You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

See my pictures in Instagram, @teguhidx.

Welcoming ‘January Effect’

In the world of capital markets, 'January Effect' is a situation where stock prices increased significantly in the month of January. There are several things that could explain this phenomenon, like because the investor is usually fresher and more eager to buy stocks after a long holiday (Christmas and New Year), the beginning of a year is almost always fulfilled with optimism, and because companies usually pay dividends in the first half, precisely in April – June, so investors will have taken a position in the stock in question in advance, starting in January.

Buy on Weakness, Sell on Strength? Really?

If you often travel throughout Indonesia by plane, you must be familiar with the famous Lion Air.. but ain’t famous in a positive sense, but famous as an airline that sucks, where its flight schedule are often delayed. Because of its bad reputation, when several years ago I began to travel frequently by plane, I deliberately avoid Lion Air and prefer other airlines like Garuda Indonesia, Air Asia, Citilink, and Sriwijaya Air. And indeed, I have never been in trouble with those airlines, especially with Garuda which always provided excellent services (though its tickets also not cheap).

New Engine of Economic Growth: Internet!

When studying the data of economic growth for the third quarter of 2015, I was confused by the fact that the level of national consumption still grew 4.96%, or above the overall economic growth of 4.73%, whereas the prices of goods clearly soaring, and it should lower the purchasing power of people. But as far as I could observe, almost everybody is still happy, and even the workers still dare to protest to demand higher wages. The question is, how can it be?

Kalbe Farma

Most people assume that the pharmaceutical industry, just like other consumer industries, is resistant to the risk of economic slowdown, so companies in this industry should have a consistent financial performance from year to year, thus the stocks are also good for long-term investment. Because, logically, if you get sick, you inevitably have to drink/consume a particular drug, right? Even though the price of the drug is probably expensive.

Yuan = World Currency, Next?

Last night, the general meeting of executive directors of the International Monetary Fund (IMF) decided that the chinese currency, Yuan (also called Renminbi), to be included as one of the world reserve currency, effective from October 1, 2016. In the new calculation of special drawing rights (SDR), Yuan weighs 10.9%, or greater than the weights of Britain Pound Sterling or Japanese Yen, but still much lower than the weights of US Dollar and Euro. You can read the explanation of SDR in this article.

The Strongest Leader Ever!

The term 'koppig' comes from Dutch language which means stubborn. It was first pinned by Sukarno, Indonesia's first president, to Ali Sadikin, the then Governor of Jakarta, for his tough stance in building the Capital. Ali was a controversial figure who built infrastructure in Jakarta using the money generated from gambling business, but he never step back though his leadership is opposed by many people. Even at that time, Ali often slap his incompetent subordinates using his own hands, and all of the City officials were afraid of him.

Sekawan Intipratama: Another Stock Fraud

In Wednesday, November 11, 2015, the Indonesia Stock Exchange (Bursa Efek Indonesia, BEI) suspended three brokerage houses from stock trading activities, namely Danareksa, Millenium Danatama, and Reliance, because the three were allegedly ‘not to performing an adequate procedure of internal controls’. BEI execute the suspension after receiving a report from the Financial Services Authority (Otoritas Jasa Keuangan, OJK), that the three were involved in ‘pump and dump’ activities related to Sekawan Intipratama (SIAP), a small-cap stock, which causes huge losses for many retail/institutional investors in the market.

IPO Prospect of Kino Indonesia

As one of the most prominent players in the industry of fast moving consumer goods (FMCG) in Indonesia, the IPO of Kino Indonesia (KINO) may be interesting, because we know that companies in the field of FMCG usually have a stable performance in the long term. And KINO itself has a good reputation as an innovative company that always create new consumer products, while its founder, Harry Sanusi, is well known as an inspiring entrepreneur who successfully founding and developing company from scratch. Okay, let’s get it on.

‘Invest to Seek Losses’

Last night before going to bed, I, as usual, browsed the internet on the phone, and I come to a website and forum about jobs and careers. When I go into a forum for jobs for entry level (fresh graduate or experienced 1 – 2 years), I noticed something: Everybody talks about, how much salary in company A? If l made it to be appointed as a permanent employee, how much my take home pay will be? What are the benefits beyond salary?

Asset Revaluation, and Its Influence on Company’s Fundamental

When the Government launched the package V of economic policy, one of the policies is tax incentives for companies that perform asset revaluation. Normally, the company must pay income tax of 10% for the increase in value of assets due to revaluation (the difference between the value of assets before and after the revaluation is considered as corporate earnings), but now the tax is 3 – 6% only. This policy is expected to encourage companies to revaluate its assets such as land, buildings, etc, where the value of these assets will usually rise, and eventually raise the value of net assets/equity of the company as a whole.

Bank BNI

Until the third quarter of 2015, Bank Negara Indonesia (BBNI) posted net earnings of Rp6.0 trillion, down 21.2% over the same period in the previous year, and its ROE was only 16.1%, also down compared to the previous period of 22.7%. Although it looks bad at first glance, but when the financial statements released on October 16, BBNI shares remained in its position, ie Rp5,100 per share, and now it is already at 5,250. And although the stock was once dropped until 4,000 when the Jakarta Composite Index (JCI) was under attack in last September 28, but it quickly rose back until reached 5,000 in just two weeks later. So maybe BBNI is not that bad?

Logo of Bank BNI with its slogan: Serve the country, the pride of the nation

Indonesia Economic Growth: Not as Bad as It Looks

On 5 November, the Indonesian Central Statistics Agency (Badan Pusat Statistik/BPS), released the rate of economic/GDP growth for the third quarter of 2015, which is 4.73% y-o-y. The rate, though still below the expectations of the Ministry of Finance and Bank Indonesia of 4.8 – 4.9%, but it’s better than the second quarter, which was only 4.67%. And if we take a look at the components of the economy itself, we will obtain some interesting facts.

Read the News Carefully!

On last August, the Jakarta Composite Index (JCI) dropped from 4,800’s on the beginning of the month, until reaching 4,484 on August, 19. The market was starting to panic at the time, but there’s another issue that more attractive to investors: The news that some public companies, in this case the state-owned banks, would buy back their shares in public. And I immediately received a lot of questions: Does this mean that I can buy the shares of Bank BRI (BBRI), Bank Mandiri (BMRI), or Bank BNI (BBNI)? Because if the company itself has decided to buy shares from the public, then the price must be already low enough, right?

Investor Protection? By Who?

About two months ago, a man with bicycle named Elianto Wijoyono stood in the middle of an intersection in City of Jogja to confront a Harley Davidson convoy, because the convoy was deliberately going to break through a red light. This action of ‘Bicycle vs. Harley’ gained a lot of comments on social media, and Elianto explained that he had planned his action, because he was concerned with the bad behavior of those motorists which often violate the traffic signals, causes trouble for other road users in the city of Yogyakarta.

Investment Opportunity from ‘Value Gap’ – 2

In previous articles we have discussed that the best time to buy shares of Berkshire Hathaway is when the price dropped so deep in a given year until its value gap becomes positive (you can read the previous article here). And now, this year of 2015 is the first time that Jakarta Composite Index (JCI) dropped significantly since 2008, that in year to date (until September, 10) the stock index has dropped 16.1% (While in 2013, the stock index fell only 1%). So, although some stocks may still rise, but most other stocks fell significantly compared to their position at the beginning of the year, even if the equity value of the company is actually still rising. In this condition, some stocks then create a positive ‘value gap’.

Investment Opportunity from ‘Value Gap’

Since taken over by Warren Buffett in 1964, Berkshire Hathaway (BRK) has made investment gain of a total of 1,826,163% for anyone who holds its stock in the last 50 years (until 2014). This means that if you buy BRK for US$ 1,000 in 1964 and still holding it until the end of 2014, then by ignoring the factor of inflation, your investment is now worth.. US$ 18.3 million.

Bumi Resources: Analysis of Debt Restructuring

Last September, the management of Bumi Resources (BUMI), the largest mining company in the Indonesia, announced the company’s latest proposal of debt restructuring. As of August 31, 2015, the outstanding debt of BUMI stood at nearly US$ 4 billion, and most of them will mature in less than a year. Given the poor condition of mining sector, including the price of coal remains low in the last few years, the company had no choice but to propose the options of debt restructuring to its creditors.

Investing is Just Like Mountaineering

Last weekend I with some friends went to climb a mountain, in this case Mount Salak in Sukabumi/Bogor, West Java, which has an altitude of 2,211 meters above the sea level. In contrast to other leisure activities which are relaxing, mountaineering requires physical endurance so I had to exercise regularly for at least a week before the ascent. Therefore, since the last ascent about two or three years ago, only last weekend I had the time to do it again. And after cramps, rain, cold, and thirsty for two days and one night, thank God we successfully reached the summit, and also successfully returned home.

The Secret Method of Investment

On Thursday, October 1, I met face to face with an investor named Joel Cohen, who works for Mitimco, an asset management company in the US with AUM of approximately US$ 19 billion. Although I’ve had previously met several investors from abroad (where they came to Jakarta), but this is my first time to meet someone who represents a large institution. So for me, it's a brand new experience.

Market Outlook After IDX Regulations

In August 24, 2015, the Jakarta Composite Index (JCI) fell to 4,164, which was the lowest position of the index since almost two years ago. And in Thursday, August 27, 2015, the Indonesia Stock Exchange (IDX), the host and regulator of Indonesian capital market, finally held a press conference regarding the current condition of the Indonesian stock market. Here are the points of the conference.

Press Conference of IDX. Source: www.idx.co.id

How to be Greedy When Others are Fearful

This morning, the Jakarta Composite Index (JCI) tumbled 2.0% to 4,033 only minutes after the opening. Shortly after, I receive Whatsapp from one of alumni of my value investing class, asked about one of the stocks that I recommend (and not only I recommended it, I buy it as well), let us call it ‘A stock’. He asked, Dear Sir, is A stock still in your pick list? Because I saw its price fall down this morning.

As an Investor, What Do I Do?

What my mom thinks I do

Nippon Indosari Corpindo

If you use a standard method of valuation, then with PER of 22.3 and PBV of 5.2 times at the price of Rp1,085 per share, Nippon Indosari Corpindo (ROTI) at first glance seems unattractive. However, if we talk about ‘wonderful company’ like this company, then we probably can not afford to buy it at a ‘wonderful price’, or in other words, the current price is fairly reasonable and worth the buy. And indeed, ROTI is a wonderful company (in Indonesian language, ‘roti’ means bread), and I'll tell you why.

Between Euphoria and Despair

Whenever the Jakarta Composite Index (JCI) dropped significantly to a panic level, I usually write a ‘counseling’ article to calm down the investors. However, starting from this year I will probably let the panic happens, because based on experience, panic is a normal part of the cycle that occurs in the stock market. I mean, even if you are desperately trying to calm down the markets, the people will still throw everthing out because once again, it is a normal part of a stock market cycle.

New Drama: Yuan vs US Dollar

In the last two or three days, I received several emails asking for my opinion related to the rumors that the International Monetary Fund (IMF), in the next October, will announce that the currency of China, Yuan or Renminbi (RMB), will be the ‘pair’ for US Dollar (USD) as the world reserve currency. And if the rumors were right, the USD will no longer be dominant in its position as the world’s major currency. There will be dramatic changes where institutions/individuals will immediately convert their USD denominated assets into Yuan, and the value of the USD would be dropped.

Yuan vs Dollar. Source: www.laowaiblog.com

2015: The Year of 'Orientation'

Last Monday, July 27, 2015, is the first day for school students to return to their class after a long Eid holiday. And for students who entering a higher level of education (from primary school to the junior high school, from junior school to the high school, and so on), they would experience the ‘orientation phase’ or, in Indonesian term, ‘masa orientasi siswa’ or MOS. Although MOS, in some cases, is more like an bullying activity where the new guy is bullied by senior students, but based on my own experience back then when I was attending the school/college, the tradition of MOS is helpful. Most noticeably is the togetherness among junior students, where we quickly knowing each other because we once 'struggling together' to work on various tasks. Before the MOS, we did not know each other at all.

Time to Buy Coal Stocks?

When this article was written, the Jakarta Composite Index (JCI) is in a position of 4,717, dropped almost 10% since the beginning of this year. In a condition like this, of course almost all shares on the Indonesia Stock Exchange (IDX) has been dropped. But interestingly, based on IDX stats, the index of mining sector has plunged 27.2% during 2015, the worst compared to any other sectors, while in fact the stocks in this sector have gone down a lot in previous years. Some mining stocks, or in this case, coal stocks, even fell more than 90%, if calculated from their peak position in 2011.

Sinarmas Acquired Berau Coal: Why?

Indonesian largest but -on the other hand- also most indebted coal company, Bumi Resources (BUMI), has just released its financial statements for the period of first quarter of 2015 (late as usual). And the result? Well, it’s just getting worse. BUMI reported a net loss of US$ 344 million, leading to a capital deficiency of US$ 1.2 billion. On its balance sheet, from US$ 5.7 billion of liabilities of the company, US$ 3.6 billion of which are bank debts that will mature in less than one year. With the current conditions where the coal price is still falling down, how could BUMI repay those short-term debts?

Chinese Stocks Plunged, What Happened?

On June 12, 2015, having just scored another new high at 5,178, The Shanghai Stock Exchange Index (SSE) suddenly fell.. and continue to fall until reached 3,383 on July 9, or dropped more than 30% in just less than a month! The stock index were dropped so quickly, to the extent that investors from around the world, including from Indonesia, raise the question: What is really going on in China? Is it true that there was a crisis?

When Capital Gain Is Not Everything

In value investing, there is a very popular term ie intrinsic value of stock. According to Opa Warren, intrinsic value of a stock/company is the value of net asset/equity of the company plus the accumulation of net income that can be acquired in the future, ie as long as the company operates. Thus, when you see that the equity value of company A is US$ 100 million, for example, and there is a strong assumption that the company will be able to generate a decent and consistent earnings over the long term, then the intrinsic value of the company is usually greater than the equity.

Megapolitan Developments

A few days ago, the Government of Republic of Indonesia issued at least two regulations that are expected to have a positive impact on the growth of property industry in the country, which began to slowing down along with the slowdown of national economy. First regulation is the reduction in the minimum down payment for purchase of property, from previously 30% to 20% (from the value of the property) only. Second regulation, foreign investors and individuals are now allowed to buy property/real estate assets in Indonesia. The announcement of these regulations are responded positively by investors in the Indonesia Stock Exchange, where the property stocks jumped significantly in the last two to three days.

Why You Should Invest in Indonesia

With a market cap of Rp5,070 trillion or equal to US$ 381 billion on June 19, 2015 the Indonesia Stock Exchange or IDX is of course not one of the largest stock exchanges in the world. However, if we're talking about its history, the IDX has a historical background that was more complex than you might imagine. Including, believe it or not, the first public company in the world whose shares are traded on the Stock Exchange, they were not based in London, New York, or Tokyo, but.. Jakarta!

‘Drama Queen’ of Stock Market

A few days ago I had a small incident with my family at home. So my 3-year-old daughter was running around and fell, so her knee scuffed. The next morning, she refused to shower because afraid that her ‘wound’ would be hurt when exposed to water. Her mother repeatedly explained that it was just a little sore so it will not hurt, but she kept shouted 'I said no!' Losing patience, her mom also shouted. As a result, it was an uproar morning at home just because of a small blister on the knee, and the papa (it’s me) should intervene. After taking her to a playground and slowly explaining about her ‘injuries’, she finally willing to shower.

How to Deal with the Bear Market

After rose 22.3% in 2014, the Jakarta Composite Index (JCI) seems to having a hard time in this 2015. When this article was written, the stock index fell to 4,887 or down 6.5% from year to date. Considering about the poor conditions of national economy (we've discussed about this in this website many times before, try to read our articles since last March), then this situation is not surprising at all, and has been anticipated before (or at least we’ve anticipate it, I don’t know about others). If there is no fundamental change in months to come, then most likely this condition will continue, and consequently the JCI would grow negatively in this 2015. The question, what should we do?

Trada Maritime

In the first quarter of 2015, Trada Maritime posted a net profit (attributable to the shareholders of parent entity) of US$ 0.4 million. Although the figure has risen significantly over the same period of the previous year, but it is very small compared to the value of the company's equity of US$ 86.7 million. However, an interesting story about this TRAM probably not related to its financial performance, but rather related to its share price that currently slumped at the level of Rp50’s per share, or extremely low compared to its peak price (in the last one year) which was Rp1,900 per share. If you read the company’s financial statements that, although don’t show good fundamentals but also not that bad (the company still posted a profit, and the equity was still positive), and its PBV at current prices is only 0.5 times, then as a bargain hunter, you may ask: Is there an opportunity here?

Investment Grade for Indonesia?

On Thursday, May 21, one of the big three rating agencies in the world, Standard & Poor's (S&P), released a change of credit rating for Indonesia, from previously BB+ with a stable outlook, to BB+ with a positive outlook. Thus in fact the rating remains the same, only it outlook has changed to be better. Yet still, the investors respond to this news positively, where the Jakarta Composite Index (JCI) closed up for the day despite had been down for a moment in the morning. And on that Thursday, too, the foreign investors recorded a net buy for the first time in the last few weeks (but they recorded another net sell on Friday). The question might be, what is credit rating? And how it affects the economy in Indonesia, especially JCI itself?

Understanding Warrants: Opportunities and Risks

On last November 2014, I decided to buy shares in the construction sector, in this case Nusa Raya Cipta (NRCA) at an average price of Rp910 per share, because I see that the sector would probably benefited from the plan of long-term infrastructure development by President Jokowi, who was inaugurated just a month earlier. Then why NRCA? Well, that's because, after taking into consideration about 1. The fundamental/financial performance of the company, both historically and its latest, as well as 2. The valuation of the shares (in value investing of our style, we only look at these two things, and only after that we look at the ‘prospects’), then NRCA is indeed the most sensible option compared to seven other construction stocks that available in the market. More details related to NRCA, read again its analysis here.

Our Current Economic Situations & Outlooks

In recent months, the Indonesian economy at the level of real sectors outstandingly experiencing bad periods. Some large companies such as Astra International (ASII), Perusahaan Gas Negara (PGAS), Gudang Garam (GGRM), Semen Indonesia (SMGR), until Jasa Marga (JSMR), all recorded a decline in net income in the first quarter of 2015. While in the smaller businesses, the condition is not much different. Here are some of the 'testimony' I collected from my entrepreneur friends in several cities in Indonesia.

Sri Rejeki Isman (Sritex)

As you know, currently about 90% of listed companies on the Indonesia Stock Exchange has released their financial statements for the period of First Quarter 2015. The bad news, most of them had an unsatisfactory performance. Even reputable companies like Astra International (ASII) recorded a decline in profits of more than 15%, the worst in the last 10 years. Seeing these facts, no wonder that in the past several days the Jakarta Composite Index (JCI) fell by almost 7% (although it later rebound). Because I myself, if I own ASII or other stocks whose company had a poor performance, I would certainly going to sell it.

IPO Prospect of PP Properti

In April 2014, Wijaya Karya (WIKA), one of the state-owned construction company in Indonesia, brought one of its subsidiary, Wijaya Karya Beton (WTON), to the Indonesia Stock Exchange through IPO. The proceeds were Rp1.2 trillion (about US$ 100 million), and the initial price of WTON was Rp590 per share. Before the IPO, the equity value of WTON was only Rp680 billion, which after divided by 6.7 billion shares, then the book value per share of the company was Rp102 per share. So it is quite clear that the public investor has paid the new shares of WTON at a very expensive price, ie almost 6-fold higher (590 versus 102) than the price ‘paid’ by WIKA as the majority shareholder of WTON.

PGAS: Super Bluechip at Bargain Price!

Warren Buffett once said in one of his annual letter, ‘We like to invest in companies that are already established and operated for more than 100 years. We do not want to take the risk by invest in startup companies that do not have a long track-record of performance.’ In short, Buffett prefers to invest in mature and well-established companies rather than ‘brand new’ ones. However, when this principle is applied in Indonesia, investors may find it difficult. Because, from about 500 companies that listed on the Indonesia Stock Exchange, how much of them that have been established for more than 100 years? The fact is, our beloved country (Republic of Indonesia) was proclaimed in 1945 or seventy years ago, and the Jakarta Composite Index (JCI) itself was launched in 1983.

What If The Company Controls Its Stock Price?

Some time ago I received a question from a friend (damn I have a lot of friends, thanks to this blog) which sounds like this, "Dear Sir, there are several companies on the Indonesia Stock Exchange which had a consistent growth performance, the share price is low, and the management apply the good corporate governance. But still the shares are illiquid and hard to move, one of which may Mandala Multifinance (MFIN) that you recommend.'

How to Diversify Your Portfolio Without Diversification

Diversification is an important element in investing in stocks, mainly to reduce the risk of losses, and in this blog we have discussed the theme of 'diversification' several times, for example in this article, and this. I probably need to say once more that, if you imitate the style of Warren Buffett on diversification, then you can hold about 15 to 20 different stocks in your portfolio. In the 1960s, when still managing Buffett Partnership with funds under management of approximately US$ 40 million, Warren Buffett was only holding about 20 stocks in his portfolio.

Fed Rate, and Its Influence Towards the JCI

On Thursday, March 19, 2015, chairwoman of Federal Reserve, Janet Yellen, said that the Fed (a popular term for Federal Reserve, which is the Central Bank of the United States of America) is not in a hurry to raise its benchmark interest rate, or known as the 'Fed Rate'. Shortly after the statement was released, stock indices in Europe and Asia increased significantly. Prior to the statement, investors in Europe and Asia, including Indonesia, were concerned that if the Fed raised the Fed Rate, then the foreign funds in the local stock markets will be withdrawn to be placed in the US. In the view of global investors, if the benchmark interest rate was higher, then investment in the United States will offering higher yields, while on the other hand the risk is still considered to be very low because the US is a country with the largest economy in this world.

Indonesia's Current Economic Developments

Based on data from Bank Indonesia (BI), on March 14, 2015, Rupiah closed at the position of Rp13,191 per US Dollar, and this is the lowest level for the Indonesian currency towards the US Dollar since.. well.. the financial crisis in 1998. So although in the past two years I was trying to ignore the macro-economic developments in the country in order to be focus on the company's fundamentals in investing in the stock market, but this remains an issue, because even in 2008, at the peak of global crisis, the exchange rate of Rupiah had never drops to as low as today. Back to 2008, Rupiah only dropped to Rp12,768 per US Dollar as its lowest point, before then immediately return to the normal level of Rp9,000’s per US Dollar.

Show Me the Money!

Some time ago I met with an old friend (we meet regularly every 2 – 3 months for small chit chat), and we talked about stock investments and others. Coincidentally a few days earlier, this friend of mine had just met with one of the hottest figures in Jakarta: The Governor of Jakarta, Mr. Ahok, in one event of gathering. In the forum Mr. Ahok talked much about this and that, and my friend told me that he was a fun person! Previously my friend did not ever notice about Ahok, but after the gathering, he explicitly said that he liked the governor.

Bank BTN, a Short-Term Trading Opportunity

Bank BTN (BBTN) had a rather poor financial performance in 2014 in which its net profits fell from Rp1.6 trillion in 2013, to only Rp1.1 trillion in 2014, or down 28.6%. Although seem disappointing, but in fact this is the first time in the last eight years in which the company recorded a net profit that is down over the previous year (in 2006, BBTN profits were down compared to 2005, but it was because in 2005 the company did not do a provision for the payment of taxes). While between 2006 and 2013, the bank profits continue to rise consistently, as well as its equity.

Logindo Samudramakmur

On yesterday, Monday February 23, 2015, Jakarta Composite Index (JCI) closed at 5,403, which is recorded as the highest position in history so far. In friendly market conditions like these days, most of the stocks on the Stock Exchange are keep breaking their highest price records. However, some stocks has a different story in which they are not rising but falling instead. And one of them is Logindo Samudramakmur (LEAD), which is currently traded at Rp1,845 per share, or waaayy below its peak position ie 5,325. In contrast to some other stocks that fell either because lack of fundamentals, or because the company’s financial performance has decreased, or because of certain negative sentiments, then LEAD seems to have no problems. Is this an opportunity?

'Wonderful Company at a Wonderful Price'

Warren Buffett once stated one of his famous quotes: "It is far better to buy a wonderful company at a fair price, than a fair company at a wonderful price." If we notice, in the sentence Buffett stated that in selecting stocks to buy then we have to choose one best factor, whether it is the lowest possible price, or the highest quality of the company's fundamentals. Is almost impossible for any value investor to be able to find a company with a very, very good fundamentals, but on the other hand it is sold at a very, very low price. So, in this case, Opa Warren prefers 'wonderful company at a fair price'. Not necessary low price, as long as not too expensive.

But hey, what if we could find a stock like that? That is, a very good stock which is sold at a very low price?

Best Stocks in Terms of Real Growth of the Company

If you want to invest in the Indonesian Stock Market through mutual funds, one way in determining the quality of mutual funds is by looking at the track record of the fund’s performance in the long term, say five years. If the compound annual growth rate (CAGR) of a mutual fund is better than CAGR of Jakarta Composite Index (JCI) in the same period, then we could simply said that it has a good performance. If the difference is fairly large, say 17% per annum while the CAGR of JCI over the same period was only 7% (so that the difference reaches 10%), then it is even better.

Capital Expenditure, an Easy Explanation

Some time ago a friend of mine asked me, 'What is the capital expenditure?' And I realized that although we have discussed a lot of things in this website, but we has never discussed about capital expenditure, or commonly abbreviated as capex. While in fact, the factor of capex is important in analyzing the prospects of a stock, since it answered the question, 'What is the company doing to gain additional revenue/profit in the future'. Therefore, we will also discuss it here, of course, with some easy words. Here we go!

Questions of Beginners, and The Answers

Every time I held a seminar/training of value investing, I provide an opportunity for participants to ask questions through email about investing in stocks. And well, there is an incoming email which seems to represent the majority of questions from investors, especially beginner investors aka the newbies. Therefore, I write this article. Actually, for those of you who are new in the stock market (has become an investor less than 1 year), you may have hundreds of questions in your head. But hopefully this article can at least answer some of these.

Investment Opportunity in Cement Stocks

On Friday 16th January, for the first time in history, the government of Republic of Indonesia intervened the cement industry by announcing a decrease in the price of cement at a maximum of Rp3,000 (abour US$ 0.25) per sack. And the result is predictable: The stocks of cement on the Stock Exchange collapsed immediately. On that Friday, the stock of Semen Indonesia (SMGR) fell 7.4% from16,200 to 15,000, and dropped further to the level of Rp14,100 per share on the next trading day. Other cement stocks like Semen Baturaja (SMBR), Holcim Indonesia (SMCB), and Indocement (INTP), all three also fell between 4.9 to 12.2% in two trading days after the cement price reduction policy was announced.

It’s Okay to be Different, As Long As..

Some time ago I met a friend, a senior investor, and we talked a little bit about one of the most famous stock investor in Indonesia: Mr. Lo Kheng Hong (LKH). According to this friend of mine, LKH deserves not to be called as 'Warren Buffett of Indonesia', because there are some fundamental differences (of way of investment) between LKH with Buffett. For example, LKH is not a long-term investor like Buffett. In 2002, LKH bought United Tractors (UNTR) at the price of Rp400 per share, but in only 3 years later he had it sold. While Buffett, since he bought the shares of Coca-Cola in 1989, until today, or more than 25 years later, these shares are still in the portfolio of Berkshire Hathaway.

Economic Challenge for President Jokowi

On Friday, January 2, 2015, President Jokowi inaugurate the opening of the first trading day in stock market in 2015, at the Stock Exchange Building, Jakarta. Although in the last few years, the opening of the stock market at the beginning of a year is regularly attended by the President of Republic Indonesia, but the presence of Jokowi was special because we all knew that, related to the tragedy of Air Asia, he had to go from Papua - Jakarta - Pangkalan Bun – Surabaya, and back to Jakarta again in a matter of days, and that's not including fulfilling the state duties such as receiving George Soros at the Palace, held a meeting with the ministers related to fuel prices, and appointed several new military high officials. However, he still had time to came to the Stock Exchange and also present on time (before the market opened at 09.00 AM), while before that (in the same morning) he visited the market of Tanah Abang first! To ‘blusukan’ as usual, and also to open the trading activities at the market.

‘Follow the Trend’ in Fundamental Analysis

Some time ago I received a suggestion from a friend, 'Dear Sir, I know that you are a value investor who tends of using fundamental analysis. But as we know, in the market, there are more technicalists than fundamentalists. So what if you also write about analysis of a stock from a technical perspective? Your website will have more readers.'