Book value

Today, when I watched ROBTV, Brian Acker talked about book value. I think he made a point. He was talking about Microsoft. He mentioned that during the past few years, we noted that accumulated depreciation on Microsoft has been become larger and larger. What does it mean? It means Microsoft has not invested significantly on the equipment or other fixed assets. When this happens, you start to question how much management is willing to commit this company? It applies other tech companies. If management is reluctant to invest itself, how sustanable will this company be? No wonder Brian is an accountant. I think he has made an excellent point. Looking into the company's book does play an important role in investment.

PFE starts to decline to $25. I have set $20 limit order. If it goes that low and I purchase them at that price, I will be very happy.

Still love oil companies. Su stays at $34.50. I think it will go higher. I set $38.18 sell limit order. Continue to watch oil, coal and material sector.

My return on investment is 15% for this year. It is not easy task. Take it slow. Let my book value grow.

It is very strange. All the news is againest US $. And US $ is down. However, gold stocks are coninuing it south journey. I think people are still having faith in US $ and are not interested in gold. The media has not touched gold quite often. My gold holdings are down to 10% to 20% because I was purchasing them at the peak (November 2004). It was a little rush when I purchased them. I think I am going to continue to hold them as the insurance policy. I am so longer for collecting my insurance benefit.

I am watching a few stocks right now. NSANY (Nissan motor) is quite cheap from the fundamental point of view. Comparing US companies, it is not cheap but I don't have faith on Ford and GM. The pension and health cost will not change any time soon. Nissan models are very hot and I have heard some very positive comments on those Nissan cars. Right now, it is around $22.00. The 52 week range is $19.65 and $23.30. 1% dividend yield is not attractive. But p/e at 9.5 is reasonable. How much can it appreciate? I need time to think through.

Another one is IBN, which is indian bank. Canadian website is www.icicibank.ca. It is very competitive versus www.ingdirect.ca. right now, it pays 2.75% versus 2.4% in ING. Considering the booming economy in India, it worths looking to it.

Investment ideas for 2005

I summarize some ideas which will potentially affect my investment strategy for 2005.

1. Flat tax system proposed by Bush administration.
2. Transpostation sector which benefits from just-in-time inventory and Chinese manufactories.
3. Investing in Japan. (after 15 years declining of its stock market, it is time for them to go up. Evidence is that Japanese government does not intervene Japanese Yen appreciation against US $. Why? )
4. Pharma stocks. (Due to a basket of scandals, investors will have beaten this sector. In addition, sharply declining US $ will help largely increase their sales globally.)
5. Gold. No question against decling US $.
6. Energy stocks. No question. Betting on increasing demand from China. Limited supplies at least in 2-3 years. Canadian oil sand is very attractive, due to its stable environment and close to US market.
7. Coal. I love coal. Chinese are suffered to the shortage of electricity. Coal is a cheap supplies.
8. Social security tax reform. More demand for equity investment.

Other questions I don't have the answer.

1. What is the second tier for my current investment? Parma stocks?
2. How to play in a uncertain currency environment?

I may add more ideas later.

Happy New Year

Happy New Year!

Today is the first day of 2005. I have been organizing my thought about my 2005 investment strategy.

First, I am a still firm believer that commodity stocks will outperform other groups. I currently own oil, coal, gold, pharma and technology stocks. Speaking of technology, I think Nokia should not belong to technology stock. It should be more like fashion related stock. Have not found a proper sector for it. I temporarily put it as technology.

Today, I have mde up my mind that I continue to heavily invest in oil and energy sectors this year, because I believe that in the next five years, these stocks will deliver superior returns. I also think I should watch pharma stocks because as US $ continues to decline, the pharmas stocks will benefit from it.

In the next 30 days, I am waiting for a pull back of oil stocks. SU and CNQ have been up quite a bit. I belive oil stocks rally just begin for the next two months. Whether I should follow in or should wait, I have not make up my mind. Canadian Oil Sand (COSWF) is quite attractive. I feel a urge to own it. Around 3% dividend yield and 30 years life reserve index are very attractive to me. Besides Canadian $ natually hedges my bet.

I will follow it and update it.

Tax season will start and I have finished my study for CFA. I feel a little pressure now. Hope I can overcome them.