U.S. Government Bailout Plan rejected, and the stock market had one of its biggest one-day drop in history

If you have been following the news for the past 24 hours, you know what I’m talking about.

At first, the U.S. Government plan to bailout the banks was a done deal. Things were starting to look rosy again. The next thing you know, wham, the bill was rejected, and it was kicked right smack on its backside.

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Market Commentary 17th June 2008: Crude Oil prices set to fall? Harga minyak mentah dunia akan jatuh?

I see two possible scenarios unfolding in the near future that could lead the world Crude Oil prices to ease and perhaps fall drastically.

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KLSE falls and trading halted: Bursa KL merudum jatuh dan digantung!

So, the trading halt on Bursa Saham Kuala Lumpur (BSKL) or Kuala Lumpur Stock Exchange (KLSE) has been lifted and we are back trading again. The Composite Index is recorded an increase of 30.29 points or 2.58% as of 10.20 am Malaysian time just now. That’s a minuscule if you compare it with yesterday. Our market plunged a little over 130 points or more than 10% before being put on a trading halt at 2.58 pm.

Well, to be honest, that was to be expected. I’m sure a lot of people can only guess how the stock market was going to react to the Pilihan Raya Umum ke-12 results. It is usually an understood and well-accepted phenomenom that the market will rally up to the election and then cool off a little bit after. However, to be honest, due to the bear market that has unfolded globally and the huge volatility that struck our local market, we actually didn’t see much of a rally at all.

Whatever it is, I’m sure a lot of people were not expecting the market to free fall by that much yesterday!

I did expect the market to fall handsomely on Monday but I also was not expecting 10%.

Why did it happen? There are a lot of theories out there and here’s mine. The big fall was due to the opposition getting their so-called political tsunami and the denial of Barisan Nasional (BN) from their two third majority target.

Logic behind this could be:

Well, investors had felt safe and comfortable investing in our market before the election because they were satisfied with the policies (I’m using this term loosely here) carried out by the BN government. They were confident that BN is invincible. After BN was denied the two third majority and the opposition managed to invade the parliament and BN’s territory, investors started to get nervous, afraid that some of the policies will get questioned and kicked out of the door. Bear in mind that the opposition (or Barisan Rakyat) is a force to be reckoned with now. Putting myself in an investor’s size-10 shoes, I myself would feel nervous. Some investors might think that policies that induces economic growth (and inflation for that matter) will be scrapped and some of the policies (like the Negara Kebajikan policy) of the Barisan Rakyat adopted instead. Please please please, I’m not implying that one is better than the other. I’m just merely talking from an investor’s perspective.

Anyway, what did the investors do? Dump the stocks. When the big guns started dumping the stocks (which pushes the market down), the small fish will follow suit as well. Not to mention the margin calls and triggered stop losses that further drives down the market.

Call it panic selling if you may.

So, that’s my theory.

I’m sure my unit trust investment got hammered yesterday as well. Hard times folks. Hard times indeed.
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Microsoft’s Bill Gates no longer world’s richest man

Guess what folks? Bill Gates has been dethroned and no longer the richest man on earth, after maintaining that spot for 13 straight years. He is now in third place.

Warren Buffett overtook him and became the richest man on earth with USD 62 billion. Second place was secured by Mexico’s Telecom Mogul Carlos Slim Helu with USD60 billion.

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A 13-year-old Homeowner: Arguably the Youngest in Australia

Just now, I watched on Seven’s Today Tonight (current affair show) about something that really caught my attention.

Have a look at the title. Can you believe it? A 13-year-old girl owns her 4-bedroom, 3-bathroom, house. Not just that, she almost paid off the whole amount of her loan. The story was also posted on the Seven Network’s website. Here’s the article here.

Ok, fine, she might have a bit of an advantage over mere mortals like us. She might be paid “modestly” through her modelling career, but that’s not the point! The point is, a young kid actually has the intention to invest their money rather than spending on other useless things.

The best thing is, in Australia, it doesn’t really matter how old you are. All that matters is your income. If you can afford it, then by all means, go out and get it!

The second part of the feature was about this guy, Paul McManus, who just celebrated his 22nd birthday. As of today, he has AUD 6 million dollars worth of property under his belt.

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Chain Letter: How to Drive Petrol Prices Down

Recently, I have been receiving e-mails on how to drive petrol prices down. There are a number of variations of the e-mail. The first one is about boycotting the big players like ESSO/MOBIL, SHELL, PROJET and opt for the so-called small players like CALTEX and PETRONAS. This way, we can make the big companies bleed, and thus bringing petrol prices down. This idea supposedly came from people from PETRONAS. They regard this idea as “price control”. This idea was also supported by somebody that goes by the name of Phillip Hollsworth (try google-ing this name, and you won’t even find a trace of this bugger).

The second e-mail variation is about boycotting petrol as a whole for a certain period of time.

Now in this article, I’ll explain to you why not in a million years these concepts will work. By the way, I’ll be using the words fuel and oil interchangeably.

Firstly, we need to understand that fuel is a necessity (need) and not a luxury (want). At this day of age, it is impossible to go through your day without encountering fuel or fuel-induced goods and services.

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Where are we headed next?

I have been observing an interesting occurrence here in Malaysia. I have noticed that the number of luxury cars on the road, like Mercedes and BMW has increased significantly like mushrooms. People are getting richer.

I still remember (vividly of course) about the last 1997/1998 Asian Financial Crisis. Before the crisis was unleashed upon us, it was pretty similar as well. Loads of Mercedes’s and BMW’s on the road. After the crisis hit, not a single luxury car could be seen, though there were those odd few. I still remember that I came across only a few luxury car during my whole journey back to Kelantan for “balik kampung.”

Fast forward to now, where are we at the present moment economy-wise? Are we already at the top of the economic cycle? Is the mushroom-ing (if that’s even a word) of wealthy individuals a good indicator to predict that an inevitable recession is about to come? Or does the economy has a bit more steam to soldier on? Are we about to embark on a commodity super cycle as stated in the media and by research analysts? Or are we already on it?

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Lower Unit Trust Sales Charges

It seems like, for Employees Provident Fund (EPF) contributors, there’ll be a discount for them if they decide to invest in unit trusts. They’ll be paying lower unit trust sales charges of not more than 3%. That’s a steal!

I reckon that this is a really good move if we want encourage people to invest their money. It gives people an incentive to invest in a high-yield asset rather than just leave their money in their EPF accounts earning a rather low rate of return.

Anyway, how about the rest of us mortals with no EPF accounts? Will we still be paying the same 6.5% for equity funds? Any unit trust consultants out there to answer this? :)

Also, does this mean less commission for the unit trust consultants? :)

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How to make over 700% return in one day???

I read in a newsletter today about this company that goes by the name Flinders Diamond (ASX Code: FDL). Yesterday, the price of a single share of that company closed at 1.1 cents.

Today, they announced around noon that they had discovered an iron ore exploration target. What happens to the share price?

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Britney Spears the Cash Cow

I came across this article about Britney Spears on CNN Money a few weeks ago. I’ve included the link to the article below. It was reported that she earns $737,000 per month. That’s in US Dollars by the way! And guess what? She neither saves nor invests her money. Haih… What a pity..

I mean, come on, how much can one spend in one go?

Imagine if she uses that money to buy shares and real estate. She could have been a billionaire in no time.

“More than $100,000 each month is going to entertainment, gifts and vacations alone.”

I think $100,000 per month is more than enough to support me, my parents, my brothers, my nieces, my nephews, my cousins, my uncles, my aunties….. And Britney is spending is for entertainment, gifts, and vacations :P

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