Benjamin Graham’s Timeless Investing Principles

Posted on 13 January 2009. Filed under: Finance, FOREX, HYIP, Pendapatan Aktif, Pendapatan Pasif | Tags: , , , , , , , , , , |

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Benjamin Graham‘s Timeless Investing Principles

 
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” – these were the wise words of  Benjamin Graham, the father of two fundamental investment disciplines – security analysis and value investing. Not a name unheard of in the investing world, Benjamin Graham was an icon for many, including William J. Ruane, Irving Kahn. One of his most loyal and notable disciples however, was Warren Buffet.There is no better way to learn how to make it big in the investing world than learning it from the best and it doesn’t get any better than Benjamin Graham.

Benjamin Graham was born in UK in 1894 and moved to US when he was eight and a half years old. Although he came from a poor family, he was exceptionally bright at young age. He graduated from Columbia University in 1914 and started his investment career by joining Wall Street as a financial analyst. He established his first private investment organisation, the Benjamin Graham Joint Account, at the age of thirty two. During the Great Depression, between 1929 and 1932, he lost 70 percent of his $2.5 million fund. Although some of his clients gave up, his fund managed to survive the worst and by 1935, he recovered all the losses.

What did Graham consider as critical elements to successful investing?
Here, we will briefly go through the investing principles propounded by Benjamin Graham.

Understand the difference between investment and speculation
Graham established a clear distinction between an investment and a speculation. To qualify as an investment, it must go through thorough analysis, must have a good margin of safety and a satisfactory return. Speculation on the other hand merely involves timing and profiting from market fluctuation.

  • Do a detailed analysis as stocks represent a share of business
    In the process of doing a detailed analysis, investors need to have the mindset of treating stock purchasing as if they own a piece of the business, to evaluate stock price from the perspective of the underlying asset value, financial strength and future earning prospect, instead of focusing on the short-term fluctuation of the market. This is regarded as the intrinsic value of the company.
  • Build Margin of Safety
    Graham’s most famous and influential motto is ‘margin of safety’. The experiences that he cumulated during the frenzy Great Depression made a deep impression on him.  He became a very cautious investor as a result, whose number one investment concern is the safety of investment principal. If the intrinsic value of a stock is RM1 and you buy the stock at the price of 67 cents, then your margin of safety is 33%. This serves as a cushion to your investment in the case of a market down turn or to provide you with a margin of error in calculating the intrinsic value, so that the chances of you losing your principal are at the lowest.
  • Hava a  realistic return objective
    The objective of making an investment is to make money. However, Graham warns against aiming for unrealistic return objective. If you expect abnormally high return from your investment, chances are you will be exposing yourself to unnecessary risk in order to achieve your return objective, which will become speculation instead of investment. There is no short cut or quick ways to making money. Graham’s way of investing is to set a realistic return objective and making investments based on sound investment principles and having the discipline to follow through.
  • Treat the market as servant, not master
    Graham believes that risks and returns do not increase proportionately. He sees the opportunities in market volatilities. To him, the stock market is manic-depressive and investors should go for a bargain hunt during a market down turn. The risk of investment can be significantly reduced if investors understand the business and apply good judgment based on the above first three elements in searching for good fundamental stocks, which are temporarily depressed due to market reasons.

However, he discourages making decisions based on any form of forecast and timing of the market. Instead, the decision making should be made based on price attractiveness. Graham’s stock selection criteria include a price-to-book ratio of 1.5 times, price-to-earnings ratio of below 20 times and debt-to-equity ratio of 0.5 times.

From the above, you can observe that Graham advocates defensive investing approaches. This, later become the foundation of the investing principles of the famous investing guru, Warren Buffet, who learned about the quantitative screening process from Graham while working in Graham’s company.

However, for a lay person to successfully apply Graham’s approaches, you need to be prepared to overcome some hurdles. You need to do a lot of hard work and have good accounting knowledge in order to dissect the financial information provided in the annual report or other financial publications. In addition to that, you will have to be highly sensitive to any news that will affect the performance of the company or the relevant industries. Having the ability to derive your own conclusion from your research, you will also then need to have the determination and faith in your work so as to prevent yourself from being blown away by the market.

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DINAR EMAS

Posted on 4 November 2008. Filed under: Banking, Finance, Perbankkan | Tags: , , , , , , , , , , |

Former Malaysian Prime Minister, Tun Dr Mahath...

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DINAR EMAS

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1. Ramai juga yang bertanya berkenaan Dinar Emas termasuk juga BBC yang mengadakan wawancara dengan saya baru-baru ini.

2. Apa yang sudah jadi kenyataan yang tidak lagi dapat dinafi oleh negara-negara di dunia ialah sistem kewangan yang ada sekarang sudah gagal untuk diguna dalam ekonomi dan dagangan baik dalam negeri atau antarabangsa.

3. Keputusan Bretton-Woods selepas Perang Dunia Kedua ialah semua matawang negara di dunia ditentukan nilainya mengikut nilai tukaran dengan matawang Amerika Syarikat.

4. Tetapi di tentukan juga yang nilai Dolar Amerika ialah sebanyak 35 Dollar untuk satu ouns emas. Ini bermakna secara tidak langsung semua matawang dinilai mengikut sekian banyak emas.

5. Di masa itu semua matawang adalah kukuh. Tetapi Britain, pada tahun 1966 telah turunkan nilai Pound British. Malaysia telah rugi banyak kerana simpanan (reserve) kita adalah dalam matawang Pound. Pada satu masa Pound yang bernilai Ringgit Malaysia 8.30 telah turun kepada Ringgit Malaysia 3.60.

6. Kemudian Presiden Richard Nixon membuat keputusan bahawa Dollar Amerika tidak lagi terikat dengan emas. Amerika telah tolak apa yang dipanggil sebagai “Gold Standard“. Amerika juga memutuskan bahawa pasaran akan tentukan nilai Dolar Amerika.

7. Tetapi negara-negara lain masih percaya akan kekuatan ekonomi Amerika dan meneruskan ikatan nilai matawang mereka dengan Dollar.

8. Satu lagi keputusan dunia antarabangsa ialah nilai dagangan antarabangsa ditentukan dengan nilai Dollar Amerika dan bayaran juga dibuat dengan Dollar Amerika. Ini menyebabkan permintaan bagi Dollar Amerika menjadi kuat dan sekali gus menjamin nilai Dollar Amerika tidak jatuh walaupun tidak lagi diukur dengan sekian banyak emas.

9. Pada satu masa dahulu bank besar dibenarkan mencetak dan mengeluarkan “Bank Notes” sebagai wang yang sah dipergunakan. Kemudian pemerintah mengambil alih pengeluaran matawang.

10. Bank mengeluarkan pinjaman daripada modal dan deposit oleh pelanggan. Kadang-kadang jumlah pinjaman melebihi wang yang ada dalam bank. Tetapi ini dihadkan. Walaupun demikian pinjaman yang dikeluarkan kerap kali jauh lebih banyak dari had yang ditentukan.

11. Apabila pendeposit mengeluarkan simpanan mereka beramai-ramai maka bank tidak mampu untuk membayar balik kepada pendeposit kerana semua wang telah diberi pinjam bahkan lebih daripada itu. Dalam keadaan ini bank mesti di selamatkan (bail-out) oleh Kerajaan.

12. Melihat bahawa bank boleh mengeluarkan pinjaman hampir tanpa had (unlimited) maka penyangak pun merancang untuk guna duit bank yang tidak terhad ini untuk meraih keuntungan atas angin. Maka berlakulah dagangan matawang, pinjaman kepada peminjam yang keupayaan membayar tidak terjamin, penjualan pinjaman yang dikeluarkan oleh bank kepada syarikat insurans dan syarikat gadaian (mortgage company) dan lain-lain. Jumlah semua transaksi ini amat besar, bernilai berbilion dolar. Apabila ramai peminjam tidak dapat bayar hutang atau servis hutang, maka mereka yang membeli pinjaman bank dapati mereka akan rugi berbilion dolar.

13. Dan banyak lagilah penyalahgunaan sistem bank Barat yang dilakukan. Demikian Amerika dengan kekayaannya yang besar sekalipun tidak dapat menampung berbilion dolar kerugian oleh bank, syarikat, insuran, syarikat mortgage, hedge funds, merchant dan investment bank dan lain-lain.

14. Sesungguhnya sistem bank dan matawang Barat sudah gagal. Dunia harus kaji untuk menggantinya dengan sistem lain termasuk perbankan Islam dan dagangan dengan matawang khusus seperti Dinar Emas.

15. Tidak seperti duit kertas emas tetap mempunyai nilai dimana-mana dalam dunia. Dinar Emas dicadang hanya untuk menyelesaikan bayaran dagangan antarabangsa.

16. Apakah ada cukup emas dalam dunia untuk dijadikan wang antrabangsa? Sudah tentu tidak.

17. Tetapi kita tidak perlu bayar dengan dinar emas sepenuhnya. Memadai jika kita bayar cuma lebihan antara import-eksport antara dua buah negara.

18. Jika sebuah negara mengeksport 100 juta Dinar kepada sebuah negara lain dan negara itu pula mengeksport kepada negara pertama barangan atau khidmat yang bernilai 110 juta Dinar, maka bayaran yang harus dibuat oleh Bank Negara negara yang pertama hanyalah 10 juta Dinar emas. Jika tidak ada Dinar Emas yang mencukupi maka bayaran boleh dibuat kemudian dengan eksport bernilai 10 juta Dinar.

19. Kita bukan sahaja boleh ada dagangan antara dua buah negara tetapi antara beberapa buah negara. Sebenarnya bank-bank mengguna cara ini untuk menyelesaikan bayaran cheque kepada beberapa bank yang telah terima dan mengeluarkan bayaran berasas kepada cheque lain-lain bank.

20. Sudah tentu akan ada banyak masalah pada permulaan. Tetapi pakar-pakar boleh cari jalan untuk selesaikan atau atasi kelemahan sistem Dinar Emas ini.

21. Bank Negara Malaysia pernah runding dengan sebuah negara lain dan penggunaan Dinar Emas memang boleh dilaksanakan. Tetapi entah kenapa Bank Negara Malaysia tidak dapat menjayakan sistem ini.

sumber dari : http://test.chedet.com/che_det/

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