Friday, September 26, 2014

7 Top Money Management Apps 2014
The Dailycost app helps track monthly spending.

Keeping a balanced budget can help you stay on track and sleep better at night. But if your money-management system requires sifting through piles of receipts and retrieving cash from various pockets and purses, it’s time to reconsider your approach. With these seven apps, you can put away the paperwork and get a better understanding of your daily, weekly, monthly and annual spending habits. 
Ready, set, download and go!
COST: Free
Operating system: iOSAndroid and Windows
This app offers both smartphone and web interfaces. The clean, easy-to-navigate interface features four big buttons: SmartScan, Add Expense, Track Time and Track Distance. 
“SmartScan” lets you photograph, categorize and tag receipts, and then add them to expense reports if necessary. You can also enter the merchant name, total amount spent and date for each expense. This is great for anyone who wants to save receipts but doesn’t want to hang on to a paper copy. If you prefer manual input, “Add Expense” offers the categorizing options. You can also note if the expense is billable and/or reimbursable by the flip of a few switches. 

The “Track Distance” option is especially handy for freelancers who travel by car and want or need to bill by distance; here, you can track by odometer, or just turn on location and use the app’s GPS. The “Track Time” option offers a way to keep tabs on hourly earnings, which are based on a set hourly rate. 
Add your debit and/or credit card through the web version of Expensify, and you’ll be able to track your total account balances alongside those daily expenses and earnings. Expensify offers both micro and macro pictures of your financial life. Later, you can export your expense reports or send invoices straight from the app or the web version.
COST: Free
Operating system: iOS and Android
Check is an excellent money management app for those who prefer to put all expenses on their credit and debit cards. After establishing a secure connection, Check asks you to add your bills to the account. This means credit card bills, gas, electric and even car payments. 
Check is especially useful for notifications about bill payment dates. It tells you when your credit card bill is due, what your minimum payment is and offers you an opportunity to pay your bill through the app. If you’re a first-time Check user, you’ll get $10 off the first bill you pay if you do use the app. You can also track your credit score for $6.99/month and learn about other credit card offers through the My Offers tab. If you are a heavy credit card user and want to track expenses that way, Check is an ideal app for you. You’ll even receive an alert email if you are using more than 30% of your credit limit’s total credit because doing so could damage your credit score. 
When you enter your bank account info into Check, the app also tells you how much you have in your account right now so that there’s no vagueness around your current money situation. It shows you this week’s bills, how much is on your credit card at all times and a pie chart of where your money is going.
COST: $1.99
Operating systems: iOS
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DailyBudgt (yes, there’s no ‘e’) is designed to help you keep track of your daily expenses. First, go into the app and set your budget for the week, then set your budget just for today. This can be especially useful if you’re taking out an amount of cash as a method of slowing down your spending. You can also turn on a reminder for extra notifications about what you’ve spent from your daily and weekly budget. 
DailyBudgt also shows you which week of the year you’re in so that you can better track long-term spending. After inputting information, the app lets you see what you’ve spent by day, month or week. Checking the “month” option will give you a circular chart with “total,” “balance” and “spent,” or how much you have left to spend this month. If you look at spending by week, you’ll see the icons associated with each type of spending in addition to a smaller pie chart. 
This app does not connect to debit or credit card accounts. But if you are used to writing down all of your spending by hand on a notepad and feel ready to make the switch into digital, this app will do the trick. DailyBudgt aims for simplicity above all else.
Spending 2
COST: Free 
Operating system: iOS
Spending is a great app for tracking month-to-month spending, particularly if your budget changes on a monthly basis. Start by entering the first month’s budget and then divvy your spending up into five categories: food, personal, transportation, bills and education.(There’s also a separate category for traveling only, which is useful if you do have a separate travel budget.) The app shows your spending yesterday and today, but you can also view it by week, month and year. You can also select the day your week starts, which is useful for people whose schedules do not operate on a regular nine to five, Monday through Friday workweek.
When entering expenses, you can also mark something as a “repeat.” So if you take the same yoga class every Thursday, say, you can just input it as a recurring expense. In this app, you can also enter your income alongside expenses; your income appears in green, your expenses go blue and the overall balance (income minus expenses) appears in black. 
You can also specify whether an expense is cash or credit upon entering it, which comes in handy if you’re putting certain expenses on your credit card and others with cash. Note that the app doesn’t put a default decimal point into dollar amounts so be sure to do it yourself. Otherwise, what should be $5.50 could turn into $550.
COST: $1.99
Operating system: iOS
DailyCost is an easy-to-use and rather basic app for tracking monthly spending. Before you open it, decide if your week starts on Sunday or Monday. Enter your daily expenses, filing them under a bevy of categories including movies, travel, books and groceries. DailyCost keeps track of everything through a spool-like counter at the top of the screen, organizing by number of days, number of entries and total cost. 
To leave the input section, tap the checkmark in the upper right-hand corner of the screen; there you’ll see the entries broken down by category. To return to the spool, tap the bottom right-hand corner of the screen. For fun, you can change the wallpaper background on total spending; at the top, you’ll also see time elapsed by day of the week. You can also invite a friend via email to try out the app or export a CSV of all your spendings via email. 
If you travel often, note that DailyCost differentiates between travel (flights and trains) and transport (commuting in cities via bus, train or taxi). DailyCost also offers international currency options.
HBL Moneywise
COST: Free 
Operating system: iOS and Android
MoneyWise is designed to help you balance your budget, track expenses, generate reports and bank on the go through a “find ATM” option and mobile banking. The app’s home screen is very straightforward, offering buttons for budget overview, adding expenses, tracking savings, expenses overview, categories, reports, finding nearby ATMs and mobile banking.
MoneyWise serves little tips at the top of the screen, which give this app a more personalized touch. (Example: “Go grocery shopping while you are in a hurry. You will be focused and won’t have time for needless browsing.”) Everything in this app is efficient and straightforward—especially the Expense section. Here, you see all of your spending by category.
COST: Free
Operating system: iOS and Android 
Dollarbird is a useful and intuitive money-tracking app that doesn’t offer a lot of bells and whistles. This app uses a monthly calendar format, which allows you to look at how much you’ve spent every day of the month. Enter your expenses, and then they’ll show up as a single light gray number on that day. At the end of the day, you’ll know how much you spent and what you purchased.  
You also have the option to track expenses by color-coded category. Be sure to add any new, recurring categories. For example, I added categories like “hair cuts” and “coffee,” which aren’t part of the Dollarbird default categories. Swipe through each month, and you’ll see totals and get a good idea of the category expenses you tend to spend the most on. You can also add your income and overall budget, and get an overview of spending by month through a comprehensive graph.  
Dollarbird also offers optional PIN code protection and allows you to decide whether your week starts on Monday or Sunday. And if you’re the type that doesn’t constantly enter transactions but does save receipts, flip the switch “on” for a reminder to input transactions at a specific time of your choosing. There’s also an option to download all of your expenses into a CSV spreadsheet. 
The story “7 top money management apps” originally appeared on

Tuesday, September 16, 2014

Why value investing works

Value Investing Works
"In the world of investing, being correct about something isn't at all synonymous with being proved correct right away”                Howard Marks

Price Vs Value
Share prices don't exist in a vacuum. Instead, they represent what it costs, at one point in time, to buy a tiny proportion of a company listed on the stock exchange - a company that employs people, produces goods or services and, hopefully, generates revenue, profit and cash flow. Alongside this quoted stock price, value investors also take account of a company's underlying, or "intrinsic" value. 

Unlike the stock price, you can never get an exact fix on this figure but you can sometimes make a reasonable estimate by undertaking "fundamental analysis", which involves looking at a company's financial statements over time and making an assessment of its management, markets and growth potential. Share prices, you may have noticed, vary enormously over the course of a year. But a business's revenue, profit and cash flow rarely change anything like as much as that. The reason for this is that the price of a company's shares is only a reflection of what people are willing to pay for them at any given time. 

Sometimes, usually when prices are rising, they're greedy. When prices fall, they become fearful and rush for the exits. All this emotion can push the share price a long way from the intrinsic value of the underlying business. Value investors aim to benefit from this by buying shares when they're trading at significantly less than their intrinsic value. Or, to put it another way, buying a dollar's worth of value for 50 cents.

Why value investing works

If value investing works so well, why doesn't everyone jump on the bandwagon? Not everyone is able to view movements in stock prices with the detachment that's required of a value investor; if they could, then the share market extremes caused by fear and greed would not occur. This paradox is one of the keys to the success of the value approach: the concepts are extremely simple to grasp but can be very difficult to put into action. Why? Human psychology. Most stocks tend to be priced about right much of the time. Something significant usually has to happen for a stock to become under or overpriced; a profit warning or a competitor releasing a super-duper new product, for example. In other words, an attractive opportunity for value investors is very often caused by bad news, while good news is very often the signal to head for the exits. So value investors have to be contrarian, looking for the positives when everyone else is looking at the negatives (and vice versa). Humans are hard-wired to follow the crowd, but that's usually an unprofitable course of action in the share market.

The other reason is related to retail investors’ emotional biases. Few retail participants in Bursa are interested in dull stocks with not much of trading activities. There is no fun watching it with little or no movement in share prices of these stocks every day. Most of them just listen to hot tips and rumours to speculate in the market without having any knowledge about investing. 

Those retail investors with better knowledge and experience will have an advantage. There is also this institutional imperative. Most institutional investors have no mandate investing in small capitalized firms. Fund managers are more concern about their career risks if following a winning strategy if it involves enduring long stretches of relative underperformance which does happen in the short term, but usually not in the long term. They feel that it is safer to be wrong when everyone else is losing money than to be wrong when everyone else is making money which the formula can do.

Value investing is extremely simple in theory, but tougher in practice.  If you compare the price of a stock with a confident valuation of its true worth (intrinsic value) and find you can buy it at a considerable discount (margin of safety) then you may be onto a winner. But value investing is much harder than it looks for two reasons, firstly the real intrinsic value of a company can be tricky to calculate but also the practice of buying beaten down stocks also runs contrary to almost all human instincts.  Who wants to be the guy holding the boring power generation stocks MFCB when everyone else is buying the hot stock KNMBut it’s precisely these tendencies that lead to so many investors over-reacting,  driving prices down so low that value stocks become so profitable in future.

How Profitable is Value Investing?
Benjamin Graham is widely regarded as the dean of value investing as well as the whole industry of Security Analysis.  This influence stems not only from his published works but also from the eventual fame and fortune of the pupils that he taught at Columbia University who included Warren Buffett.

 It is thanks to Graham that we have a whole catalogue of quantitative bargain stock strategies at our disposal with such obscure titles as ‘Net Net Bargains’ and ‘Net Current Asset Value Bargains’ as well as a whole ream of other concepts that we’ll explore in our course including Margin of Safety.
In a paper titled “The Super Investors of Graham and Doddsville”, Warren Buffet showed the track records of each of nine disciples of Benjamin Graham showing that they all generated annual compounded returns of between 18% and 29% over track records lasting between 14 to 30 years. 

Is it likely that these individuals from the same school of thought could all beat the market over a generation if the stock market was a place of luck? Warren Buffett doubted it most eloquently when he said “I'd be a bum on the street with a tin cup if the market was always efficient”.  Let’s have a look at their profit history...
InvestorNo. of YrsAnnualised
S&P / Dow
Buffett Partnership     13     29.5%  7.4 % (Dow)
Walter Schloss     28      21.3%   8.4%
Tweedy Browne     16      20%   7%
Bill Ruane     14      18.2%   10%
Charlie Munger     14      19.8%    5.0% (Dow)
Pacific Partners     18      32.9%    7.8%
Perlmeter Investments     18      23%    7.0 % (Dow)

The value investing camp splits into two on this topic. Fundamental value hunters who follow Warren Buffett tend to fall into the ‘focus portfolio’ camp believing that you should put all your eggs in just a few baskets and watch them like a hawk. 

 An alternative approach is that espoused by the more ‘quantitative’ value farmers who seek to ‘harvest’ the value premium from the market. Graham recommended owning a portfolio of 30 bargain stocks to minimise the impact of single stocks falling into bankruptcy or distress, while Joel Greenblatt recommends a similar level of diversification in his Magic Formula strategy

Making Sense of Value Investing Principles

What should be clear now is that while intrinsic value and margin of safety make perfect sense in the context of value stock selection, defining precisely how to execute each principle requires some careful thinking and the acceptance that some nuances can only be decided by the interpretation and preference of each investor. 

By kcchongnz