Is December good time to invest in stock market? That’s the question that I ask myself lately. I did not buy any stock after selling Tanjong plc stock last month. And plan to buy back it again now. But when is the question. Therefore, I did some research on the previous years’ performance on the month of December. Let’s see the history speak for itself. Anyway, past historical record does not mean that it will perform as same as before. Stock market is not predictable. But you can know it better by studying more.
December 2008 KLCI vs Dow
As you can see, KLCI gains around 4% while Dow at 8% on December 2008. Below are the record from 2007 onward…
2007 – KLCI 2% gain while Dow flat
2006 – Both around 2% gain
2005 – KLCI 1.5% gain but Dow 1.5% loss
2004 – KLCI 1% loss but Dow 2% gain
2003 – KLCI flat while Dow 5% gain
2002 – KLCI 4% gain but Dow 6% loss
2001 – KLCI 8% gain and Dow 3% gain
2000 – KLCI 6% loss but Dow 1% gain
1999 – KLCI 9% gain and Dow 1% gain
1998 – KLCI 6% gain and Dow 4% gain
1997 – KLCI 13% gain while Dow flat
1996 – KLCI 1% gain but Dow 1% loss
1995 – KLCI 2% gain and Dow 1% gain
Woo… There are lot of blue colour ~ gain. I have my answer now. The stock market for December 2009 will likely go up. 
“Spend your money wisely”. Yes… We really need to use our hard earn money wisely. Else you will end up using all the money very fast. Why do I have this kind of feeling? Hmm… I want to buy lot of stuffs like new mobile phone, new SLR camera lately. Trying to spend the money that I earn from stock market lately. I do have financial planning but earning from stock market is not included in the spending plan yet. But I have decided to include it in starting next year. Therefore, I need to buy whatever I like before end of year.
To buy lists
HTC HD2
Nikon D700 body
Nikon 50mm f/1.4 lens
Nikon SB900 flash
Nikon 12-24 f/2.8 lens
Nikon 70-200 f2.8 VR lens (II)?
Nikon 24-70 f2.8 lens?
To sell list
Canon EOS 400D
Canon 18-55 kit lens
Canon BG-E3
Canon 17-55 f/2.8 IS lens
Canon 50mm f1.4 lens
Canon 580EX II flash
Should I buy new SLR system by switching from Canon to Nikon? It is a very expensive investment…
Should I borrow money to invest in stock market? Actually, the concept is the same as borrow money to buy car or house. Just that car and house is a must for our daily life and not stock. Most of us cannot afford to buy car and house in cash. And need to borrow from bank with interest changes. Same apply to share margin financing. With proper finance management, borrow money to invest in stock market does bring more revenue.
I am using Public Bank Online Share Trading with Share Margin Financing account. The minimum amount to borrow is RM50k (last time is RM100k) and with BLR – 1.8% (around 3.8% based on current BLR) per annum interest rate. Public Bank will borrow you 1.5X money based on what you have in that account ~ cash or stock value. For example, if you have RM100k cash there, you can borrow up to RM150k margin to invest. So total up as RM250k. Same apply to stock value. However, the stock value is determined by bank and not the market value. Some of the stocks do not have such value and bank does not want to take risk to lend you too much money. And if you are not able to pay back the loan, bank can force sell your stock.
Choosing the correct stock to invest is important. You don’t want to invest on a stock have only 2% dividends and without any capital gain at all. Then you need to pay 3.8% to bank. End up you are losing money at 1.8%. So make sure you pick the high dividend yield stock to invest.
Timing is another factor. With economy getting better and in the recovery road, having more money to invest is a nice move. You can easily earn more than 100% during this time. Why? Most of the stocks are undervalue and at a very attractive price. Some stocks can even go up to 300%. Therefore, you can earn a lot more with this extra money.
Borrow money == Make more money
Everybody make mistakes. That’s no a problem. But knowing it and without rectify it. Then it will be a problem. I thought stock market will rally until end of October 2009. However, it did not. Both of the stocks INTC and Tanjong that I target were flat in October. Just like Maybank Investment Bank asked traders to sell on 5 October 2009, a wrong prediction. Anyway, it is hard to predict stock market. And investor should not buy stock based on prediction but on the stock value itself.
INTC October 2009 performance
There are 2 important dates in October for INTC. One is the quarterly report announcement and the second one is employee stock option exchange date. I predicted there will be spike in price on both of the dates. But I was only correct on the first one. And wrong on the other ~ it is good for Intel employees because of the low stock option exchange price. But not for me who want to sell at USD22.50. Hmm… I have to keep it for another 3 months again.
Tanjong PLC October 2009 performance
Same apply to Tanjong PLC. Its 1H net profit increased 10.4% to 372.941 million. And it should be able to climb back to RM16.00 easily. But it failed to do so in October 2009. Luckily, I still have the dividend of 17.5 cents. Else, I will end up earning nothing for October 2009.
Do you have passive income? No… Then you need to find one very soon. I was down with one-handed last few days. Can’t drive to work, and can’t work of course. No work == no income. This is normal for most of the people who don’t have passive income. Of course my company still pay me during my absence due to medical leave policy. Else I will have no income.
I was not able to update my blogs during these times. Luckily, scheduled posting is being used on PrettyGirl2u.com. Else readers will be disappointed and might go away. But look at the bright side, the income still coming from these blogs. Thanks to organic sources like Google, Bing and Yahoo. All the popular old posts still bring the traffic and income. Therefore, blogging is a good passive income generator.
Besides, investing in stock market also bring good passive income. With high dividend yield stocks, you can relax and do almost nothing for the money to come. Of course, you need to invest quite a big amount in order to do so.
Back to the question. Do you have passive income?
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