stlplaceI usually have a weekly call with my parents. My mom knows I investing in stocks. On today’s call she suggested I touch less on stocks. I think this sums up the sentiment of Chinese stock market very well. After recent drop of the A share market, people are weary of what the goverment will do (further) to cool down the market.
(source: online-sign.com)
Yesterday morning when I went to Panera (St. Louis) Bread to get morning bagel, I noticed they raised the price from 89 cents to 95 cents. I can fully understand the pressure they are facing: the rising wheat, diary, and energy cost.
Today Starbucks came out with earning, and understandablely a disappointing outlook (bloomberg).
SBUX and PNRA are hit on two sides: the rising costs of raw materials; and shrinking pockets of US consumers.
Long term, I do believe Starbucks will do very well in China, and other emerging markets; but right now, the sales from China is just too small to overcome the difficulty in the US…So I will NOT try to be hero at this time.
I resumed my homework on stocks today. By homework I mean the research I did on stocks, basically I copied the financial numbers, such as revenue, earning, company own forecast to a Google spreadsheet, and do some simple calculation such as growth rate, price sales ratio (market cap divide by the revenue). This is very rudimentary but notheless it does give me a feeling whether the stock is expensive or not. On reflecting the mistakes on CROX, I think one reason is I did not keep the speadsheet up to date 🙁
Actually on my spreadsheet for CROX (last updated on July 26), I had a few lines like: “sell some before Q1 earning”, “sell some before Q2 earning”? I did sell some on early May (before Q1 earning), but I did not cash out any before Nov. 1 melt down. I am not saying “had I did the homework, things would be different”. In stock market there are no “had I”, or “would be”. But one thing I can make sure is sit tight, and do the home work.
Now back to the homework for Mindray (NYSE:MR) and Longtop (NYSE:LFT).
No I haven not changed my employer or anything, but my company was acquired by a global 50 company this year, and from next year we will have new 401k plan. Currently my 401k is in Vanguard and I am happy with them so far. One advantage with Vanguard is they have the lowest fees in the industry. If all other things are equal (in the long run, I do believe the performance of most large cap stock funds tend to converge), lower fee means better performance for investors.
(Picture from Money Magazine)
That being said, I also found some interesting things about my new 401k plan: the new funds categories by the investment regions; and the company stock.
Early August 2007, when I was in Shanghai, the US stock market underwent a crisis from the sub-prime mortgage. At that time the focus was on BearStern and its two hedge funds. In China, and in overseas Chinese financial community, the book named Currency Wars authored by Mr. Song Hongbing was very popular. So I bought one in Shanghai. The heart of this book is (in my own words): we are inceasingly live in a world that controlled by international bankers. In a way, ordinary people (like you and me) are very much like their (bankers) slaves.
(picture from Amazon China)
As I am reading the book about Fed history (Wiki: US Fed reserve), and listening to Ben Berneke (the Fed chairman) speech this morning, I think this is very interesting: is Ben Berneke, an Econ professor from Princeton, look like the representative of the bad guys (a.k.a., the bankers)?
Here are some comments about the book at douban.
(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.
The drama in wall street did not end on last Friday. Today E-Trade, the few dot com survivor, came into news about is exposure to Mortgage Backed Securities (MBS). In these days, MBS are pretty much like useless paper, because of the sub-prime crisis. Accoring to analyst, the chance of E-Trade go bankrupt is still remote, or 15%. But this will make the E-Trade investors and customers nervous, and its competitors happy. So, what if E-Trader eventually do go bankrupt? What does that mean to its investors and customers?
For E-Trader investors (stock holders of ETFC), it is simple: that means total loss.
Week in review 11/04 to 11/10
1) Shanghai Univ of Finance and Economics, or SUFE, is celebrating its 90 years annaversary. SUFE also launched Shanghai consumer/investor confidence index, similar to Univ of Michigan consumer confidence index.
Zinio is an electronic magazine reader. It offers a wide array of Chinese magazines such as Capital Week, the best Chinese financial magazine in my mind. I subscribed it last weekend, and paid RMB 274 through China NetBank. The Zinio reader (and Capital Week) is OK except its text is not dark enough when zoomed out.
Personally I like paper back version of things better, hopefully as the Chinese stock market grows, maybe one day we can get it here just like one can get WSJ around the world.
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.