Hey, Entrepreneur – forget the bank!

If you think you will have what it takes, except capital money,  to help yourself do a business or even invention that will help not only yourself but also your community, then wait no more ! A method called “micro finance” will give you the money you need to start your business ! And it is not that difficult. So, wake up and do the following:

1. Go to www.kiva.org – read anything you need to know about how this works. See some other would be entrepreneur from all other country as well.
2. Go find “Field Partner” in your area, or at least in your country
3. Prepare your initial “business proposal” or idea or something that you want to do that will meet the criteria. Doesn’t have to be fancy
   
4. Contact the Field Partner, ask the detail and fulfill their requirement
5. Have yourself listed on Kiva.org !

And I will help you further. I cannot promise to finance and lend money to every one of you, but this is what I can promise: put the detail of your Kiva listing on the comment section below, and I will republish this article to include your business and listing in Kiva, hence your business will have the loan fully finance faster as this article will help to promote what you’re after.
Just remember: think big, but start small ! Scale up on the way !

For The Rest Of Us….

We know all the cliche from Dan Quayle, 44^th Vice President of the
United States : “If you give a person a fish, they’ll eat for a day. But if you train a person to fish, they’ll fish for a lifetime” – well, this is it.

You can be the “Global Financier” just by lending – not giving (although you can too) – start with $25.

Your $25, combined with all other “micro financier” all around the world will be lent to local small entrepreneur to do their project.

True, that you won’t get any interest payment for your money – so don’t think this opportunity is about hot investment strategy – but imagine if your money, your money … is helping the next Bill Gates or the next Albert Einstein or the next Richard Branson to make the world a better place. But forget that, how about to see a man/woman help them selves out from poverty with just a little help from you!

When that happen, I would guarantee you, there will be nothing feel like it !

Beside, it’s only $25 ! Some loan will be defaulted (and you can loose that $25), but most of this people is honest and hardworking people and most of them will repay the money. And you then can lend it to other people, over and over again.

You choose who to lend to – whether a baker in Afghanistan, a goat herder in Uganda, a farmer in Peru, a restaurateur in Cambodia, or a tailor in Iraq – and as they repay their loan, you get your money back.  It’s a powerful and sustainable way to empower someone right now to lift themselves out of poverty

So, go to Kiva (www.kiva.org) – register yourself, deposit some money and start helping people bring themselve out of poverty and make the world a better place to live for all of us ! Don’t forget read about microfinance as well.

Have a great day !

If you see some stock chart already, don’t worry this article is not about share trading.

Hindsight vs Foresight

According to Merriam-Webster Dictionary, hind·sight is perception of the nature of an event after it has happened. On the other hand: fore·sight is an act of looking forward. For easy example let see what happen here:

a Stock Chart (2 years span)

(I intentionally hide both axis to make it as anonymous as possible-but the span is 2 years) Say, point “B” is now. Then your investment of $10,000 made on point A 2 years ago, worth around $13,000 now. (33% from “90″ to “120″). This is the hindsight: the investment made 30% profit in 2 years.

Now, you are in point B will you take your investment or let it run for another 2 years ?  Well, if the next 2 years the investment will be still going up, of course then you will let it run or even put some more money in, but if it’s going to be down you will take it out. But how do you know? Nobody knows. So, how you see the future is the make the decision. Take a pick, now!

Now, let fast forward another 2 years

The chart for 2 years further

The next 2 years, the investment go up for another 16% (“120″ to “140″ :point “C”). So, if you decided above that you will let it run, you have another $2000 profit. If you took it out, you “miss” this $2000.

So, if you “guess” right, now your investment worth around $15,000. Then the same question will arise. What to do now? Let it run? or Took it out? Take a pick !

Now, let fast forward for another 2 years

The chart for another 2 years further

Well, as you can see, should you hold the investment for another 2 years, you have burn all the profit as the investment go back to “90″ level (point “E”). But if you exit just in point “D” (“150″ level) then your $10,000 6 years ago is now around $16,000. But who knows ? That’s the benefit of hindsight.

With hindsight, you can easily say that we should sell on point “D” to get the maximum profit. But as you can see above, it is impossible to know it exactly before it’s happen. (What you should actually do in this case, well tune in to  http://sharetradingbyme.com and you will know the answer.)

(BTW, the chart is the famous S&P500 index from 2003 to 2009 – the complete chart is below)

sp500 index:2003-2009

Make Hindsight Your Friend

Foresight Will Make You Money

I hope at this point you understand fully why you see all those disclaimer “Past performance will not guarantee future performance” on any investment / manage fund ads, because it does not. But on the other side, do not underestimate the hindsight for the fact that it has happened already.

Classic example: There is another recent news that say the property in Sydney has doubled again for the last decade. And people will murmur. “I wish I had that property 10 years ago, it was only $150,000, now it’s $300,000!” Well, that’s the hindsight isn’t it ? You don’t know at that time.

OK, let’s do it the other way. A friend tell you “Hey, you should buy that $500,000 in the corner there, by the time your baby 10 years, it will worth $1 million dollar.” The typical response will be “No way it’s going to be worth $1million” See, that’s the problem you know that within 10 years it can double $150,000 to $300,000, right ? Then what does prevent $500,000 become $1million within the same time span?

What we can do is to make “hindsight” a history lesson. Make hindsight as “something that might happen” or possibility and hindsight will become your best friend.

So from above example the history lesson will be: investment can go up and down, 30% return for 2 year is possible, but 60% loss in a year is also possible. So with this knowledge, what should you do ?

Make Up Your ForeSight

Based on whatever knowledge you have, make a decision what will more likely to happen. Nobody will really know, but you need to decide one. Without decision there will be no action. But once you make up your foresight, i.e: pick or guess what you think will happen, stick on it and act on it.

Then take responsibility. if it goes wrong, it is your own fault because it’s your decision – not somebody else. At least it is your own decision based on the knowledge that you have.

On the other side, if it turns right, it’s because of you and you only – not anyone else. You will be proud of yourself.

In all aspect of your life

The discussion above is not only about investment and share market, it’s about everything in your life. Wants example?

• Should I buy petrol today with price $1.1 /liter today ? or should I buy it tomorrow, maybe it’s going down. Yes, but what if tomorrow the price go up? Go undecided? you cannot afford to, your car will need refill some how. If you think (guess) that tomorrow it’s going to be more expensive, then assume that and buy now. If not, then buy tomorrow.
• Is my boyfriend/girlfriend good enough? What if tomorrow I will meet the right one ? Yes, but what if he/she is the best available already. See no body knows, hence made up your mind. If you think (guess) that he/she is the one marry him/her and stick with it.
• Should I accept this job-offer or wait another month ?
• I should cancel that trip so that accident will never happen – Duh, who can tell?
• If I know I will get diarrhea, I should not eat that meal…
• etc…etc…. you can go on forever

So, without the benefit of the hindsight, you just need to make a decision right here right now, based on the knowledge and “gut feel” that you will adopt. Commit to it then act on it. In severals you will make it wrong, but on others you will make it right. That’s life!

Do the Number

Let’s quickly do the number of  $350,000 home loan from Commonwealth Bank, the biggest lender in Australia. The current rate is 6.39% (for fixed rate) and 5.74% (for variable rate) and most likely only very little number pay that rate as somehow everybody qualify for “professional discount” or “wealth package discount” of 0.7% for variable rate but only 0.15% for fixed rate.  Commbank already announces that they will only pass 0.1% of the cut to their customer despite 0.25% cut of benchmark interest rate. Therefore, the final interest rate would be 6.24% (for 5 years fixed rate) and 4.94% (for variable rate) – assuming the fixed rate will be cut at the same rate as the variable (unlikely)

If you switch now you will be worse off by $264 per month. That’s not including the upfront establishment fee just to change from variable to fixed rate. This significant difference is the direct cause of that 1.2% difference of the interest rate between the fix and the variable. It simply too wide.

So, yes, at this moment do NOT fix your mortgage. The situation is not unique to Commonwealth Bank only, it will be quite common. If you do have that extra money to convert to fixed rate, then these are some suggestions that you need to consider in order to priority:

• Use the money to pay up loan with higher debt, for example credit card debt or car loan or other personal loan. Mortgage / homeloan is usually the cheapest debt you can get, so if you have other debt with higher rate do that one first.
• Put that money into your offset account to reduce the principal of the loan while building you up an emergency cash that you can access when there is a need.
• Put that $264 as extra repayment on your mortgage. This will save you thousands of dollar during the duration of your homeloan

When actually switching to the fixed rate is a better option:

1. When you really cannot afford further hike in the interest rate
2. The different between the fixed rate and the variable rate is below 0.6%-0.7% (so take only 2-3 interest rate hike before break even)
3. When you expect the economy to heats up: increasing stock market price or/and property market, increase GDP, government anticipate high inflation, etc
4. If the lender require you to have a fixed rate (usually if the lender doubt that you can sustain further interest rate increase)

In my opinion, while we are already past the worst chunk of the economy crisis, it will be at least another year before the economy take off again (and potentially make the interest rate higher in fear of inflation), but in the meantime the interest rate will stay around the same as it has only little bit room to go down.

A Big Relief for Gracious Australian

For a loan of 350k, a 30-years-mortgage holder Australian was paying around 9% interest rate on September 2008. That’s a repayment of $2816 per month. After these strings of cut, the same mortgage will cost only around 5% interest rate on April 2009, or a repayment of $1879. A huge saving of $937 per month. But as mentioned on other article here and here, the Aussie have more to cheer on: an average family with 2 school-age kids will also have huge $5600 real free money (tax free) from government since December 2008. (The detail is: 2x$1000 x’mas bonus per child,2x$900 back to school bonus per child, 2x$900 tax stimulus per tax payer)

As final word, with this good position we should all be gracious and maximize this condition to improve your financial position.

My medium term outlook will be looking economics to make a turn to the positive again but not that fast. It will takes 2-3 years before we are thinking about be in the similar condition before credit crunch hit the world.

Hope this helps

So, if you are sitting on the fence wondering whether to buy or rent a property, read on below, made up your mind and go get your property ! Of course, this apply also for all the property investor out there ! Good long term investment that cannot be more obvious than this…

Reason Why You Should Buy Now!

1. The price of the property itself is lower than previous year
2. The interest rate for the home loan is at record low. Do you know that the official interest rate now is sitting at 45 years low ? Means: the only cheaper than this was 45 years ago!
3. Government give you free money (Sorry, Aussie only): For NSW resident you will get maximum $24,000 to buy a brand new home ($21,000 if you live outside NSW) or $14,000 if you buy existing one. Read this for more info.
4. The renting is more expensive than buying:
   • Rent 2 bedroom unit cost you $350 per week, or around $1516 per month ($350 x 52 weeks then divide by 12 months)
   • You can buy 2 bedroom unit at $250,000. With interest rate of home loan around 5%, your monthly payment will be only around $1342 per month.
   • Check your number online here (The actual repayment after all cost only can be determined after all paperwork has been submitted)
5. You don’t want to compete with the migrant from overseas. Sydney only, received an inflow of thousands migrant per week. Sooner or later they will need their own place to call home, their best alternative will only RENTING (they are not eligible to take home loan before become permanent resident), then you don’t want to compete with them for a place for rent in Sydney. Buy one for yourself. Remember, especially if your rent is out of your initial contract, your land lord can actually increase the rent every single month. If somebody offer the landlord $400 a week rental and you only pay $290 a week since you have been living there for years, if you were the land lord who do you choose ?
6. With building industry is also in recession (less and less new property is available) while the migrant to Australia is still in high number, it’s only time before the price of the property will shoot up again. At the end the fundamental of economy of supply and demand will take charge. At this moment, supply is in abundance, get that one quickly before it become rare.

What to do Now?

1. Go find a good mortgage broker. Ask me if you don’t have one! Why You Should Always Use Mortgage Broker For Your Homeloan
2. Go home hunting in the internet NOW!
3. Meet with your mortgage broker first, before inspecting the property!
4. Start tidy up your document. Your broker will need it soon: Official ID, bank statement, bill statement, loan statement, salary slip, etc…

Read this article for more info: Getting Your First Home Loan or Mortgage: Not That Hard!

Happy home hunting !

If you want to drive here, don’t worry about the parking space. Remember, the facility is ‘leftover’ from Sydney Olympic 2000, so the parking space is olympic size as well. Furthermore, once you validate the ticket, you have free 4 hours parking – not bad….

Should you take public transport, probably train will be the most convenient. Just heading to ‘Aquatic Center’ after arrive at Olympic Park Station.

Aquatic Center Entrance

The main area

The Slide

Lap Pool and Spa

The entry ticket itself is really affordable. $6.6 for adult, $5.2 for children. Under 4 year is free and there is ‘spectator’ ticket for merely $3.20. Also family ticket for 2 adult+3 children (or 1 adult + 4 children) is price only $20.50. So, that’s it: full half day with your family at only around $20…  Already includes parking! Cannot complain at all…

There are 4 big pools inside: the olympic size pool for serious swimmer, another big lap pool, a stream pool and big children pool with all the goodies: water spray, fountain, all of them. There is also a big slide and spa as additional facility.The quality of the water is superb: sparkling clean without smell of chlorine that make your eyes red.

Just this summer, they also just add a great feature for children to play around water, they call it “Water Playground” (see below)

The Water Playground

I guess the “Water Playground” is the real magnet for kids. Its main attraction is the big bucket on top of the roof that can be filled in full at around 10 minutes and spill all the water down. Just similar the one in Jamberoo. The splashing quite spectacular if you are near, so people just queue 2-3 minutes before the spill over to get more fun.

For the hungry tummy, 2 cafe/takeaway shop with ‘usual’ food such as fish and chip, nugget, coffee, soft drink, cake and the like are waiting for you on each floor. But don’t expect too much, they are just ’standard’ tummy filler.  Oh, there is also outdoor area with plenty of seating and table or you can do a bit of picnic as well.

For your cloaking, there are 2 kinds of lockers. The untimed $2 locker (but can only be unlocked once, unless you insert another $2) or $3 per 3 hour locker. Make sure you read the instruction first to select the correct one. Otherwise just put your stuffs on the pool side. There are too many pool attendant hovering around to discourage the naughty hand – but you never know…

All and all, everything was good and in order. The only problem is that my laptop has running out of battery power and the kid and the mommy still want to play around. I guess it’s time for a cup of cappuccino for me….

Written by Denis Kristanda from pool side near the spa at Sydney Olympic Park’s Aquatic Center via broadband mobile.

Monday, 8 Dec, I got the weirdest margin call I’ve ever know: my broker call ans ask me to deposit some money to cover the margin for my option position. Well, fair enough… but which one? The one needed margin cover is the Covered Call¹ Option position. The problem is that I have covered that position with the stock that being optioned itself.

Background

I have covered call position on OZL (OZ Mineral Ltd) for December 2008 expiry date. As we know, on 1 Dec 2008, OZL have requested to suspend the trade of their security pending some refinancing issue. The suspension is expected to last up to end of December.

Then because of the suspension, both stock and option trading stop and basically all OZL security activity is being frozen on the market. And ACH then decide to declare the OZL security is illegible as  collateral/margin. Have a look at the excerpt of ACH and ASX Market Notice #22308 below ²:

…ACH may from time to time require the removal of collateral securities lodged with ACH where these securities are subject to a corporate action or event. This is done in accordance with standard procedures which apply when any corporate action or event has collateral implications for ACH.

On 1 December 2008, OZ Minerals Limited (OZL) announced that the Company will be
suspended from quotation prior to the commencement of trading on Tuesday, 2 December
2008.

ACH and ASX Participants are advised that all OZL shares lodged as collateral with ACH
must be removed before or by the close of business, Wednesday, 3 December 2008. Any
collateral held after that date will be removed by ACH.

The Real Problem

The removal of collateral securities lodged with ACH is routine item and is needed to ensure the margining system is working smoothly. For example, people doing “Naked Put” for BHP securities can lodge OZL securities as the collateral instead of cash. Since OZL securities is non-liquid, it’s a reasonable and required decision to remove OZL securities as collateral and demand other collateral such cash or other security. I understand this fully and support it. BUT NOT FOR COVERED CALL !

People who buy the call option have the right to buy the security at strike price. So the collateral on covered call is just to make sure that the writer of the option have enough money to buy the securities from the market and sell it cheaper (hence making a loss) to the option holder that will exercise the option.

Now, having already the stock itself for collateral (Providing OZL securities for OZL call option collateral) is actually the most secure and reliable way to ensure smooth transfer in case of exercise. Once the option exercised, the ACH just need to transfer the security to the new owner. Nothing else to be done.

Asking cash collateral for call option is actually more risky. Imagine if the stock price shoot up 100%, then ACH will need to demand 100% of the amount. Then, what is the real reason to reject OZL securities as collateral of OZL call option ? Let see what is the possibility:

• If the OZL securities shoot up above the strike price of the option, ACH just need to hand out the stock to the option holder who exercise the option. That’s it.
• If the OZL securities goes down below the strike price of the option, no one will exercise the option anyway, so nothing to be done.

So, the real problem is ACH reject the securities that being optioned as collateral and asking cash margin which is more risky and totally unnecessary if you have the stock itself as the collateral.

Does Mr Eddie Farah who authorized the removal of all OZL securities, know about this basic fundamental of how option works? If he knows, why he still remove the collateral for the covered call? Does ACH know what they are really doing ? Anybody could lighten me up, please ?

The Effect

The obvious effect for option writer is of course unnecessary margin call. People who hold about $50,000 worth of OZL securities have to lodge more than $15,000 cash collateral.

But the real damage for wider audience is losing confidence. Does ACH knows what they are doing? If the official clearing house of ASX does not know the real effect of their action, who does ? Or is this careless decision is just because of negligence of certain person only ?

What should happen?

The solution of this problem is just simple additional 1 line of English sentence of the notification. The market notification/decision should read:

….

ACH and ASX Participants are advised that all OZL shares lodged as collateral with ACH,  except those lodged as collateral for OZL call option, must be removed before or by the close of business, Wednesday, 3 December 2008. Any collateral held after that date will be removed by ACH.

See… easy and everybody is happy ! Nobody can complain or whinge about this matter anymore, even me.

Is that easy enough or I am asking too much ?

If you are one of those affected, or market participant that tired being played by ACH or anybody else that care about the credibility and the correctness of stock market, please kindly have your thought heard via the comment box below. Thank you.

p.s: I have tried call the ACH and email them, but as expected, no one wants to talk to small retail investor like me. It seems the broker also does not seems interested to stand up for their customer. Hence this post!

Wednesday, 19 Nov 2008 – Dow Jones closed 5 years low after tumbling 417 points to 7997. This 5% drop – as expected – followed by the rest of the world including Australia. Thursday, 20 Nov 2008 – ASX down 127 points to 3515, a level not seen since 2004

The next day, the Dow make another dramatic fall just in the last hour of trading to close 11 years low after shedding another 445 points to 7552.

And again as expected, the index of the world follow suit. ASX is down as low as another 132 points to 3201 – a 5 years low. Another bad day in the market ? Wait a minute, look up the chart !

Yes, ASX has beaten Dow Jones ! Just after 1 o’clock – as if every trader and investor in Australia have a magic lunch and back to trade with new attitude – the index just climb and climb without a breather and finish in positive territory with plus 79 point. Total swing of the day is 211 points or around 6.5% ! I repeat, despite Dow Jones fall more than 400 points, ASX is up 79 points ! This is very very very rare occasion Once, ASX pull this bounce, the rest of Asian and European market follow suit and refuse to follow the Dow !!

So what’s really happened ? I search and search what the occasion locally, regionally and globally – nothing happened at that particular time – no news , no announcement, no nothing. Is it really the magic lunch ? We better send everybody to the same restaurant every day then…. After I open my historical chart, I found the very answer: THE POWER OF TECHNICAL ANALYSIS. Believe what you see below…..

First , around 2000-2002, we can see very clearly that there is a resistance around 3200 point marks. After failing to get trough that resistance, the market heading down until 2003 when it start the long bull journey to all time high in 2007. This significant resistance obviously become strong support during the retracement. What a simple technical analysis !

Secondly, if you draw a fibonacci retracement from 1987 – Yes, it was the Black Monday in Oct 1987 the biggest stock market crash to date – to all time high in 2007, we can see approximately that 3200 level is on 61.8% retracement. As you know 61.8 is the strongest level of all fibonacci number.

Coincident ? You may say so. But this is exactly what technical analysis is all about. People try to search the reason to buy. This time Technical Analysis with simple support/resistance and fib level give people exactly that. And if a lot of trader / investor (I mean really a lot) apply the same analysis above, then it become self fulfilling prophecy – that’s the power of technical analysis.

If you only understand just a part of what I write above, feel free to go to “Share Trading By Me“, a fast growing website, where all stock market related aspects are explained in plain English for the very beginner to advance trader/investor. “Have a look !

In the mean time, happy trading and don’t forget buy your protection to avoid capital loss ! I’ll pop my champagne and celebrate this Australian trader achievement…..
‘Til the next article !
– The Smiling Investor

Unleashed Your Marketing Genius (UYMG – PDF dump, 276k) is one of the signature event from the great Stephen Pierce. With proud, yes, I am one of his disciples.

The Promise

All participant were bound to bring the laptop. The promoter even suggested a rental unit if anybody got difficulty with one. A pre-home work also assigned and everyone is promised “dedicated Internet Connection for the full duration of the event”

Of course it’s not free. For this internet access, $295 was the ticket price. This is on top of the program enrollment of $2500 per person.

Well, for 3 days internet access, at about $100 per per day, that’s quite an expensive internet access
But that’s the cost of education, isn’t it ? Or is it ?.

Internet ? What Internet?

On the first 10 minutes of entering the Grand Ballroom of Acer Arena, nothing in my head will alert me about major problem with the internet connection. After all, it’s the Olympic 2000 site. There was hundreds of journalist there all with connection during the olympic, so the infrastructure is not a problem.

“Cool, no wiring, all will be wireless..” I told my friend. Turn on computer, login, select access point, open Sydney Morning Herald website. Quite fast. No problem.

But wait until everybody ready with their laptop, about 300 of them. One by one all the connection knocked out and the familiar “Server Not Found” or “Internet Explorer cannot display the webpage” turning up. Even my laptop. Not only cannot connect to internet , my laptop even cannot connect to the network – probably the DHCP was running out of IP address. But we are not alone, even Stephen himself experience the same problem right there on the stage with huge projector.

In the afternoon, tehnicians were called and additional wired connection is being setup. It helps a bit, at least everybody got LAN connection, but internet? What internet ? The presenter have to ask the audience not to follow the website that he went. All interactive activity were cancelled. It’s no longer workshop, just show and tell as usual. Until the last day, the condition is not improved.

Embarassment for Australia

Well, Empowernet is at it again (see Credit Card bungle). They know exactly how many person will attend (as they need to pay before hand), so the math will be simple:

[bandwidth required]=[bandwidth per person] x [number of person]

So, if everybody is given 56kbps (dial-up bandwidth), then with 300 laptop in the room, therefore at least 16.8 Mbps uplink need to be allocated.

There are 2 possibilities that is the root-cause of the problem, nothing else:

1. The IT contractor did not deliver what they should provide.
2. Empowernet did not order enough bandwidth (obviously for cost cutting)

But either way, Empowernet – as promoter and organizer – is responsible for the problem and make an embarrassing event for Australia.

Stephen Pierce and team do the UMYG program all over the world. Of course, they depended heavily from local organizer to make everything right. In this case, Empowernet has damaged Stephen’s reputation as well. All the 300 attendee would went home with a grudge how awful is the internet connection at UYMG which is one of Stephen’s signature event.

If Stephen and team did not take any legal action or compensation on this UYMG, I would reckon that’s early Christmas gift for Empowernet. Because I can guarantee it will be there on their contract whose responsibility was the internet connection.

Apology

“Stephen, sorry about that, mate !”
As Australian, I feel embarrass by this problem, we do have broadband here !
As one of the attendee, I feel that UYMG definitely will be much better without this bungle.
Perhaps there is other better promoter/organizer here down under that you can choose for your next UYMG !