Well, it’s time to start making the $ work for me. Obviously leaving my money in a savings account or GIC is retarded and not worthwhile. The stock market seems risky but alluring. I was thinking about buying a house or apartment in Canada and renting it out to cover the bank loan. The problem is I do not plan to be in Canada any time soon or make regular visits.
So
I bought UMC ADRs at US$3.04 a share, currently at US$3.31. I would go long on chips (very cheap right now) and PC-related stocks based on impending upgrade cycle. Buy Taiwan shares and you don’t have to pay capital gains.
A 5% return in bonds, money markets, or CDs is a pretty good place for your money over other risky investments.
In my pocket. Pretty much all of it.
Brian
How much risk are you willing to accept?
And will you need to use this money soon for something else?
Good question SJ, well, I am sure I will have a steady income for a few years here in Taiwan. Therefore, I can part with the money (I have saved now) for around 5 years or maybe more!
OK. Whats is an UMC ADR? and “impending upgrade cycle?”
Buying stocks in Taiwan sounds interesting. I guess I would need a broker? Or can this be done online?
[quote=“stevieboy”][/quote]
OK. Whats is an UMC ADR? and “impending upgrade cycle?”
Buying stocks in Taiwan sounds interesting. I guess I would need a broker? Or can this be done online?[/quote]
ADR’s are a way for non-US companies to list in the US, in other words UMC’s ADR’s are “shares” of UMC traded on NYSE. (The A in ADR stands for american, the DR stands for Depositary Receipt, which means that they deposit the shares in a custodian bank and get some receipts, they can sell on a US bourse pending further approval procedures etc.) Try to guess what a TDR is? 
In case you want to trade local shares, the best is to find a good local friend and gen him/her to open an account you can use. Foreigners can open brokerage accounts here (needed if you want to buy shares), but you need a tax guarantor with an annual income of NT$1m. Moreover, if you get your hands on an existing account, you can also short. (IE borrow shares, selling them and hope to buy back once the shares have depreciated).
Some (most I think) Taiwanese brokerages have online trading facilities. You might want to open an account with one of them. (Taiwan Securities have, so does Yuanta Core Pacific etc).
The PC upgrade cycle is what we are all waiting for. Last time US companies replaced their PC’s (IE the last upgrade cycle) was in 1999~2000. Those PC’s are getting worn and will have to be replaced, as IT spending in the US has been subdued since late 2000. We hope this will start to kick in later this year, but hard to tell what this will actually mean for individual taiwanese stocks, as margins have fallen over the last years and may not pick up due to competition from PRC.
Hope this helps.
[quote=“Sir Donald Bradman”]In my pocket. Pretty much all of it.
Brian[/quote]
Not in the barman’s till?
[quote=“Omniloquacious”]
Not in the barman’s till?[/quote]
Damn, that’s where my monies usually end…
And what about risk?
Look at it this way. There’s “investment” and then there’s “speculation.” If your primary purpose is to protect your money, that’s investment. If you want to get rich quick (or make money faster than other people), that’s speculation. Of course there’s all kind of gray area in between, but the basic approaches are pretty different–either chasing or avoiding risk, for example.
How much of your money are you willing to lose? And how much of a probability that you’ll lose it, can you tolerate?
I want to invest, not speculate. I can afford to lose money but I am the type who would be very pissed if I did! I guess I would have to deal with that if the time came…
I’d like to minimise my risk, but, I understand that risk is involved. 5% doesn’t mean much in my opinion. I want more !!!
In your opinion would it be smart to invest in a Canadian bank like TD(Toronto Dominion) or a tech company like Microsoft, Intell, or IBM?
I don’t think I would feel comfortable investing in a Taiwanese company because my general knowledge of Taiwan and its business environment is very poor.
You can’t go wrong with chip manufacturers or those computer companies. Apple just awarded contract to another Taiwanese company to make their long rumored hand-held Mac (to run on the next OS, Panther). Every PC in the world has at least some parts made in Taiwan or made by a Taiwanese subsid.
Or maybe the good old fashion fortune 500. Less risk, but damn it, growth is slow.
scchu
Scchu, do you know what you’re talking about when you say invest in Taiwanese chip manufacturers and computer companies? Do you know how they run their businesses? Here’s a tutorial:
Options: As an investor you will get to see the lao ban dilute the ownership in your company and basically give your money away by giving away options. If you think options are bad in the US, they’re just as bad in Taiwan.
Transparency: I’m more likely to find out the name of the CEO’s mistress than I am to find clear true financials.
Margins: I find myself saying marwhat??? Most tech companies are under a lot of competetive pressure. Most tech companies here are based on making products based on foreign technology which really eat into their profits. China is just another Asian competitor.
Fabs(TSMC and UMC) in taiwan are starting to get hit between two competitors. One is fabs in China, since the gov’t their is throwing land and money at anyone wanting to start a fab. IBM on the other hand is starting their own fab in upstate New York using all the newest technology. I can only see margins getting squeezed for Taiwan’s fabs. Labor is only 8% of the cost of a fab and I believe it is getting lower. Taiwan has trouble keeping their current fabs up, because they have had trouble in the past keeping them stocked in water(Hsinchu) and power. The high speed rail will destroy what fabs are based in Tainan, because of the vibrations. I have the papers on this from a Taiwanese student of mind. They also lack enough water in Tainan for their fabs because of the dam they refused to build down there.
Investing in Taiwan is like gambling at a casino. Watching TV here you can see a lot of shows on cable TV going on and on about technical analysis. I don’t see a lot of investment opportunity in Taiwan. The structures are not there for a clear efficient deep market and then there is the gov’t meddling.
Okami
Crap… made a fool out of myself. Didn’t think that further ahead. Come to think of it, your logics do make sense. What was I thinking…
scchu
Okay then. For investment, you shouldn’t be thinking so much about specific stocks (or whatever) as about a balanced portfolio. You should decide what percentage you want to consist of safe investments such as blue-chip stocks and the higher-quality bonds, and what percentage should be more adventurous (including commodities or currency trading, for example).
Generally speaking, you should not be picking these yourself, unless you consider yourself to be an expert on that market. At the same time, you want to be extremely careful who you entrust your money to. I’m thinking a reputable money-market fund here.
Okami’s right that investing in Taiwan stocks is like gambling in a casino. Heck, investing in US stocks is too. First, you can’t learn enough without serious studying to really understand all the various factors. Second, there are plenty of professionals who claim to understand such things and most of them lose money. Third, even if you understand the terminology, you can’t really count on the companies’ figures anyway, as the corporate accounting scandal in the US has showed us. And for Taiwan companies, even if information was readily available in English, which it isn’t, I suspect it would be even less accurate than in the US, or Canada.
The majority of stock market investors surely LOST money in the last three years. Most of them, like you and me, were not satisfied with 5%, and believed the bullshit stories that were fed to them from people like your friend who talks of earning 40% or whatever. For all but a very few lucky individuals that’s nonsense. I’m with Ali: go with bonds, CDs or money market funds. Not glamorous, but I’d gladly take 5% annual return over the losses I earned in surefire winners like Cisco, GE, etc.
To earn a high return you must accept a high risk. A risk that you will lose money. It’s that simple. If you enjoy betting on the horses or other gambling, throw your money in the market and good luck to you. But it is a gamble. If losing your money would really bother you greatly, then accept a lesser return and the greater security.
i haven’t seen cd’s at 5% for a long while.
well, yeah. three years ago was the height of a bull market. now we’re in the middle of a bear market. if you bought then and sold now you lost. now taking that reasoning the other way…
i might also add that you don’t gain or lose until you sell.
index funds are considered relatively safe for long term investing. and by long term i’m talking at least 10 years.
OK, let’s talk specifics. Why or why not ? (in your opinion)
Are these considered “Blue Chip”?
Also, I am looking at 5 years, and probably longer than that! This would be my first non-GIC investment.
I’m not interested in trading currency. I am looking for one company to through a chunk of change at.
I uderstand that a balanced portfolio is important. I think that this is the best way for me to get started.
I dont want to invest in a money-market fund because I do not trust the “market”.
Anyone out there investing in these companies who get the contracts from the US gov. to re-build Iraq? Are they listed?
Screaming Jesus’ advice is very good. You should always remember the golden rule of investment: [quote]
[color=darkblue]Don’t put all your eggs in one basket. [/color]
[/quote]
This doesn’t mean you should invest in eggs or chickens or baskets. It means you should invest in a range of different investments.
The safest investment is putting cash in the bank. The risk is virtually zero, but often the return is not much more. That said you should always have at least a few thousand dollars sitting in the bank in case of emergencies. After that few thousand you can then consider other investments. Fixed interest or term deposits are OK. It offers fairly low returns, but almost no risk. If you are conservative and worried about losing your money keep a large proportion of it in this category.
Nobody has mentioned real estate. It is generally fairly safe, but you need a lot of initial capital and/or a good reliable income stream to get into it. It is definitely a long term investment, too.
Shares are very easy to get started in as you can start with as little as $1,000. If you invest in good reliable companies that pay good dividends and are prepared to keep your money in for at least five years then shares are good. Just remember the price of shares goes up and down every day. If you buy some shares and they go down 10% after a few weeks you don’t necessarily need to worry. Remember you are investing for the long term.
It is important to get advice from a broker. Just because Company X is a big company that has been around for a long time and you always buy its products doesn’t necessarily mean it is a good investment. You need to know about the company’s debt level, management and ability to pay a dividend. Good brokers have access to forecasts and research. Their advice is not foolproof, but better than what you would do on your own.
Also don’t invest all your money at the same time. If you buy when the market is at a peak then It may take years just to recover your initial investment again. If you make investments regularly then you average out the peaks in the market. Sometimes you buy high, sometimes you buy low. If you invest in shares it is a good idea to read the business pages so you are aware of any major changes in the companies you have invested in and the general direction of the market.
I have been investing in shares in Australia for about ten years now. I have bought one or two bad stocks, but overall I have done much better than I would have if I’d left my money in the bank (where I may have also been tempted to spend it). Now that I have a fairly decent sum of money I hope to invest in real estate in the next few years. The main reason for this is that you can’t live in shares 
If I buy a nice property I can rent it out and then some time in the future I can live in it if I need to.
I wouldn’t invest in foreign currency or gold. These carry a high level of risk and require expertise and constant management. Other investments I have mentioned don’t require the same level of attention.