You buy shares from a certain stock and when the stock price goes up, you sell and earn money out of it. That is probably the main reason for all of us to invest in stock. But do you know why stocks exist at the first place? Is it for you to invest and earn money out of it? Yeah, that’s true. But then why the company want to issue a share for your benefits? Don’t forget that economy is always win-win…
Why stocks exist at the first place?
Stocks exist at the first place because companies want to raise capital (i.e. get more cash) for their business. Why companies want to increase their capital? Because they want to make their business big and eventually make even more money! Assuming a company wants to increase its capital to $1000K, the company will issue shares that worth for $1000K for investors to buy. Let’s say 100K shares are issued, 1 share will cost $1000K/100K = $10. When investors buy all these 100K shares, the company will able raise it cash or capital to $1000K.
You may also wonder why don’t the companies raise their capital from bank by taking loan. That is because taking loan has its limitation and you usually can borrow up to certain limit. Also, when you’re in debt you need to pay for the interest too. In order to get more money than what you can borrow from bank and most importantly without debt, the most effective way is to make your company listed in stock exchange by issuing shares to the public or in other words make your company a public company.
When your company is listed or became public, everyone can own part of your company by just buying shares from your company. For instant let's use the example above, you buy 1000 shares, you basically own 1K/100k = 1% of the company. If you buy 10K shares, then you own 10% of the company. Cool isn’t it?
How to determine the initial stock price?
Of course, the owners of a company decide what should be the initial stock price and how many shares they want to issue. However to determine the stock price, they must look from investors perspective. Let’s assuming you own this company and the annual net earning (i.e. net income – expenses) of this company is $100K. How much do you think your company worth? Let’s say you price your company worth for $1000K, this means that if I’m a investor and I invest $1000K. I will get back $100K annually as my return of investment – ROI which is $100/$1000K = 10% (assuming the earning is constant in the coming years). If you price your company for $500K, then the ROI from investors is 20%. The technical term for this ROI is called “Dividend”.
So do you think investors will invest for 10% ROI or 20% ROI? Of course, 20% right? But keep in mind that you only get the capital of $500K from a company perspective. What if you offer 10% ROI, do you think investors will invest? If yes, then you will get the capital of $1000K which is 2 times more than $500K. You get more money by offering 10% ROI as compared to 20% ROI. So, should you price your company $500K or $1000K? Well, that depends how good your judgement on what are the investors' need and to get the optimum capital that you want. :D
If you issue 1 share for $1000K (which is unlikely in reality because after you sell your share, your company no longer belongs to you!) , then 1 share will cost $1000K. If you issue 100K shares, then 1 share will cost $1000K/100K = $10. If you issue 1000K shares, 1 share will cost $1000K/1000K = $1. Do you think the public or investors have enough money to buy 1 share? So the quantity of the share decide how cheap is unit price per share that affordable by majority of investors. This is up to you to make a call too, if you’re the owner of the company.
Once you have decided to price your company for $1000K and issue 100K shares, your initial stock price will be $1000K/100K = $10 per share. So you make this offer to the public which is also called “Initial Public Offering (IPO)” with $10 per share.
Summary
Well, I summarized a lot of stuff here and in reality the process is a lot more complicated than what I have explained. I think it is always important to understand the basic fundamental especially from a company and investor perspective before we start investing in stock.
This article explains how stocks gets started in the first place. Feel free to comments and provide feedback if anything is not clear and you would like to discuss further. Happy investing!
Sabtu, 26 Maret 2011
Minggu, 06 Maret 2011
How to Embed Stocks that I am Watching?
If you're looking for a way to embed the stock charts in a website or a blog, you can now can do it through wikinvest. Here is my list of stocks that I"m watching and the chart shows 1 year history trend for that particular stock:
INTEL CORPORATION
ALTERA CORPORATION
If you have a better way to embed stock chart into a website or a blog, feel free to share. So far, I find this wikinvest is the best.
[02 April 2011]: There is a bug in the Malaysian stock chart which shows only until August 2010 and I have reported to wikinvest. This is the respond that I got from them:
[11 April 2011]: By the way, check it out my latest post on Stock Portfolio System to monitor or track your stocks. I find it pretty useful! :)
LOG
[03 March 2011]: Added AIRASIA BHD
[04 April 2014]: Removed CIMB Group Holdings Berhad, PBA Holdings BHD and Airasia BHD because it is no longer working. :(
P/S: Now you can spy on me because I will continue keep this post updated for the stocks that I"m watching.
[04 April 2014]: By the way, I no longer keep this post updated for my watched stock, will be remove this link from the right panel as well.
INTEL CORPORATION
ALTERA CORPORATION
If you have a better way to embed stock chart into a website or a blog, feel free to share. So far, I find this wikinvest is the best.
[02 April 2011]: There is a bug in the Malaysian stock chart which shows only until August 2010 and I have reported to wikinvest. This is the respond that I got from them:
Hi Champdog,
I filed a report of this issue when you wrote in a few days ago, and it's been added to our developer's work queue. I don't have a formal estimate at this time, but I'll keep you posted of our progress.
Thanks for your patience!
Wikinvest.com
Investing, Simplified.
[11 April 2011]: By the way, check it out my latest post on Stock Portfolio System to monitor or track your stocks. I find it pretty useful! :)
LOG
[03 March 2011]: Added AIRASIA BHD
[04 April 2014]: Removed CIMB Group Holdings Berhad, PBA Holdings BHD and Airasia BHD because it is no longer working. :(
P/S: Now you can spy on me because I will continue keep this post updated for the stocks that I"m watching.
[04 April 2014]: By the way, I no longer keep this post updated for my watched stock, will be remove this link from the right panel as well.
Sabtu, 26 Februari 2011
Latest FD, EPF, Inflation, BLR and Saving Interest Rates History Trend in Malaysia
If you wonder where to get the latest FD (Fixed Deposit), saving interest, EPF (Employee Provident Fund) dividend, BLR (Base Lending Rate) and inflation rates history trend in Malaysia, this is the place for you. I wrote about a similar topic in my previous post (almost 3 years ago) and apparently it is out-dated. The latest data was only up to 2007.
I will use this post to keep track of the latest interest rates. As you can see from the graph or chart below, I put the inflation rate as reference – green line. Any interest rates above the green line is good to go and this is where you want to put your money into. However for those who are buying house, you need to look at the BLR – brown line, any investment return that higher than BLR is where you want to put your money into especially if you don’t like Flexi loan package.
[Updated: 26 April 2014]
What can we conclude from this trend?
[Updated: 26 April 2014]: Update data up to 2013, inflation has moved down (lower than FD) and EPF is till performing good!
P/S: Well, to summarize: don’t put your money in saving and use FD as emergency fund. EPF dividend rate and BLR are very important because that is the investment goal that you want to set (i.e. Any of your investment return from stock, mutual fund, and bonds should be more than 6%).
I will use this post to keep track of the latest interest rates. As you can see from the graph or chart below, I put the inflation rate as reference – green line. Any interest rates above the green line is good to go and this is where you want to put your money into. However for those who are buying house, you need to look at the BLR – brown line, any investment return that higher than BLR is where you want to put your money into especially if you don’t like Flexi loan package.
[Updated: 26 April 2014]
What can we conclude from this trend?
- Saving rates is getting lower and lower. Thus, you shouldn’t put your money in saving at all. For instance, if your monthly expenses is RM3K, you just need to make sure that you have RM4K in your saving account every month. RM1K extra is for backup.
- FD is as useless as saving but it is still better because it is higher than inflation rate in most of the years. But keep in mind that personal inflation rate is the thing that you want to look at (not the inflation rate reported by the government!)
- As expected, EPF is the best investment vehicle (of course only compared to FD and saving) and it is catching up the BLR rate (but still below BLR). This tells you that withdrawing your EPF money to pay your house loan is the right choice. How about withdrawing your EPF for Mutual Fund? Yes, but do this only when you believe the mutual fund return could be higher than 6%.
- 6% is a important value (based on EPF dividend return and also BLR). You will use your extra money to invest (after you have enough emergency fund) and your investment return should at least more than 6%. If not, you’re making a bad investment.
[Updated: 26 April 2014]: Update data up to 2013, inflation has moved down (lower than FD) and EPF is till performing good!
P/S: Well, to summarize: don’t put your money in saving and use FD as emergency fund. EPF dividend rate and BLR are very important because that is the investment goal that you want to set (i.e. Any of your investment return from stock, mutual fund, and bonds should be more than 6%).
Sabtu, 19 Februari 2011
How to read buying & selling price in money changer counter?
Have you ever confused with currency exchange especially when you want to buy certain country’s currency in the money changer counter before you travel? Should you aim for lower or higher price?
There are only 4 things you should able to see from money changer counter: Date, Unit, Currency, Buying and Selling prices. Here is the example:
Before you go into this, the first thing you need to know is the base currency. The base currency should be the currency based on the country where you exchange your money. For example, if you go to the money changer in Malaysia, the base currency will be in MYR – Malaysia Ringgit. If you exchange your money in China, then the base currency will be based on the Chinese RMB then.
The table above is an example that you can see from the money changer in Malaysia (the base currency is MYR). The table tells you that you need RM3.035 to exchange with 1 US dollar and RM46.650 to exchange with 100 Chinese RMB. Look at the “We Sell” column whenever you want to buy and look at the “We Buy” column whenever you want to sell. The formula is very easy:
Example 1: You want to exchange RM10K to USD. You should able to get:
RM10K/3.035 X 1 = USD 3,294.89
Example 2: You want to exchange RM10K to RMB. You should able to get:
RM10K/46.65 X 100 = RMB 21,436.23
Example 3: You want to exchange USD10K to MYR. You should able to get:
USD10K X 3.015 / 1 = RM 30,150
Example 4: You want to exchange RMB10K to MYR. You should able to get:
RMB10K X 46.00 / 100 = RM 4,600
Key Notes: The lower of the buying price (we sell) or the higher of the selling price (we buy), the more money that you will be getting back after the conversion. Thus, if you want to compare with different money changers, look at the lowest buying price (we sell) and highest selling price (we buy) that they can offer. It is a similar concept with buy low and sell high. If you want buy, look for the lowest price. If you want to sell, look for the highest price.
Happy traveling! :)
p/S: The different between the selling & buying price is where the money changer makes their money!
There are only 4 things you should able to see from money changer counter: Date, Unit, Currency, Buying and Selling prices. Here is the example:
| Date: | 20/02/2011 | ||
| Unit | Currency | We Buy | We Sell |
| 1 | US Dollar | 3.015 | 3.035 |
| 1 | Great Britain Pound | 4.880 | 4.935 |
| 100 | Chinese RMB | 46.000 | 46.650 |
| 1000 | Japanese Yen | 36.250 | 36.700 |
Before you go into this, the first thing you need to know is the base currency. The base currency should be the currency based on the country where you exchange your money. For example, if you go to the money changer in Malaysia, the base currency will be in MYR – Malaysia Ringgit. If you exchange your money in China, then the base currency will be based on the Chinese RMB then.
The table above is an example that you can see from the money changer in Malaysia (the base currency is MYR). The table tells you that you need RM3.035 to exchange with 1 US dollar and RM46.650 to exchange with 100 Chinese RMB. Look at the “We Sell” column whenever you want to buy and look at the “We Buy” column whenever you want to sell. The formula is very easy:
You want to buy foreign currency with MYR, this is how much you should get:
You want to sell foreign currency and get back the MYR, this is how much you should get:Money that you want to exchange in base currency(MYR) / We Sell (Buying Price) X Unit
Money that you want to exchange in target currency(Foreign $) X We Buy (Selling Price) / Unit
Example 1: You want to exchange RM10K to USD. You should able to get:
RM10K/3.035 X 1 = USD 3,294.89
Example 2: You want to exchange RM10K to RMB. You should able to get:
RM10K/46.65 X 100 = RMB 21,436.23
Example 3: You want to exchange USD10K to MYR. You should able to get:
USD10K X 3.015 / 1 = RM 30,150
Example 4: You want to exchange RMB10K to MYR. You should able to get:
RMB10K X 46.00 / 100 = RM 4,600
Key Notes: The lower of the buying price (we sell) or the higher of the selling price (we buy), the more money that you will be getting back after the conversion. Thus, if you want to compare with different money changers, look at the lowest buying price (we sell) and highest selling price (we buy) that they can offer. It is a similar concept with buy low and sell high. If you want buy, look for the lowest price. If you want to sell, look for the highest price.
Happy traveling! :)
p/S: The different between the selling & buying price is where the money changer makes their money!
Jumat, 14 Januari 2011
Latest Live Gold Price History Trend in MYR & USD
This the gold price trend in 1 year, 5 years and 10 years in Malaysia Ringgit (MYR) and US dollar (USD) currency. The following graphs will be automatically refreshed to show the latest live and most updated history trend.
The data is sourced from goldprice.org. Have fun! :)
1-Year Gold Price in MYR & USD
Per ounce
Per ounce
Per gram
Per gram
5-Year Gold Price in MYR & USD
Per ounce
Per ounce
Per gram
Per gram
10-Year Gold Price in USD
Per ounce
Per ounce
Per gram
Per gram
Notes: The Y-axis is in unit ounce and 1 tray ounce = 31.1034768 grams. If you want to covert to grams, you need to divide the number with 31.1034768 to convert the Y-axis to grams.
[29 March 2014]: Update graph to include per gram so you don't need to convert it to ounce.
P/S: For real time daily live gold price in Malaysia, visit here.
Gold Related Articles:
The data is sourced from goldprice.org. Have fun! :)
1-Year Gold Price in MYR & USD
Per ounce
Per ounce
Per gram
Per gram
5-Year Gold Price in MYR & USD
Per ounce
Per ounce
Per gram
Per gram
10-Year Gold Price in USD
Per ounce
Per ounce
Per gram
Per gram
Notes: The Y-axis is in unit ounce and 1 tray ounce = 31.1034768 grams. If you want to covert to grams, you need to divide the number with 31.1034768 to convert the Y-axis to grams.
[29 March 2014]: Update graph to include per gram so you don't need to convert it to ounce.
P/S: For real time daily live gold price in Malaysia, visit here.
Gold Related Articles:
Sabtu, 08 Januari 2011
Lifespan vs. Income in the Past & Future
This is an interesting video and yet easy to be understood by Hans Rosling (a Swedish medical doctor and satistician) explaining the world progress in the past 200 years ago. Here you go and enjoy! :)
In case you don't get it yet, how big is the bubble represents population size of a countries. Brown or light orange bubbles refer to Europe. Yellow bubbles refer to USA. Red bubbles refer to Asia and Blue bubbles refer to Africa,
There are few interesting things that I get from this video:
In case you don't get it yet, how big is the bubble represents population size of a countries. Brown or light orange bubbles refer to Europe. Yellow bubbles refer to USA. Red bubbles refer to Asia and Blue bubbles refer to Africa,
There are few interesting things that I get from this video:
- I don't know we die so early in 200 years ago which is below age of 40? Please note that the 40 years old is the top and average it should be (40 + 25) / 2 = 32 years old. Huh? Averagely we can live until 32 years only in 200 years ago? Interesting...
- You may notice very big swing in some of the countries and I guess it is probably due to the War or tragedy (e.g. diseases) that happened to those countries. That's why you see such big swing on the income or the lifespan. You can look at the action replay at the end of this video. OR is it mainly for animation purpose? I could be wrong...
- As what is expected, rich & poor gap in China is demonstrated. Shanghai wealth is like Italy and Guizhou wealth is like Pakistan and etc. I like the way how he splits the bubble...
- Everyone is moving towards the "Rich & Healthy" direction. So let's extrapolate the graph, everyone will be "Rich & Healthy" in 100 years later? Hmm... how true is this? So, no bell curve?
- Moving forward, my best guess is probably everyone will be healthy but NOT everyone will be rich. The lifespan will be increased to a certain limit (e.g. 80 years old) but the gap for the income should still be there or maybe even serious in 100 years later. The rich will become richer, the poor will become poorer and the middle class stays where they are and trying to survive. It is probably just shifting the graph (e.g. 40K income become a middle class income). What do you say?
Minggu, 26 Desember 2010
Check Tyre Manufacture Date and its Certification
I still remembered when I got my first car and I didn’t understand the importance of changing new tyre until my tyre broke into pieces in the middle of the highway. That was due to the tyre was too old (> 7 years old)and the rubber become too hard. I couldn't imagine the tyre can just break into pieces at that time! :)
From that time onwards, I always pay attention to my tyre and to make sure it gets changed maximum every 4 years. Well, the usual recommendation is you should always change every 2 years to 4 years for safety purpose. The reason is most tyre manufacturer only has 4 to 5 years warranty period. So assuming if your tyre is brand new, you can only used up to 4 years or 5 years.
Wait a minute! If you buy a tyre in 2010, does that mean you should change in 2014? Well, that is only true if your tyre was made in 2010. If your tyre was made in 2009, you should change in 2013 and if your tyre was made in 2008, you should change in 2012 (which is 2 years after you buy a new tyre). So, it is extremely important to understand when your tyre was made? If it was made in 2006, your tyre has already expired although you buy a new one. You’re being cheated!
How to check tyre manufacture date?
Well, tyre manufacture date can be found from your surface of your tyre. What you need to do is look for the 4 digit numbers. First 2 digit numbers represent the week of the years (1 year has 52 weeks) and the second 2 digit numbers represent the years after 2000. Here are the few examples that you can see from your tyre:
As you can see, the 0907 refers to this tired was made in week 09 of 2007.
The manufacture date (i.e. 2307 - week 27, 2007) is usually stamped at the right side of the DOT code as you can see below:
However, I’ve seen not all tyres are like that. So the rule of thumb is just to search for the entire tyre that contains the 4 digit numbers. So, please make sure you check your existing tyre (is it already expired?) or the new tyre that you buy (is it really new?).
My recommendation: You should only buy new tyre with less than 1 year old. Please check every time you get a new tyre and don’t be cheated. This is also good for your safety.
P/S: Well, if you don't see any 4 digit numbers. This is usually the 4 digit numbers are at the other side of the tyre. For some tyres, only one side have the manufacture date information. An inexperience worker may not aware of it and fix your tyres wrongly. The date should be always faced outside.
US, Europe or Malaysia Certification?
There are basically 2 international standards of certification. In US, the DOT code is being used and in Europe, the E-mark is being used. Your tyre should at least contains minimum one of them (either DOT code or E-mark). The following shows example of DOT code and E-mark (e.g. Eii or E4) from your tyre:
However, as for Malaysia certification, it is usually marked with the “Sirim” logo and the word “SNI” (optional). The following shows example of the “Sirim” logo (i.e. MS) and the word “SNI”.
Well, “Sirim” and “SNI” is in fact not a big deal (although it seems to be a big deal). If you have the “Sirim” and “SNI”(optional) mark on you tyre, you still want to make sure you have a least one of the either the DOT code or E-mark on your tyre. Having US or Europe certification is most important thing. If your tyre is made in Malaysia, the "Sirim” and “SNI”(optional) marks must be there.
My recommendation: You should make sure your tyre must at least contain the DOT code or the E-mark code. If you're Malaysian and you really scared (in Chinese, we call it “Kia Su”), you can make sure your tyre has the “Sirim” Logo but please also make sure it contains DOT code or the E-mark code as well. If you’re super scared (i.e. super Kia Su), you can make sure you tyre has 3 of them (i.e. DOT code, E-mark, and Sirim)!!!
Summary
Tyre is the most important safety that we all should pay attention to but it often gets ignored. You should understand how to read these codes on your tyre (at least the manufacture date), to make sure it is not old or expired (i.e. > 4 years) and make sure it has the proper certification (i.e. DOT code or the E-mark). You should also often check your tyre condition (e.g. enough air pressure – usually is 32 psi for normal compact car). Good luck!
Merry Christmas & Happy New Year 2011! Drive safely too…
From that time onwards, I always pay attention to my tyre and to make sure it gets changed maximum every 4 years. Well, the usual recommendation is you should always change every 2 years to 4 years for safety purpose. The reason is most tyre manufacturer only has 4 to 5 years warranty period. So assuming if your tyre is brand new, you can only used up to 4 years or 5 years.
Wait a minute! If you buy a tyre in 2010, does that mean you should change in 2014? Well, that is only true if your tyre was made in 2010. If your tyre was made in 2009, you should change in 2013 and if your tyre was made in 2008, you should change in 2012 (which is 2 years after you buy a new tyre). So, it is extremely important to understand when your tyre was made? If it was made in 2006, your tyre has already expired although you buy a new one. You’re being cheated!
How to check tyre manufacture date?
Well, tyre manufacture date can be found from your surface of your tyre. What you need to do is look for the 4 digit numbers. First 2 digit numbers represent the week of the years (1 year has 52 weeks) and the second 2 digit numbers represent the years after 2000. Here are the few examples that you can see from your tyre:
As you can see, the 0907 refers to this tired was made in week 09 of 2007.
The manufacture date (i.e. 2307 - week 27, 2007) is usually stamped at the right side of the DOT code as you can see below:
However, I’ve seen not all tyres are like that. So the rule of thumb is just to search for the entire tyre that contains the 4 digit numbers. So, please make sure you check your existing tyre (is it already expired?) or the new tyre that you buy (is it really new?).
My recommendation: You should only buy new tyre with less than 1 year old. Please check every time you get a new tyre and don’t be cheated. This is also good for your safety.
P/S: Well, if you don't see any 4 digit numbers. This is usually the 4 digit numbers are at the other side of the tyre. For some tyres, only one side have the manufacture date information. An inexperience worker may not aware of it and fix your tyres wrongly. The date should be always faced outside.
US, Europe or Malaysia Certification?
There are basically 2 international standards of certification. In US, the DOT code is being used and in Europe, the E-mark is being used. Your tyre should at least contains minimum one of them (either DOT code or E-mark). The following shows example of DOT code and E-mark (e.g. Eii or E4) from your tyre:
However, as for Malaysia certification, it is usually marked with the “Sirim” logo and the word “SNI” (optional). The following shows example of the “Sirim” logo (i.e. MS) and the word “SNI”.
Well, “Sirim” and “SNI” is in fact not a big deal (although it seems to be a big deal). If you have the “Sirim” and “SNI”(optional) mark on you tyre, you still want to make sure you have a least one of the either the DOT code or E-mark on your tyre. Having US or Europe certification is most important thing. If your tyre is made in Malaysia, the "Sirim” and “SNI”(optional) marks must be there.
My recommendation: You should make sure your tyre must at least contain the DOT code or the E-mark code. If you're Malaysian and you really scared (in Chinese, we call it “Kia Su”), you can make sure your tyre has the “Sirim” Logo but please also make sure it contains DOT code or the E-mark code as well. If you’re super scared (i.e. super Kia Su), you can make sure you tyre has 3 of them (i.e. DOT code, E-mark, and Sirim)!!!
Summary
Tyre is the most important safety that we all should pay attention to but it often gets ignored. You should understand how to read these codes on your tyre (at least the manufacture date), to make sure it is not old or expired (i.e. > 4 years) and make sure it has the proper certification (i.e. DOT code or the E-mark). You should also often check your tyre condition (e.g. enough air pressure – usually is 32 psi for normal compact car). Good luck!
Merry Christmas & Happy New Year 2011! Drive safely too…
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