So what's the difference? And why is it important to know?
CEO (Chief Executive Officer) as the name implies; is a company top decision maker and all other executives report to him or her. CEO/President usually delegates most of the tactical tasks to other managers, so that he/she can focus on adopting strategies for company i.e which competition to take on, when and which markets should they target, should they go for M&A (merger and acquisition) or partnerships with other companies etc. All CEO are accountable to the BOD (Board of Directors) for the company performance.
Chairman is the head of its BOD of a company. The board is elected by shareholders and their main duty us to protect investors' interests; such as the company's stability as well as profitability. Chairman usually meets BOD multiple times per year to set long-term objectives, evaluate performance of keys managers, review financial results and vote on essential strategic decision proposed by CEO. Directors that are appointed can also fire key managers such as the CEO and president. Chairman normally has substantial power in setting the board's agenda and determine the outcome of votes. The main thing is that Chairman does not necessarily play an active role in everyday management.
The chairman of the board is technically a CEO's superior as the CEO can't make major moves without the board's consensus and his/her job security will depends on their satisfaction. In another word, chairman is the ultimate boss of the whole company's structure. CEO can also affect the composition of the BOD through his/her selection of senior executives, many of them are confirmed board seats by company bylaws.
After reading through, now you know the main differences between CEO and Chairman. Its important to know because if you had purchased any shares of a listed company and you are one of the substantial shareholders, you might be able to determine the fate of the BOD.
28 September 2016
21 September 2016
Book Value or Earning?
The value of a company lie in their power to generate consistent good revenue rather than book value in my personal opinion.
Though some of the companies may go private despite having losses for consecutive quarters, however because their share price was so low that sometimes it make sense for them to privatize rather than remain listed if they have enough "financial muscle" to do so.
There are some possible reason why company choose to go private rather than remain listed especially during recession times. Below are some of the possible reasons:
1) Founder / Substantial shareholders of the company has the financial means to do so.
2) Founder / Substantial shareholders of the company no longer wants to go through the hassle of holding AGM or getting approval from shareholders when certain tasks (i.e. issue right, perpetual securities, bonds etc) need to be carried out.
3) Founder / Substantial shareholders can now have a bigger pie of his /her company's earnings.
4) Market price of the share is way below its intrinsic value
Above mentioned are not exclusive though, there are also other various reasons why a listed company will go listed.
Do comments or share your personal experiences.
Though some of the companies may go private despite having losses for consecutive quarters, however because their share price was so low that sometimes it make sense for them to privatize rather than remain listed if they have enough "financial muscle" to do so.
There are some possible reason why company choose to go private rather than remain listed especially during recession times. Below are some of the possible reasons:
1) Founder / Substantial shareholders of the company has the financial means to do so.
2) Founder / Substantial shareholders of the company no longer wants to go through the hassle of holding AGM or getting approval from shareholders when certain tasks (i.e. issue right, perpetual securities, bonds etc) need to be carried out.
3) Founder / Substantial shareholders can now have a bigger pie of his /her company's earnings.
4) Market price of the share is way below its intrinsic value
Above mentioned are not exclusive though, there are also other various reasons why a listed company will go listed.
Do comments or share your personal experiences.
20 September 2016
Does dividends matter?
Yes definitely it does matter.
According to online research, it says that dividends account for about 40% of your returns.
And according to personal experience and strategy, most of the time if I don't need the money (dividends) that I collected, I will look for others undervalued stocks or reinvest it.
The reason of doing it is because of compounding effect.
As simple as that!
Do let me know your point of views why or why not dividends does matter.
18 September 2016
Accept the offer!
During the so call "Recession" period, some of the listed companies have chosen to privatize instead of remain listed in the stock exchange.
According to my experience, most companies will offer price above their book value, minority will offer price below their book value, however almost all would offer more than 10% above their current trading market price.
So as a minority shareholder, what should we do?
My personal opinion is to accept the offer. In most situation, once the listed company has acquired above 90% of their shares, it would turn from conditional offer to unconditional offer, so by the time it turned into unconditional offer, what can a minority shareholder do if the company turned into a private company?
My personal answer is NOTHING! Just imagine you are the minority shareholder of a private limited company, what can you do?
Therefore personal suggestion will be accept the offer and move on to invest in other great companies.
Have you ever been the minority shareholders of a listed companies? What did you do when the listed company goes private? What experience did you learn out from it? Do share my post and comments if you have any other suggestion or would like to share your personal experiences.
According to my experience, most companies will offer price above their book value, minority will offer price below their book value, however almost all would offer more than 10% above their current trading market price.
So as a minority shareholder, what should we do?
My personal opinion is to accept the offer. In most situation, once the listed company has acquired above 90% of their shares, it would turn from conditional offer to unconditional offer, so by the time it turned into unconditional offer, what can a minority shareholder do if the company turned into a private company?
My personal answer is NOTHING! Just imagine you are the minority shareholder of a private limited company, what can you do?
Therefore personal suggestion will be accept the offer and move on to invest in other great companies.
Have you ever been the minority shareholders of a listed companies? What did you do when the listed company goes private? What experience did you learn out from it? Do share my post and comments if you have any other suggestion or would like to share your personal experiences.
29 August 2016
Getting excited when the price is falling
Are you crazy? Why are you so excited when the stock market is so depressed?
Why not? I asked?
Because the share you bought loses its value! You used to buy at $1 and now it becomes $0.80. If you have bought 10,000 shares, now it will becomes $8,000!!! You have lost $2,000.
Is this true?
To answer this question, let me ask you one question.
If you go to the grocery stall and buy 1 dozen of eggs at $5, and 2 weeks later because the eggs stocks have goes up and thus causing the price to come down to $2.50, will you buy more or less? I don't know about you, but definitely I will rush in and buy more. Probably I will buy 2 dozen of eggs instead of usually I only buy 1 dozen.
This is the reason why I always get excited when the stock market goes down than going up.
Why not? I asked?
Because the share you bought loses its value! You used to buy at $1 and now it becomes $0.80. If you have bought 10,000 shares, now it will becomes $8,000!!! You have lost $2,000.
Is this true?
To answer this question, let me ask you one question.
If you go to the grocery stall and buy 1 dozen of eggs at $5, and 2 weeks later because the eggs stocks have goes up and thus causing the price to come down to $2.50, will you buy more or less? I don't know about you, but definitely I will rush in and buy more. Probably I will buy 2 dozen of eggs instead of usually I only buy 1 dozen.
This is the reason why I always get excited when the stock market goes down than going up.
26 August 2016
The Importance of Portfolio Balancing
Is portfolio balancing important?
Definitely yes!
Imagine that some of the stocks that you bought are over-valued and you still hang on to it without selling, guess what? After a few weeks or months, the market correct itself and the price came down and the size of your portfolio went back to square one again.
So what could be done better?
If you have followed my blog so far, you could use the "making use of market volatility approach" However, in stock investment, the most important question is to know the valuation of the company at the per share basic. Meaning that if the market cap of the company is worth so much, how much then the company would be worth per share? After you got the "intrinsic value" then you can sell the share when it goes over valued and buy in more when it becomes undervalued again.
Other way to do it is definitely to sell those over-valued shares that you are holding and buy into good/great companies that are over-valued.
Keep doing this, be patient and soon you will find that your portfolio will grow bigger.
Definitely yes!
Imagine that some of the stocks that you bought are over-valued and you still hang on to it without selling, guess what? After a few weeks or months, the market correct itself and the price came down and the size of your portfolio went back to square one again.
So what could be done better?
If you have followed my blog so far, you could use the "making use of market volatility approach" However, in stock investment, the most important question is to know the valuation of the company at the per share basic. Meaning that if the market cap of the company is worth so much, how much then the company would be worth per share? After you got the "intrinsic value" then you can sell the share when it goes over valued and buy in more when it becomes undervalued again.
Other way to do it is definitely to sell those over-valued shares that you are holding and buy into good/great companies that are over-valued.
Keep doing this, be patient and soon you will find that your portfolio will grow bigger.
24 August 2016
Using Option to "turbo charge" your portfolio
I have wrote about how to use option strategy to "turbo charge" your portfolio.
It is a simplified written EBook.
Feel free to purchase from "My Ebook and Product" section or alternative just click below to make a purchase:
Passive Income through Option Strategy
It is a simplified written EBook.
Feel free to purchase from "My Ebook and Product" section or alternative just click below to make a purchase:
Passive Income through Option Strategy
23 August 2016
Is yield important?
What is yield?
Yield is return, usually in a form of dividend of a stock.
So how do we calculate yield of a stock?
Example if you are getting $0.05 dividend of a $1 stock that you purchased, the yield is given by $0.05 divided by $1 which equate to a 5% yield. As simple as that!
So is it important?
The real quick answer is yes and no.
What's the reason for yes?
Its important because in order to get the highest yield of a stock, we need to buy at the lowest possible price.
What's the reason for no?
Its is not important because as an intelligent investor, we shouldn't just purchase stock simply because it gives the highest yield.
Yield is return, usually in a form of dividend of a stock.
So how do we calculate yield of a stock?
Example if you are getting $0.05 dividend of a $1 stock that you purchased, the yield is given by $0.05 divided by $1 which equate to a 5% yield. As simple as that!
So is it important?
The real quick answer is yes and no.
What's the reason for yes?
Its important because in order to get the highest yield of a stock, we need to buy at the lowest possible price.
What's the reason for no?
Its is not important because as an intelligent investor, we shouldn't just purchase stock simply because it gives the highest yield.
11 August 2016
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19 July 2016
Is Beta a Measurement of Risk?
Most of the time we heard people said that the price of a share move up and down too drastically that it cause them to have a lot of worries which is why most gave up on buying shares.
Some of the good companies stock price can goes up or down 10-20% within a short time frame (a month or less) especially when market uncertainties arises among investors.
So is Beta (a measurement of volatility or systematic risk) a measurement of risk?
To answer this question, let me ask you one question:
If you are paying for something which is worth $1 for $0.60, is it riskier or less riskier than if you were to buy $1 for $0.40?
If you answered less riskier, congratulation! You have bust the myth that Beta is a risk! Because assuming that you have done your homework to come out with an opinion that a company's per share is worth $1 and they are selling for $0.60, wouldn't it make more sense that they have lesser risk and higher reward to buy at $0.40?
Therefore, my conclusion is Beta is not a risk, it is there to serve you.
Some of the good companies stock price can goes up or down 10-20% within a short time frame (a month or less) especially when market uncertainties arises among investors.
So is Beta (a measurement of volatility or systematic risk) a measurement of risk?
To answer this question, let me ask you one question:
If you are paying for something which is worth $1 for $0.60, is it riskier or less riskier than if you were to buy $1 for $0.40?
If you answered less riskier, congratulation! You have bust the myth that Beta is a risk! Because assuming that you have done your homework to come out with an opinion that a company's per share is worth $1 and they are selling for $0.60, wouldn't it make more sense that they have lesser risk and higher reward to buy at $0.40?
Therefore, my conclusion is Beta is not a risk, it is there to serve you.
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