Beware of bankruptcy

Seeing Lehman Brothers filing for Chapter 11 protection,
it gives a chill..

One of the worst nightmares of investing is "bankruptcy"..
It can affect our financial well-being badly, some examples:

• company invested bankrupt,
• critical supplier/customer of company invested bankrupt,
• bank holding big portion of our savings bankrupt,
• insurance company underwriting our policy bankrupt,
  ….. the list goes on…

For US,
Visual charts about different types of bankruptcy:
Chapter 7
Chapter 11
Chapter 13

http://www.bankrupt.com/
Its "Troubled Company Reporter" (Asia Pacific, US, Europe) is useful..
We can look for potential problematic companies news here..
(though not sure whether the database is complete)

Web BRD (Bankruptcy Research Database)
website
A website to do Bankruptcy Research :-)
(to be continued….)

Country analysis : Socio-political risk

PERC (Political & Economic Risk Consultancy)
website

Free reports are available in its library.

Its framework of analysing socio-political risk are:

• Domestic political risk
• Social disorder risk
• External risk
• Systemic risk

Refer to any one of the Risk Monitoring Service’s reports for more detailed breakdown.
Too bad not all its updated reports are freely available.

Book : The Snowball – Warren Buffett and the business of life

"The Snowball – Warren Buffett and the business of life" is Warren Buffett’s authorised biography to be published on 29 Sept 2008.
website on the book

Thre is an article which features Warren Buffett "10 ways to get rich":
article

It’s a good read with condensed wisdoms.
I try to "re-phrase" the main points using my own words (after reading the "10 ways to get rich").

1. Reinvest your profits

Power of compounding;

2. Be willing to be different
Beware of "herd mentality";
Own yardstick to judge yourself, not the world’s;
Live your own life, not others

3. Never suck your thumb
Gather info/database before hand to enable fast decision making;
Set a deadline for decision;
Don’t procrastinate on decision

4. Spell out the deal before you start
Get the specifics/details before start

5. Watch small expenses
Beware of any cost that can eat into profit;

6. Limit what you borrow
Be debt free, then work on savings, then only invest

7. Be persistent
Importance of cost reduction;
Importance of negotiation;
Persistance even when in "underdog" situation;

8. Know when to quit
Beware of "mental accounting";
Know when to quit;
Learn from mistakes;
Never repeat mistakes;

9. Assess the risks
Risk analysis by using scenario analysis: best case scenario, worst case scenario;
Decision making analysis : "and then what ?" (much like decision tree)

10. Know what success really means
Success is not measured by dollars nor monuments;
Success is charity, be loved

Industry Analysis – treasure hunt using Wikipedia

Though a good insightful industry analysis may not be easy to do,
but even a layman can leapfrog his knowledge in the industry pretty fast
(much like a steep learning curve).

To illustrate the point, imagine I am a layman (I really am) to the palm oil industry and
I know nothing about palm oil except the word "palm oil". :-)

You can try it out yourself to understand my point.
Let's start the "treasure hunt" using Wikipedia.
http://en.wikipedia.org/wiki/Palm_oil

From the Wikipedia’s external links only, we found:
1. Palm Oil HQ: (bingo, hourly updated palm oil industry news, CPO future prices, historical prices)
http://www.palmoilhq.com/

2. oil palm production, consumption, export, import: (bingo, can do supply/demand analysis, can know which are the big producers and users, industry concentration etc..)
http://www.indexmundi.com/en/commodities/agricultural/oil-palm/

3. Greenpeace report (bingo, we know one of the threats to palm oil industry)

From the Wikipedia’s references, we found industry associations like: MPOA, MPOB, MPOPC
search using Google:
1. MPOA (Malaysian Palm Oil Association)
http://www.mpoa.org.my/
which further leads us to RSPO (Roundtable on Sustainable Palm Oil)

2. MPOB (Malaysian Palm Oil Board)
http://mpob.gov.my/
which further leads us to more "links" from its links.

3. MPOPC (Malaysian Palm Oil Promotion Council)
which is showing dead link but found:
MPOC (Malaysian Palm Oil Council)
http://www.mpoc.org.my/main_ind.asp
This is a treasure of palm oil industry data.

Just wonder why the industry bodies are MPOA, MPOB, MPOC respectively, so funny :-)