Events Unveiled so far in this Credit Crunch.

Been busy with work and my exams coming up, guys. Sorry for the delay as i have not come up with my new post for around a month.

FerroChina has released their annual report for FY2007. It was not as good as expected, as they only take into account 2 months of revenue from Superb Team, their new subsidiary, rather than 3 months. But nonetheless, FerroChina grew 41.7% in net profit from the previous year.
I have no doubt FerroChina's share price will go up on the long run. (Current Price is 1.23) Its current PE ratio of 5.8 is at a really low valuation. My calculation of its Intrinsic Value is at around $3.50. I will proceed to review how i have calculated this value in my next blog.
But i would want to discuss about the current credit crisis is US which has affected the global markets which led to the downturn of events.

Is US in recession? How does this sub prime crisis come about ? I came across this book, ' The Trillion Dollar' Meltdown' which discussed about how the subprime credit crunch has evolved and the causes of it.
After reading the first few chapters, i was intrigued by how the events turn out to be this way. If you want me to use one word to describe the cause and downturn of this crisis, it will be GREED.

As many of us know the recent downfall of Bear Sterns has caused many of its shareholders to lose a big part of the value of their shareholdings. Its share price dropped 80+ % overnight. JP Morgan snapped it up for only $2.35 a share.

We may not recall that in mid-June last year, Bear Sterns was the first to show any signs of market downfall by disclosing that two of their mortgage hedge funds could not meet margin calls. ( Unfortunately they will not be last to end this meltdown) They would therefore had to cough out$3.2 billion to save their funds.

During that time, cooler heads reminded the world that subprime mortgages were a small market and the problems were contained.
Then subprime-related problems began to pop up all around the world. A $900 million London hedfe fund closed its doors. German and Swiss banks announch big writeoffs. Markets began to panic when even China was affected. In August, the Fed and European Central Bank injected their economies with fresh money.

It did not help when Citigroup wrote off $400 Billion. Merrill Lynch wrote off $5 billion in asset write-downs. Its CEO, Stan O'Neal was fired. Citigroup's Chuck Prince left the bank. How many times have we seen the Federal Reserve cut interest ratesss for the banks to borrow money from them? Its current rate is at 2.25% (Was around 5% in June 07) It certainly is not improving the situation so far.

Many top executives are being retrenched. Stock markets have hit to all time lows. US dollar is suffering. It presents a great opportunity to Value Investors like us. Thus I would like to give an insight of my view on how long the subprime crisis will last in my subsequent blogs, and discuss about which industries we can look into.

Meanwhile, I will be looking for new investment opportunites, and looking be a long term shareholder of a Great Company.
See all you people soon!

Cheers,
Derek

Attention to Value Investors Out There

Value Investing is an art. We as retail investors only have limited resources and information. But what the art of value investing requires is the ability to pick stocks with the absence of emotions. This is where behavioural finance comes into play. Temperament together with the right discipline will bring you success in long term investing.

I am very fascinated with the psychology of investing as when it comes to money, people will take more risks which they normally will do. Greed is a major factor.

To all Value Investors out there:
I am creating this blog for one sole purpose. Have you been analysing company reports day and night on your own? Have you been picking stocks on your own and showing less than optimum results? Value Investors always feel that we should not be influenced by other people's success and stick to our own investment philosophy. But when it comes to money, not all of us can resist the temptation to earn quick profits. I was a victim to greed before, and as a result lost a significant percentage of my capital.

THIS COMES THE BIG INVITATION:
I hereby seek people with this wonderful investment philosophy of Value Investing to come and form a Investment Mastery Circle.

Some people may have heard of Mastermind Groups. It is a group of people with the same passion and experties constantly meet up to share their knowledge and skills. Basically, they leverage on each other to accelerate their learning curve.

A Mastery Circle is very similar except for one MAJOR difference. We would turn our passion into profits as a team. We will share ideas and analyse company reports, different industries, identifying different barriers to entry..etc( All of Benjamin's Graham Criterias)

The amount of leverage we can get is tremendous as we will have different people with immense exposure and discipline and people with the drive and willingness to put in hard work to achieve optimum results.
Note: Warren Buffett also has Charlie Munger and other assistants when making his investment decisions.

Interested Parties: I would like to arrange an appointment with any of you to discuss about this Mastery Circle concept.
My Handphone Number is 97962494.

Cheers.
Derek