Portfolio Update September 2009

Portfolio Growth (YTD)	232.15%
Portfolio Value (Asset Value)	$59,457.71
Account Value (Owner's Equity)	$48,623.05
Outstanding Shares	154,314
Wittaya Wongwanich	88,362
Pramote Lumyai	27,698
Chaweng Wongwanich	38,179
Price/Share	$0.3853
Capital Inflow	$10,000
Capital Outflow	$0
Fund Purchasing Fee	$3
Total Capital	$31,600.00
Wittaya Wongwanich	$10,250.00
Pramote Lumyai	$6,350.00
Chaweng Wongwanich	$15,000.00
Asset Category
Cash Acct Balance	$0
Margin Acct Balance	$0
Margin Loan Balance	($10,834.66)
Equity	$54,573.00
Fixed Income	$0
Commodity	$0
Real Estate	$0
Options	$4,884.71

What Poor Charlie Teach Us

An Investing Principles Checklist from Poor Charlie’s Almanack

Risk – All investment evaluations should begin by measuring risk, especially reputational

1. Incorporate an appropriate margin of safety.
2. Avoid dealing with people of questionable character.
3. Insist upon proper compensation for risk assumed.
4. Always beware of inflation and interest rate exposures.
5. Avoid big mistakes; shun permanent capital loss.

Independence – “Only in fairy tales are emperors told they are naked”

1. Objectivity and rationality require independence of thought.
2. Remember that just because other people agree or disagree with you doesn’t make you right or wrong – the only thing that matters is the correctness of your analysis and judgment.
3. Mimicking the herd invites regression to the mean (merely average performance).

Preparation – “The only way to win is to work, work, work, work, and hope to have a few insights”

1. Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.
2. More important than the will to win is the will to prepare.
3. Develop fluency in mental models from the major academic disciplines.
4. If you want to get smart, the question you have to keep asking is “why, why, why?”

Intellectual humility – Acknowledging what you don’t know is the dawning of wisdom

1. Stay within a well-defined circle of competence.
2. Identify and reconcile disconfirming evidence.
3. Resist the craving for false precision, false certainties, etc.
4. Above all, never fool yourself, and remember that you are the easiest person to fool.

Analytic rigor – Use of the scientific method and effective checklists minimizes errors and omissions

1. Determine value apart from price; progress apart from activity; wealth apart from size.
2. It is better to remember the obvious than to grasp the esoteric.
3. Be a business analyst, not a market, macroeconomic, or security analyst.
4. Consider totality of risk and effect; look always at potential second order and higher level impacts.
5. Think forwards and backwards – Invert, always invert.

Allocation – Proper allocation of capital is an investor’s number one job

1. Remember that highest and best use is always measured by the next best use (opportunity cost).
2. Good ideas are rare – when the odds are greatly in your favor, bet (allocate) heavily.
3. Don’t “fall in love” with an investment – be situation-dependent and opportunity-driven

Patience – Resist the natural human bias to act

1. “Compound interest is the eighth wonder of the world” (Einstein); never interrupt it unnecessarily.
2. Avoid unnecessary transactional taxes and frictional costs; never take action for its own sake.
3. Be alert for the arrival of luck.
4. Enjoy the process along with the proceeds, because the process is where you live.

Decisiveness – When proper circumstances present themselves, act with decisiveness and conviction

1. Be fearful when others are greedy, and greedy when others are fearful.
2. Opportunity doesn’t come often, so seize it when it comes.
3. Opportunity meeting the prepared mind; that’s the game.

Change – Live with change and accept unremovable complexity

1. Recognize and adapt to the true nature of the world around you; don’t expect it to adapt to you.
2. Continually challenge and willingly amend your “best-loved ideas”.
3. Recognize reality even when you don’t like it – especially when you don’t like it.

Focus – Keep things simple and remember what you set out to do

1. Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat.
2. Guard against the effects of hubris (arrogance) and boredom.
3. Don’t overlook the obvious by drowning in minutiae (the small details).
4. Be careful to exclude unneeded information or slop: “A small leak can sink a great ship”.
5. Face your big troubles; don’t sweep them under the rug.

In the end, it comes down to Charlie’s most basic guiding principles, his fundamental philosophy of life: Preparation. Discipline. Patience. Decisiveness.

ABSOLUTE IMPACT of ARRA 2009

The Economic Impact of the American Recovery and Reinvestment Act of 2009

What is the the American Recovery & Reinvestment Act (ARRA) ? Should we investors pay attention to it ? Yes Of course, the Federal Government always play an important part in any economy recovery stage. Such The Act of Congress was based largely on proposals made by President Barack Obama and was intended to provide a stimulus to the U.S. economy in the wake of the economic downturn; creating a job that will put Americans back to work and get U.S. economy back on track ASAP. The measures are nominally worth $787 billion.

The Act includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector. You can see from a balloon diagram below.

The Act specifies that 37% of the package is to be devoted to tax cuts equaling $288 billion and $144 billion or 18% is allocated to state and local fiscal relief (more than 90% of the state aid is going to Medicaid and education). 45% or $357 billion is allocated to federal social programs and federal spending programs.

Recently, The Council of Economic Advisers has released a report on the economic impact of the stimulus package. The estimates, which have a lot of uncertainty attached to them, are that the recovery package "added roughly 2.3 percentage points to real GDP growth in the second quarter and is likely to add even more to growth in the third quarter"

Energy Tree – Sustainable Computing

We have entered the 21st century entering a dawn of being constantly connected and always on. We are now more efficient within our work and leisure but not within our use of power and energy. The EnergyTree will change the perception and view of how power is being used, implementing a complete system looking at device consumption, home consumption and long term sustainability. The EnergyTree is more innovative as it looks as energy consumption.

Tree Health – The Energy tree contains a real tree, which requires no conventional maintenance from the user. The trees health is decided upon how well the user utilizes energy. If the user is extremely efficient with there energy use the EnergyTree will give the tree the nutrients and water it needs to survive and flourish. If the User is inefficient with their energy consumption the EnergyTree will poison and malnourish the tree, eventually killing it. This benefits the user by giving them a long term overview of how much energy they are saving.

Device drain – Device drain is a more specific use of the product that both monitors and can control devices that are connected to the EnergyTree, allowing all devices connected by DeviceCheck to monitor energy consumption and can control and turn off all power to device when not needed, or when controlled from the EnergyTree control panel.

Household drain – This part of the EnergyTree monitors the house as a whole. Looking at all energy consumption from heating the house, to the efficiency of your recycling with the aid of EnergyTree Recycling bins. This will be linked to an online system that will calculate your household efficiency and give you green points in reward for an eco-friendly house.

Collector – Collector makes use of the community spirit in today’s web 2.0 online societies. The system will be online, and accessed via the touch screen of the EnergyTree. The collector is there to encourage people to recycle and take recycling to the depot to be processed. Once at the depot the collector will get extra green points. Although every person could take there own Re-Tree Bins, not everyone will want to and not every local government can afford to collect and sort the recycling as effective as lots of dedicated collectors.

A Rich

"A rich man is nothing but a poor man with money."

By W. C. Fields, An American comedian, actor, juggler and writer.

Apple and the Miracle M@C

Hello, I'm Mac I'm PC. A popular Mac vs. PC Ads you typically watch on TV. Apple Computer (AAPL) redefine the consumer electronics market with innovative products, from the way we listen to music with iPod to redefining cell phones with iPhone. Now, Apple has market cap of $150 billion with rising earning every single year.

In 2003, company announced their first handheld music player an iPod since then Apple become the Next Big Thing. iTunes store launched in 2004 and became one of the premier marketplaces for digital music. For god sake, I still remember the day that their stock trade at $60 price range in late 2006 before it shoot up to $180 in late 2008; 200% gain in 2 years. What's a incredible day !!! Sadly, Many investors missed that opportunity.

Steve Job introduce his iPhone in 2007

The question is Should we invest in Apple now? Is it too late? My simple answer is, "Yes but not yet." Here's why:

First, Apple thrives on innovation and managing its product cycles however Apple doesn't have any new blockbuster products on the immediate horizon coming, except rumors about their own netbook "tablet." Only that it's not enough for driving Apple's growth plus their stock price a little too high comparing to its book value.

Apple Rumor "iTablet" spread all over internet

Second, the volatility in share price caused by speculation over Steve Jobs' health makes stock a little risky. Company must less dependent to their beloved founder. What will be happen if Steve gone forever ? For us now, Steve Job is Apple.

Nevertheless, Apple Computer has an unique corporate culture; beautiful is everything. Many people consider Apple a design company with engineer. Definitely, Apple has current strength in consistent income stream; their new iPhone 3GS sold over 1 million in just 3 days and a 4% increase in Mac sale revenue from a year ago. These performance indicate that company slowly gain a bigger share of the computer market. Unfortunately, the future is not quite impressive for Apple. While the latest iPhone numbers are good, iPod sales are downed 7% year on year. Since company relies on a strong product cycle, without any highly-anticipated offerings on the horizon, We have to be skeptical of Apple's future prospects.

Three things that we would like to happen at Apple are More Focus and Competitive on its OS and computers, Less Focus on CEO Jobs and More Impressive Numbers on profit margin.

Steve on 10 Sept 2009 after his pancreas cancer surgery

Introducing the new iPod Nano with video camera

Ideal Asset Allocation

With currently total capital of USD 31,600; assuming savings per year about $5,000. Tax Rate is 25% and no income require until retirement. Risk tolerance is high.

Large cap stock	26%	$8,320
Mid cap stock	20%	$6,400
Small cap stock	16%	$5,120
Foreign stock	17%	$5,440
Bonds	10%	$3,200
Municipal bonds	0%	$0
Cash	11%	$3,520

Capital Asset Pricing Model

Diversification cannot eliminate all risk. Sharpe-Lintner-Black tried to determine what part of a security’s risk can be eliminated by diversification and what part cannot. The result is known as the Capital asset pricing model (CAPM). The basic logic is that there is no premium for bearing risks that can be diversified away. Thus, to get a higher average long-run rate of return in a portfolio, you need to increase the risk level of the portfolio that cannot be diversified away.

Beta and Systematic risk

1. Two kinds of risks: systematic risk and unsystematic risk. Systematic risk cannot be eliminated by diversification. It is because all stocks move more or less in tandem that even diversified stock portfolios are risky. Unsystematic risk is the variability in stock prices that results from factors peculiar to an individual company. The risk associated with such variability is precisely the kind that diversification can reduce.
2. The whole point of portfolio theory is that, to the extend that stocks don’t move in tandem all the time, variations in the returns from any one security tend to be washed away or smoothed out by complementary variation in the returns from other securities.
3. The beta calculation is essentially a comparison between the movements of an individual stock (or portfolio) and the movements of the market as a whole. Professionals call high-beta stocks aggressive investments and label low-beta stocks as defensive.
4. Risk-averse investors wouldn’t buy securities with extra risk without the expectation of extra reward. But not all of the risk of individual securities is relevant in determining the premium for bearing risk. The unsystematic part of the total risk is easily eliminated by adequate diversification. The only part of total risk that investors will get paid for bearing is systematic risk, the risk that diversification cannot help.

CAPM

1. Before the advent of CAPM, it was believed that the return on each security was related to the total risk inherent in that security.
2. The theory says that the total risk of each individual security is irrelevant. It is only the systematic component that counts as far as extra rewards go. The beta is the measure of the systematic risk.
3. As the systematic risk (beta) of an individual stock (or portfolio) increases, so does the return an investor can expect.
4. If the realized return is larger than that predicted by the overall portfolio beta, the manager is said to have produced a positive alpha.

Look at the record

1. Fama and French found that the relationship between beta and return is essentially flat.
2. The author believes that “the unearthing of serious cracks in the CAPM will not lead to an abandonment of mathematical tools in financial analysis and a return to traditional security analysis. There are many reasons to avoid a rush to judgment of the death of beta:

• The beta measure of relative volatility does capture at least some aspects of what we normally think of as risk.
• It is very difficult to measure beat with any degree of precision. The S&P 500 Index is not “the market”. The total market contains many additional stocks in the US and thousands more in foreign countries. Moreover, the total market includes bonds, real estate, precious metals, and also human capital.
• Investors should be aware that even if the long-run relationship between beta and return is flat, beta can still be a useful investment management tool.

Arbitrage Pricing Theory

1. It is fair to conclude that risk is unlikely to be captured adequately by a single beta statistic. It appears that several other systematic risk measures affect the valuation of securities.
2. In addition, there is some evidence that security returns are related to size, and also to P/E multiples and price-book value ratios.
3. If one wanted for simplicity to select the one risk measure most closely related to expected returns, the best single risk proxy turned out to be the extent of disagreement among security analysts’ forecast for each individual company. Companies for which there is a broad consensus with respect to the growth of future earnings in dividends seem to be considered less risky than companies for which there is little agreement among security analysts.

To sum up, the stock market appears to be an efficient mechanism that adjusts quite quickly to new info. Neither technical analysis, nor fundamental analysis seems to yield consistent benefits. It appears that the only way to obtain higher long-run
investment returns is to accept greater risks.

Unfortunately, a perfect risk measure does not exist. The actual relationship between beta and rate of return has not corresponded to the relationship predicted in the theory during long periods of the twentieth century. Moreover, betas for individual stocks are not stable over time, and they are very sensitive to the market proxy against which they are measured.