flight,

<< it is how well u are able to evaluate what a business is worth. When u can put a number on the business, u can find a margin of safety. When u buy below the margin of safety, u just need to wait for the market to find out the value that uve been able to see. >>

Which takes certain skill where some people have NEITHER the COMPETENCE or MOTIVATION to acquire it. So, if they want to invest on stock, they have to do it some other way.

<< A 20% return doesnt necessary mean u need to take a high risk, it is not a game where u can either have this, or have that. If u do ur homework u can have both.>>

That is the WHOLE POINT. Some people either could not or will not do the home work.

<<Some things are more certain than others, and some things less certain.>>

Unless something is 100% certain, there are RISKS. Hence, you have to have the APPETITE to take the RISK. Aka, risk appetite.

Financial number is NOT the same as SCIENTIFIC FACT. We have enough FINANCIAL SCANDALS in USA to know that numbers can LIED. And, they do LIED. All your homework and calculations are based on NUMBERS that could be FALSE. In some cases, they are SUBJECTIVE aka OPINION of some accountant. It depends on how an accountant classified certain numbers and they will come out differently.

So, if ALL your assessments are based on numbers that are OPINION of some accountant, they are NOT FACTS. They are OPINIONS. They may not be 100% opinions. But, they definitely not 100% facts.

Do not confuse opinions with facts.

Dreamer

This post has been edited by dreamer101: May 23 2010, 07:22 AM

Just a real example which is a classic of hugely undervalued issue i.e. red chips.

We know all red chips are severely undervalued which are having PER of 2x 3x.
Based on PER, NTA or even their balance sheet situaiton, and whatever ratio we put up, they are hugely undervalued based on paper and their financial report, or accounting.

But do they actually undervalued?
Can we said it is safe to buy that can gain us good profit?

My answer : I don't know

This is getting massively irritating....


Do u know what is an irrelevant answer? I ask u what is the sky colour, u tell me the chicken hatched 3 eggs today.
When I say that the risk u take depends on how well u are capable of evaluating the business. That is what I am saying.
I am not saying that they have to evaluate what the business is worth. I am saying that risk can be taken away if u do ur homework.


Again, I am not saying what other people need or need to do. I am saying if u do this, u can get that. Whether u choose to do it is up to u.



When I say something is more certain than others, I am referring to your claim that only 5 companies are worth investing in Malaysia. Somethings, like there only being 5 companies in Malaysia worth investing, is almost certainly wrong, however since u havent responded to that, I assume that u know just exactly how right I am. Especially since ur position is now that it is ur perspective. Im still waiting for u to swallow ur words.



This is entirely to do with the system that exists in Malaysia, the accounting framework is designed to provide numbers that are accurate. It's true that regulators in Malaysia are sorely lacking, but saying that the financial numbers are just the opinions of accountants is again. WRONG AND IGNORANT. Accounting FRAUD is something u go to jail for, again this sort of events where financial fraud happens is the exception rather than the norm.


edit: Let me emphasise something, I have no problem with the way u r picking stocks, i am not saying one way is inferior than another, everybody is different. A lot of people dont have the capability or the time to spend on learning how to invest. What I am saying is that what ur doing is a very simplified version. It is for the layman, ur claim that all the other ways are not as good or the market only has very little shares to invest in is just WRONG. There are many other ways to invest.

edit edit: Financial figures are just an accountants opinions... LOL.

This post has been edited by flight: May 23 2010, 07:55 PM

flight,

<<Again, I am not saying what other people need or need to do. I am saying if u do this, u can get that. Whether u choose to do it is up to u.>>

If you UNDERSTAND this, then,

It is SIMPLE to understand this

<< I am referring to your claim that only 5 companies are worth investing in Malaysia. Somethings, like there only being 5 companies in Malaysia worth investing, is almost certainly wrong, >>

<< What I am saying is that what ur doing is a very simplified version. It is for the layman, ur claim that all the other ways are not as good or the market only has very little shares to invest in is just WRONG. There are many other ways to invest.>>

As per my SIMPLIFIED version, there are ONLY 5 stocks worth investing.

I CHOOSE NOT to spend all those time looking at financial numbers.

Why is it SO HARD to understand this??

<<edit edit: Financial figures are just an accountants opinions... LOL. >>

Thank you for letting us understand your level of accounting knowledge.....

Dreamer

This is just u being stubborn.


By saying that financial statements are an accountants opinion u are basically saying that the entire field of accounting is obsolete... Which is again.... not true..... Do I even need to say this?

Good god...

flight,

<<By saying that financial statements are an accountants opinion >>

It is YOUR OPINION that I am WRONG. And, you CANNOT offer any FACT to support YOUR OPINION.

<<u are basically saying that the entire field of accounting is obsolete..>>

Do not put your words in my post. I am SAYING financial statement is NOT 100% based on FACTS. Some portion is based on SUBJECTIVE JUDGMENT of accountant. Aka, opinion.

Do you do any accounting or have any accounting background to begin with??

Have you done any balance sheet and so on??

Stop blabbering. If you want to PROVE that I am WRONG, bring out some FACTS. Or else, it is YOUR OPINION versus MY OPINION.

Dreamer

What sort of facts do u want be to bring out huh? How about that 99% of professional investment is evaluated based on financial figures which come from the accounts? Its such a ridiculous proposition that it hardly needs any evidence. What u are saying is that the financial accounts are suspect because it is based on an accountants opinion. What else is it that u are trying to say huh? Is it not that it is because the accountants opinion is such an important factor in the financial accounts that it renders reading the accounts obsolete?

There are issues in accounting that are subject to a "subjective" opinion, but even subjective opinions are supposed to be within the band of what is considered acceptable. U cannot add a good will of 10000million, when it is only worth 10 million. U cannot classify something as an investment when it is not. If u were to do that, it would be considered FRAUD.

What u are saying is just downright IDIOTIC, if accounting wasnt good enough to provide u with a barometer to judge the company then u might as well not have it. The subjective nature of some parts of accounting does not mean that the financial reports are not worth reading. Nor does it make them an accountants opinion.

just for the record, this is not an OPINION. This is called LOGIC.

This post has been edited by flight: May 23 2010, 10:56 PM

flight,

<<There are issues in accounting that are subject to a "subjective" opinion, >>

Which means FINANCIAL STATEMENT is NOT 100% based on FACTS.

<<but even subjective opinions are supposed to be within the band of what is considered acceptable.>>

Which means that you could use ANY NUMBER within that range without BREAKING the accounting rule.

<< What u are saying is just downright IDIOTIC, if accounting wasnt good enough to provide u with a barometer to judge the company then u might as well not have it. >>

Bingo. You FINALLY got IT. I CHOOSE not to TRUST financial statement. On the other hand, you CHOOSE to TRUST the financial statement.

It is a CHOICE. Hence,

A) It is YOUR OPINION that you could TRUST the accountant's OPINION and use those numbers to invest.

B) It is MY OPINION that I choose NOT TO TRUST those financial statement aka accountant's opinion. Hence, in MY WAY, without TRUSTING the financial statement, there are ONLY 5 stocks worth investing in KLSE.

<<How about that 99% of professional investment is evaluated based on financial figures which come from the accounts?>>

So?? Most of the professional investment is a FAILURE. In fact, you PROVE my point. It had shown again and again. Every year, 2/3 or more of the mutual fund aka professional investment FAILED to beat their benchmark. You mean you DO NOT KNOW this??

Dreamer

Professional investment can be a failure, but it is hardly due to reading the financial statements.



Yes it is a choice, however saying that the financial statements are unreliable because they are based on an accountants opinion is not a stating a choice choice, it is a statement, which happens to be false.

donkey stubborn.

flight,

I do not know what is YOUR BACKGROUND. But, I am an engineer.

<< however saying that the financial statements are unreliable because they are based on an accountants opinion >>

It is OBVIOUS to me that any statement derive out of SOMEONE's opinion is UNRELIABLE. It is because a person's opinion is UNRELIABLE. This is BASIC COMMON SENSE.

Garbage in garbage out. GIGO.

<< it is a statement, which happens to be false.>>

Anybody that has some SIMPLE LOGICAL SENSE will know what I say is true.

If you calculate A based on B but B is unreliable, hence, A must be unreliable too. Simple logic.

<<Professional investment can be a failure, but it is hardly due to reading the financial statements.>>

So, you are backing out of your statement because professional investment do this and it is the RIGHT THING to do.

Dreamer

Sigh... somehow you 2 completely veered the thread off topic.

skiddtrader,

It is NOT OT if you read carefully. This thread is discussing about the philosophy of investing and what kind of investor that a person is. Flight and me represents the two opposite views of how to invest in the stock market.

Dreamer

+1

Not that its completely OT, but it has become personal war between the two of you. I dont see how that would benefit other forumers. Whether its investing or doing business, the market is so big that its WRONG in the first place to judge what the others are doing/thinking just because it contradict your belief/statistic.

One has to make the judgement themselves. There is no one size fits all. Enough said.

Fair enough.

Still sounds like a pointless shouting match though, nitpicking words and interpretations. End of the day, both of you are making money at your own comfort level and that's is the most important message.

I also want to be add I also pay money to professional people to do my investment apart from doing the investing myself.

The professionally managed part is my serious money whereas the one which I manage on my own is my fun money. I use a Licensed Financial Planner for the serious part. The fun part... I experiment here and there to find the right mix.

Xuzen.

Interesting. I always thought about what a Financial Planner can do for me. Mind telling us how much you have to pay the financial planner? Is there a minimum investment amount to hire one?

As to what class of investor I am.... errmm.... I got no class..... probably a very-low-risk investor with frequent-itchy-trigger-fingers who follow what other people buy. (Still made profit so don't look down on me ok? )