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tuan nguyen
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I am a long term investor mostly in technology and telecom where I am a specialist for 10 years working in the domain for France Telecom in Europe, Alcatel Lucent in US
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  • World Economy Vs Market Indicator For 2012 - Good Time To Invest ?

    We saw all of companies in US posting their Earning for Q1, Q2 and most of them showing a very positive result but Economic datas are not showing a great picture. What can we learn from those indicators?


    -US companies mostly posted good earning quarter Q1, Q2 2012

    -Sale is relatively slower than expected (except Apple 88% growth)

    -Higher marginal profit, higher Earning thanks to new market for US companies (IBM, Apple, Starbucks, Ford started expanding their revenue in China significantly)

    -Dow and Nasdaq growth 15-20% in 2012


    -US data showing that consumers having less saving, slowing spending with GDP growing only 2% instead of 3% expected. FED is not ready for any Money easing or other commitment for 2012 in keeping very low interest rate nearly 0%.

    -Higher gas price, cafe, commodities, etc

    -Big concern about Europe debt (Spain, Italy)

    -Lots of election in Europe (May 2012) and US (Dec 2012) in which Socialist will win those elections due to weak economic indicator and high unemployment in Europe more than 10% (22% in Spain). US having unemployment is going down to 8%

    -China slow expanding

    How can we predict 2012 to our real life for now as an Investor, CEO or economic point of view when seeing those mix informations (bad and good at the same time) ?

    It seems to be a contradiction between Economic indicator (macro economy seems slow growing for the rest of 2012 based on some indicators) and Market indicator (companies can grow more in 2012 based on Q2 result).

    So investment with prudence, Sell in May and Buy back from September could be a good idea as most investors doing very successgfully since the last 5 years ? What do you think about the growth rate of companies. Apple still is the leader of capital market, skewing the growth to very high level for most index indicators. Will it be possible to continue for growth in the rest of 2012 or Economy will slow down slightly ? How do you share with this idea ?

    Tags: SBUX
    Aug 09 5:55 PM | Link | Comment!
  • Thoughts On Company Valuation

    Thoughts on company valuation - Tuan Loc Nguyen

    I. Investment - how did I start:

    This is very interesting for those who want to know how to make a smart decision as an investor. There is no right or wrong here, it always depends on many criterias. The interesting thing is market unpreditable.

    I want to thing like a long term investor not a trader, how to beat the market is a very difficult and

    challenging issue. As Buffett mentioned, even market could go up and down as per nature, there is always a chance for smart investor to make money in any sense.

    I did learn one thing here, the financial report showing the past result, earning, cash flow for investor to predict the future cash flow. But if you have a sense what could be for the next, where the consumer or business will be arriving, you have a big chance to beat the market. I am trying always to identify the investment in 6 steps:

    1. Brainstorming to know the market trend
    2. Pickup a couple companies in this trend
    3. Company business model analysis
    4. Financial analysis based on previous financial reports. then compare with other competitors/market
    5. Market, risk analysis with all ratios, earning, cash flow
    6. Decision making and wait until the good moment to purchase/sell
    If you put the assumption that the crisis can not be gone for couple years, people can not spend a lot due to unstable status of their job situation, you have a big chance to invest in company with low fixed cost. Those companies like service company which can provide quick service could have a big RO than traditional company.

    Another prediction, let see people prefer now buying products online more and more than buying traditional shops. Investing in online company like Amazon, Groupon could beat the ROI of Bestbuy which focus more on traditional with high fixed cost. Another good example, there is a new market with millions of talets selling now. I can not predict the market but I can see the trend of people having more tablets. What can they do with those mobility devices ? The response is to connect to Internet any time with more mobility. Company selling applications for those devices or providing WifWeconnectivity for tablets will have a jump on their sell associated with tablets selling. Why dont I in invest on those companies like Cisco, Aruba Wifi, etc...

    Then I will focus on the business model of company like Amazon, is it an excellent business model or not ? seems both are good model but Groupon has a model that everyone can easier copy than I gonne face a lots of competitors. This is not a good company for long term investment.

    If I look at Cisco or Aruba, I prefer Aruba as this company is smaller than Cisco with potential jump on sale and profit after couple years of restructuring with a good management and cost of sold controlled, etc.

    Based on that, I can start analyzing Aruba financial reports, risk management, cash flow, sale to confirm our trend analysis and our market research, market knowledge. It requires us to read a lots of articles about the online market, their management, etc.

    II. Think as Warren Buffet:

    I used to follow the secret published by Warren Buffett as below. He basically calculated the future earning with high dividend yield and he did something wrong in investing in ConocoPhillips, NRG energy, Bank of America but he was very wonderful investor with investment in Cocacola, AMEX, Geico, Wellsfarfo (in average 10 times ROI after years and years only purchasing without selling). I am trying to follow my feeling and invest in small amount to test the concept (as a student I am not rich) . I always bought stock with low P/E and good price P/B. So the secret formula of long term investors for me is to know the trend of market and your feeling to move toward to the end of your assumption independently of other analysis might scare you out

    Here is his sample calculation with Warren Buffett:
    Net Profit Margin 17.44%
    Dividend Yield 2.24%
    Stock Price $24.28
    Book Value/Share $27.62
    Buffett intrinsic value = (Net profit margin + dividend yield ) / ( Price / Book Value per share) = (17.44 + 2.24 ) / ( 24.28 / 27.62) = >=15

    It is greater than 15, so Warren Buffet might buy it.
    Then when time coming, based on the evaluation of the assumption (people will use internet everywhere or people want to use online service), if this assumption is correct and I had a good evaluation, the big chance you can beat the market which always follow you couple months or years later based on the next earning coming.

    Look at Buffett in 2011, his biggest investment this year is IBM with 10b usd, the domain that he never got into it. Reason, maybe IBM is fully services now and have very strong earning the last 3 years with high sale, but as he said, it was a little late due to price has been raised so high, same issue with Apple. So choosing a good moment for entrance and exit is also so important as a very small investors like us

    III. Trend and conclusion:

    For the last one hundred years, telecom has been like a closed black box. Connecting to network resources required esoteric technical knowledge and the ability to cope with an environment that was hostile to rapid business development. Deals were slow to take shape and often seemed to move ahead at whim of the carrier. It happens in part because disruptive technologies are often difficult to recognize. This is especially true in the case of telecom, when the disruptive innovation isn't any particular technology but the rise of smart devices at the edge of carrier networks.

    Carriers have embraced this trend, believing that iPhones, iPads, Android, Lumia and other smart devices will eventually reduce customer churn and increase the amount of time they spend on the network. It's a reasonable approach but it is contributing to a dramatic shift in the balance of telecom power in the United States. This is particularly obvious in the wake of the holiday season. App makers and device manufacturers like Apple are enjoying blockbuster sales, while carriers are struggling with declining margins and rising capital costs. Then along came Steve Jobs and the iPhone. Jobs not only put an extremely smart device at the edge of the network, he made it a platform for app development. Jobs wasn't breaking new ground he was simply remaking the classic technology drama that pits the intelligent network against the intelligent edge. This is just what we saw in the struggle between the mainframe and the PC, the PC and the Internet, and the Internet and peer-to-peer networks.

    Therefore, to recognize the disruptive technology trend, we need to understand the process of growth, don't bet only based on the result of process to predict future growth. In the meantime, firms have to demonstrate and convince the market those choices are always the best interest for their shareholders, explaining the market why they had to make those decisions on the best of his firms not to destroy the value of their shareholders.

    Although building successful growth businesses is such a vast topic, this research focuses on the most important decisions that all managers must make in creating growth, decisions that represent key actions that drive success inside the black box of innovation. Managers have to consider to make a balance between their maximize shareholder wealth and profitable for their stakeholders. So the main objective of a manager into make those decisions in a way that greatly improves their probability of success and to contribute of improving the predictability of business building, trusting that their predictions based on reliable evident and convincible justification to their shareholders and their employees, given the circumstances that they are in...

    Tuan Loc Nguyen

    Apr 24 12:53 AM | Link | Comment!
  • Discounted Cash Flow Analysis

    Discuss about Discounted cash flow analysis

    To calculate a Return of Investment, we use NPV-Net Present Value and IRR- Internal rate return as they are 2 primary capital budgeting metrics that have been traditionally used for this process: the net present value (NYSE:NPV) and the internal rate of return (NYSE:IRR).

    The advantage of NPV is that is increases the wealth of the share holders where IRR is indicating a rate of return of a project. with the help of IRR one can find the discount rate at which the total amount received on the investment is equal to the investment that is made today. One would be at no risk of loosing the money as the required rate of return should be equal to or higher then the IRR.

    1.NPV only gives an indication of the value of the money today but nobody knows the exact rate of return so IRR gives you the rate you are safe where in NPV a discount rate is assumed.

    NPV t also tells whether the investment will increase the firm's value based on the time value of money and to considers the risk of future cash flows (through the cost of capital). On the other hand, NPV requires an estimate of the cost of capital in order to calculate the net present value in terms of dollars, not as a percentage. If the discount rate chosen for the NPV assessment of an investment is unrealistic, the decision to accept or reject the investment would therefore be unreliable.

    2.IRR tells whether an investment increases the firm's value and to considers all cash flows of the project associated with the risk of future cash flows (through the cost of capital in the decision rule). But IRR requires an estimate of the cost of capital in order to make a decision and IRR can not give the value-maximizing decision when used to compare mutually exclusive projects. IRR can not give the value-maximizing decision when used to choose projects when there is capital rationing. It is not absolute method to be used in situations in which the sign of the cash flows of a project change more than once during the project's life.

    What do you guys think about NPV and IRR, could it be justifiable ?

    Apr 24 12:52 AM | Link | Comment!
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