He makes BIG MONEY in shares, not soccer - By Joyce Lim

Great work there Chyelink.

Cheers
Niversphere.


Article excerpted from He makes BIG MONEY in shares, not soccer

* LAST WORLD CUP: Civil servant turns down friends' offer to bet on matches, instead he buys shares
* Now: They've gone broke, but he's worth $800,000. His salary? Just $3,000 a month

MR Roger Koh aims to become a millionaire in less than 10 years.

And it is not just a pipe dream for the 33-year-old civil servant, even though he draws a monthly salary of just $3,000.

In fact, he's just $200,000 shy of it.

Like some Singaporeans, Mr Koh has $500,000 in CPF, insurance and housing.


--Joyce Lim
But unlike many Singaporeans, he has $300,000 in cash and shares. His four-room HDB flat in the west and Japanese saloon car have also been fully paid for. This brings Mr Koh's total assets to $800,000.

Showing his latest bank and CPF statements to The New Paper on Sunday, Mr Koh proudly declares that he is debt-free.

And in a country where Singaporeans are quick to swipe and sign, Mr Koh is a rare breed.

He claims he has never owned a credit card.

Indeed, Mr Koh, married with a 1-year-old son, hates spending on credit and prefers to pay with cash or by Nets.

But he might not have the comfortable life he's leading now if he had gambled on the World Cup four years ago.

He contacted us after reading our report about a man who became a bankrupt after he gambled away all his money on World Cup matches.

The story struck a chord with Mr Koh as he too had once come close to losing his life savings on soccer bets.

He recalled: 'My friends and colleagues asked me to chip in on their bets. They told me, 'Sure win'.

'But I didn't believe them because they were soccer fanatics, and every match to them was a sure win.

'I'll place my money only on something I know well. Though I like playing soccer, I don't really follow soccer news or watch the matches.'

So Mr Koh watched from the sidelines as his friends placed huge bets.

'When I told my friends, 'No, thanks', some of them made fun of me and called me kiasu and kiasi (afraid to lose and die in Hokkien),' he said.

'When they won, they would say to me, 'See, told you to buy, but you didn't want'.'

STOOD HIS GROUND

Many times, he was tempted to take the plunge, but each time he said he stood his ground.

Instead, he put his money in shares, even though the stock market was languishing then.

'My friends, who won in the soccer matches, laughed at me for putting my money in stocks. They said that the market will keep going down. But I thought otherwise,' said Mr Koh, who holds a local diploma in business studies.

'I recalled how there was a rebound in the stock market after the 9/11 incident. So I decided to take the chance and invested all my money then.'

'I spent my time reading up on financial news and wrote e-mails to company CEOs to ask about their financial reports.'

With a capital of $30,000 in his CPF account and $50,000 cash, Mr Koh first invested in unit trusts and stocks.

Withing a year, he made $100,000.

His current portfolio includes shares in HTL International, Unisteel, BestWorld and TPV.

In four years, his investment portfolio increased by more than 160 per cent.

His friends, on the other hand, landed themselves deep in debt - many of them got burnt by gambling on the World Cup.

Mr Koh said: 'They lost their promotions, advancements, and most importantly, their loved ones, as the debt was too much for them to handle.

'Some of them tried to borrow money from me. But I refused because I didn't think it would do them any good.

FRIEND DECLARE BANKRUPT

'One of them, a property agent, was more than $50,000 in debt and finally had to declare himself a bankrupt.

'Another colleague's career was affected when his boss found out about his gambling from debtors who visited him at the office.'

Looking back, Mr Koh said he was glad he stayed away from football betting.

'Now, I aim to help my friends or relatives in their investment portfolio.

'I don't just concentrate on making money. I also want to give back to society by donating blood 100 times before I reach 50. I have since donated blood 42 times.'

And since the World Cup is just round the corner, Mr Koh has pasted The New Paper on Sunday report at his work desk to remind his colleagues about the pitfalls of soccer betting.

'I'm glad your paper ran the report. I hope it can serve as a reminder to readers not to blindly place their money on something they don't know about.'



--------------------------------------------------------------------------------
Odds are stock market will be hit

FORGET about the stock market.

Come June, punters will be watching the likes of Ronaldinho, David Beckham and Roberto Carlos make their runs down the soccer field rather than the rise and fall of the Nikkei, Dow Jones and Hang Seng indices.

With Berlin 2006 kicking off in just over a month, punters are more likely to be putting their money on the World Cup.

Some analysts believe that many retail investors and contra players, who look for short-term gains in shares, will shift their resources to football betting.

Remisier James Quek, 30, feels that the World Cup will ease share-trading activities.

'There will probably be less speculative trading,' he said.

'Even though share trading and soccer betting are two different things, the latter is still an opportunity to make money.'

HYPE

With less liquidity, share prices are set to fall.

'Some people may just take advantage of the situation and come in during the World Cup period,' said Mr Quek.

There are bound to be some brokers who will be distracted by the World Cup and their work attitude will be affected.

'Maybe there'll be a lot of hype in the first few matches. The middle part will be quieter until the finals,' said Mr Quek.

During the last World Cup in 2002, turnover on the SGX was almost halved in June, compared to the previous month. Share prices also took a hit.

However, a veteran remisier, who declined to be named, feels that today's market cannot be compared to four years ago.

She said: 'There was the crisis back then. Our economy has since recovered and we've recently been seeing a high volume of China stocks here.

'Also, with the General Elections, the market will do well,' she said.

Share investor Andy Ang, 28, agreed.

'In fact, people are speculating that the STI will go up even more,' the engineer said.

He is looking forward to the World Cup's kick-off on 9 Jun, but said he will not neglect his stock market activities.

Most of the investors we spoke to also said they would not be dumping their money into football preferring shares.

Though share speculation is also a form of gambling, it is still safer than soccer betting as losses can be reversed if the share price recovers.

Share investor Andy Ang said although he is looking forward to the World Cup's kick-off on 9 Jun, he will not neglect his stock market activities.

Engineer Ray Tan, 30, is also not bothered by the World Cup.

'I don't give a damn about the World Cup. Not everyone is into soccer,' he said.

'Some investors will probably be watching soccer matches and be less focused on the stock market.

'In that case, fewer stocks will be traded, which could result in depreciating share prices.'

This means the World Cup may actually be a good time for investors to go bargain hunting.

Why Global Testing share price not affected by recent share placement?

I have been reading some forums on Global Testing and noticed that some investor's education(in stocks) less than satisfactory. There was another thread which claimed that TMSC and other shareholders are selling Global Testing on the open market following the share placement news.

To clear some doubts, i wrote this article here. Global Testing placed 245,000,000 Ordinary Shares comprising:- (A) 175,000,000 New Shares; And (B) 70,000,000 Vendor Shares. The net asset


Thanks for your question as to why Global Testing’s net asset value (NAV) went up instead of down after the issue of 175 million new shares. Why isn’t there a dilution of its NAV?

The NAV went up because the new shares were issued at 31.25 cents which is higher than the pre-issue NAV of 22.54 cents.

The 175m new share actually was supposed to cause a dilution in the share price as the issue price of 175m new shares was at a discount of 4% to the prevailing market price of 32.5 cents (if my memory serves me right). The announcement of the new share issue caused a pull back in share price for only a day or so. When the market realized that the proceeds would be used for expanding and upgrading the production facilities in anticipation of a soaring demand, the share price then reversed its pull back and skyrocketed to 38 cents within a matter of days.

Normally new share issues cause a dilution in share price but not NAV because NAV is usually less than half or even one third of the traded share price for manufacturing and trading companies and a smaller fraction for service companies like education or IT services. But for property and hotel companies, share prices are commonly 20 to 40 % below NAV. For such companies, a new share issue could result in a dilution of NAV.

The Wit and Wisdom of Peter Lynch - By Kaushal B. Majmudar, CFA

We were fortunate to have an opportunity to hear Peter Lynch speak at an investment conference in New York about a year ago. Peter is, of course, the famed ex-manager of the Fidelity Magellan Fund. Under his stewardship, the Magellan Fund, which he ran from 1977 to 1990 grew from a small $20 million fund to $14 billion in assets when he stepped down to focus on family and other interests. In 1983 (just 6 years after he took over), the fund had grown to $1 billion on the back of Peter's exceptional performance. More specifically, according to a secondary source quoting Valueline, Lynch achieved an average annual return of 29% per year over his 13 years running the Magellan Fund.

Besides his fame as an exceptional investor who helped thousands through the fund, Peter is also well know for writing two very good books on investing that became best sellers. Peter's fund continued to perform well even as the fund became the largest equity fund in the country. Peter Lynch was only 46 when he retired (no doubt to the consternation of his many investors) at the top of his game. According to Peter, the fund continued to outperform the market for the next 7 years after he left! Also interesting to students of investing and value investors in particular is that Peter's approach featured wide diversification and opportunistic flexibility to buy any company for the Magellan Fund without arbitrary size or value versus growth limitations (in today's parlance the fund had a "core" approach).

In sharing his comments, Peter was exceptionally funny and entertaining. Though he has probably delivered some version of this talk many times (indeed he had a handout with his main bullet points on it - summarized below), he also made some comments that were clearly off the cuff. For example, the host of the conference was an investment bank that was very proud of being the bank with the highest profits per employee and after Peter was introduced, he quipped that "It makes you wonder why they don't hire more people."

In any event, the meat of Peter's comments were essentially straightforward and very common sense oriented. Peter shared his rules/observations on investing (8 of them) and proceeded to share some thoughts on each point and then talked about 10 wrong-headed and dangerous things that people say (often to themselves) about investing. It never hurts to review the fundamentals and glean insights from superstars like Peter so we took the time to share the essense of his message below.

After each of Peter's fundamentals, we provide a brief synopsis of his key comments or message relating to that fundamental. The discussion below includes our own observations on the several parallels to Warren Buffett's wisdom on investing. At The Ridgewood Group, we find it encouraging that many long-term successful investors like Peter Lynch and Warren Buffett seem to share many of the same key fundamentals since it means that other investors also have a fighting chance to learn and learn to properly apply these same fundamentals in order to become better investors.

Peter S. Lynch's Fundamental's of Investing
1.) Know What You Own - Most people don't really know the reasons why they own a stock - you should. Ed's Note: Similar to Ben Graham and Warren Buffet's Businesslike Investing in your Circle of Competence

2.) It is Futile to Predict the Economy, Interest Rates and the Stock Market(So Don't Waste Time Trying) - "If You Spend 13 minutes per year trying to predict the economy, you have wasted 10 minutes" Focus on the "facts" now at hand rather than predictions about the future

3.) You Have Plenty of Time - to identify and recognize exceptional companies. If you bought WalMart AFTER it rose 10x in its first 10 years, you got another 60x return over the next 30 years. Bottom line: Don't be in a rush - look at plenty of stocks, but be patient. Note: Buffett's "Wait for the Perfect Pitch"

4.) Avoid Long Shots - his record was ZERO out of 25 investing in companies with no revenues but a "bright future" to sell. His advice if you run across a company that falls into this category but still excites you - do nothing and write down the name. Look at it again in 6 to 12 months and see if you still think it is good. If it is one of the good ones and went from 5 to 15 while you waited, per point #3 above, you probably still have plenty of time. Note: Following this rule could keep you out of trouble. Benjamin Graham and Warren Buffett talked about avoiding Speculations and focusing on Investments instead

5.) Good Management is Very Important and Buy Great Businesses - good management is very important - maybe even the most important consideration. It may also be the most difficult item on this list to get right. His advice: look for good companies because a good management in a bad business will probably fail. "Buy a business any fool can manage because eventually one will" Buffett has also observed that when a good management meets a bad business, it is the reputation of the business that generally prevails.

6.) Be Flexible - lots of unexpected things happen, some good and some bad. Many of his best investments happened for the "wrong" reasons, i.e. his original thesis was off, but the investment still worked out. Sometimes he was absolutely right about the growth but the investment was still lousy and he did not make any money. So be flexible and humble

7.) Knowing When to Sell is Hard - before you make a purchase, you should be able to explain why you are buying/own it in terms that an 11 year old could understand - three sentences at most. Remember this reason and sell the holding when the reason no longer continues to hold. Investing well does not take a genius - only need 5th grade math - so math has nothing to do with being a great investor

8.) There is Always Something to Worry About - and this makes things interesting. The 1950s were one of the best decades to own stocks, but from a geopolitical basis everyone was scared of nuclear war. In the early 1990s, everyone was scared about the Japanese taking over the world and beating America. Not coincidentally, more all-time worst market days occur on Mondays because people have the whole weekend to WORRY. His advice is to forget about all the global bad stuff because the key to good investing is not the brain/intellect, its having the stomach.

In addition to the above points, Peter also shared his Ten Most Dangerous Things People Say About Stock Prices reproduced below. Even more than the points above, Peter's good sense of humor came through when he discussed these old saws:

1.) "If it's gone down this much already, how much lower can it go?" (answer: Zero)

2.) "If it's gone this high already, how can it possibly go higher?" (some of the best companies grow for decades)

3.) "Eventually they always come back." (no they don't - there are lots of counterexamples)

4.) "It's only $3 a share, what can I lose?" ($3 for every share you buy)

5.) "It's always darkest before the dawn." (Its also always darkest before it goes absolutely pitch black. Don't buy a business just because price dropped and it is cheaper now)

6.) "When it rebounds to my cost, I'll sell." (The stock does not know you own it! Don't take it so personally Note: this comment is explained by the well documented psychological tendencies called loss aversion and anchoring bias which are talked about in Behavioral Finance. If you liked it at ten, you should love it at 6 so either buy more or sell)

7.) "What me worry? Conservative stocks don't fluctuate much." (There is no such thing as a conservative stock - the average stock fluctuates between 50% to 70% from its high to its low price every year. There is a graveyard where all the "conservative" stocks get buried. Companies and businesses change!)

8.) "Look at all the money I lost - I didn't buy it!" (Don't beat yourself up about the missed opportunities because it is not productive - when he managed the Magellan Fund, he almost never owned one of the 10 best performing stocks in a given year, but he did fine anyway).

9.) "I missed that one. I'll catch the next one." (Doesn't work that way)

10.) "The stock has gone up - so I must be right" or "The stock has done down - so I must be wrong." (Technical analysis is not worth much. So many people like something at 20 and hate it at 12 - never made much sense to him).

Peter's fundamentals, like those of many other super investors are grounded in common sense and an understanding of human misjudgments and failings. At the Ridgewood Group, we draw inspiration from outstanding investors like Peter who remind us that in investing our greatest challenges are often internal and psychological.