SMART Market

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What Is The Pivot Point Forex Trading System?

One of many ways to profit in the buying and selling of financial instruments is trading in foreign currencies. Also called “foreign exchange” (or “forex” for short), currency trading can be as lucrative for the experienced day trader as trading in ordinary stocks.

To understand the foreign exchange market, consider this simple example. If I wanted to acquire 100 British pounds, it may cost me $200 to buy them. Later in the day, I might be able to sell those same 100 British pounds for $204 because the market for that currency rose during the day for obscure reasons.

Deducting my commission costs, perhaps I make a $2 profit that day. It doesn’t seem that much, but if I can repeat that 200 times during the year, I’ve used $200 to generate $400 in profits, or a 200% return on investment.

Of course, repeating that positive performance on a daily basis while investing thousands more dollars is what separates the professional from the soon-to-be-destitute amateur. And the pivot point strategy is one of the tools the professionals use.

Floor traders originally developed this strategy because it was an extremely simple way to predict when rising or falling prices would reverse direction. The basis of the strategy is rooted in market psychology.

Buyers tend to have a natural resistance to paying too high a price for a currency, and that’s called a resistance price. Conversely, if a currency price goes too low, buyers consider it a bargain and start buying it. That’s called a support price.

On most days, currency prices revolve around a center value and bounce back and forth between the support and resistance prices. So when the price drops to the support price, expect people to start buying. When it rises to the resistance price, expect them to start selling. (You can find a variety of formulas for calculating one or more support and resistance levels.) The name “pivot point” relates to the center value around which prices pivot, and also the upper and lower psychological limits where prices pivot on themselves and reverse direction. To use this strategy, buy when the currency hits the lower support value, and sell after it runs upward. When the currency hits a resistance value, sell, then buy after the price falls. Of course, this is not a perfect algorithm.

Sometimes when a price hits an upper or lower barrier, it keeps going. Usually once it passes that psychological boundary, it can continue to rise or fall until a second emotional barrier is reached. Some pivot point methods calculate these secondary, and even third-level boundaries. Part of the reason for the success of this strategy is that everyone uses it. They have all calculated their support and resistance prices, and will buy or sell when those prices are reached. In day trading, those who react the fastest capitalize on the change of direction before the herd follows into the market.

The most successful traders are tracking price fluctuations by the minute, but they have several other supporting indicators they rely on before making a decision. Thus, their secret to success in day trading is move fast but place only bets with higher odds of winning. As funny as it sounds given day-trading is such a high-risk venture, the conservative day trader is the hare to the frantic trader’s rabbit.

by Steve Holder Date Sunday, September 28th, 2008

February 20, 2009 Posted by | Commodities | Leave a comment



Charlie T Munger works alongside Warren Buffett, as Vice-Chairman ofBerkshire Hathaway and Warren invariably refers to him as his partner and right hand man, generously giving Charlie credit for much of his success and that of the company.

Charlie Munger was a practising lawyer, having got into Harvard Law School without then having an existing Bachelor degree, not an easy thing to do.Roger Lowenstein recounts that Charlie was somewhat assertive as a student; when challenged by a professor in the Harvard Socratic fashion to analyze a case, Charlie, who had not prepared for the lesson, is reputed to have told the professor to give him the facts of the case and he, Charlie, would give him the law.

Charlie was practising law in Omaha Nebraska when he met Warren Buffett and Buffett eventually persuaded him to give up the law and get into financial investment. Charlie did so, a decision that one suspects neither man has regretted. Certainly, long time shareholders of Berkshire Hathaway would not.

Munger is chief executive officer of Wesco, an associate of Berkshire Hathaway, and like Buffet, his annual letters to shareholders can give good clues as to the investment secrets of this brilliant duo.

Charlie Munger is not only a brilliant investor; he is also a deep thinker with strong views on society, education and the philosophy of life. Go here to read an example of Charlie Munger’s frank discission of investment philosophy.

In 1995, Charlie Munger addressed students at the Harvard Law School on the issue of psychology of human misjudgement.

Charlie Munger is an interesting man and the recent subject of a book on investment philosophy, Investing: The Last Liberal Art

February 19, 2009 Posted by | Investor Biography | Leave a comment


margin-of-safetyBENJAMIN GRAHAM

Benjamin Graham tells us that investment policy can be reduced to three simple words: “Margin of Safety” – the price at which a share investment can be bought with minimal downside risk.

The important point here is that the margin of safety price is not the same as the price that an investor calculates a share to be intrinsically worth.


An investor may calculate the intrinsic value of a share by differing methods and will eventually come up with a price that he or she believes represents good buying value. Graham had his methods of calculating intrinsic value, Warren Buffett has his, other successful investors have theirs.

Graham acknowledges, however, that calculations may be wrong, or that external events may take place to affect the value of the share. These cannot be predicted. For these reasons, the investor must have a margin of safety, an inbuilt factor that allows for these possibilities.


For Benjamin Graham, the benchmark for calculating the margin of safety was the interest rate payable for prime quality bonds. As Graham wrote in an era when prime bonds were much more prominent, it is more practical now to adopt, as Warren Buffett apparently does, the rate of return of government bonds as the benchmark.

Graham then uses a comparative approach. If the risk in two forms of investment is the same, then it must be better to take the investment with the higher return. Conversely, an investment with higher risk, such as shares, should, when calculating the margin of safety, have a higher return


Modifying then the example that Benjamin Graham uses in his book, we can take a share investment that is yielding 10 per cent earnings. For example, company A is earning 90 cents per share and is selling in the market at 10 dollars. If the rate of return on government bonds is 5 per cent, then the share is yielding annually an excess of 5 per cent. Over a period of ten years, the excess yield will total about 50 per cent, which, in Graham’s opinion, may be enough, if the share investment was wisely chosen in the first place. Of course, the total margin of safety will fluctuate depending upon the quality of the share investment.

Even so, something may go wrong. Graham believes however, that, with a diversified portfolio of 20 or more representative share investments, the margin of error approach will, over time, produce satisfactory results.


“[To] have a true investment, there must be a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience”.

February 19, 2009 Posted by | All Stock Market Strategies, Value Investing | 1 Comment


Benjamin Graham130px-benjamingraham was born in London in 1894, the son of an importer. His family migrated to America when Ben was very young and opened an importing business. They did not do well, Graham’s father dying not long after moving to America and his mother losing the family savings in 1907 during an economic crisis.

Graham, a star student, managed to get to Columbia University and, although offered a teaching post there after graduation, took a job as a chalker on Wall Street with Newburger, Henderson and Loeb. Before long, his natural intelligence won out when he began doing financial research for the firm and he became a partner in the firm. He was soon earning over $500,000 a year, a huge sum; not bad for a 25 year old.

In 1926, Graham formed an investment partnership with another broker called Jerome Newman. He also started lecturing at night on finance at Columbia, a relationship that was to continue until his retirement in 1956.

The Crash of 1929 almost wiped Graham out but the partnership survived with the assistance of friends and the sale of most of the partners’ personal assets. At one stage, Graham’s wife was forced to return to work as a dance teacher. Graham was soon back on his feet but he had learned valuable lessons that would soon be brought home to investors in his books.

In 1934, Benjamin Graham together with David Dodd, another Columbia academic, published the classic Security Analysis which has never been out of print. Despite the crash, the book proposed that it was possible to successfully invest in common stocks as long as sound investment principles were applied. Graham and Dodd introduced the concept of ‘intrinsic value’ and the wisdom of buying stocks at a discount to that value.

The partnership between Graham and Newman continued until 1956 but never again lost money for its investors, earning, we understand, an annual return of about 17 per cent. Graham continued as a partner, while writing and lecturing at Columbia, before retiring from that institution, also in 1956.

Warren Buffett studied under Graham at Columbia and approached him for a job in his investment firm. Graham declined but Buffett was persistent, and Graham finally yielded, giving Buffett a job in the firm. This was the start Buffett needed and he has never failed to acknowledge what he learned from Ben Graham.

It is interesting that one of the Graham Newman investments was GEICO, which, as you probably know, was an early acquisition of Berkshire Hathaway and which remains today a major investment vehicle in the Buffett Group.

Graham had originally bought GEICO in 1948. Apparently, after the partnership bought it as a private business, it was found that an investment firm could not own an insurance company and accordingly Graham and Newman converted it to a public company and distributed its shares amongst their investors.

In 1949, Graham wrote The Intelligent Investor, considered the Bible of value investing. That book too has never been out of print.

Benjamin Graham died in 1976, with the reputation of being the ‘Father of Security Analysis.’

February 19, 2009 Posted by | Investor Biography | 2 Comments

Forex Trend Following – 3 Steps to Catching the Mega Moves

Monday, February 16, 2009

The big Forex trends last a long time and you can lock into them and make huge profits yet, most traders fail to do this, despite the fact it makes such big gains. Let’s take a look at how to do it correctly…
Below you will learn how to do trend following the correct way.

1. Don’t Focus on Market Noise

Most traders lose because they try and catch small profits, they day trade or scalp or are so pleased when they have a profit, they take it. If you do this, you will lose or make marginal profits. The fact is any currency trader is going to have losses and to compensate for them, you need to have big winners.

The successful Forex trend follower can lose 50% of the time and still make huge profits, because his profits are far bigger than his losses.

Look at a Forex chart and you will trends that last for many weeks or months and if these can be caught and held, huge profits are the result. So how do you catch them?

2. Use Breakouts

The simplest way to catch big trends is to trade breakouts, to new highs or lows on a Forex chart. If you look at any Forex trading chart, you will see the big trends start and continue ,from these breaks and by going with them and holding them, you can make big gains.

3. Place Stops Outside of Random Volatility

Most traders don’t understand, that you need to trail your stop outside of random volatility if you want to win. The losing trader gets so excited that he has a profit, he wants to protect it, and he brings his stop up inside random volatility and gets stopped out of the trade. What happens next?

The trend continues for months on end, piles up thousands in profits and he’s not in.

Understand this, if you keep your stop back outside of the market noise, you will make a lot more money. Accept that at the end of the trend, you will give a bit back. You cannot predict when a trend will end so don’t try, if you caught 60% of every major trend, you would be very rich.

Forex trend following works and the big trends yield big profits.

If you focus on these high odds trades, you will trade less and make more money, with less effort.

If you trend follow Forex correctly, you can enjoy currency trading success and a great second or even life changing income – so try it and you maybe glad you did.

February 17, 2009 Posted by | Forex | 4 Comments

2009 Ripe for Corporate Buyers

For Corporate Buyers that Pursue a Disciplined Approach – 2009 is the Time to Buy a Company

Corporate executives at middle market companies understand that meeting investor demands for growth is difficult to achieve organically. Therefore, making strategic acquisitions are critical to building scale and growing revenues.

The impetus for pursing an acquisition have become even more compelling in light of the current challenging economic times, which has put downward pressure on valuation multiples. Indeed, a recent Boston Consulting Group report entitled “The Return of the Strategist: Creating Value with M&A in Downturns” underscores why a weak economy is often an ideal time to acquire a company. Key findings of this report include:

Corporate buyers are uniquely positioned to take advantage of the tough economic times, since they possess the cash to complete transactions, whereas the financial private equity buyers have been restrained from borrowing in the wake of the credit crisis.
Acquisitions completed during recessions are twice as likely as upturn deals to produce long-term returns in excess of 50%, and, on average, create 14.5% more value for acquirer shareholders.

The best type of company to buy during a recession is one with strong finances and relatively weak profitability.

Corporate buyers can also increase their returns and likelihood for success by acquiring relatively small targets.

Surprisingly, acquirers can also create value by paying above-average premiums, provided the underlying rationale for the deal makes sense.

Acquirers in difficult economic conditions are better at identifying targets with unrealized potential, probably because of the disciplining power of downturns, when every dollar counts.

Yet, despite the promise of adding value from a discounted acquisition, the reality is still that the majority of acquisitions will fail to result in any cost savings or merger synergies. So, how do the top value creators in downturns pick the best targets? To summarize research in this area, the world of corporate acquirers is divided into those that discipline their acquisition process and, thereby, improve the odds that an acquisition will prove successful, versus those who essentially roll the dice each time they acquire.

Disciplining the acquisition process means employing best practices, implemented at each step of the acquisition process. These steps proceed methodically from clarifying the acquisition strategy, to analyzing financing options, to systematically researching all potential target acquisitions, to evaluating strategic value, to formally valuing targets (using discounted cash-flow analysis, accretion-dilution analysis, and EBITDA market comparables), to negotiating Letter of Intent terms, to conducting both strategic and risk-oriented due diligence, and finally, to negotiating a set of definitive Purchase and Sale Agreement documents.

In short, if you want your corporation to take advantage of quality market opportunities to make an acquisition, you need to honestly assess whether your company already has, or realistically can develop internally, a disciplined acquisition process. Corporate executives who believe that their skills in other financial and operation areas can be quickly applied to acquisitions are often only rolling the dice. They would be better served by engaging a M&A investment banking firm that does such acquisition work for a living. Experienced M&A Professionals know how to implement buy-side “best practices,” and their services can be obtained either on a fully outsourced basis, or more commonly, to complement your in-house Corporate Development team’s efforts.

Yes, the market in the first half of 2009 will be ripe for corporate buyers. However, only those corporate buyers that pursue a disciplined acquisition process will improve the probability that a strategic acquisition will actually result in anticipated value synergies.

February 17, 2009 Posted by | Corporate Finance | Leave a comment

Why Business Plans Get Rejected

With all the news about the difficulties the Big Three auto executives had in securing financing from the U.S. government, it is good to know that middle-market business owners do not need an Act of Congress to get funded. However, you can be assured if you are looking for financing in today’s market — every aspect of your business will be examined in detail, including your business plan.

Even with a great product or service and a long list of customers your business may not receive the desired funding. Prospective investors receive so many business plans each year that weeding through them with only a cursory review has become a standard practice. In order to ensure your business plan gets read by investors, it will need to stand out. From the investor’s point of view, some of the more common problems with a business plan include the following:

Unrealistic Claims About Competition or Risk

Everyone has competitors, so to claim that you have no competition will almost certainly cause investors to conclude that you do not have a firm grasp of the market. The “Competition” section of your business plan is your opportunity to list your strengths as compared to that of your competitors. Identify the ways that you can compete and accentuate your competitive advantages.

Do not try to claim that your business has no risk. Instead, try to emphasize how you plan to minimize or mitigate risk. Be able to back up your claims by showing the research that you have done on both the competition and risk.

Spelling, Punctuation, and Grammatical Errors

A poorly written business plan is a reflection on the leaders of the company. When investors see a business plan with spelling, punctuation, and grammatical errors they immediately wonder if the managers are really qualified to run the company. In the minds of investors, this carelessness in writing a business plan could also mean the managers are careless in other areas, such as operating the business.

Content and Formatting Errors

Your business plan should be written in the proper format with headings, the required sections and the appendix. Both content and presentation should be error free. Charts, tables, or graphs should not contain missing labels, incorrect units, or the wrong terminology. If investors can not easily locate a section such as “Management,” they may decide to reject your plan and move on to another one.

Incomplete or Vague Information

Your business plan should include information for all areas that are standard to your industry. These areas include customers, products and services, operations, marketing and sales, the management team, and the competition. The plan should also include information about industry trends. Finally, your plan must include detailed financial forecasts, cash flow and income statements, as well as annual balance sheets.

Writing a business plan is hard work. Even if you have a great idea to start or expand your business, you’ll need to do the research and investigate everything you can before you even start writing the plan. Investors look at business plans as a form of “road map” for the business. If they see that you can not put together this road map for them, then it is likely that your business plan will be rejected.

Sourcing capital for business acquisition, recapitalization or simply growing the business will be a challenge for the next 12 to 24 months. A bullet proof business plan is just one component in securing capital resources. Adding an investment banker to your advisory team will help smooth out the wrinkles inherent in structuring a financing package that meets your needs for 2009.
Dec 20, 2008

February 17, 2009 Posted by | Corporate Finance | Leave a comment

2009 – Year of Opportunity for Smart Business Owners

As of January 2009, many banks and non-bank lenders are caught in a ‘liquidity trap’ where they must fix their own balance sheets before they can resume lending to customers. Getting buyout financing is harder than ever and new loans are secured by both cash flow and hard assets. On Wall Street, there’s a big slowdown in mergers & acquisitions.

Wall Street’s train wreck is Main Street’s opportunity. Smart business owners and their advisors will certainly use these changes to their advantage. Here are some ideas for owners considering a capital transaction in 2009:

Cash is king. Instead of an illiquid investment in a private company, this is probably a good year to have cash. Consider a buyout or recap if you have another use for money. There are many opportunities in financial investments and real estate, for example.
Debt is cheap. For borrowers that qualify, interest rates are as low as they have been in a lifetime. If you have good credit and debt-free assets, consider recapitalizing with low-cost debt. Ask for an estimate of your secured debt capacity.
Taxes are low. Regardless of your political persuasion, it looks like taxes will go up – maybe as early as this year. We certainly don’t know the outcome, but if the tax on gains goes back to the old rate, then a deal now is worth 18% more than a deal later. After taxes, you could keep more today than you might get by waiting for a better market someday.

Owner financing is back. Owner financing was risky back in the days of over-leveraged buyouts. In today’s under-leveraged buyouts, the owner can take the place of last year’s bank loan. Instead of getting taxable cash and then buying an annuity, a tax-deferred note can more than double your retirement income.

Value is relative. Even in a down market, there are always investors looking to invest in good companies. These well-capitalized buyers do deals in good times and bad. If your business is flat when everyone else is down, you might be the most attractive company in your industry.

Get paid twice. Don’t sell it all when the market is down. Sell up to 80% and keep the rest. As the business grows and pays down debt, the part you keep can be worth as much as the part you sell. Ask an advisor about this ’second bite of the apple’ transaction.

In summary, there’s no such thing as a bad time to do good business. Now more than ever, it’s important to talk with an experienced firm – one that has done many transactions in both good and bad times. Consult your advisor to discuss these and other ideas for a successful capital transaction in 2009.

By Larry

February 17, 2009 Posted by | Corporate Finance | Leave a comment

PT INDOSAT Tbk (ISAT): Neutral Market Perception

cover-capital-market-trends1PERDANA WAHYU SANTOSA (Chief Knowledge Officer-CAPITAL PRICE)

Artikel ini pernah dimuat di Harian Bisnis Indonesia hal F2 dan menjadi materi Talk Show di PAS FM 92.4 Mhz pada 9 Januari 2009

Profil Emiten

PT Indonesian Satellite Corporation Tbk. (ISAT) didirikan pada tahun 1967 sebagai Perusahaan Modal Asing, dan memulakan operasinya pada tahun 1969. Pada tahun 1980 ISAT menjadi BUMN dimana seluruh sahamnya dimiliki oleh Pemerintah Indonesia. Hingga sekarang, ISAT menyediakan layanan telekomunikasi internasional seperti SLI, selular, internet dan layanan transmisi TV antar bangsa.

ISAT adalah perusahaan telekomunikasi dan multimedia terbesar kedua di Indonesia untuk jasa seluler ( Satelindo, IM3 dan Star One) setelah Telkom. Saat ini, komposisi kepemilikan saham Indosat adalah: publik adalah sekitar 44,91%, Qtel memiliki 40,8%, dan Pemerintah sendiri memiliki saham ISAT sebanyak 14,29% dimana saham ISAT termasuk blue chip.

Profil Sektor

Sektor telekomunikasi pada tahun 2009 ini diprediksi masih dapat tumbuh sebesar 4-6%, walaupun terkena dampak krisis global. Untuk pelanggan telepon tiap tahun cenderung meningkat baik untuk telepon tetap maupun telepon selular. Pelanggan telepon tetap 2006 sebanyak 14,8 juta, pada 2007 sebanyak 19,5 juta, dan 2008 menjadi 20,6 juta. Sedangkan pelanggan selular tahun 2006 sebanyak 63,8 juta, pada 2007 sebanyak 93,3 juta dan 2008 sebanyak 124,8 juta (tumbuh 55,49 persen).

Sejak November 2008, perang tarif antar operator mulai menurun. Bahkan pada akhir tahun lalu beberapa operator mulai menaikkan tarif, baik on net (dalam satu operator) maupun off net (antar operator). Namun potensi perang tarif antar operator kembali berlanjut. Seperti aksi XL menurunkan tarif on net sejak 7 Januari 2009 sebesar 25% pada peak hour. Juga promo Esia yang menurunkan tarif off net 25% maksimum 5 nomor baik GSM maupun CDMA. Operator lain, masih mempertahankan bahkan menaikkan tarif off net.

Beberapa alasan perang tarif akan kembali marak karena melambatnya pertumbuhan pendapatan di sektor telekomunikasi. Hal ini disebabkan terus turunnya daya beli masyarakat dan melambatnya penetrasi pelanggan akibat krisis ekonomi global.

Highlight 2002-2009

Saham ISAT pada penutupan perdagangan 3 Februari 2009 berada pada level Rp.5650, dengan volume perdagangan sebesar 4 juta lembar saham dengan transaksi Rp 22 miliar lebih. Pergerakan saham ISAT diprediksi naik karena tender offer saham ISAT oleh Qtel pada harga Rp. 7.388 per lembarnya.

Kinerja saham ISAT selama tahun 2002-2007 cenderung meningkat dan menunjukkan sinyal uptrend dan ISAT mencapai level tertinggi sebesar Rp 9.900 pada tanggal 13 November 2007, dengan nilai transaksi sebesar Rp 107 miliar.

Sepanjang tahun 2002-2007, dari lima indikator keuangan utama (sales, operating profit, Net Income, Total Equity dan Total Assets) perusahaan ISAT mampu meningkatkan sales dengan rata-rata pertumbuhan per tahun (CAGR) sebesar 19,50%, bahkan pada tahun 2007 perusahaan berhasil mencatat pertumbuhan sales tertinggi 34,72% dibandingkan dengan 5 tahun terakhir yang berkisar antara 5%-28%. Profitabilitas perusahaan juga meningkat dengan CAGR sebesar 18,78% untuk operating profit dan 43,44% untuk net income.

Sales & Profit

Kinerja keuangan ISAT hingga kuartal III 2008 selalu meningkat dan menunjukkan tren positif, ini ditandai dengan pertumbuhan sales sebesar 14,89% (Rp. 13 triliun lebih) dibandingkan pada kuartal III 2007 (Rp. 11 triliun lebih). Pertumbuhan penjualan (Sales Growth) ISAT meningkat signifikan pada 2007 sebesar 34,72% dibandingkan 2006. Profitabilitas ISAT pada 2008 mengalami pertumbuhan tipis seiring dengan pertumbuhan sales, terlihat operating profit tumbuh sebesar 4,02% dan net income tumbuh sebesar 1,94% dibandingkan 2007.

Sedangkan net profit margin (NPM) meningkat selama periode 2002-2007. Semua ini menunjukkan bahwa ISAT terus berusaha meningkatkan sales dan efisiensi sehingga profitabilitas ISAT meningkat, dengan cara memperluas market share melalui penambahan asset (BTS) seiring dengan meningkatnya target pelanggan ISAT.

Bisnis seluler memberikan kontribusi 74,9% dari sales perusahaan, bisnis MIDI (multimedia, komunikasi data, dan internet) berkontribusi 15,54%, sisanya berasal dari bisnis telepon tetap.

Asset & Equity

Selama 2002-2006, debt- to-assets ratio (DAR) ISAT stabil berada pada kisaran 51-57%, kecuali 2007 yang mencapai 63,48%. Indikasi ini menunjukkan melonjaknya total asset pada 2007 sebesar Rp.45 triliun lebih dari 2006 yang hanya sebesar Rp. 34 triliun atau tumbuh sebesar 32,36%. Pendanaannya berasal dari utang korporasi. Struktur modal seperti ini membebani keuangan ISAT dan meningkatkan resiko cost of capital apabila ISAT target sales tidak tercapai.

ISAT memiliki utang sebesar Rp. 500 miliar yang jatuh tempo pada 2009 ini kepada PT Bank Mandiri Tbk dan PT BCA Tbk, untuk itu ISAT telah telah mempersiapkan dana dari kas internal untuk membayarnya. Kenaikan total asset ISAT seiring dengan kenaikan total equity namun pertumbuhannya tidak sebanding total assets. Total equity ISAT tumbuh sebesar 8,83% (2006-2007), ini menunjukan bahwa manajemen ISAT mampu memaksimalkan modal yang dimiliki untuk menambah asset guna memicu sales dan menciptakan profitabilitas yang lebih tinggi.

MVA & Market Risk

Kinerja saham ISAT terus meningkat sepanjang April 2005-April 2008, ditunjukkan melalui peningkatan shareholder market value added (MVA) terhadap equity book value (BV) yang sebelumnya mencapai 126,63% (April 2007) dan April 2008 lebih dari 127,28%. MVA/BV adalah selisih antara harga saham (market value) perusahaan dengan nilai buku ekuitas (book value). Nilai MVA/BV yang positif memberikan indikasi ISAT mampu memberikan nilai tambah terhadap nilai buku ekuitasnya. Makin tinggi nilai MVA makin baik sahamnya.

Di tengah penurunan market (IHSG) selama periode April 2007-April 2008 MVA ISAT cenderung stabil karena market risk (Beta) ISAT mulai menurun sejak April 2006 hingga mencapai di bawah 1. Market risk ISAT dalam kurun waktu April 2002-April 2006 berkisar antar 1,00-1,33, dan menurun pada April 2007 (0,87) dan April 2008 (0,80). Market risk (koefisien beta) menggambarkan risiko yang terkait dengan pergerakan pasar, atau risiko sistematis. Market risk yang bernilai lebih dari 1 mengindikasikan harga saham perusahaan berfluktuasi lebih besar dibandingkan fluktuasi pasar. Tingkat volatilitas harga saham perusahaan selama April 2004-April 2007 cenderung stabil di kisaran 32%-38%, kemudian meningkat 91,75% pada April 2008

Market Perception Map 2008

Selain mempertimbangkan kondisi makroekonomi, mikroekonomi, dan analisis fundamendal keuangan (seperti PER, PBV, EPS, ROE, NPM), terdapat faktor penting dalam proses pengambilan keputusan investasi yaitu persepsi pasar (market perception).

Market Perception merupakan konsensus pasar sebagai hasil analisis para investor terhadap kinerja emiten saat ini dan peluang bisnis di masa depan yang berpotensi besar dalam pembentukan dan pergerakan harga saham. Tim riset CAPITAL PRICE meng-‘kuantifikasi’ unsur kualitatif yang melekat dari persepsi pasar tersebut menjadi sebuah market perception map yang mudah dipahami

Market Perception map 2008 memvisualisasikan letak perusahaan terkait dengan CP index dan FGO index relatif terhadap perusahaan-perusahaan lain pada tahun 2008 (April 2008). Ekspektasi pasar terhadap profitabilitas ISAT dalam jangka pendek (CP) pada tahun 2008 hampir sama dengan rata-rata perusahaan lainnya, sedangkan ekspektasi pasar terhadap prospek pertumbuhan ISAT di masa depan (FGO) juga tidak jauh berbeda dengan perusahaan lainnya.

Persepsi pasar terhadap saham BUMN ISAT ini berkualifikasi netral.

Recent Development

Qtel telah memastikan untuk melakukan tender offer atas 1,31 miliar saham dengan harga Rp 7.388 per sahamnya atau setara 24,19% emiten bersandi ISAT tersebut. Total dana yang dikeluarkan untuk tender offer ini sekitar Rp 8 triliun. Apabila program tender saham berlangsung mulus, Qtel akan menggenggam 65% saham Indosat, karena sebelumnya Qtel sudah memiliki saham Indosat sebesar 40,8% yang di akuisisi dari Singapore Technologies Telemedia senilai US$ 1,8 miliar atau Rp 16,8 triliun. Pada penutupan transaksi perdagangan kemarin, harga saham Indosat justru mengalami penurunan tipis sebesar 0,88% menjadi Rp 5.650 per saham.

Business Outlook

Potensi pertumbuhan di industri seluler masih tinggi, dari 220 juta penduduk Indonesia dewasa ini baru sekitar 28 juta nomor seluler yang beredar (13%) sehingga pasarnya masih terbuka lebar. Kesempatan penetrasi ponsel masih besar, yaitu lebih dari 30 juta pengguna internet mobile dari lebih dari 120 juta pengguaan seluler.

ISAT mentargetkan dapat 200.000 pengguna pita lebar bergerak (mobile broadband) 3,5G dengan diluncurkannya modem mobile 3,5G Indosat berkecepatan unduh (downlink) 14,4 Mbps berteknologi High Speed Packet Access (HSPA). Pada tahun 2010 penetrasi broadband mencapai sekitar 2% dengan potensi pendapatan US$900 juta. Semua ini dapat memberi dampak positif bagi kinerja ISAT dimasa depan khususnya sales dan profitabilitas, sehingga dalam jangka panjang potensi ISAT masih baik.

Ditulis bersama DEDDY ERTANTO (Financial Research Analyst-CAPITAL PRICE)

February 17, 2009 Posted by | Stocks Analysis | Leave a comment

Random walk?

by Veryan Allen

Random walk? Advance warnings were in place for a global correction. Smart money has been selling to dumb money for a while. When equity volatility and credit spreads are at lows but financial arrogance and market myopia are at highs, a bear market is usually coming sooner or later. With Sam Zell taking a lot of real estate chips off the table, Warren Buffett searching for a successor and some bottom tier hedge funds even saying they couldn’t find any shorting opportunities(!), the canaries in the coal mine could not have been singing much louder.

Since 1896 there have been 130 worse sell-offs than 27 Feb 2007, or more than 1 each year. We hadn’t had a major drawdown in ages and volatility clusters so perhaps the year of the Golden Boar will see several more. The Dow fell 3.7 sigma which randomly “should” occur every 18 years but Chinese stock indices made a 6 sigma move which, according to the random walkers “should” happen every 2 million years. The VIX rose by a percentage that “shouldn’t” have occurred since this planet was formed. There was nothing random about last week and bearish times are looming. BUYING the VIX on the rare occasions it drops below 10 ALWAYS pays – the implied volatility for daily market movement at such levels is unsustainable. 10/srqt(256)=0.625% was ludicrously low.

Random walk? No predictive information in financial data? Chinese day traders “cause” the recent global correction? On the 9th day of the Lunar New Year (27 Feb in 2007), it is custom to make an offering to ensure continued prosperity. The China “catalyst” had more to do with a desire to take profit and what better day to pay an 8.8% tithe to the Jade Emperor? That’s eight point eight. Eights are a big deal in China as with the Olympics starting at 8pm on 08/08/08. While profit-taking was overdue, it is a stretch to blame Chinese retail investors for global turbulence.

The eclipse over the weekend wasn’t the only syzygy obviously influencing recent investor behavior. Prominent business magazines lined up in a classic convergence to signal a possible pause in the euphoria; when Forbes implies the bull market might just be getting started, Fortune runs a glowing advertorial for private equity and Businessweek says we are in a low, low rate world, you just “know” there could be problems soon.

Then there is the “economies are still doing great” contention. Don’t people realise that market volatility CHANGES the fundamentals? George Soros has never received due credit for his reflexivity theories. The reminder that risk assets actually are risky will change investor and business behaviour. Private equity deals yet to be announced will not now emerge with leverage harder to get and much more expensive. Roach motel illiquid securities (you can check in but you can’t check out) will be evaluated much more closely. Some say the “Greenspan put” or “private equity put” are floors on any sustained market drop but those are myths. Some who would have qualified for a mortgage before will NOT now, which will impact real estate. Credit will be harder to get as will loans to finance other loans coming due.

Many “reasons” have been offered for the “correction”. Ben Bernanke said there was no single trigger but that is ALWAYS the case anyway. Yes subprime mortgages are a disaster but that is not “new” news though it has yet to fully impact the markets. The possibility of recession? What else could Alan Greenspan have said? He had three choices, 1) “Don’t know, don’t care” which wasn’t really an option for him in his position 2) “No way, there is never going to be a recession ever again” (wrong, obviously) or 3) Sure there is a chance. Choice 3 was the only realistic statement, but he gets blamed.

World equity, credit and most commodity markets went down because there were simply more sellers than buyers. Some say it was just a “fluctuation” in the random walk. Really? Why did the drunken man suddenly take such a Bob Beamon like big jump backwards? A corollary to random walk assumptions is that there can be no such thing as investment skill! It is amazing how this rubbish persists in the face of such overwhelming counter evidence.

Truth is the first casualty of war and liquidity is the first casualty of volatility. The second casualty however is rising risky asset correlations. Most commodities, weaker credits and equities dropped last week, almost everywhere. The popular fear gauges of equity implied volatility and credit default protection blew out massively. It is yet more confirmation that in the flat world of global capital markets, it is STRATEGY diversification more than ASSET diversification that is most likely to protect portfolios and make money when most risk assets fall.

Also worth noting is that the stock markets impacted the worst were those that make onshore short sales complicated or illegal. Every market needs such natural BUYERS during sharp corrections and taking profits is easier than cutting losses. Short sellers REDUCE the severity of market drawdowns by buying to cover those prior shorts.

There may be some “smart” investors around but there is far more “dumb” money playing the markets. There is not much connection between intelligence and financial savvy. Whether it was Isaac Newton getting blown up by the markets in 1721, Albert Einstein’s bond trading, the Long-Term Capital Management option pricing “geniuses” in 1998, or the “can’t find any short sales” superstars that got “fluctuated” recently, there is plenty of money for genuinely smart investors to extract from other market participants in bull AND bear markets. It does not particularly matter what the reasons are for a move, what matters is that alpha was extracted and risks were ANTICIPATED. There is NEVER a situation where there is nothing to short. Never.

Alpha capture is really an alpha redistribution game. I don’t know which market offers the most beta but the USA easily has the most alpha available and Japan has the second largest amount. It is trendy for pundits to talk about the US markets being too “efficient”, too “analyzed”, too much “smart money” for anomalies to remain but that is just plain wrong. Last Tuesday, even Dow Jones and NYSE computers couldn’t add up and divide the prices of 30 major stocks. The best money making opportunities are in the US markets because it is so inefficient, so liquid and has the widest range of tradeable securities, derivatives and options. The best source of alpha will continue to be the USA if only because it has the biggest and deepest markets. You have to be sceptical of investors moving into new areas because they are not making money at home. If a hedge fund can’t make money in its “own” country how can it possibly do so elsewhere?

Markets are not random just like coin tosses are NOT random. It would not be particularly difficult, theoretically, to construct a hedge fund strategy around coin flips. Coins “seem” random because most of us only witness single or very low sample sizes. If you toss many coins using the same mechanism and starting conditions the bias is 51/49 which, while sounding slim, is an exploitable edge. If the coin is spun instead, the bias is often in favor of heads, 70/30 according to empirical work by Persi Diaconis. Spin a new 1 cent penny however and the chances are it will come up tails. Look at any coin – is the centre of gravity EXACTLY half-way or isn’t there a tiny bit more metal on one side?

Returning to China, if you got every Chinese citizen to toss a known coin each day, had knowledge of the starting face and modeled a few thousand sample flips from each flipper the non-random bias would be obvious. Bet $1 on each toss and you would have a $1.3 billion hedge fund generating a high annual return from a supposedly random process called coin tossing. It is possible to develop predictive edges from ANY process involving human bias and behavior. NOTHING is random. Not coin tosses, not roulette wheels, not “random” number generators in spreadsheets and definitely NOT financial markets. Bias is omnipresent.

It is noteworthy how the smart money has been selling out while the beta players have been buying. I generated some positive alpha from the sell-off not because of some amazing foresight but primarily because I have stress tested for anything, was sufficiently diversified and am ALWAYS long of options. Vega, volga and vanna are often ignored, obscure to many, but were important recent factors in the markets.

If you have prepared for the chance of the sun not coming up tomorrow, -3.3% drops in the Dow or a steeper fall in a market previously up well over 100% don’t cause a sweat. All I know is that there is bias in EVERYTHING, that neither prices nor volatilities are stochastic and that the risk-reward equation had swung over to the negative outlook a while ago. The reasons for stock market crash don’t particularly matter. It will be interesting to see if this volatility cluster continues. Maybe it will soon blow over, maybe it won’t. But whatever happens it will not be random. It never is.

February 14, 2009 Posted by | Capital Market Education | Leave a comment