Pemulihan Ekonomi Global Masih Rapuh

Perdana Wahyu Santosa

World Bank merilis Global Economic Prospect:  Crisis, Finance and Growth 2010, Jumat 22 Januari  2009. Dalam laporan analisis dan riset tentang situasi  krisis finansial, keuangan dan pertumbuhan ekonomi  global 2010 tersebut dapat disarikan bahwa volume  perdagangan dunia diprediksi meningkat tajam namun  pemulihan ekonomi tetap lambat. Kondisi ekonomi 2010  tersebut dinilai masih rapuh dan diselimuti ketidakpastian sehingga tergolong masih rapuh (fragile). Namun, secara umum pertumbuhan ekonomi global dapat memberikan rasa optimisme terhadap ekspektasi pemilihan yang telah meemukan titik terangnya.

Beberapa hal penting dari laporan analisis tersebut adalah:

• PDB global yang jatuh hingga 2,2% pada 2009, diekspektasi dapat kembali tumbuh pada tingkat 2,7% pada 2010 dan 3,2% pada 2011.
• Prospek ekonomi negara-negara berkembang (developing countries) mendapatkan predikat relatively robust recovery, dengan ekspektasi tingkat pertumbuhan PDB sebesar 5,2% pada tahun ini dan 5,8 pada 2011 atau meningkat sekitar 1,2% dibandingkan 2009
• Pertumbuhan PDB negara-negara maju (rich countries) yang sebelumnya mengalami penurunan sebesar 3,3% pada 2009 diharapkan mampu meningkat setidaknya sebesar 1,8% dan 2,3% untuk 2010 dan 2011.
• Volume perdagangan dunia yang mengalami penurunan tajam sebesar 14,4% pada 2009 diproyeksikan dapat kembali meningkat 4,3% pada 2010 dan 6,2% pada 2011.

World Bank juga mengutarakan hasil analisis prospek tersebut berdasarkan skenario dasar dengan mempertimbangkan faktor-faktor ketidakpastian yang relatif tinggi. “Depending on consumer and business confidence in the next few quarters and the timing of fiscal and monetary stimulus withdrawal, growth in 2011 could be as low as 2.5 percent and as high as 3.4 percent.” Further, over the next 5 to 10 years, increased risk aversion, a more prudent regulatory stance, and the need to curb some of the riskier lending practices during the boom period that preceded the crisis can be expected to result in scarcer, more expensive capital for developing countries.

Dalam situasi dan kondisi ekonomi yang relatif masih lemah, pergerakan harga minyak mentah dunia diharapkan stabil pada kisaran rata-rata $76 per barrel serta harga-harga komoditas penting lainnya hanya mengalami kenaikan harga rata-rata sepanjang 2010 dan 2011 sebesar 3% pertahun. Peningkatan harga komoditas yang lebih tinggi diprediksi  menghambat pertumbuhan ekonomi dunia yang baru pulih.

Source: http://www.researchrecap.com

Review dan Prospek Pasar Modal 2010

Perdana Wahyu Santosa

Review 2009: Flying High Again

Awal tahun 2009 lalu pasar modal BEI didera    penurunan luar biasa tajam akibat kecemasan  mendalam akan kehancuran ekonomi global yang  berawal dari krisis subprime mortgage di AS dan sebagian Eropa. Krisis instrumen derivatif berlandaskan aset KPR berkualitas rendah tersebut menjalar begitu cepat sekaligus sangat dahsyat. Hampir semua pasar modal baik emerging market ataupun pasar yang sudah efisien mengalami kejatuhan luar biasa. Tingkat kejatuhan pasar modal global mencapai kisaran 60-80%. Krisis tersebut menghapus sebagian besar kekayaan para investor kakap yang telah berinvestasi selama satu dekade. Dari rakyat biasa hingga para analis keuangan, ekonom sampai dengan petinggi negara membicarakan krisis ekonomi disertai bumbu politik, anti-kapitalisme, neo-liberalisme, dan berbagai penyedap lainnya sesuai dengan motif masing-masing kelompok. Perekonomian dan pasar finansial berada pada kondisi yang rentan dan penuh ketidak-pastian tanpa gairah pada saat itu, plus kerawanan isu sosial politi jelang pemilu pada paruh pertama 2009.

Namun orang bijak menatap dengan cara lain, katanya setiap krisis akan menciptakan berbagai peluang bisnis dan investasi. Ketika pasar modal BEI terjungkal hebat hingga level 1.100 an per Januari 2009, dunia seolah terbalik dimana investor kaya menjadi “miskin” dan terbuka peluang besar bagi para investor baru “newbie” untuk menjadi kaya. Investor baru dapat masuk pada saat harga-harga saham terdiskon sangat rendah akibat krisis ekonomi dan panic selling yang berlebihan. Ini jelas peluang langka. Untuk mendapatkan peluang investasi sebaik ini mungkin harus menunggu selama kurun 10 tahun lagi. Situasi saat itu dapat disebut maximum investment opportunity. Namun, peluang berharga tersebut kurang dimanfaatkan akibat rasa takut dan dampak psikologis yang dalam akibat kejatuhan pasar finansial dunia.

Hal tersebut dapat dimaklumi, Lehman Brothers, AIG, Citigroup, JP Morgan dan sederet manajer investasi kelas dunia saja terkapar tak berdaya dihantam badai subprime mortgage tersebut. Namun kita harus memahami, bahwa fenomena tersebut hanyalah sebuah siklus yang terus berputar dari masa ke masa. Setelah mengalami krisis, kembali pasar finansial mengalami booming, kemudian kembali didera krisis dan seterusnya.

Pertumbuhan indeks pasar BEI yang cukup baik dimulai 2006,hingga 2007 dan paruh pertama 2008. Setelah naik 55,3% pada tahun 2006, dan naik lagi 52,1% pada tahun 2007, Indeks Harga Saham Gabungan (IHSG) menurun 50,7% selama tahun 2008. Memasuki kuartal III 2008, pasar finansial global mulai limbung dan hancur pada kuartal terakhir 2008. Sampai paruh pertama 2008, BEI mencetak rekor dalam sejarah hingga level 2830. Kejatuhan BEI disebabkan karena keluarnya hot money besar-besaran terutama pada kuartal terkahir 2008 akibat kecemasan dampak krisis global.  Selanjutnya pada paruh pertama 2009 indikator ekonomi makro Indonesia yang cukup kuat dari terpaan krisis global dengan PDB sekitar 4,3% tersebut membuat pasar kembali memasuki wilayah optimis sekalipun senantiasa dibayangi berbagai kecemasan akan pemulihan ekonomi global yang belum jelas.

Akhirnya jelang kuartal kedua 2009, IHSG kembali menujukkan kekuataannya dan berhasil up trend luar biasa hingga 50,1% pada akhir semster 2 tahun 2009. Serta merta peguatan IHSG diikuti oleh menguatnya nilai tukar IDR terhadap USD menjadi sekitar Rp. 10.200/USD pada akhir Juni 2009 setelah sempat terpuruk hingga Rp. 12.000/USD pada Desember 2008. Pemulihan tersebut juga didorong oleh penurunan tingkat suku bunga BI (BI rate) dari 9,5% hingga 6,5% saja secara periodik. Penguatan IHSG terus berlanjut pada kuartal 3, bahkan berhasil menembus level psikologis 2000 dengan mulus disertai penguatan IDR/USD pada kisaran Rp. 9500-10.000/USD.

Memasuki kuartal terkhir 2009, para investor semakin percaya diri bahkan cenderung over confidence terhadap prospek investasinya. Hal tersebut, membuat IHSG kembali terbang tinggi menembus level wajarnya di 2250. Bahkan pada November dan Desember 2009, IHSG berkali-kali menembus level keramat 2500. Namun, para investor nampaknya belum berani melangkah terlalu jauh sehingga pada kuartal terkhir 2009 IHSG berfluktuasi pada kisaran 2400-2500 an. Bayangkan, pada 31 Desember 2009, Indeks Harga Saham Gabungan (IHSG) telah bertengger di atas evel 2.500 atau tumbuh sekitar 85,86%. Ini berarti IHSG sudah kembali normal hanya dalam satu tahun saja. Namun hal yang mencemaskan adalah kenaikan harga crude oil dunia yang mencapai level USD 78,76/barrel. Kenaikan harga minyak mentah dunia tersebut lebih disebabkan aktivitas spekulasi dari pada proses supply-demand.

Prospek 2010: Flying Over High atau Profit Taking?

Apakah suasana keceriaan di BEI pada akhir 2009 ini akan berlanjut pada 2010 nanti? Apakah IHSG akan terus terbang lebih tinggi lagi di 2010? Tentu saja itu harapan kita semua. Ada baiknya jika kita mengacu kepada prospek indikator ekonomi makro Indonesia dan global pada umumnya. Sekalipun, secara psikologis, IHSG akan terus mencoba menembus level tertingginya di 2830 pada awal kuartal pertama 2010 nanti. Tendensi “pemecahan rekor tertinggi” ini tampaknya cukup kuat dan beralasan.

Jika kita mengacu pada prospek perekonomian nasional di 2010, yaitu angka pertumbuhan ekonomi 2010 oleh beberapa ekonom dan lembaga riset terpandang dipatok sekitar 5-6%. Bahkan ada yang memprediksi di atas 6%. Hal ini tentunya merupakan alasan kuat bagi para investor untuk kembali menanamkan dananya di BEI selama 2010. Secara umum, jika perekonomian dapat tumbuh 1%, maka dibutuhkan dana investasi sekitar 4,5% dari APBN. Maka untuk tumbuh sekitar 5,5% dapat dihitung secara kasar jumlah dana investasi yang diperlukan untuk mencapainya. Tentu saja pemerintah harus berupaya maksimal dan fokus untuk menciptakan situasi kondusif bagi para investor asing dan swasta nasional agar dana investasinya dapat bertahan lebih lama di Indonesia. Sedangkan untuk menarik dana besar dari investor asing, tentunya peranan pasar modal sangat penting.

Di samping itu, masuknya dana asing akan membuat rupiah semakin kuat dan stabil dalam mendukung pertumbuhan ekonomi 2010. Jumlah modal yang dibutuhkan para emiten juga semakin besar untuk dapat menangkap peluang bisnis di 2010 tersebut sehingga pasar modal akan diwarnai berbagai aksi korporasi untuk menjaring dana segar dari masyarakat. Di samping itu, jumlah emiten baru yang prospektif ditargetkan otoritas BEI sekitar 25 emiten. Ini berarti dalam setiap bulan akan ada initial public offering (IPO) sebanyak 2 emiten. Situasi tersebut merupakan peluang tambahan yang dapat dimanfaatkan para investor di 2010.

Indikator ekonomi makro seperti inflasi dinilai akan stabil pada kisaran 6,5-7% sedangkan BI rate akan dipatok untuk menjaga situasi ekonomi yang kondusif pada kisaran 7-7,5%. Kedua indikator penting tersebut memberikan harapan yang sangat bagus bagi investor dan pelaku ekonomi riil. Nilai tukar IDR/USD diestimasi berada pada level Rp. 9200-9600/USD.

Beberapa lembaga keuangan dunia juga memberikan target IHSG yang menjanjikan. Pada umumnya mereka mentargetkan IHSG di atas 3000 an dengan berbagai asumsi dan metode analisisnya. Melihat situasi tersebut, tampaknya IHSG akan flying over high dan memberikan imbal hasil yang baik bagi pelaku pasar.

How high can you go, IHSG?

Adalah pertanyaan mendasar di 2010, betapa tidak, jika IHSG terlalu tinggi (overvalued) maka konsekuensinya akan rawan anjlok sesaat akibat aksi ambil untung (profit taking) dan mengakibatkan capital outflow dana panas yang dimiliki asing. Hal tersebut wajar terjadi karena kenaikan IHSG selama 2009 sudah melebihi 85% ditambah potensi kenaikan selama 2010. Sikap overconfidence dari para investor diprediksi akan mewarnai transaksi saham di BEI terutama pada saham blue chips. Namun secara umum, indikator price earning ratio (PER) IHSG masih berada pada tahap aman.

PER IHSG masih tergolong murah dibandingkan dengan PER beberapa negara seperti China dan India. Apabila dibandingkan dengan PER rerata historis IHSG, yaitu sekitar 35x sehingga  tingkat IHSG saat ini masih undervalued. Temuan ini juga merupakan peluang investasi yang cukup baik di 2010. Bersikaplah cerdas dan bijak di tahun macan yang penuh keberanian ini namun takutlah saat mayoritas investor menjadi tamak.

Salam SMART Market…

Mengidentifikasi Tawaran Investasi Fiktif

Investasi berpotensi besar meningkat kesejahteraan dan  kualitas hidup dan kehidupan keluarga kita semua. Namun,  sampai dengan saat ini masih saja ada orang atau kelompok  tertentu yang tertipu dalam jumlah yang sangat besar karena  berinvestasi. Setelah diselidiki ternyata investasi yang  dilakukan hanyalah investasi fiktif yang berkedok perusahaan  profesional dengan berbagai promosi atau iklan yang sangat  menjanjikan. Pada umumnya perusahaan investasi fiktif tersebut menjanjikan keuntungan yang sangat tinggi (bahkan tidak masuk akal) dan dibayarkan melalui term jangka pendek seperti bulana atau kuartalan saja secara periodik. Nah atas dasar pengalaman inilah maka anda sebaiknya selalu waspada dan berhati-hati terhadap tawaran investasi fiktif tsb.

Agar kita tidak menjadi korban investasi fiktif atau bodong tersebut maka sebaiknya kita memiliki beberapa ciri-ciri atau karakter dari investasi jenis tersebut. Pemahaman yang baik terhadap dunia investasi tentunya akan membantu anda lebih cepat sekaligus tepat dalam memahami ciri-ciri produk investasi keuangan. Produk-priduk investasi  fiktif tidak pernah surut bahkan semakin banyak jenisnya dengan kualitas penipuan yang semakin canggih pula.

Beberapa Kasus Investasi Fiktif

Skandal terbaru adalah skandal Bank Century yang menjual reksadana fiktif yang laris manis karena menjanjikan imbal hasil yang tinggi. Para nasabah yakin karena yang menjual reksadana, Antaboga,  tampak sangat bonafid dan profesional. Selanjutnya kasus investasi fiktif tersebut bergulir menjadi skandal ekonomi-politik dengan dana bail out sebesar Rp. 6,3 triliun.  Selain itu, kasus investasi fiktif lainnya seperti PT Wahana Bersama Globalindo (WBG). Sekitar 10.000 nasabah WBG harus gigit jari perusahaan investasi ini kolaps. Akibatnya, ratusan juta dolar dana investasi mereka mereka pun raib tak berbekas. Para petinggi WBG juga sudah kabur. Selain kasus ini, tentu Anda ingat kasus POMAS, Qurnia Subur Alam Raya (QSAR), Sarana Perdana Indoglobal (SPI), dan masih banyak lagi (Kontan, 2009).

Bahkan di AS yang terkenal canggihpun sistem investasinya ikut kebobolan lewat produk investasi yang ditawarkan Bernard Madoff mantan petinggi SEC di Wall Street. Madoff menjaring para korbannya melalui skema ponzi alisa gali lubang tutup lubang yang rumit dan canggih. Terakhir, pada akhir 2009 aksi penipuan Ustadz Lihan dengan metode yang sama dibalut iming-iming keuangan syariah yang mencapai Rp.800 milyar.

Dengan demikian, agar anda tidak tertipu oleh beragam jenis investasi fiktif tersebut maka tentu kita harus mampu mengidentifikasi produk investasi bodong tersebut dengan tepat dan cepat. Yang harus anda cermati adalah:

Pertama, imbal hasil yang sangat tinggi.

Produk investasi fiktif pada umumnya selalu ditawarkan melalui konsep atau skema imbal hasil (return) tinggi yang tidak rasional menurut kaidah keuangan dan investasi. Misalkan menawarkan keuntungan dalam UD$ sebesar 25-30% pertahun atau 4 kali keuntungan wajarnya seperti yang dilakukan PT WBG atau Qsar menjanjikan investasi agribisnisnya memberikan imbal hasil 7-10% per bulan secara tetap atau 120% pertahun. Begitu pula aksi Ustadz Lihan yang menipu ribuan nasabahnya dengan cara yang hampir sama.  Nah, imbal hasil atau potensi keuntungan yang tinggi tersebut adalah umpan yang efektif dalam menjaring korbannya. Berpikirlah lebih rasional agar kita selamat dari jeratan investasi fiktif baik konvensional maupun berkedok syariah.

Kedua, berkedok Perusahaan Berjangka resmi.

Jenis ini menawarkan produk investasi melalui instrumen berjangka (future) luar negeri dengan keuntungan yang luar biasa, maka disarankan anda lebih berhati-hati. Saat ini banyak perusahaan investasi bodong berkedok perusahaan berjangka yang memiliki legalitas aspal belaka. Misalnya, jika ada perusahaan investasi menawarkan instrumen investasi melalui kontrak berjangka luar negeri – baik valas maupun indeks bursa asing – maka perusahaan tsb harus memiliki izin dari Badan Pengawas Perdagangan Bursa Komoditi (Bappebti). Selain itu, perusahaan itu juga harus memiliki izin dan menjadi anggota bursa berjangka yang ada di Indonesia, yakni: Bursa Berjangka Jakarta (BBJ).

Karenanya, jika ada perusahan menawarkan investasi di bursa berjangka, Anda harus meminta bukti izin mereka dari Bappebti maupun BBJ. Kalau perusahaan itu tidak bisa menunjukkan izin-izin tersebut, atau hanya bisa menunjukkan Surat Izin Usaha Perdagangan (SIUP) belaka – seperti PT. Wahana Bersama Globalindo (WBG) — kemungkinan besar perusahaan itu ilegal. Dalam kasus yang lain, dapat saja perusahaan fiktif mampu menunjukkan semua izin-izinnya. Namun sebaiknya anda melakukan pengecekan langsung ke Bappepti maupun BBJ.

Ketiga, berkedok Agen Penjual Reksadana.

Di samping produk berjangka, produk pasar modal seperti reksadana juga berpotensi untuk disalahgunakan oleh pelaku penipuan dengan berkedok manajer investasi (MI) legal. Produk reksadana mempunyai aturan sendiri. Menurut Badan Pengawas Pasar Modal dan Lembaga Keuangan (Bapepam-LK), orang yang menjual produk reksadana harus mengantongi izin Wakil Agen Penjual Reksadana (WAPER) dari Bapepam-LK. Karenanya, jika ada sales reksadana yang menawari Anda produk reksadana, apalagi dengan imbal hasil tinggi maka sebaiknya cek kembali apakah dia memiliki izin itu. Jika tidak, jangan mau membeli reksadana dari dia.

Keempat, berkedok Manajer Investasi (MI).

Sebagai pengelola reksadana, Manajer Investasi harus memiliki izin  resmi dari Bapepam-LK. Aturannya, MI juga tak boleh menerima dan menampung sendiri dana investornya. Dana dari investor tersebut harus disimpan di bank kustodian yang ditunjuk. Karena itu, ketika anda membeli produk reksadana, maka dana ditransfer ke rekening bank kustodian, bukan rekening MI. Maka apabila ada agen penjual reksadana itu meminta Anda untuk mentrasfer dana Anda ke rekening MI, atau bahkan rekening lainnya maka itu jelas-jelas menyalahi aturan.

Investment Philosophy

Investment philosophy consists of a mixture of financial gurus who have one goal in mind when purchasing securities:finding undervalued securities.

David Dreman

1. Invest in undervalued companies that exhibit strong fundamentals, above-market dividend yields and historic earnings growth, which analysis indicates will persist.
2. Own strong,fundamentally sound companies and to avoid speculative stocks or potential bankruptcies.
3. Markets are not perfectly efficient and that, in particular, behavioral finance plays a considerable role in investor actions and over-reactions and subsequently in stock price movements

Joel Greenblatt-

As for the “complicated” formula, here is the big picture. For “cheap stocks”, the formula uses earnings yield (the inverse of P/E, it is simply earnings divided by market capitalization).

For “good stocks”, the formula uses return on capital. Many analysts use a simple return on equity calculation (earnings/equity) or return on assets (earnings/assets) ratio to determine return on capital. As with earnings yield calculations, we make a couple of adjustments that account for differing debt levels and tax rates between companies. We also compare earnings to the total “net working capital” plus “net fixed assets” required to generate operating profits. Intangible assets are excluded as described in detail in the book.

Source:http://www.magicformulainvesting.com/book/about_mfi.jsp

Benjamin Graham

* “An investment operation is one which,upon thorough analysis promises safety of principle and an adequate return.Operation not meeting these requirements are speculative.”-Security Analysis

Mechanical

The approach mentioned above is almsot 100% mechanical with very little security analysis.Thus, every stock mentioned should not be considered a buy decision.

http://www.contrarianvalueinvesting.com/philosophy/<

The Nature of Stocks and Their Markets

by Peter Leeds is the American financial author and investment coach with expertise in choosing and profiting from penny stocks. Peter Leeds manages several informational site focusing on penny stocks and publishes an investment newsletter.

Stock Brokers
Besides money, the only thing you need to start investing is a stock broker. Your broker will be the individual or organization that have execute your buy and sell orders. They will have an account for you which is just like a normal bank account, except that it can contain not only cash, but stocks and bonds as well. Money from the sale of shares will go into this account, and cash to buy shares will be taken from this account.

There are two types of stock brokers which you can choose between, full service and discount. Each has advantages and disadvantages, as discussed below.

Full Service Stock Brokers
Full service brokers will give you advice and investment recommendations. However, they do have very high commission fees and are usually only suitable for investors who have a great deal of money to invest and who do few trades. For penny stock investment, the frequency of trading and the small amounts of capital per trade make full service brokers inappropriate, because their commission fees will be too high. You may be required to pay as much as $100 or more to have your full service broker buy you some shares, and just as much again when you sell.

Discount Stock Brokers
Discount brokers can answer any investment questions you may have, but they offer fewer personalized services for their clients, such as making stock recommendations or giving you portfolio advice. These are the brokers you see on television, advertising $10 or $20 a trade commission fees. When you buy or sell stock, you will be required to pay this lower commission rate, and can therefore keep more of your own money in your pocket.

As well, with discount brokers you can often monitor your account and execute trade orders from your computer or through an automated telephone system. With the computer system you are able to see all of your open buy orders, check market indexes and get stock price quotes. On-line discount brokers are best for anyone investing in penny stocks, as you are able to check prices anywhere there is a modem, and as many times as you like throughout the day.

When you’ve chosen which broker you want to establish an account with, simply contact them and they will help you fill out any forms and set up your account. You generally will need an initial deposit of cash. Getting your account running and ready for trading is simple and should not take more than three days.

Buy Orders
When you want to acquire shares of a stock, you give your broker a buy order. Make sure you have enough money in your account to cover the cost of the shares, as well as the commission fee. You will need to know the following;

1. The ticker symbol of the stock (i.e.- COMX is the ticker symbol for Comtrex Systems)

2. The market the stock is trading on (i.e.- NASDAQ)

3. How many shares you want to acquire. This is also referred to as the volume. With penny stocks you should always buy in multiples of 1000 shares, as you may be otherwise subject to extra commission charges from your broker.

4. The price you are willing to pay for the shares. A ‘market’ order means you are willing to pay the best available price at the time. A ‘limit’ order means you will specify a price which you are willing to pay, and your trade will only take place if shares reach that price. We strongly suggest the use of limit orders, to increase you control over the transaction and to avoid price volatility.

5. The duration of your order. For example, you may keep your order good for just that trading day, or have it good every trading day until it expires on the date you specified, which may be weeks later.

Thus, an example order you might enter would be; “I wish to buy 6000 shares of Lore Diamonds, ticker symbol LOR, at 19 cents or less. The stock is on the Vancouver exchange, and I want this order to stay active until Friday of this week.”

If the price of LOR hits 19 cents or less, your broker should acquire the shares for you. You will find that 6000 shares of LOR have been added to your account, and the money for them has been taken out (6000 shares * $0.19 = $1140 + commission fee).

Sell Orders
A sell order is simply the reverse process of buying. Make sure you know how many shares you have in your account when selling a stock. Tell your broker; “I wish to sell the 6000 shares of Lore Diamonds from my account. The ticker symbol is LOR, and the stock is on the Vancouver Stock Exchange. I want to sell at 24 cents or higher, and keep the order good for the day.”

If the price of LOR hits 24 cents or higher, your shares should be sold and the money from the transaction (6000 shares * $0.24 = $1440 – commission fee) deposited into your account within three days, ready to be used in another purchase.

Special Trading Notes
When trading on an exchange, investors either enter a bid price (if they are buying) or an ask price (if they are selling). When a bid and ask price meet at an agreed price, a trade takes place. In other words, if you are willing to pay 24 cents per share for a stock, and someone is willing to sell shares of the same stock for 24 cents, you will exchange the shares for the cash.

At any one time there are usually several buy orders and sell orders all at different prices for a given stock. However, when you check a stock quote you will only see the highest bid price and the lowest ask price, representing the most that investors are willing to pay for the shares, and the lowest price at which shareholders are willing to sell, respectively.

Due to the ‘best price’ priority, your order to buy stock will not get filled until all buy orders of a higher price are filled first. Similarly, your sell orders will not get filled until sell orders of a lower price are filled.

For orders to buy (or sell) stock that are entered at the same price as other similar orders, preference will be given by the exchange in the order in which they were received.

Unfilled Orders
Due to the above mentioned ranking order, and the often light volume of shares trading, you may not always get your order filled. You may put in an order to buy at a certain price, and find that the shares did not trade at that price during the duration of your order, and therefore you did not make the transaction. There will be no broker fee when no trade takes place.

Partial Fills
You may also find that you got your order partially filled. You may want 8000 shares of a stock, but only get 2000. This is because only 2000 shares were available at the price you had stipulated. This applies to both buying and selling. If you notice that this may be the case mid-day, you can respond by adjusting the price of your order to ensure you trade all the shares you want. You will not get an extra commission for that. However, if your order spans several days and is partly filled on more than one day, you will get a commission charge from your broker each day you trade shares.

Canceling and Changing Open Orders
Buy and sell orders can be canceled or changed during their duration. Consult your broker for more information about changing open orders.

Review: The New Buffettology

by Mary Buffett and David Clark

This book is essential reading for anyone who wants to know more about Warren Buffett and how he does what he does.

The authors look at the companies Buffett has invested in over the years and what he has said about investment principles, and use this to draw up a series of tests and principles that they claim he puts in place when selecting investments.

We cannot say with any certainty that these tests and principles totally and accurately reflect the way that Warren Buffett does business. We can however say that they make good and logical sense to us.

For example, the authors assert that Buffett only looks at companies with consistently high rates of return on equity, preferably rising, and give mathematical tests and equations for assessing this. This seems to accord with everything that Warren Buffett has ever publicly said and makes sense.

In the early part of the book, Mary Buffett and David Clark analyze some of Warren’s historical investments and come up with a series of guiding principles on what to buy and when to buy it. They include important factors such as brand name companies, information sources, and company management.

Later in the book, the authors set out a series of financial and other equations for assessing likely investments, and the price that an investor can pay and still have Graham’s famous ‘margin of error’.

Generally, these equations and calculations can easily be done by the average reader, with the assistance of a financial calculator, such as the Texas Instruments Solar Financial Calculator. One equation, that using book value to predict earnings growth, did give us some difficulty at first but proved do-able after a couple more readings.

The authors also produce a Buffetology Workbook that contains all the steps the reader needs to make the calculations suggested in the principal book.

This is a must-have book for any reader wanting to tap into the Buffet investment secrets.

http://www.buffettsecrets.com/the-new-buffettology.htm

Review of Investing – the Last Liberal Art

by Robert Hagstrom

Charlie Munger is like a kind of Mycroft Holmes to Warren Buffett’s Sherlock – he is the deep thinker of the two, and a man who believes strongly that the general acquisition of wisdom can lead to a better approach to investing.

Munger believes in having a grasp on the central ideas of as many disciplines as you can, and furthermore believes in finding the links between those various disciplines – the “lattice-work of models”, in Munger’s words, that enables a person to approach any new idea or concept with a framework of understanding that goes well beyond the subject at hand. Beyond being useful for investing, Munger believes, as do we, this to be a healthy approach to life in general.

Influenced, as he acknowledges, by Charlie Munger’s investment philosophy, Robert Hagstrom’s book takes up on Munger’s approach. Investing: the Last Liberal Art, by the author of The Warren Buffett Way, is an extraordinary achievement, a book that goes far beyond being a simple primer of investment approaches. In its two hundred pages, it manages to elegantly offer the following:

1. An explanation of the stock market, and a common-sense guide to investing

2. A necessarily brief, but nonetheless clearly written overview of much of Western thought in regard to physics, biology, psychology, and genetics, as well as fascinating, more detailed looks at certain basic principles in all these areas.

3. A series of frame-works of understanding, drawn from these disciplines, for understanding the stock market and investing

4. A powerful and convincing plea for a traditional liberal arts approach to knowledge, and an indictment of business schools and their emphasis on a narrow focus that obliterates a larger view of life, and in turn leads to a narrow, capitalistic, money driven and shallow human being.

Hagstrom proceeds sequentially through various areas of Western thought, highlighting general principles and showing how they can be applied to economics, the stock market, and investing. From physics, he focuses particularly on equilibrium theory. In the following chapter, biology, he draws parallels between Darwin’s principles of evolution and the stock market, in which “survival of the fittest investment approach” can be said to operate, resulting in a continuous need for new approaches.

The following chapter, exploring the social sciences, is the book’s strongest. Hagstrom draws convincing connections between the foraging patterns of ants, the growth of the internet, and current experiments in the ability of social systems to find optimal solutions, to explain the way the stock market continuously corrects itself. As if that wasn’t enough, he follows it up with a lucid explanation of how the nature of catastrophe works in social systems, how minor problems can multiply exponentially out of control until a new stability is reached, and the implication this holds for stock market crashes.

In psychology, Hagstrom examines some of the inbuilt pattern-seeking mechanisms of the human brain, and explores why these mechanisms result in stock market instability. The human brain, Hagstrom explains, is not designed for optimal processing of stock market information, and this results in inherent instabilities in the system that cause oscillation. By compensating for these inbuilt flaws, however, Hagstrom explains how investors distinguish themselves from speculators on the stock market, and are able to judge not trends, but the intrinsic value of shares, irrespective of current market value, and thus take advantage of psychologically-based oscillations to purchase shares at a price lower than they should be.

The final disciplines Hagstrom looks at are philosophy and literature.. From philosophy Hagstrom focuses, perhaps too narrowly, on the sub-branch of Pragmatism.The chapter on literature takes a somewhat different approach: rather than explore how specific literary techniques or approaches can provide insight into economics, the stock market, or general thought, Hagstrom makes a general plea for reading as a productive exercise, particularly for investors and those in the finance industry.

In this section, Hagstrom interviews graduates of St John’s College, a liberal arts college that focuses exclusively on a set four year program of intense study of the great books of Western thought. He speaks to graduates of this college who currently work in the finance industry, and it is clear this liberal approach to education has helped them both as investors, and in their personal lives.

One cannot disagree with Hagstrom’s point. But we also believe that while you might lead investors to water, you can’t make them think. A small minority will seek to understand the general principles that lie beneath human existence, and the majority will continue to look for a shopping-list formula that will enable them to get rich quick. Some will live wealthy and productive lives; others might get rich, but will remain shallow and ignorant.

There is no doubt which approach Buffett and Munger adopt. We would have liked a chapter on history, but this is a small complaint, and does not detract from the quality of this book, which has recieved wonderful reviews throughout the world. More than just a book on investment philosophy, it’s a book for those who seek to understand the world about them. Those who approach investing as an exercise of the mind, as well as a way to make money, wil be enthralled by Hagstrom’s thoughts – those who seek only a formula for quick profits will miss the point.

http://www.buffettsecrets.com/investing-liberal-art-review.htm

Review: The Snowball: Warren Buffett and the Business of Life

by Alice Schroeder

There have been many books written about Buffett and I have read most of them. They generally gloss over his life but try to extract his investment principles by deduction from some of the trades that he has made.

This book is different. It examines Warren’s life in some detail and interposes the tale with comments directly from Buffett himself and from others in his life. What is important however is that it looks in exquisite detail at many of the deals he has made, giving the reader the opportunity of working out his investment principles for themselves. This way you get to make up your mind how he does it.

Unlike many of the other Buffett books, Schroeder also shows us the occasional error of judgment and, like Buffett, you can also learn from these.

This book tells us all about the big and well-publicised deals – Coca Cola, Washington Post, Salomons. But it also details the many smaller and lesser-known ones – the shirt factories, the share-an-airplane company and others. I particularly liked the chapter on Rose Blumkin and the Nebraska Furniture Mart. I think that the amazing Rose may be one of the few people that had Buffett’s measure. And the story of Warren’s early career as a race handicapper is a blast.

This is one of the best biographies that I have read in years.

These are perilous times but I believe that a close reading of this book, together with a re-reading of Buffettology by Mary Buffett will give you a good insight into the way Buffett does it. Plus, I would also re-read The Intelligent Investor by Benjamin Graham, the man Buffett says taught him the basic principles of investment.

http://www.buffettsecrets.com/investing-liberal-art-review.htm