at a deeper discounts later. Borrowing from Warren Buffett's wisdom, "we shall be fearful when others are greedy, and be greedy when others are fearful".. Why shouldn't we?

Another quote I like very much, by Leonidas in the movie 300: "enjoy your breakfast, for tonight we dine in hell"... Like the feelings of "be prepared for the worst to come, and embrace it".

Opportunities lie ahead..