2013

Dear Readers,

As the founder of St Jude Investments, our flagship Fund, Wolf Fang Fund for this year performed on the average, returning at approximately 8% for this year. Granted, KLCI and the S&P has beaten us with a considerable margin and actually left us in the dust. This really gives me the feedback i need to reflect on what went wrong.

Mistake 1:
Selling way too fast.

Now, from my picks, i am very very capable of picking stocks, however, the need is for me to evaluate how i sell stocks. It seems that all my picks; SKPetro, Digi, KSL for this year delivered exceptional returns for the shareholders. IF they have held on to it. I did not. This i need to take the blame for. Should i have held on to them, the returns would be in the double digits. I guess i need to overcome the fear of holding on once the stocks reach an all time high and keep holding on provided their fundamentals change to reflect the ever changing market.

All three companies above were fundamentally strong, with little or no chance for drastic changes in the future. They were like dating Rinko Kinkuchi; should i have held on, i would have found heaven. rather i chose to chase the next short skirt available.

Now, i do advocate taking profit when it reaches your target, but i would take this holiday to devise a strategy to mitigate this risk in the future.

Mistake 2:
Losing my balls

Some of the best returns were lost due to me losing my balls. I just did not pull the trigger when the price was tempting enough; hoping for a pull back which never came. Ford came into the picture when i initiated a call at USD12, now it is at USD15.

I am always proud to summon my Ultimate Defense; where rain or shine, no harm shall befall my principal. But this year, my defense, although did not fail me, it served to be a hindrance. By focusing too much on the defense, i became lethargic on my offense.

Again, i will take this holiday season to develop a plan to mitigate this.

As of right now, we are loaded with cash and will seek to buy only companies who fit our model. I have found a few that do currently, either by their shift in strategy ( my oh my, it starts with a G), shift in demand ( starts with a V) or just battered by irrational pessimism ( starts with an F).

I am willing; albeit still seeking my balls, to bet on them with everything i have.

till then, happy holidays. and god bless

Can the market keep going higher?

It has been nearly 5 years since the great crash of Lehman Brothers. The US government via the Federal Reserve is trying to prop up the market with a wave of printed money and there are no signs that it is abetting.

It seems to me that the market is really overvalued but at the same time the taper cannot start. The US government is stuck between the proverbial rock and a hard place. They are blowing bubbles but at the same time they can't afford to stop. If you look via the chart, you can see an eerie looking similarity between the 2004-2007 bubble and the one developing now.

At first, i am very very surprised that the Fed did not taper in Q4 2013 but were willing to wait until 1H2014. In the face of such strong economic data, they are still keeping the money printing going strong and no signs of slowing down at all. Why is that? There is absolutely no logic to that movement.

But now we know.

Faked data seems to have bloated the job numbers in 2012 and it happened during the time the US election is happening. Now it makes sense. If the job data is not as strong as it is reported, the Fed would of course keep the money printing machine going!

It basically means that all the profit, all the EPS increases and what not are actually the product of the free money that is being printed around.

And the best part is Japan is coming on stream and joining the party!

my best prediction is that the government loses control of the debt, investors flee en masse to gold and to oil and the market crashes.

oh with it, the property prices of Malaysia, Hong Kong, Singapore and to a certain degree China.

You have Wolverine's great powers

Do you have a favorite superhero? I do. Mine is the feral, cigar chomping beer drinking Wolverine. Now let me be specific on which version of Wolverine i like ( ok, my geek side is showing). I loved the version where he healed from serious injuries but he is still mortal; not the Nitro ( please read Marvel's Civil War storyline) where Wolverine can be blown up to leave only his skeletons and he can still regenerate.

Now why do i like that version? Simple, if a superhero cannot die, all he needs to do is jump into every fight with gutso and slice and dice until he wins no? No heart, no element of injury nor death to suspense us.

For those who do not know who the Wolverine is here is a link to wikipedia:

http://en.wikipedia.org/wiki/Wolverine_(comics)

and i hope your nose bleeds for not knowing this icon.

I have always wanted his super powers, adamantium claws and super fast healing factors and his amazing one liners. I have spent years trying to gain his super powers but alas only perfected my one liners ( read: being an a$$hole)

But, deep down i believe all of us have the same powers that make Wolverine so great.

Do you know which story that touched me best? There are actually two.

First story is called Wolverine: Origins where we traced who Wolverine was and his childhood. It was a tragic story ending with him killing his first love called Rose accidentally. He was so traumatized by the event that his mind was totally damaged and his healing factor kicked in to heal it; causing him to lose the memory.

The second story was when he met his other love Mariko. Mariko was poisoned with tetrodotoxin from a blowfish by an assassin named Reiko, in the hire of her rival Matsu'o Tsurayaba.  She asked Wolverine to kill her to avoid a painful death and preserve her honor. 

He did.

Imagine this: both women that you love were killed by your own claws. How would you feel losing the one person that understands you, that accepts you for who you are and you are at your heavenly blissful state with her; and yet you are the one responsible for their death?

I would be devastated. I would have lost the will to go on. I would have stumbled around, not knowing right from wrong and finally give up.

But he did not. He preserved. Sure he grieved, spent some time in the wilderness and in Mariko's case, cut off a part of Matsu'o's body on the anniversary of her death. But he never freaking gave up. Nor did he lose his moral compass.

That is the super power that you and I have that we share with Wolverine.

To not give up. No matter how bleak it is, never ever give up.

To not lose our moral compass. To always know what is right and what is wrong even in the toughest of environments. To stand tall when everyone else starts to lose their footing and fall.

To stare defeat in the eyes when he tells you in his icy cold voice that he will tear you down; in good ol-fashioned Wolverine style say "Let 'er rip!"

3 ways Malaysians are screwing up on their retirement

Malaysians, by and large, are very pessimistic lot. They see everything as half empty instead of half full. The paradox is that with such uninspired view of life, they choose to ignore or to half ass the plan for their retirement. Maybe just maybe, they have such a uninspired outlook of life they need to drown their sorrows with splurges that they never need.

Lets start:

1: No plan
I am utterly dismayed that so many of Malaysians have absolutely no plans for the future. Their route is always the same; get a job, save, buy a car, buy a house, get married and live until you die of old age. They never seem to be able to plan for any emergency ( lay-off, death, sickness). When this emergency happens, they tap the easiest ( and also costliest) credit they know. which is the credit card. Stupid is it not? Then they spiral out of control into a mountain of debt.

Even more astounding is the fact that they have absolutely abysmal knowledge of how to grow their money to beat the inflation that is inevitable. They do know on a very basic level-buy property and rent lor, become "millionaire landlord" mah, buy stock wait for goreng. I cant seem to facepalm myself enough when i hear these two statements. Utter stupidity when you consider these "millionaire landlord" are bleeding their finances every month by buying a property so high in price that their bank installments are higher than the rent itself. No positive cash-flow. ( factor in the maintenance, sinking fund and income tax, it would be even worse.) 


2: Not wanting help

Malaysians in general do not seem to want help in their finances. Yes, they know that they are in debt, but they will not seek help until it is too late; and even after bankruptcy, they still do not want help!.

Example would be how many people are "investing" or i call gambling in the stock market instead of utilizing the mutual funds that are available out there. These fund managers devoted their life to understanding the stock market and are fully qualified to make investment decisions with at least some form of fundamental analysis and/or technical analysis.

But what do Malaysians do? Invest in the stock market based on tips they get from their neighbours' cousin brother who works in MOF that overheard the pantry lady talking to her nephew's wife that xxx stock will rise soon. 

I mean really? Give you an analogy. Assume that you have cancer. Instead of going to the doctor, you decide to read a few books on how to perform surgery, and after hearing about some guy in africa who performed the surgery and survived, you decide to do it yourself.

With a butcher knife.

3: Health care dichotomy

This is more of a grey area but Malaysians seem to underestimate the impact of their health on their long term finances. They either buy insurance that under protects them in terms of emergency and during their old age. How much money you need to survive now, I guarantee you that by the time you hit retirement, with your income gone and you need MORE money for medication, you will suffer.
Maybe Malaysians found the fountain of youth so that is why they are not worried about insurance.

Malaysian Budget 2014, how will it affect us?

Well it is not a secret anymore that with the Malaysian economy tanking and we are running close to the self-imposed limit of 55% ( we are currently at 53%), Malaysia will have to increase revenue and at the same time reduce expenditure. However, reducing expenditure might be too big a task as most mega projects have commenced and postponing or canceling them will have adverse impact on the economy.

For me I believe these are what will happen:

a) Impose of GST to replace the SST. Will likely be at 3-5% and this will cause a drop in the average Malaysians disposable income. However, I would believe that the Government will reduce the personal income tax to ensure that Malaysians have money to spend in the first place. A reduction of income tax by 2-3% points should be suffice.

b) Extension of the tax exemption for hybrid cars lower than 2000cc. That should spur our car industry and ensure that the major car manufacturers choose Malaysia as the hub for EEV manufacturing. We will never be able to fight Thailand in terms of producing petrol and diesel vehicles as they are miles ahead of us, but we can still offer some challenge in terms of EEV. DON'T let this slip out of our grasp Malaysia. We NEED this!

c) Remove DIBS, impose higher stamp duty for third property onwards, increasing the RPGT higher and imposing a lower MOF for third properties and onwards. That should help stabilize the property market.

And finally lets see what the Government will do to stop our free falling currency. Normal doctrine will show us that the Government will increase the interest rates to stop the free fall. And that is what a normal thinking person would do as well.

I would take the opposite view. Look at the reports coming out, our export is falling and our foreign currency cash pile is dwindling. And our growth comes from local consumption. To encourage a greater export and to ensure sustainable internal consumption, what is the best way to do it?

Decrease the interest rate!

Let our currency go to RM3.80 to the dollar. Make sure that our export grows and when interest rates are so low, no1 keeps money in the banks anymore. they will spend on either consumables ( and thus increase our GST collections) or they will hedge against inflation; buying up properties maybe? ( increase our stamp duty collection)

So if i exchange RM20,000 to the dollar now ( RM3.20 to the dollar) that would be approximately USD 6250. Now assume that the Ringgit does drop to RM3.80, that would be RM 23,750, a profit of RM3,750. 15% returns. ( ok, i assume that you are smart enough to find banks or changers that charge lower service fees)

But assume that the Government does increase the interest rates, what is the risk? Rm3.00 to the dollar? that would be RM18,750, a deficit of RM1,250.

So make that call, if you think our currency will drop further, make that exchange.

Im taking the opposite view

From a prominent Malaysian financier.

For the past 2 years, I was very cautious about the market until the breakthrough in market sentiment after GE XIII; I cited the major risks in:-
1. The end to Fed easing- The day will come when Bernanke couldn't find enough paper to wrap the fire he was playing with in QEs. 
2. The huge property bubble in Asia.
3. The reverse in the miraculous Asean markets in Philippines, Indonesia and Malaysia- What goes up, must come down.
4. Credit bubble in Asia- The wealth we see today is a mere aftermath of easy money by Asian central bankers.
5. Rising interest rates eventually

From Wall Street:

A lot are screaming like a petulant child when their candy is being taken away when Ben said that they will soften QE with an eye to stopping it all together.  They are saying that with the rising interest rates, the bond yields, it will hurt the economy and cause it to stumble into recession.

My take:

Lets focus on the Malaysian economy first.

Point 1. Stupid at best. 

Point 2. Huge property bubble in Asia. In Malaysia i really do not see a bubble popping. Yes the prices are high but will it pop and send KLSE crashing? No. There are a few factors that cause the bubble to pop ( cheap money, sub-prime credit, banks highly leveraged) out of the three points, besides cheap money to a certain extent, none are present in Malaysia yet. You can argue saying that households are gearing up on their personal loan to pay 30% down-payment for their third property but in all likelihood, these people CAN afford their monthly repayment not some burger sellers.

Point 3:Again i struggle to understand why people are reluctant to give Indon, Philippines their due. is it because our maids come from Indon? Indonesia is quite populous while Philippines is growing by leaps and bounds. The market might correct but a full blown crash? Unlikely. Even Malaysia does not seem to be a candidate for a full blown crash ( even with debt top GDP nearly 53%)

Point 4: Credit bubble, totally agree. Cheap money is leaving as interest rates are higher, that should help the market correct itself to sustainable levels. Biggest risk is actually in the Land of the Dragon. Cheap international money is pump priming the stock exchange, cheap money by the Central banks to pump prime the property, cheap money to banks to lend out thus creating a shadow banking network, all these points to a deadly cocktail that may push China off the rails. ( Oh, if China goes off the rails, we should buy Airasia X shares in anticipation of all the China girls coming to Malaysia to work..tongue in cheek, i mean their tongue in my cheek)

Point 5: For USA i assume, if so, do you realize the main problem with the US economy? They are not saving enough, spending like there is no tomorrow. Like what i would say, taking a dump without making sure there is toilet paper.) So yes, rising interest rates would allow Americans to think about savings, to grow their money and in turn create sustainable spending. Short term pain, long term growth.

QE is basically printing money. Them being stopped is a good move. No one wants fake money running around the economy. The faster they are stopped, the better. Let the economy slowly grow but the growth is both sustainable and natural.

Advise is always the same:

Profit when your neighbor starts talking about stocks. But if you see them holding their heads in despair buy them. Once you identify good companies, BUY them. Good companies will stumble, but in the long run they WILL make money.

Stocks to me is like having sex. You go HARD or you go HOME. Once you find a gem, go HARD.

Joe's Jeans-JOEZ

Dear Investor,

It makes premium jeans in the United States. It has secured a price niche that is neither too expensive nor is it too cheap. Consumers always want to have the latest fashion and apparent from their balance sheet that consumer spending is likely back.

Profit

Description	2011 (Q1) (USD’000)	2012 (Q1) (USD’000)	2013 (Q1) (USD’000)
Retail	-119	253	-326
Wholesale	4,441	5,671	6,704
Total	4,322	5,924	6,378

Strength:

·         Premium branded jeans. Gross profit margin stands at 50%.

·         The consumers are spending again in the US,

·         Third most owned premium brand in the US

·         Wholesale via Departmental stores are growing

·         Experimenting with retail which could boost their brand image

·         Jeans known for its comfy and perfect fit

Weakness:

·         Dependant on consumers to like them, one wrong product and they are screwed

·         Competition are strong; profit margin maybe eroded from heavy discounts

·         Its jeans; not much of a differentiator

·         Retail is still making mistakes and hiccups

Opportunity:

·         The countries such as China, South East Asia has not been penetrated. IF they can just make it into these markets, the potential will be immense.

·         Their retail strategy in theory should be better; once they sort it out, they will be making money

Threat:

·         Bigger guys going after them; Guys like True Religion.

·         Consumer spending to go down will cause even more discounts

Catalyst:

Currently, they are facing investor’s wrath because of missed earnings. In Q1 2013, they spend money to acquire the founder’s block of shares so that they do not need to pay him the gross profit anymore, thus lowering their earnings. But from the business fundamentals, nothing has changed.

Opportunity to accumulate will be present to accumulate if this falls to levels around USD1.20…(RM3600 per lot)….

DIGI

Ok guys, just bought 20 lots of DIGI at an average price of 4.59. Lets see what how much we can earn from there:

Why i like DIGI?

• Take their last year (2012) EPS and also their dividend. Their PE is ~11. Not very undervalued but nevertheless, it still provides me with a certain margin of safety. Im willing to take a certain risk.
• 2011 profit per share is 33.63...2012 profit per share is 41.81 (EPS+dividend)...take note that 2012 is a bad year for DIGI; with the tax structure higher that chipped away their profit, the network optimization progressed slower than anticipated that resulted in less aggressive customer conversion. However, they still managed to grow at an impressive rate of 24% PROFIT margin! 2013 will be where their network is optimized, no more tax to worry about....so make your own assumption.
• Potential for growth is immense. Telecom is the same as roads. We as a developing nation with one eye aimed at becoming developed nation. it is important to have a good telecommunications network. And Digi stands to benefit from that.
• Migrant sector is well defended. Awesome profit margin there!
• Youngsters LOVE DIGI. When you grab them young, they will likely stick with you for the rest of their lives unless something compelling urges them to change to another telco ( probable but highly unlikely)
• Growth in the data revenue. With more and more youngsters getting their hands on smartphones ( thanks to our Government) the data requirements will likely increase from the youngsters. ( refer to point number 4). Biggest beneficiary, DIGI
• Cost savings with their tie up with Celcom, potential to boost their bottom line.
• With the Government looking to allow foreign ownership up to 70% in telcos, Telenor is definite to buy up the stocks to make up for the 70%. Moreover, EPF is also definitely buying up the stocks so that they can generate the returns for their shareholders from DIGI dividends. When two behemoths are eyeing the same piece of pie, chances of it going up is high.
• DIGI is looking to change the company structure to a trust so that they can pay even higher dividends! when that happens, imagine the funds that will rush in to buy

Currently, all funds are eyeing DIGI but are afraid to go in. Either its because of the General Election or because they are just plain dumb ( im sticking with the latter)..truth is, its a wonderful choice.

BINGO-FAVCO

again make money. Favco at 1.80 now at 1.96. making money is a matter of time if we adopt the correct strategy.

Now all my cash is ready for the general Election. Once it is announced, i will buy in.

Follow me sure will make money. i can feel the bull just waiting to be released

BINGO-KSL

http://monnaiefinance.blogspot.com/2012/06/ksl.html

I blogged KSL up last year in June, bought at 1.35..average price at 1.44...see the price now?2.00

39% returns in one year!

This is the beauty of stock picking...this is the beauty of my art...sure fire way of making money.

http://monnaiefinance.blogspot.com/2012/08/favco-my-new-darling-of-gem.html

Now Favco is screaming to the top again.

So is picking stocks based on low pe wrong? i dont think so..is picking stocks based on future projected earnings wrong? Definitely NO..

I have my way of picking stocks, it may not go up in the next 2 weeks, but by the time it is ready, it will go up all the way.

Energy boom in the USA

Randy Foutch calls it a renaissance, but when you listen to the veteran Texas oilman and others describe America's nascent energy boom, it sounds more like a miracle.

Politicians have been warning for decades that the U.S. must wean itself from foreign energy, but just a few years ago their words seemed like so much wishful thinking: The U.S. was facing what seemed like ever-rising oil prices and was importing about 60 percent of its supply. Natural gas inventories were shrinking, and the country was considering importing a liquified form from the Middle East.

But in a turnaround that industry insiders describe as nothing short of amazing, the picture has drastically changed. Oil and natural gas drilling is now booming in places like Eagle Ford, Texas, and the Bakken formation in North Dakota, bringing jobs and prosperity to those regions. And believers say the newfound resource is so much bigger than anticipated that it can help drive economic growth nationwide for years to come.

"For the first time in my career, we actually have the ability to talk about real energy security or independence," said Foutch, 61, a burly Texas native with four decades experience in the oil business.

Technological innovation – primarily the growth of horizontal drilling and hydraulic fracturing, or "fracking" as it's commonly known – is driving the new production, enabling oil and gas to be extracted from geological formations once considered impregnable.

"The ability to drill these long reach horizontal wells into reservoirs we could never reach before was a big change for the industry," said Foutch, head of Oklahoma-based Laredo Petroleum.

As a result, U.S. oil and gas production is growing so rapidly - and demand dropping so quickly - that in just five years the U.S. may no longer need to import oil from any source but Canada, according to Citigroup. And the International Energy Agency projects the U.S. could leapfrog Saudi Arabia and Russia to become the world's biggest oil producer by 2020. IEA sees the U.S. becoming a net oil exporter by 2030.

Horizontal drilling is not new but the widespread application of it is. When combined with fracking, which uses highly pressurized water and sand to break through rock formations, usually shale, and "stimulate" the movement of hydrocarbons, it has made recoverable billions of more barrels of oil and vast stores of natural gas.

"The key year was 2003," said Daniel Yergin, vice chairman of the energy consulting company IHS, referring to the first use of horizontal drilling combined with fracking. "That was when it was proof of concept. So for five years, it unfolded quietly with the independents. In 2008, that's when the majors got interested."

In 2003, there were 1,900 horizontal wells operating in the U.S. IHS estimates there were closer to 45,500 in 2012. 

That has led to forecasts that once sounded far-fetched becoming reality: U.S. oil wells produced 6.4 million barrels of oil per day last year – the highest domestic production level in 20 years -- and are expected to yield 7.3 million barrels per day this year, according to the U.S. Energy Information Administration. The EIA recently increased its forecast for U.S. oil production to 8 million barrels a day by the end of next year.

"One thing I can say with absolute certainty…is that our long-term forecasts are going to be wrong," Adam Sieminski, EIA administrator, said in a recent speech. "It looks like the direction we're going ... on oil is there's going to be more of it."

At the same time, the U.S. imported about 7.6 million barrels per day in February, a decline of 1.3 million barrels per day from the same time last year. And in 2012, U.S. oil demand – 18.56 million barrels per day -- was down 2 percent from the previous year and at its lowest level since 1996, the EIA said.

If those trends continue, Yergin said, the U.S. will largely be able to wean itself off non-North American oil sources within a decade.

"The view I have is the U.S. will be a lot less dependent with Canada," said Yergin, who also is CNBC's global energy analyst. "That will really reduce imports, combined with more fuel-efficient cars, reduce exports from outside North America. We'll still be importing some but it's certainly a rebalancing of global oil. That oil that was coming to the United States will go somewhere else and that somewhere else would be Asia."

Canadian production is expected to increase to 6.5 million barrels per day, and even Mexico is now expected to join the North America energy renaissance under a new government interested in exploiting its resources, according to Citigroupresearch.

Since 2006, U.S. oil field production of crude, plus natural gas liquids and bio-fuels has grown by 3 million barrels a day, about the same as the total output of Iran, Iraq, or Venezuela. In the same period, Canadian production has grown by 510,000 barrels a day.

Citigroup analyst Edward Morse, said in an interview that the U.S. could in theory need to import only from Canada within five years.

Implications for U.S.

The already-low natural gas prices and anticipated decline in oil prices have many analysts projecting a ripple effect that will energize the long-moribund U.S. manufacturing sector. The Citigroup report, for examples, lists more than 30 companies expanding capacity in the U.S. because of cheaper energy.

Dow Chemical is on the list, and the company's CEO, Andrew Liveris, is outspoken about his belief that cheaper energy can bring manufacturing back to U.S. shores. Yergin, the energy analyst, said the industry supports 1.7 million jobs, a number that he says could grow to 3 million by 2020.

Such rosy estimates rely on the industry being able to surmount both logistical challenges and concerns among environmentalists, particularly fears of water contamination, seismic activity and methane gas release from fracking.

The biggest logistical hurdle is that the U.S. has insufficient pipelines to handle the growing supply. The industry has turned to rail shipping to help transport its oil to refineries, and more than half the oil in North Dakota travels out of the state by train.

"Our logistical system needs to catch up with these new supplies," said Yergin. "Five years ago, no one would have thought that North Dakota would be supplying oil to a refinery in Philadelphia."

But efforts to build new pipelines invariably run into opposition from environmentalists and residents whose homes and property they would bisect.

The most high-profile battle recently has been over the Keystone XL pipeline, which would move crude from the Canadian sands to the Gulf Coast refineries. The plan to build the 1,700-plus-mile pipeline has drawn fierce opposition from environmentalists and some elected officials in the upper Midwest out of fears that a spill could contaminate the Ogallala Aquifer, which provides drinking water to 1.9 million people, according to the U.S. Geological Survey.

The fact that the dilute bitumen oil obtained from the so-called Canadian oil sands also requires additional energy to process has added to the outcry, said energy analyst John Kilduff of Again Capital.

"The extraction method utilizes natural gas so it's a crude oil that has a much higher carbon footprint than normal and it's the most corrosive type of crude oil, so the environmentalists do have some more arrows in their quiver to fight this, more than normal," he said.

Kilduff said he expects the pipeline to eventually gain approval from the White House after the State Department on March 1 said it found no major environmental reason to block it.

But such concerns have some in the oil and gas industry urging caution as domestic production ramps up.

Tinker, who leads the group studying the obtainable natural gas reserves in the various shale areas, says the growth of hydrocarbon energy supply should accompany growth in alternative energies and be used in conjunction with wind, solar and nuclear.

"It's part of a sensible energy portfolio," he said of drilling shale wells. "...You look at nuclear, renewables, you look at hydro. It makes sense to keep your portfolio diversified. I think it's important for policy makers and regulators and people investing in the industrial process to keep these things in mind."

Foutch, the CEO of Laredo Petroleum, has the kind of brash optimism you'd expect from a Texan with a master's degree in petroleum engineering from the University of Houston and a background as an amateur rodeo cowboy.

He said the horizontal drilling era presents the country with an important opportunity, and is one reason he's still at the helm of Laredo after selling off two other drilling companies he founded, including one called Lariat.

"We thought we had two or three years of drilling opportunity captures in front of us, maybe four or five and that was a premium that other people would pay for and we sold the company," he said. "At Laredo, we've captured, depending on how you want to look at the numbers, 20 years or 25 years of drilling inventory of what appears to be high quality drilling potential."

That's not to say that America shouldn't develop other forms of energy, he said, but it can't afford to turn its back on one that is crucial to its future.

"The long term answer is the most critical one," he said. "We as a nation, we just won't recognize that hydrocarbons are here to stay as an energy source and it's a very high quality energy source, and we can do all we want with wind, solar and algae. I hope all that stuff works. … The fact of the matter is we are going to be using hydrocarbons for some time to come."

This story originally appeared on NBC News.com.

2013-Things to look out for

This is the third month of the 2013 year. This post basically will set the tone for my investment portfolio for this year. I adopt a simple top bottom approach as compared to the bottom up approach favored by most banks. (Maybe that is why i am more successful as compared to them?) I will focus only on two markets currently; which is the US and also Malaysia. Before that, lets have a look at the macro economics first. Why i love stocks this year

Global liquidity is not seen to be drying up anytime soon. With all major economies printing money such as the USA and also Japan, the current market is flooded with cheap money. My guess, the stock market will rally higher and higher this coming year. The US seems to be growing and the consumers are spending again, Japan is hell bent on reviving its economy while China is building their way out of chugging growth. All these activities are likely to boost the share market higher.

However, do look out for a few speed bumps along the way.

a) China screeching to a halt. With many ghost towns sprouting across China, the property prices rocketing up to unsustainable levels, but the Government are still building more townships, a property bubble seems to be growing and it should be soon before it bursts. Coupled with the fact that their shadow banking is slowly spreading its icy cold grip to an even larger pool of SMEs gives me a sense of foreboding

b) Europe problem has NOT gone away. best part is, seems to me that Germany is being dragged down by the other EU countries. Scary eh?

c) Malaysian election. When will it be? Who will win? Go to any coffee shop and it will be rife with talks of the general Election.

Ok, now the industry that i really really like for the year and the industry i really really dont like for the year.

What i dont like:

Property developers: EVEN property players in the Iskandar Region i hate. The prices of property has gone up sooo much that many Malaysians cannot afford a decent condominium anymore. Rm500k per unit? How much are you supposed to make in the householed? Likely to be in the region of RM6,000 to be able to afford. While i dont see a bubble in Malaysia, i believe that more and more are likely to take on more debt ( either personal or credit card-which will not be good in the long run) or they will cut down on their leisurely spending ( which is also not good in the long run)

Oil palm counters:
EU has just signed a Agreement to NOT use palm oil in many of their products. From what i heard, big names like Wal Mart and Unilver is also thinking of not using palm oil in their products, As such this will definitely have an adverse impact on palm oil prices.

What i DO like:

Oil and gas
With Malaysia dying to increase national oil and gas output, the outlook seems bright for oil and gas players. Companies with steady earnings like Dialog seemed poised to benefit, international big boy like SKpetro also is one of my likes. But the hidden gem among all is a company that flirted with bankruptcy but now is roaring back stronger than ever, starts with M.......go figure.

Telecommunications:
bad times, good times, more smartphone launches, all point to the higher data and phone usage. CAPEX will likely trend lower as more equipment are bought at lower prices and sites are shared between players to reduce the OPEX. Major market catalyst seen very soon after the GE. Most likely to dump my dog's coffin money into this sector in the next few months. Hidden gem...starts with a D...go figure

Consumer goods:
With the market depressed for so long in the US, once the people there starts to have a bit of disposable income, common sense will dictate that they buy the following..new cloths and new cars. While i have not seen much effect yet on the cost savings, in the next few years, i can see the shift in their thinking on how to boost their profitability all across the world. If only they focus their cost savings in places like Asia huh. ( No ecoboost for the Focus, seriously?! what happened to saving costs?)

Hidden gem-Cars..starts with an F

Apparels, this company is slowly but surely picking up, they have mastered the wholesale segment and seems to be growing there, while after an initial few mistakes growing their retail business, it seems they are ready to move forward. However, no catalyst for this particular stock.

Hidden gem-apparel- stats with a J

Stuck in reverse, Detroit?

Last month I watched with delight as General Motors launched their Corvette Stingray, the C7. I find the design really really eye catching and the interior was posh. Ford launched their Atlas concept for their F50 pick up truck to remind America who is the King of Pick-up. It is Ford, GM and Chrysler who gave Detroit their identity as the Motor City.

But the city is slowly dying.

http://biz.thestar.com.my/news/story.asp?file=/2013/1/29/business/20130129090149&sec=business#1359500745865331&if_height=493

Detroit's population is shrinking, their tax revenue is shrinking due to business dying. Nothing seems to be going right for them and they are contemplating a bankruptcy case. A city; going bankrupt. Can you imagine that?! Now when i read that there are streets without lamps, I am saddened to think that this city is part of America. Reading the news would help my mind to link these images to a place in Uganda, not America!

Now Mr. Rick Snyder, if you are reading this, let me help you out a bit.

Did you know Michigan is the 14th state in the USA to lead in clean energy? Did you know that the future of cars are in clean tech; be it hydrogen fuels and battery? Did you know that Detroit is Motor City? Can you not link those three questions together?

Can you not have the people of Detroit to install solar panels on their homes to provide free energy to their homes? Any extra electricity generated can be sold to the city to power the street lights!

Ok, you might argue, the people of Detroit may not have the money to buy and install solar panels, so this is not going to work. Mr. Snyder, provide a loan for the people to buy up the solar panels. This way you earn via interest charged on them as well.

You cannot jack up the interest rate, this would exaberate the flee out of the city.
You should selectively reduce them for clean energy technology companies. that would theoratically improve the business for Detroit, which will lead to higher tax revenue.

If you really must, in the short term, you can go for a bankruptcy war to make yourself leaner. But without a proper strategic planning, 10 years down the road you would face the same problem. Why not bear the pain of bankruptcy, make youself leaner, and then set a proper path to improve business conditions there?

Start churning out clean tech engineers so that we can have a talent pool to support green energy in Detroit.
Start laying the groundwork for car manufacturers to flourish with clean tech.
Start ensuring that clean tech companies can set up shop there and support the industry.

New world, new challenges and new opportunities

This was posted in one of the blogs i was reading. I posted it here because i find it very refreshing and relevant in today's world.

HBR Blog Network

The Future of You

by Tomas Chamorro-Premuzic  |   9:00 AM January 1, 2013

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Economic and technological changes are reshaping the nature of work. Having a great job does not guarantee your career success; your competence no longer depends on what you know; and being an affluent consumer matters less than becoming a sought-after product. Welcome to a new era of work, where your future depends on being a signal in the noisy universe of human capital. In order to achieve this, you will need to master three things: self-branding, entrepreneurship, and hyperconnectivity.

Self-branding is about being a signal in the noise of human capital. The stronger your brand, the stronger that signal. In today's world, self-branding matters more than any other form of talent, not least because the mass market is unable (or unwilling) to distinguish between branding and talent.

We are all individuals, but unless we are also a brand, our individuality will be invisible. Being a brand means showcasing that which makes you special, in a way that is distinctive (recognizable), predictable (consistent), and meaningful (it allows others to understand what you do and why). This is why David Beckham and Lady Gaga are much more successful than their more talented competitors — they understood that being a marketing phenomenon is more important than displaying outstanding soccer skills or musical talent, and focused more on self-branding than their counterparts did.

Successful brands are polarizing (they generate strong reactions) and simple. Strong self-branding means removing all non-essentials from your public reputation or, as Antoine Saint-Exupery put it, "perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away."

Entrepreneurship is about adding value to society by disrupting it and improving the order of things: it is turning the present into the past by creating a better future.

We are all busy, but the only activity that really matters is enterprising activity or entrepreneurship. Entrepreneurship is the difference between being busy and being a business, and the reason why some are able to stay in business.

Everything that isn't already optimized or automatized depends on people, and every transaction between people is a business transaction. The most important commodity in human capital today is people who can grow a business, that is, work on the business rather than in a business.

Today's war for talent is the war for identifying, developing, and retaining true change-agents. Change-agents are hard to find, hard to manage, and hard to retain. Entrepreneurship is about being a change-agent; change-agents are signals, everyone else is noise. If you are not bringing growth, you are replaceable and recyclable.

Whether you are self-employed or employed by others, whether you work in a big business or own a small business, your career success depends on your ability to offer something new: new solutions for existing problems; new services and products; new ideas; etc. Everything that isn't new is old, and if you are doing old you are stuck in the past. In the age entrepreneurship, the future of you is new, and your value depends on your ability to do things differently. As the great Alan Kay pointed out, "a change in perspective is worth 80 IQ points."

Hyperconnectivity is about being a signal in the sea of data and making and shaping the waves of social knowledge.

We are all online, but what matters is being a relevant connector. Hyperconnectivity is not about being online 24/7; it's about optimizing the online experience for others.

Unless you are a hyperconnector, only Netflix cares about what movies you watch, and only your friends care about where you went for brunch. But when you are a hyperconnector, thousands of people will watch the movies you like and your brunch recommendations will shape reviewers' comments on TripAdvisor. In the era of information overload, being a trustworthy source of information is a rare commodity — it is the digital equivalent of being an intellectual and the latest state in the evolution of marketing.

The world's knowledge is too large to be stored anywhere; Wikipedia and Google aren't enough; the Library of Congress isn't enough. Hyperconnectors point us in the right direction. Anybody can upload a video on YouTube or tweet, but only a few can direct us to the videos or tweets we want to see.

The most important form of knowledge today is knowing where to find stuff. In fact, the ability to find stuff is now almost as important as the ability to create stuff. Hyperconnectors are the creative of the digital era because in the age of information overload, where everybody creates online content, effectively curating content is what really matters.

In short, the future of you depends on your ability to be a brand, a change agent, and a link to useful information. Paying attention to your personality and managing your reputation (how others see you) will turn you into a successful brand; paying attention to your ideas and defying the status quo will help you become a change agent; and bridging the gap between social knowledge and collective interests will turn you into a hyperconnector.

More blog posts by Tomas Chamorro-Premuzic

More on: Career planning

TOMAS CHAMORRO-PREMUZIC

Dr Tomas Chamorro-Premuzic is an international authority in personality profiling and psychometric testing. He is a Professor of Business Psychology at University College London (UCL), Visiting Professor at New York University, and has previously taught at the London School of Economics. He is co-founder of metaprofiling.com.