火燎森 - 我向巴菲特借第一個1,000萬

書中作者除分享了多次創業的經歷，亦詳述其反對分散投資及適當運用貸款投資等反傳統的投資智慧。
書中描述了一個「生意」青年的心路歷程，當中有關如何 investing from business perspective、為何應該集中投資自己熟悉的項目、如果管理借貸風險、fundamental analysis/ value investing 與 technical analysis 的取捨等，都是此書值得一看的原因。

劉創楚 - 20/80 時 代 智 富 路

劉創楚 - 20/80 時 代 智 富 路

快讀劉教授最近出版的《 20/80 時 代 智 富 路 》，當中最吸引的，可算是劉教授的個人故事：40年前的孤兒因饑荒徒步來港、寄人籬下在惡劣的環境苦讀最得博士學位、在「佳寧」一役痛失所有四十萬圓身家後惡補三年理財知識、致令擁數以千萬明年退休。

劉教授相信時間是最佳拍檔，好股真正價值需要時間來反映；要有長 線持有的心理準備，最少要5至10年，其間股價越升，代表自己看法正 確，越升越唔怕買。

劉教授看今日中國經濟情況，就如80年代的日本和香港，正值高速增長年代，建議長線投資龍頭股如中移動、中國人壽、招商銀行、建設銀行等。

論勢 - 曹仁超創富啟示

速讀曹Sir新作，非常認同以下觀點：
1.儲蓄致富觀念過時，通脹蠶蝕金錢購買力；
2.盡早開始投資理財，並準備終身學習；
3.投資策略應個人化，理財要有目標及計劃，不可冒不能承受的風險；

曹Sir投資智慧是採取由上而下方式(top-down approach)，由大圍經濟開始 (3W-where, when, what)。曹Sir大勢看法:
1.國內民企難與國企直接競爭
2.美日經將失領導地位，金磚四國崛起

曹Sir選股條件﹕
1. 良好管理
2. 公司具創意
3. 毛利率達15%
4. 良好財政狀况 (低負債)

曹Sir格言：有智慧不如趁勢，止蝕不止賺，溝上唔溝落。

曹Sir趁勢投資智慧與傳統價值投資相異，但仍深具參考價值。

證券分析實踐--從香港經驗認識國企前景

points to consider for stock picking:
general:
1) economic franchise + market demand
2) product, service & price setting satisfy market demand
3) management quality
4) 4-5 year EBIT, profit margin, ROA, EOE
5) cashflow, capex need, debt/equity ratio
6) return of new investment
7) dilution of equity interest?
8) ratio comparison within the industry

banks:
1) book value (P/B ratio)
tier 1 capital: equity
tier 2 capital: bond + CD
2) loan growth
3) ROE
4) bad debt, provision / total advances
5) cost / income ratio

life insurers:
1) cost /income ratio
2) embedded value: EV ( P/EV ratio, PEVG)


conclusion: it is an old but still good book..

富爸爸series

just revisited the three books of the 富爸爸 series, the present ideas are impressive.

in short, we should

• identify correct assets (which generate incomes) & liabilities (which generate expense)
• increase in non-salary income
• use 'healthy' debt to generate income (use other people's money)
• reduce tax (via tax-deductible expense )

只賺不止蝕

<<只賺不止蝕>> 不但集合了熱門網誌 - 市場先生自語 (http://hk.myblog.yahoo.com/mr-market) 的精華文章，同時也敘述了一位長線投資者在上上落落的股市之中自處的心路歷程。

我最有興趣的，是市場先生個人經歷的分享：
92年炒外匯孖展輸晒幾萬蚊本金，期後睇報紙財經版跟講股佬買股由50幾萬輸剩15萬，再從失敗經歷反省而學會價值投資，到現在擁令衆人羨慕的投資組合...

當中不單見証了市場先生的個人努力與成長，更能鼓勵讀者同樣通過學習和實踐達成財務自由。

謝謝您，市場先生！

參考:
http://hk.myblog.yahoo.com/mr-market/article?mid=156&fid=8&action=prev
http://hk.myblog.yahoo.com/mr-market/article?mid=161&fid=8&action=prev

Analysis on Li & Fung (0494)

I try to apply the three methods mentioned in Buffettology again on 0494:

1) yield

• current stock price is $28.4, historical P/E is 42.33
• the current 10 year treasury yield is around 5%; Li & Fung earning yield is around 2.36%, 5-year average EPS growth rate = 15.59%

2) EPS

• assume EPS growth rate = 15%, diviend payout ratio = 90%

3) ROE

• assume ROE = 30%, diviend payout ratio = 90%, current price = $28.4

In short, if the expected P/E is 10-30 in 5 years time, the expected annual return is from -11.22% to 14.73%.

Note:
As of end 2006, the 5-year average EPS growth = 31%, 5-year dividend payout ratio = 92.37%, 5-year average ROE = 30.77%.

In 2006, the dividend payout ratio is 84%

As of 1H2007, EPS growth rate = 31%, ROE = 25.6%.

無憂理財7堂必修課

速讀蘇偉文的新作，當中帶出一些生活理財的基本但重要知識：

1. 目標 - 財富累積須要目標、計劃，一步步實行，並好好利用複息效果。
2. 規劃 - 金字塔式，緊急基金、保險、儲蓄及投資。
3. 消費 - 理財首要量入為出。
4. 投資 - 投資不單是為了保障將來，現在的生活水平亦須得到平衡；苦行僧式儲蓄並不可取。
5. 融資 - 投資融資與否取决於資金成本。
6. 保險 - 定期壽險 + 自行投資一般較儲蓄壽險有效累積財富。
7. 退休 - 移居海外或可提升生活質素、減少花費；須要時回歸香港，享受低廉醫療服務。

Dr 蘇不但分亨了他的成長經歷，也提醒讀者理財是手段，改善生活才是最終目標，千萬不要作金錢的奴隸。

一本非常值得一看的好書。

First Analysis on China Mobile (941)

I try to apply the three methods mentioned in Buffettology again:

1) yield

• current stock price is $96.6, historical P/E is 29.1
  
• the current 10 year treasury yield is around 5.x%; 941 earning yield is around 3.44%, 5-year average EPS growth rate = 18.2%

2) EPS

• assume EPS growth rate = 20%, diviend payout ratio = 45%

3) ROE

• assume ROE = 19%, diviend payout ratio = 45%, current price = $96.6

In short, if the expected P/E is 12-17 in 5 years time, the expected annual return is from -6.75% to 10.08%.

Note:
As of end 2006, the 5-year average EPS growth = 18.2%, 5-year dividend payout ratio = 32.22%, 5-year average ROE = 18.99%.

In 2006, the dividend payout ratio is 47.19%

As of 1H2007, EPS growth rate = 25.65%, ROE = 21.15%.

Roller Coaster

A deep-V rebound is found when looking into latest (17Aug07 Friday) intra-day chart of HSI, with high-low difference of 1374 points (from 20,761.31 to 19,386.72).

Complaints were heard that it was just like riding on Roller Coaster: feeling like a disaster & fear when it fell over 1200 points at 2:45pm; and feeling surprise & confident when it rebounded over 1000 points at 4:00pm.

This reminded me on Buffett's view of "Mr Market". Personally, I think acting unlike Mr Market is not easy, but it worth to train up the FQ, EQ, risk management as well as valuation technique in order not to be affected by the short term market movement.

Some value investors suggest to buy on the current bargain price, while some others suggest to cut-lose and re-balance. I don't know which one is better, but a sound and long-term risk management & allocation strategy should be in place.

Friends, good luck and enjoy the machine game in the exciting stock market theme park =)

First Analysis on HSBC

I try to apply the three methods mentioned in Buffettology:

1) yield

• the current 10 year treasury yield is around 5.x%; HSBC earning yield is around 7.5%, 5-year average EPS growth rate = 21%

2) ROE

• assume ROE = 15%, diviend payout ratio = 55%, current price = $142

3) EPS

• assume EPS growth rate = 20%, diviend payout ratio = 55%

In short, if the expected P/E is 12-15 in 5 years time, the expected annual return is 9.78%-28.09%.

Note:
As of end 2006, the 5-year average EPS growth = 21%, 5-year dividend payout ratio = 62.9%, 5-year average ROE = 12.81%.
As of 1H2007, EPS growth rate = 22%, ROE = 19.1%.

Buffettology (2)

A continuation of the previous article named "Buffettology".

Three ways to calculate the expected return of an long term stock investment:

1) compare current earning yield (i.e. 1/PE) and long term EPS growth rate with long term interest rate
e.g. for HSBC, historical earning yield = 7.7%, and 5 year EPS growth rate = 21%; current 10 year treasury bill yield around 5%

2) by using ROE, dividend payout ratio, book value & range of historical PE ratio.
i) use current book value & long term average ROE * (1-dividend payout ratio) to project future book value;
ii) use projected future book value & long term average ROE to project future EPS;
iii) use projected EPS & range of historical PE ratio to project future stock price;
iv) add dividend pool to projected future stock price and compare with current stock price to estimate expected return.

3) by using EPS, long term earning growth rate & range of historical PE ratio.
i) use current EPS and long term average earning growth rate to project future EPS;
ii) use projected EPS and historical PE ratio to project future stock price;
iii) add dividend pool to projected future stock price and compare with current stock price to estimate expected return.

陸羽仁 - 股俠創富II鱷口偷金

Just find a "Peter Lynch Formula" mentioned in this book, which is
100*(dividend yield + long term growth rate) / PE >= 1.5

if dividend yield = 0, it means PEG <= 0.67, sounds quite conservative;
if growth rate = 0, i.e. dividend = earnings, it means p/e <= 8.16 or e/p >=12.2%, sound reasonable ?

Buffettology

Revisited this old book, and the content is quite similar to those mentioned in 'The Warren Buffett Way', except
1) use ROE to measure "return to shareholders" ;
2) measure the "value creation" by (increase in earnings over a period) / accumulated retained earnings over the same period, e.g. 5 or 10 years.

I think the first point is okay if depreciation expense is in similar amount as capital expenditure, while the second point can help eliminate the effort of market sentiment on stock price, which in turn affect the market value.

沃倫·巴菲特之路

i am now reading this book, and would like to summarize the principles of investing from business perspective presented.

I. Corporate

1. simple: the business must be simple and be fully understood in every aspect (profit, expense, cash flow, labor relationship, price elasticity, capital need, capital allocation, etc);
2. consistent & proved business model: avoid business which always change;
   
3. economic franchise/consumer monopoly: strong demand, no close substitutes, ability to raise price against inflation;

II. Management

1. rational capital allocation: invest only if return > cost of capital, otherwise pay dividend or repurchase, avoid diworsification;
2. honest: admit to errors, act to the best interest of shareholders;
3. able to act against the crowd: do not follow the crowd without independent thinking;

III. Finance

1. return to shareholders: measured by (earning before unusual, infrequent or extra-ordinary items + depreciation - capital expenditure) / equity;
2. low leverage ratios: less loan borrowings;
3. cost control: high profit margins;
   
4. value creation: increase in market value > increase in retained earnings in long run;
   

IV. Market

1. corporate value: measured by discounted cash flow method, avoid business with unpredictable cash flow to ensure accuracy, and use long term interest rate as discount rate;
2. safety margin: buy only when market price much cheaper than corporate value.

強積金基金開支比率（ FER ）

消費者委員會剛剛發表基金開支資料。

先釐清基金開支的定義：基金開支包括基金管理費、受託人費、法律服務及核數師費等，並在基金資產中直 接扣除；但不包括供款人直接或間接支付的費用開支，例如計劃參加費、年費、供款費、賣出及買入差價、權益提取費等。不過這些費用很多也有豁免。另外，部份 基金收取「表現費」或「獎勵費」 - 最高可收取基金單位在期內的資產淨值升幅的 20%

消費者委員會調查包括的 35 個強積金計劃按資產比重計算的平均 FER 為 2.06% ，由 1.61% 至 2.52% 。

跟据譚紹興的資料，強積金基金收費相對一般股票基金平均高出 0.5 個百分點 。

0.5 個百分點 的分別看來並不起眼，但以 40 年供款年期，年回報 10% 計，0.5 個百分點的開支將令最終退休款項減少約 12.7 % (可超過百萬港元) ！

強積金不能逃避，但基金開支何時才能降低？

reference:
http://appledaily.atnext.com/template/apple/art_main.cfm?
iss_id=20070718&sec_id=15307&subsec_id=15326&art_id=7336848&amp;amp;
cat_id=81&coln_id=6794993

http://www2.consumer.org.hk/p369/mpffee.pdf

2366 & 398

The recent price performance of the following two stocks catch my eyes:

Although both of them have some 'concepts', the massive raises after long silent period are good indications about the current market sentiment. Does it forecast the end of the bull market as well?

Fundology

Just finish reading this book, which is written by an award-winning fund of fund manager.

The author shared his view that top-down investment approach should be adopted (identify high growth geographic markets or industry before picking individual funds / equities). He also shared that picking a good fund is actually picking a good fund manager, whose investment approach you should know well and agree with.

Although the skill is quite remote for a retail investor, I was impressed by the author's warning to avoid funds with 'hockey stick shape' past performance, which was simply too good to sustain.

I just thought of an example:


























(from hangseng.com)

彼得·林奇的成功投資 (One up on Wall Street - Peter Lynch)

Just scanned the book, and impressed by the suggested idea of identifying investment target from daily lives.


I tried to summarized the stock-picking tips as follow:

1) PED <=1, the higher growth rate the better
2) debt/equity < 1/3
3) consistently growing dividend
4) high earning before tax
5) high level & proper usage of cash
6) high free cashflow (cashflow less capital expenditure)
7) inventory should not grow faster than sales revenue
8) pension asset >= pension liabilities
9) high operating profit margin (for long term investment target only, may not be true for short term)
10) buy right stock at the right price, sell only when the fundamentals deteriorates. (e.g. for blue chips, sell when p/e much higher than industrial average)

The Little Book That Beats the Market

Just reading the book of "The Little Book That Beats the Market", which suggests a simple method for stock picking with two criteria:
1) high return on capital by EBIT/(net working capital + net fixed assets),
where EBIT = operating earning or earning before interest & tax
(net working capital + net fixed assets) = total tangible asset - non-interest bearing loan
2) high earning yield by EBIT/EV
where EV = enterprise value, = (market value of equity + net interest-bearing debt)

The author quoted that this simple approach has worked extremely well over the years.
Over the past 17 years, owning a portfolio of about 30 stocks that had the best combination
of a high return on capital and a high earnings yield would have returned approximately 30.8% per year.

remarks: the author suggests to eliminate non-US stock, utility & financial stocks (banks, insurance companies, mutual funds etc) when using the criteria.
=============================================================

personally, i think these two ratios can help picking companies with good operating efficiency.

however, i query if the ignorance of debt may be a problem.
Take the following example:

	Company A	Company B
Sales	100	100
EBIT	10	10
Interest expense	0	5
Pre-tax income	10	5
Taxes (@40%)	4	2
Net income	6	3
Equity	100	50
Debts	0	50

Assume no goodwill, no non-interest bearing loans, and market value of Equity equals book value,
the ratio of EBIT/(net working capital+net fixed assets) of both Company A & Company B
= 10/(100) = 0.1; the ratio of EBIT/EV = 10/100 = 0.1 as well.

However, investors of the Company B, which is more risky due to higher leverage, should demand a higher return.

基金 vs ETF?

上回提及多位財經友人都不願投資基金，即使强迫選擇也只會選管理費成本較低的交易所買賣基金 (ETF)。

交易所買賣基金多追蹤某股票指數作被動式投資，如盈富基金 (2800)追蹤恒指表現 。不過，即使投資同一市場，由於追蹤不同指數，基金表現也可能有很大分別。


(擇自萍果日報)

另外，由以下比較圖可以看到，一隻表現優異的開放式基金，相對指數基金而言，長遠能為投資者帶來越倍的回報。


(擇自中銀香港網站)

基金 vs 股票

與多位熟識股票投資的朋友傾談，發現他們都抗拒投資基金，原因多是認為基金收費高，自行選股能達到更好回報。

不過，筆者認為基金可分散風險、分享海外市場回報，應是整個投資組合的重要一環。

回想十年，亞洲金融風暴期間，香港以至整個亞太區股市皆受震燙，同期歐美市場却不受影響，可見全球市場並非完全關聯 "perfectly correlated"。




雖然近一、兩年中國市場己成全球焦點，中國相關股份被普遍認定為是最有前景的投資對像。但環觀其他新興市場如東歐、亞太區、印度以至拉丁美洲，過往數年指數升幅並不遜色。

另外由於直接買賣外地股票成本不輕，基金是低成本分散風險及分享回報的好工具。

供還是租？

近日一友人因居所財務安排而煩惱。

友人現有物業已做按揭，月供約 HKD7000(當中約 HKD4000 為利息)，預期樓價升值潛力有限，故考慮轉供為租，放售物業並租回同區單位，月租約 HKD5000。

友人認為此舉能減少每月支出，及吐回首期 ，但暫時沒有投資計劃，短期亦無開支壓力。

這情况表面是租比供好，但細想下供款中的 HKD4000 利息才是成本，加上免却搬遷的一次性開支，單從財務上看，似乎還是供比租好 ？



後記﹕得高人提點，在考慮租或供樓的問題時，還須留意以下要點﹕
１．可收回資本的無風險回報；
２．差餉地租；
３．管理費；
４．可能出現的維修費用；
5．供樓利息開支的稅務扣減；

假設差餉、地租、管理費均不包括在租金內，沒有重大維修費用，及轉供為租可收回四十萬元，以3%存款息口個，即每月收回HKD1000，可填補部分增加了的租金支出。

另外，假設業主邊際稅率為 20%，如可利用稅務扣減，實際供樓利息開支應為 HKD4000 *(1-20%) = HKD 3200 。