Welcome to 2012, What Are Your Resolutions?

Time flies and it has been quite some time I has not blogged about new year post since 2009. I think I should do this now because 2012 could be the last year that I can do this. Who knows the doomsday is true? I don’t want to miss the chance. :) D

You can also read my previous new year post (if you curious in my past):

• 2008 Accomplishments and What is Next?
• 2006 and 2007 Greatest Accomplishments

Top 5 Accomplishments in the Past

• Exceeded my career growth goal. Annual increment way beyond 7% annually and get promoted within 3 years to next level. Sounds good huh? But still, I”m not sure if this is a good thing because this makes me stuck even harder!

• Health has been improving. Good cholesterol (HDL) has been increasing to the normal range and no longer have high uric acid. Sounds good but still having a lot of bad cholesterol and triglycerides that out of the normal range. The fatty liver has not been fixed. Overall, I still rated myself in bad condition.

• Investment return is around 6% but good news is earn a lot of extra money from company stock options (way beyond 7%). Use the money from stock options to buy a landed property in Penang. This is something good to be an employee.

• Finished settle my housing loan in 5 years. Suppose to be a good news because free from debt. Unfortunately, this doesn’t happen because just kick off another loan account for the new house in Penang. Debt like never ending but I hope this is a good debt!

• Part time blogging gains few more readerships especially for my financial and software blogs. The traffic has been increasing (i.e. ~15%) slowly as compared to last year. The rest of my blogs are as usual, not much increasing traffic due to low quantity of content.

Top 5 Resolutions in 2012

Improve Heath

Sounds simple huh? It is not that simple because every year I have this resolution. These are the few things that I have been doing in the past 2 months and I should continue to do that:

1. Reduce meal by > 50% and eat very less meat and sugar.  
2. Exercise everyday for 1 hour

Measure of success is to fix my medical report. I should do the check up every 3 months.

Stock Investment

Study and become familiar with technical analysis. Select few companies and perform both fundamental and technical analysis on them and blog about it.

Measure of success is to have ROI > 14%.

Migration to Australia

Study and research the pros and cons of migrating to Australia. Apply for PR when the possibility to get is higher than 80%. Also, look at what are the skills that I need to acquire so that I can get a job there (assuming if I decide to migrate there). Unless there is an semi-conductor field there (but unlikely), then I will have less worry. Things still at the early stage at this point in time anyway.

Measure of success is to apply migration to Australia by end of 2012.

Setup Travel Blog

Since my wife has been travelling to so many places, she is asking my help to setup a blog for her. I think that is a good idea too. Anyway this shouldn’t be very hard but I think the hardest part is more on the content. I will leave that to her and hopefully she is not just saying for fun. We will see…

Measure of success is to post 12 posts by end of Dec. This is the goal I set to her. lol! :)

Stretch goal: Become iOS Developer

Not sure if this is realistic or not because I have been wanting to do this for quite sometime. The thing is I need to get the Mac book air to do this which I have been unwilling to invest in the past. Also, time is another factor. That’s why I put this as a stretch goal in 2012.

Measure of success is to develop one application for iPad or iPhone by end of 2012 and get approved in “App Store”.


What are your 2012 resolutions?

Have you set your goals or resolutions yet for 2012? If you’re blogger, you may paste your link here so I will take a look at that as well. Setting goals needs to be S.M.A.R.T if you do not aware of this. The hardest part for me for setting goals is “achievable” because I usually do not accomplish all the goals I set. However, I think that’s the right way too because you do not want to achieve 100% of your goals. This basically means your goals are not challenging enough.


Please set your goals if you haven't do it. You may have different goals. For example. goals for your personal, goals for your business and goals as a employee of a company.

Wish you guys all the best and Happy New Year 2012!!

Using Price per Earning (P/E) Ratio to Analyse Stock

Price per earning or P/E ratio is another useful financial indicator that you can use to analyse your stocks.  It basically tells how many years it takes for you to earn back one share price that you buy. 2 assumptions are being made here for simplification:

• You do not sell your stock
• The stock dividend equals to the earning per share. 

For example, company A has the share price of $10 and the earning per share is $2 per year, you will need 5 years to earn back $10.  However B has the share price of $20 with the same earning per share (i.e. $2), you will need 10 years to earn back the $20. This tells you in fact company B is over-priced and company A is under-valued. In short, the lower the P/E ratio value, the better. The P/E ratio formula is:

P/E Ratio = Share Price / Earning Per Share (EPS)

Note 1: For more information on EPS, you can read my previous post: Using EPS to Analyse Stock


The earning per share should be based on yearly and NOT quarterly.  Another important thing about this EPS is, it is better to use the latest EPS rather than the one you get in the annual report unless you really don’t have a choice or you simply lazy. The technical term for this is called “Trailing Twelve Months” or TTM which means the most recently past 12 months.


Where to get P/E ratio data?

If you do not want to calculate yourself and would like to get the latest information about P/E ratio, you can just search for P/E ratio (TTM). Usually when you see P/E ratio without mentioning the “TTM”, it means the EPS is based on the last fiscal year. For example when I look at my stock trading online account on a particular stocks, the P/E ratio information doesn’t have the TTM. This means the P/E ratio is based on the last fiscal year. In short:

P/E Ratio = Current Share Price / EPS based on the last fiscal year (e.g. as stated in annual report)

P/E Ratio (TTM) = Current Share Price / EPS based on the most recently past 12 months (e.g. latest last 4 quarter)

Airasia Bhd. vs MAS Bhd. (Case Study)

The first this is to get the P/E ratio(TTM) for both Airasia Bhd. and MAS Bhd. However, you will notice that there is no P/E ratio(TTM) for MAS. This is because MAS is making lost in the past quarters. In other word, the EPS (TTM) for MAS is negative. In this case, you cannot compare the P/E ratio between these 2 companies.

• P/E ratio (TTM) for AiraSia = 13.60
• P/E ratio (TTM) for MAS = N/A

So let’s look at without the TTM which is based on the last year 2010 EPS data. You will get the following:

• P/E Ratio for Airasia Bhd =  9.56 (Under-valued)
• P/E Ratio for Mas Bhd = 18.67 (Over-priced)

Even if we use the last year EPS data to compare this 2 companies, the P/E ratio tells that Airasia is under-valued as compared to MAS and MAS is over-priced as compared to Airasia. Given that EPS analysis for these 2 companies and also based on the poor performance of MAS (i.e. making lost in the past few quarters), there is no reason to buy MAS stock.


Conclusion

Earning per share tells you the company performance but we need to study their track record by looking at the past years and look at the EPS growth instead. After that, you can perform use the price per earning ratio or P/E ratio to compare companies that are in the same industry. The lowest P/E ratio basically means it is under-valued and ot is good to buy. If both EPS and P/E ratio analysis show positive for that particular stock (e.g. in this case is Airasia), that means based on the fundamental analysis, we should buy that share
.
The challenging part is if you get good EPS but bad P/E ratio and not both. Which one has the higher weightage? I will probably wait until the stock price goes down first since the EPS is still good. If EPS is bad, I probably won’t got for this stock at all. Does this make sense?

P/S: I’m still learning but I find this EPS and P/E ratio analysis are pretty awesome but require some amount of works before you decide to buy the share. I welcome you to share your investing experience here especially you are the fundamental investor. Other than EPS and P/E ratio, what else do you look at?