My wife joked with me that I ONLY got talktive and excited when talking about the stocks. I know that is largely true, and that was the case with yesterday evening's gathering with my old friends. The good thing is unlike my wife, my friends are also interested in stocks.
For me, it is always interesting to learn some of the success stories and mistakes from others. But I still believe I learned most from my own mistakes: mistakes I made in the past, and continue to make now. Of course it would be better if we could learn from other mistakes, because the mistakes in stock investing or trading could be costly :-(
If I could give my friends one piece of advice on stocks, that's not going to be a stock pick, a good book, or where the market will go (will Shanghai composites test 4,500 before going up again?).
The most important thing in investing, is peace of mind. I remember Buffett once said he will NOT sacrifice one night good sleep for potential profit from a speculative stock. I know in real life, we (ordinary small investors) want to make fast money. But as an old Chinese saying goes, 欲速则不达 in English, "haste makes waste" (Thanks Shanzhi for correcting this). In Golf, I remember my instructor once said: grip the club with 50 to 60% of power, don't try to hold or hit it too hard.
Because if you try too hard, you will likely hit the golf ball to a pond or a ditch. I think same rule apply to investing. In the past I have bet on earning report, or IPOs day trading, but I never made any serious money. From last thanksgiving, I started doing homework and taking a longer term view on stocks such as HMIN, EDU, MR and CROX. I still lost money from time to time, including the heart breaking mistake on CROX, but the most important of all, I believe I am still beating S&P 500 index for the year (my benchmark).
Just for fun, to commerate the one year anniversary of investing in Mindray(NYSE:MR), I listed my trades here. I started buying on the Black Friday (the day after Thanksgiving) of last year.
Wednesday, November 28, 2007
Monday, November 19, 2007
Is the Chinese bull market over?
(Update Nov. 17) Shuipi of ChinaTimes(水皮华夏时报) wrote this interesting piece on his newspaper.
(Original) It looks like it, from the highs at 6,200 in early Oct to 5,200 now. But wait a minute, recently the US stock market suffered big loss because of the sub-prime meltdown, and weakening of the dollar. How could the mess in the US drag down the Chinese stock market?
Well, one can say we are in a global economy now, the ripple effect of US sub-prime meltdown means the US business and consumer will watch their wallet more carefully, which is bad for Chinese exporters. We all know the Chinese economy depends a lot on exporting to the US.
This argument is true and popular among mainstream, but it ignored two things: 1) China is becoming less and less dependent on exporting to US, in other words, in the past few years, China is diversifying the destinations of its exports, from Europe to South America, Middle east, etc. 2) The domestic consuming is also growing fast, from automobiles, to real estate, to consumer goods. Note China Mobile is talking with Apple to launch the iPhone? Those things are unthinkable in the past.
That being said, I won't blindly bet on the Chinese market (a.k.a., the FXI index fund in traded in the US). I think there will be some winners, and some losers now that Shanghai composites index is above 5,000; that's a 100% gain from the beginning of the year.
This thesis can also be confirmed by the recent Chinese ADR IPOs performance in the US. I am only talking about companies with sustainable business here. For me that exclude online gaming and solar energy companies except SunTech Power(NYSE:STP). Some companies like Mindray (NYSE:MR) still hold its grounds amid the across board sale; while new IPO companies such as E-House (NYSE:EJ), Longtop (NYSE:LFT) Wuxi Pharma (NYSE:WX) dropped more quickly from its peak.
(Original) It looks like it, from the highs at 6,200 in early Oct to 5,200 now. But wait a minute, recently the US stock market suffered big loss because of the sub-prime meltdown, and weakening of the dollar. How could the mess in the US drag down the Chinese stock market?
Well, one can say we are in a global economy now, the ripple effect of US sub-prime meltdown means the US business and consumer will watch their wallet more carefully, which is bad for Chinese exporters. We all know the Chinese economy depends a lot on exporting to the US.
This argument is true and popular among mainstream, but it ignored two things: 1) China is becoming less and less dependent on exporting to US, in other words, in the past few years, China is diversifying the destinations of its exports, from Europe to South America, Middle east, etc. 2) The domestic consuming is also growing fast, from automobiles, to real estate, to consumer goods. Note China Mobile is talking with Apple to launch the iPhone? Those things are unthinkable in the past.
That being said, I won't blindly bet on the Chinese market (a.k.a., the FXI index fund in traded in the US). I think there will be some winners, and some losers now that Shanghai composites index is above 5,000; that's a 100% gain from the beginning of the year.
This thesis can also be confirmed by the recent Chinese ADR IPOs performance in the US. I am only talking about companies with sustainable business here. For me that exclude online gaming and solar energy companies except SunTech Power(NYSE:STP). Some companies like Mindray (NYSE:MR) still hold its grounds amid the across board sale; while new IPO companies such as E-House (NYSE:EJ), Longtop (NYSE:LFT) Wuxi Pharma (NYSE:WX) dropped more quickly from its peak.
Tuesday, November 13, 2007
Product, company and stock: I
Good product => good company => good stock?
I have been thinking about it for a while, and I believe in lots of cases this formula is not necessarily true. I understand this is a difficult topic to discuss because the subjective nature of the "good product", "good company" and "good stock".
For example, Marlboro (thus Altria, the company) is good for smokers because it provides stimulate to them; but it's bad for people who lost loved ones because of cigaretee related disease. By the way, Altria (NYSE:MO) is the No. 1 in terms of investment return among S&P500 companies in last 40 years, according to Wharton professor Jeremy Siegal.
Altria/Marlboro is an extreme case, because cigarette itself is controversial. How about Crocs? Its ugly shoes can be found from Brazil to Sweden, and people seems liked it. The company is expanding rapidly in past few years and is providing good jobs for 5,700 people worldwide as of Q3 2007. How about stock holders (a.k.a, people like yours truely)? Well, it was a fun ride this year until Oct. 31, when the company announce the Q3 results. Stock dropped almost by half in 7 trading days. No one is happy except the short sellers; and a very small group of people who had escalator accident while wearing Crocs.
And it looks like people (longs) will hate the stock for a while, because they lost money on this. But does that change the fundamental of the product or the company? They are the same products (if not more), and same management (now with the lesson learned from last 10 days).
But people (longs) are still going to hate the stock for a while. Until the stock price recover, if it even happens.
To be continued...
I have been thinking about it for a while, and I believe in lots of cases this formula is not necessarily true. I understand this is a difficult topic to discuss because the subjective nature of the "good product", "good company" and "good stock".
For example, Marlboro (thus Altria, the company) is good for smokers because it provides stimulate to them; but it's bad for people who lost loved ones because of cigaretee related disease. By the way, Altria (NYSE:MO) is the No. 1 in terms of investment return among S&P500 companies in last 40 years, according to Wharton professor Jeremy Siegal.
Altria/Marlboro is an extreme case, because cigarette itself is controversial. How about Crocs? Its ugly shoes can be found from Brazil to Sweden, and people seems liked it. The company is expanding rapidly in past few years and is providing good jobs for 5,700 people worldwide as of Q3 2007. How about stock holders (a.k.a, people like yours truely)? Well, it was a fun ride this year until Oct. 31, when the company announce the Q3 results. Stock dropped almost by half in 7 trading days. No one is happy except the short sellers; and a very small group of people who had escalator accident while wearing Crocs.
And it looks like people (longs) will hate the stock for a while, because they lost money on this. But does that change the fundamental of the product or the company? They are the same products (if not more), and same management (now with the lesson learned from last 10 days).
But people (longs) are still going to hate the stock for a while. Until the stock price recover, if it even happens.
To be continued...
Thursday, November 08, 2007
Mindray investor day
(Update Nov. 7) My friend in Shanghai sent me this Chinese article about the stock options incentive for Mindray employee. Mindray CFO Joyce Hsu also said in Q3 conference call that Mindray may have the highest rate of handing out options to its employees. I think Alibaba could also count one. But with the Alibaba stock diving ever since its IPO, will those employee with options be happy?
(Original Nov. 6) No I have not flew to Shenzhen, although I would love to be there. From the news, and the presentation, the developments are very encouraging. Too bad my account ran out of money yesterday, otherwise I was going to add my MR positions amid the across board sale of Chinese stocks.
Some highlights (I think) worth noting:
1) Change of products division names
In other words, this means broadening/expansion of products. Change Patient Monitoring Devices to Patient Monitoring & Life Support Devices; Diagnostic Laboratory Instruments to In-Vitro Diagnostic Business; Ultrasound Imaging Systems to Diagnostic Imaging Systems.
2) Revenue growth:
CEO Mr. Xu Huang stated that it is the company's goal to grow overall revenue by at least 40% in 2008 with domestic sales growing 30% and international sales growing 50%.
3) Profitability:
Gross margin in the 55%-56% range for year 2007 and 2008.
4) R&D:
Ms. Joyce Hsu, Mindray's chief financial officer, provided financial highlights and reiterated the company's commitment to investing approximately 10% of revenues in R&D.
Mr. Weng Lee, Mindray's vice president of US-based research and development, commented on Mindray's 2008 new product pipeline. Mr. Weng noted that the company plans to launch 10 new products, including an iPM patient monitoring device, two in-vitro diagnostic laboratory instruments, two black and white and three color ultrasound imaging and two digital radiology imaging systems. In addition, 23 reagents will be introduced to complement the company's to-be-launched in-vitro diagnostic devices.
5) International sales:
Mr. Jie Liu, Mindray's executive vice president of international sales & marketing, highlighted Mindray's commitment to international expansion. The company recently opened offices in Canada, Brazil, Mexico and the Netherlands and plans to open an office in Russia by the end of 2007. The company has further plans for offices in Germany, France, Indonesia, Italy, Japan and South Africa. Liu noted that the company will gradually move toward a hybrid sales structure which allocates a greater amount of internal resources towards after-sales and service networks. Mr. Liu said he expects internal after- sales and service networks to help the company further understand end-user requirements and help increase international brand awareness.
By the way, I love those once-a-while sale of ALL Chinese stocks traded in the US. Next time I will prepare some bullets (money :-)
(Original Nov. 6) No I have not flew to Shenzhen, although I would love to be there. From the news, and the presentation, the developments are very encouraging. Too bad my account ran out of money yesterday, otherwise I was going to add my MR positions amid the across board sale of Chinese stocks.
Some highlights (I think) worth noting:
1) Change of products division names
In other words, this means broadening/expansion of products. Change Patient Monitoring Devices to Patient Monitoring & Life Support Devices; Diagnostic Laboratory Instruments to In-Vitro Diagnostic Business; Ultrasound Imaging Systems to Diagnostic Imaging Systems.
2) Revenue growth:
CEO Mr. Xu Huang stated that it is the company's goal to grow overall revenue by at least 40% in 2008 with domestic sales growing 30% and international sales growing 50%.
3) Profitability:
Gross margin in the 55%-56% range for year 2007 and 2008.
4) R&D:
Ms. Joyce Hsu, Mindray's chief financial officer, provided financial highlights and reiterated the company's commitment to investing approximately 10% of revenues in R&D.
Mr. Weng Lee, Mindray's vice president of US-based research and development, commented on Mindray's 2008 new product pipeline. Mr. Weng noted that the company plans to launch 10 new products, including an iPM patient monitoring device, two in-vitro diagnostic laboratory instruments, two black and white and three color ultrasound imaging and two digital radiology imaging systems. In addition, 23 reagents will be introduced to complement the company's to-be-launched in-vitro diagnostic devices.
5) International sales:
Mr. Jie Liu, Mindray's executive vice president of international sales & marketing, highlighted Mindray's commitment to international expansion. The company recently opened offices in Canada, Brazil, Mexico and the Netherlands and plans to open an office in Russia by the end of 2007. The company has further plans for offices in Germany, France, Indonesia, Italy, Japan and South Africa. Liu noted that the company will gradually move toward a hybrid sales structure which allocates a greater amount of internal resources towards after-sales and service networks. Mr. Liu said he expects internal after- sales and service networks to help the company further understand end-user requirements and help increase international brand awareness.
By the way, I love those once-a-while sale of ALL Chinese stocks traded in the US. Next time I will prepare some bullets (money :-)
Thursday, November 01, 2007
Jinjiang Inn and Jinjiang group
Before leaving I stayed at the Jinjiang Inn 锦江之星 near Zhongshan park, so I had an oppertunity to check out the current status of Jinjiang Inn. I stayed in Jinjiang Inn two years ago near Century park at Pudong. Overall I liked the setting, the furniture. It appears to me Jinjiang Inn is more luxurious than Home Inns (Ru jia). But there is one minor problem this time: the windows did not close. When I tried to pull the handle of the window, the handle breaks. Being close to the busy Changning road, I had to bear the traffic noise all night. Over my 3 months stay in Shanghai, we also frequented the Jinjiang Chef restaurant, which is owned by Jinjiang Inn. The food there is good, I think. Because we got a membership card, there usually gave some discount for certain items.
On the business side, Jinjiang group (2006.HK) recently attracted attention from the Saudi Kingdom. From this dfdaily (Chinese) news, Kingdom Hotel Investments (KHI) is interested in buying 20% stake in Jinjiang group. Note Jinjiang group owns 80% of the Jinjiang Inn, besides own/manages many high end hotels in China. I believe Jinjiang 锦江 is the No. 1 domestic hotel brand in China.
Meanwhile, Home Inns bought topstar hotel chain lately. The hotel war in China is heating up, before the 2008 Beijing Olympics and 2010 Shanghai world expo.
Subscribe to:
Posts (Atom)
