I saw this poll on a klse site

When i buy stocks,i don't use all those technical terms like candlestick , PE etc , As long as i feel there is a potential with it,i am willing to part with my money

punter

I usually follow this..
1. Select which country with the best potential, and allocate how much i want to invest there.
2. Then select the sector. I normally go for banking stocks as it's a proxy to economy and telecom if country is backward with plenty of growth..
3. Then select individual stock based on management, value, earning growth etc.
4. Then time the entry..

wow ,so many value investor?true or not?or just pretend to be so called "value investor"?

To be more objective, someone could start another poll asking about how long they hold a stock on average once they buy it. The value investors should hold it for quite long.

That is not necessarily true. A value investor invest based on the value it can derived from the stock. If they think a current stock is undervalued, they buy and sell if fully valued or over valued. A stock can reach fully valued and overvalued regardless of time held and rather on market movements.

Yup agreed. Most people equate "buy and hold" investing with value investing because it is practiced by Warren Buffett. But, most people miss the first rule in "buy and hold" which is to buy when the stock is undervalued so that you can hold it in the long run.

If you study people like Graham and Buffett carefully, most of their early days gains is from a form of investment called "special situations". This type of investment is generally on shorter term to profit from price differences on stocks. Buffett only switch to buy and hold when his capital base become too big that make it very inconvenient to move in and out of a stock.

value investing doesn't mean only buy and hold.
It means buying something at a price which is cheaper than its value.
Some of the stocks value increases over time so value investors hang on to them. So it looks like buy and hold.
But we also buy and sell in short term eg. during arbitraging. In this case we buy something at a price which is cheaper than its value and wait for the
market to realise its actual value by which time we will sell.
SO Value investing is about buying something at a price which is Cheaper than its Value.

I've read quite a few books on value investing. I think I know when a stock is undervalued, but.... my problem is, I don't know when a stock is overvalued. So..
1. How do you guys tell when your own stock is overvalued?
2. Have you sold a stock that you think is overvalued, but later turned out you were wrong? What lessons have you learned from that?

Folks,

My answer DOES NOT FIT any of those categories.

A) I do asset allocation. Hence, I SELL HIGH and BUY LOW based on my allocation percentage.

B) For one stock that I invest on. I am a dividend investor. I do not sell as long as the stock pay attractive dividend.

Dreamer

In turbulence time likes this, I think going for the undervalued stocks is still one of the best options. In FACT it is an evergreen method , meaning suited in most situations.

Looking at Dow, if a fundamentally ok stock of US 40 dropped to 1sen, don't you think it is a good buy ? if you know it is grossly undervalued. Even at US $ 10, you would still buy, knowing well that some powerful force is using HFT to suppress the prices to let say US $5 or below. Bocs sooner or later you would see the price moving close to US $ 30 to 40 .

And lot of investors are saying CI is odeli too high at 1300 or Dow is high at 11,000, I think it is not justify to say that. So long the undervalued stocks that we hold are still grossly undervalued, we are safe. And the economy is still in a healthy shape.

And talking about Asset Allocation Model . It evolves from the earlier concept of buying low and sell high. So it is still the UNDERVALUED that we buy and SELL HIGH when it is overvalued. Only various types of valuations are incorporated now. For example PE or DCF are added , instead of merely basing the raw form of buying low and selling high ( earlier model )

So asset allocation shares some similarities or growing from the same family tree. It also recognizes the important of keeping some portion of money in cash equivalent form ( Risk Adverse ) until such a time the stocks are undervalued again. It can be Auto ( computerised ) for fund investors , or using Manual for small investors like us.

Whether it is a High end or low end computer, it is still basically a computer.

If you invest in Unit Trusts , basically they are the same, only using a more complex computer model to do the computations.

I think in time like this , we need to go back to the basics ( valuations )

If not , it would be highly speculative likes the DOW, right now. Up and down a few hundred points a day though the fundamentals of a company does not change much within a day.

This post has been edited by SKY 1809: May 9 2010, 05:16 PM

1) when the particular stock return rate offer is similar to other lesser risk alternative, then surely it is overvalued.

Typically if a stock forward PER for the next 2-3 years is 25, which implied a 4% return rate, why should a investors invest into equities which is considered high risk if there is FD rate of 4% which you can sleep well and capital protected?
In this situation, there is no solid reason for putting money into equities.

Why we want to invest in stock market?
To get better reward and return.
This is the mother of all investment purposes.

2) The stock can be overvalued currently, but due to improving fundamental in later stage, then at the same price, it is not overvalued.
No one can forsee correct the future, things evolve differently from time to time. Can't say it is wrong or right if one sold the stock which currently being seen as overvalued.

---

Added on May 9, 2010, 9:37 pmJust want to add a point on value investing.

Value investing is not equal to buy and hold for life or long term although most of the time associated with it.

You want to buy a undervalued stocks, because it has higher potential given better return to you.
For eg. you invest in
A PER 10x stock, which implied 10% profit/return rate made by the company on your capital, which in turn the company has potential to give a 10% dividend to you.
as compared
B PER 20x stock, which implied 5% profit, which in turn the max company can give is 5% dividend.

Also buy a share price that undervalued than its NTA or profit level, it just means that share price has higher potential to go up,
as compared to a overvalued stock, which the chance of share price go lower is higher.

Value is always associated how much the company can make profit for you, which is the basid of stock market investing.

So with undervalued stock, it just means you have better odd chance to gain/win afterwards.

This post has been edited by cherroy: May 9 2010, 09:37 PM

SKY 1809,

As per asset allocation

1) I use INDEX FUND. So, I do not pick individual stocks.

2) The "BUY LOW SELL HIGH" is based on the relative pricing between ASSET CLASSES and its effect on the ALLOCATIONS.

<< It evolves from the earlier concept of buying low and sell high. So it is still the UNDERVALUED that we buy and SELL HIGH when it is overvalued. Only various types of valuations are incorporated now. For example PE or DCF are added , instead of merely basing the raw form of buying low and selling high ( earlier model )>>

3) I use RAW FORM. I do not consider all those advanced form as proven themselves over the low period of times.

Dreamer

I see, then in an environment of rising interest rate, stocks will become overvalued? And people will sell down stocks? Makes sense to me. In your past experience and observation, how many basis points will the interest rate have to go up for people to start selling down their stock holding?

Stocks Vs Interest Bearing Instruments basically got a lot to do with asset allocations.

You start with lower risk assets to produce the expected yields.

For example if your expected yield is 8% a year, then you need to go for lower risk ASSETS such as ASB or REITS instead of investing in High Beta Stocks. If you have exhausted these sources, then you move to assets of higher risks.

Likewise if Interest rate goes up and meets the expectation of a group of investors, they would sell stocks in favour of Interest Bearing Instruments of lower risks.

If EPF could give a dividend of 8 to 10% a year, more investors would sell their unit trusts and park back the money since the objective of 8% is met.

Likewise people would sell off stocks in favour of Cash ( FD ) etc if they believe stocks could produce negative returns in the near future in a bad economy likes the recessions. If lower risk FDs outperform STOCKS. Though interest rates might be falling likes in Year 2008/2009. Cash is King is true in that sense.

So it is not necessary mean a stock becomes overvalued if interest rate is a bit higher.

For those who believe in asset allocations ( and risk factors ), so far wisely accepted by the investment experts worldwide.

This post has been edited by SKY 1809: May 10 2010, 07:09 AM

forumers,

The yardstick used in order to determine "Value" can be numerous. for example, one can use the P/E ratio, D/Y ratio, Nett Book value, etc.

The raw numbers in the balance sheet need to be adjusted to reflect any hidden loss/gain or possible dilution in earnings. For example, the existence of warrants / convertible loan stocks that will impact on the final analysis.

It is hardly adviseable to rely on a single item alone as this might lead to inaccuracy in determining a stock is"undervalued". Normally, a basket of ratios are used together in conjunction with an analysis of at least 5 years (the longer the better) of high - low stock prices and also the high - low levels of the respective ratios used.

Again there's cases of undervaluation in certain stocks by a quick glance on the balance sheet alone.

Example would be POS Holdings (the former entity before all its cash horde being drained away in the massive capital repayment). That was about 5 - 6 years ago, the stock selling for around RM1++ And a quick calculation reveal that it's cash per share ratio is more than 1X. And with no debts to speak off; An investor buying in at RM1+ is just getting the entire postal operations F.O.C (its land / buildings / vehicles / equipment).
The current listed company is definetely not attractive at all in terms of value.

Back to now; then we have this out-of-favor counter known as KIMHIN (ceramic tiles manufacturer). With no debt, it's cash + liquid assets (mostly unit trust investment) is already abt RM1.20/share. It's stock price at RM1.26 mean it's tiles business can be bought for F.O.C

So it all boils down to one willingness to do the Homework and hunt down the undervalued stocks.

o mayne, doing them homework make meh feel laik going back to skool aite

most of the time meh cant interpret them ratios dawg, just brings too many meanings and possibilities dawg?

how yall do it?

There are plenty of ratio, data and number which is useful, but do not judge merely on those number alone. Rigid number sometimes doesn't reflect the real situation nor guide us to the future. For eg. during 2008, all O&G sectors were having good time and earn big buck, but since after the financial crisis, business condition no longer the same. Some are struggling to secure contracts, some are struggling for cashflow etc issue.
So if one uses the old data then it could be misleading.

There are many others aspect need to consider as well.

Another eg.
The company may have an asset of Rm2.00, and share price is trading at Rm1.00.
Based on number alone, it could be severe undervalued. But you need to see whether the company management utilise the Rm2.00 asset efficiency or not and how well and sincerity they treat shareholders across.
The management taking care of minority shareholders generally being well received and has higher premium than a company management never take care of minority shareholders benefit.

Dreamer says that he uses ETF or index funds?

I know those are pretty good for US, not sure about Malaysia. Need to do some research

Buying index ETF save you a lot of time compared investing in individual stock that you need to study well the individual company financial issue.

Most stocks do not outperform index, only a few gem and name in the market does.

No answer, none of the above is valid for me. Terrible choice, perhaps the original poster (not the thread starter) is in dreamworld.

aite thanks dawg, yoh a good helper aite.

what about equity funded and debt funded dawg? the more debts the company has, the riskier it is? or the more growth potential it has? vice versa.

meh know this is back to skool question aite dawg, but meh didnt go to no skool for long time, so very rusty

I don't know how to read your "English".

Aggroboy,

There are ONLY one worthwhile ETF to buy in Malaysia. There are NO TRUE index fund in Malaysia.

Dreamer

It is perfectly fine English to me... AliG's brand of English that is.

To Dreamer101:

What is the difference btw buying a foreign based fund like Vanguard vis-a-vis a local fund invested in foreign market e.g OSK Glabal Equity Fund

I think OSK's KLTracker has a beta of abt 1 wrt to KLCI and it holds the exact composition of counters as KLCI-30, hence I think it is the closest to a true index fund in Bolehland.

Xuzen

xuzen,

1) Vanguard

0% sales load plus 0.5% annual maintenance fee. You probably has to buy ETF since you do not qualify for mutual fund because you are not US resident.

2) Malaysia UT like OSK

5% to 7% sales load plus 1% to 2% annual maintenance fee..

<< I think OSK's KLTracker has a beta of abt 1 wrt to KLCI and it holds the exact composition of counters as KLCI-30, hence I think it is the closest to a true index fund in Bolehland. >>

Why are you paying

<<5% to 7% sales load plus 1% to 2% annual maintenance fee..>>

When there is a true ETF alternative in Malaysia that is a lot cheaper??

I cannot remember the name of the ETF now.. It is ETF of the 30 largest stock in KLSE.... Could someone else please post it and provide the expense ratio.

Dreamer

FTSE BURSA MALAYSIA KLCI ETF

Stock code: 0820EA FBMKLCI-EA

Manager's Fee (% p.a): 0.50
Trustee Fee (% p.a): 0.06
License Fee (% p.a): 0.04


Fees reasonable and comparable to all the big overseas ETF. Very reasonable compare to any of the local unit trusts / mutual fund.
The easiest way to have a big cap portfolio tracking KLCI for local retail investor.
Acceptable tracking error to KLCI index.

Downside: If your fund is a few million - this might not be liquid enough?

I am holding it as part of portfolio.

I am thinking abt another counter... I-Cap (closed ended fund). But I could not figure how to place this counter in portfolio yet.

I am not sure if I should use it as a counter for punting, hedging or investment?

Can I solicit some advise from other forumers'?

Xuzen

P/S Currently I use the OSK-UOB KLTracker as an index fund... 1% per transaction, 1.5% p.a. Mngt Fee. So far the return have exceeded my expectation.

Can take out money from EPF to buy this?

How do u define value? What is undervalued?

i do a lot of research on stocks, there are dozens of ways of evaluating a company, but I've found what I believe to be the best.

Here are some of the other "interesting" ways of evaluating a stock. hint hint: this isnt actually what I use.

1)Taking the cash holdings of the company out of the market capitalization, if the company has a market cap of 150 million at RM1.00 per share and an NTA of RM1.60 and holds 90million in cash. You take out the cash holdings from their market cap, essentially the business is being valued at RM0.40. So here you have a business that is capable of generating cash of RM0.60 but is being sold for 40 cents.

2)Identifying turn around companies, these are companies where they used to be profitable, but because of a slowdown their stock price has been hammered down till unreasonably low levels. The companies earnings have shown a steady recovery, but the stock price has been staying at the price it was at when business was terrible.

3)Identifying gaps between a shares price and its earnings per share. If the earnings of the share has been steadily increasing but it's price has stagnated, is it undervalued?

4)Balance sheet clean ups, companies that have cleaned up their balance sheet by reducing and getting rid of all their debt while maintaining an unreasonably high NTA vs their share price. EG: Company A has 200million in assets but holds 100 million in debt, the company gets rid of all their debt, so they have 100 million assets and no debt, but their share price is only 30~40% of what they are worth, eg:the market cap is only 30million. The rational is that by reducing all their debt, they have taken away any risk of defaulting on their loans, hence no more risk, but the business is still being valued below NTA.


and many more...

just for the record,

TGUAN (Thong Guan), qualifies for 1,2,4 of these methods of identifying an undervalued company. So is it undervalued?

Another issue you might miss which is the most important, is the future of the company aka future profitability of the company.

Share price at Rm0.30, NTA is Rm1.00, if the company is making constantly loss and future is expected to do so, it cannot be considered undervalued.

Remember, stock market most care is the future profitability of the company.

Cheers.

Profitability is sort of implied when I say the balance sheet has been cleaned up... . Since u sell off less useful assets to pay off ur debt.

Basically ur saying a whole lot of nothing... What if profitability has been increasing for 5 years in a row but the business equity hasn't risen at all?

What I previously highlight is that even NTA > share price, we cannot conclude it is undervalued. You just need a significant loss, write-off, customer default, then can wipe out chunck of the previous NTA shown.

Just like financial stocks, you just need the NPL to increase several %, then the whole P&L can turn into severe NTA eventually shrink your balance sheet aka NTA/NAV.

Balance sheet is one thing, profitability is another thing.
Clearing off balance sheet and debt, doesn't mean future profitability is good.

Clearing off balance sheet means financial situation become healthy which is good, no doubt.
But to make profit side, is another story.

While equity pricing is more about future profitability of the company.

talking rubbish

plc255,

Thank you for posting that.

Dreamer

Xuzen,

Why are you paying 2.5% for something that you can get at 0.6%?? They are both index tracker.

How smart is that???

If KLSE is doing well, the one that costs less will pay you more.

Dreamer

This post has been edited by dreamer101: May 17 2010, 06:59 PM

Just curious, how to see the NTA of the ETF

mind elaborating on point 1 and 4? i do not get why the business will be valued at RM0.40 and capable of generating RM0.60 and being sold for RM0.40. how did you get those figures?

also, in point 4, 100 million assets and no debt with share price being 30% of what they are worth, you mean 30% of the assets right? i dont get it, coz im new to this thang

Point 1)
Say you have a company that is selling at RM1.00 at the stock market with an NTA of RM1.60. This company has RM0.60 in cash holdings, because the cash is not being used to run the business, it is not part of the business. So when you value the business, you take out the RM0.60 from their share price, because essentially if u buy over the business for RM1.00 per share, you will get RM0.60 in cash, the rest of the business that has managed to generate that RM0.60 is only being valued at RM0.40. RM1 - RM 0.60 = RM0.40.

So this RM0.40 is the price of the business after taking away its cash holdings. Hence the 40 cents price tag.

Point 4)
Give u an example, say there is a company that is being sold in the stockmarket for RM0.30 per share, but their NTA is RM1, this company is selling very much below their NTA, hence it is seriously undervalued is it not? But the reason for it being undervalued is because it has not been very profitable and they hold a large amount of debt. If there was a very bad year the potential for bankruptcy might be quite high since they owe RM100million. So they clear all their debt and sell off all their assets that are not generating money. They now have RM100million worth of assets and zero debt, but their stock price hasnt taken into account the balance sheet clean up that they have gone through, it is still being priced as if they might go bankrupt because of high debt.

OK me talking rubbish again.


There are a number of stock that is debt free. But NTA wise is Rm3-4, but share price is trading at Rm1.xx-2.xx

Reason?
Because the company can only generate about 10 cents profit each year or less than that, not because there are in debt or having risk of bankrupt, which the share price on market move based on the PER which how much investor can get a return from the share price through dividend which generated from the profit.

Point 1 is pretty valid, and true.
But. As a minority shareholders, if the major shareholders are not treating well the minority shareholders, then miniroty shareholders are getting zero from the cash value of the company holds.
As company can opt to hold on those cash forever without distributing at all.
So generally market reaction and pricing is towards profit and dividend given.
No doubt, it is very good in term of "undervalued" situation.
But you just need an event of mis-managed, or whatever unfavourable circumstance, then the cash position can go within short period of time.

Point 4
Clean balance sheet now can still turn 'dirty' balance sheet afterwards, if the company is making a loss afterwards due to whatever reason, from irrecoverable receivables to making net loss in margin.
Which in turn, even a company has significant net cash value, a loss making in the future can eat into the cash position as well.

Yup, debt free is definitely good, which mean little risk of the company going down. But a loss making and negative cashflow resulted from it can eat into the cash position.
NTA can shrink pretty fast without any debt built up with significant loss making with negative cashflow.

cherroy,

UEM in 97/98.

No debt. Incredible cash flow and profit. Guaranteed profit from PLUS.Then, what happened next??

As I had said to people again and again, if you DO NOT KNOW what happened to UEM in 97/98, you should not invest in KLSE.

Dreamer

This post has been edited by dreamer101: May 18 2010, 05:34 AM

hell yeah dawg, now i feel you aite, thanks for the time explainin to me aite, respect

aite dawg, based on your explanation on point 4, do you mean taht even if a company has zero debt, and is "undervalued", it can still use up its NTA (cash) to cover its losses? (of course thats if in the future, they incur it). am i right dawg?

Yup, that's something investors should be aware of.

On going business operation, business health is the most important aspect investors should be aware of.

Even lately few years, we had seen company write off huge amount of receivables resulted huge losses incurrred.

NTA is made out of your net asset situation aka your asset worth, your holding cash, your receivables/creditors etc.

When you are making a loss from the business aka you registered a loss in your P&L, then it will shrink your balance sheet either from eat into your cash position or whatever source of your company fund/asset worth, increase in borrowing etc. Losses needs to come from somewhere.
So it will result in shrinking your NTA.

Disciple,

There has been cases where the MAJORITY SHARE HOLDER use their voting power to get the GOOD COMPANY to bail out the weak company. It could be loan with low or zero interest. Or, in the MORE SERIOUS CASE, reverse takeover.

So, even this company has no losses, it may be used to bail out other company with losses. Beware who is the major share holder of the company and how the major share holder had behaved.

Dreamer

aite, yes, now i understand it already. thanks dawg, respect.

thanks for the piece of explanation dawg, i appreciate it, i think i have to work on the fundamental analysis thang man, i really suck when it comes to ratios man, you know of any monthly magazines where they publish the ratios that are already derived, perhaps the latest news on companies etc.

because sometimes, i just dont know whether to use the quarterly results or annual results to calculate the ratios

Disciple,

Is this for Malaysian Stock Market?? If yes, 99+% of the time, it is IRRELEVANT.

The FIRST QUESTION that you should ask is DO YOU TRUST the numbers?? If you don't, how does calculating over the NUMBERS that you CANNOT TRUST matters?? Garbage in garbage out....

There are ONLY 5 counters or less worth investing in KLSE.

Dreamer

This is just flat out wrong. The bad apples are mostly government linked companies, thats where all the hanky panky things disappear into, companies like MAS, Proton, these are the ones u need to watch out for.

There are so many great companies out there. So many outstanding underresearched companies.

yeah KLSE magazines.

i dont know man, im still new to this, dont know which counter is worth investing and which not.

i believe alot of second liners still have alot of potential too. but one question dawg, normally when we wanna determine whether the counter is undervalued, we should use the quarterly results, the previous annual results or the cumulative quarters results to date.

i know this shit is irrelevant, but i really do suck in these sorta thangs, and im tryin my best to learn

Another important aspect Dreamer has brought up is the company management and major shareholders which we cannot take lightly.

Be sure the company management has good track record, treat well minority shareholders, as well as major shareholders are fair and square throughout, which also quite important for long term performance of the company eventually stock price.
GLCs or not also something issue need to be considered, as sometimes GLCs may have some political issue, political interest, social interest or whatever reason, that the company cannot operate solely based on profitability and business consideration alone factor.

It is very important to learn how to analyse company financial report, although you don't need to be sophiscated to dig one by one throughout, but the first 3 important area is how to look through the company P&L, Balance Sheet and Cashflow to determine the health of company financial situation, which just take sometimes, already can understand it.

Wow Cherroy,
Now that's fundamental in the nut shell.

yeah dawg. i look through their P&L, balance sheet, cf statements as well as other economic indicators. rubber prices, the nature of the company's business and those stuff. still learning bro.

what do you think about KPJ and Unisem?

I believe there is existing individual topic discussing the above mentioned stock, can bring the discussion there.

Cheers.

flight,

So, HOW MANY companies that you can INVEST and GO TO SLEEP for 5 years without looking at them?? That is MY CRITERIA and DEFINITION on whether they are GREAT COMPANIES for investing. As per MY DEFINITION, there are ONLY 5 counters or less in KLSE.

No, I am NOT INTERESTED in ANY COMPANIES that I have to monitored closely. I have a life to live.

Dreamer

mind to pin-point the 5 counters?

---

Added on May 18, 2010, 7:39 pmu mean Thong Guan aka '888'?

This post has been edited by fergie1100: May 18 2010, 07:39 PM

I know u googled that. Thong guan's main business is in the plastics industry, the 888 is a tea brand that they used to do, it contributes less than 1% of their profits.

I can name you 20 companies I would be comfortable for holding for the next 5 years, but I like my stocks low priced, so i dont want to draw attention to them. I'll give you one, Mega First corporation(MFCB), since its already grown so much.

Since u like management so much, heres the guy who is handling it.
Major stock holder takeover in around 2005~2006, Goh Nan Kioh. One of the formar founders of IJM, has roots in IGB, which is owned by Tan & tan, the people who built mid valley megamall. One of the most outstanding directors around, low profile and relatively unknown, Last 5 years excluding the financial crisis they have grown at 15% or more, their cash/liquidity value holdings is hitting 200 million. Balance sheet clean up in progress, every year debt has been reducing at a steady rate.


Current PE of about 6~7.

Grossly undervalued at RM1.70, which is its current price. Foreign shareholding of MFCB has been increasing in the last month, a small foreign fund has bought over 2 million shares in the last month or so.

They are in the power plants business, a very profitable industry to be in, similar to the business Tanjong is doing, however if u were to put Tanjong's PE onto MFCB, which u should btw, because MFCB's growth is better than Tanjong, MFCb is easily priced at RM2.50.

So there u have it, my "recommendation". However MFCB has been going nowhere but up since I bought it a year ago. So u might want to be careful there. But according to my analysis, this company is what u would call "undervalued".

flight,

So, how does this compare to PBBank??

I bought PBBank at RM7 a few years ago. I collect RM2+ in dividend. Now, I think it is around RM12.

I do not have to monitor. I do not have to "buy and pray". Aka, selling it to make money since I collect good dividend every year.

Now, if whatever you recommend does not give a GREAT RETURN as compare to PBBank, then, I would say it is NOT good ROI for your time.

BTW, if a stock do not give me the possibility of 10X to 20X return, I would not spend the kind of time that you do in monitoring them. It is NOT worth my effort.

Dreamer

Ur tactic is simple and effective. But just because it is simple does not mean that it is the only correct technique nor is it the best. Saying there are only 5 good stocks worth investing is just blatantly wrong. To be frank its actually quite ignorant.

I do not monitor companies, I find undervalued ones and buy them, and wait for them to become fairly valued or overvalued. It is not a buy and pray technique, as I think u ought to have noticed now.

Just for the record I bought MFCB at 96 cents, my holding period is probably a little over 1 year. Factoring dividends that return is about 90%. Buying a stock like public bank right at its lowest point is frankly speaking, a lot to do with luck. Excuse me for saying so, its not exactly a common reoccurring thing as well. Public Banks lowest price in the last few years was RM7. It wasnt because of any due didligence on ur part.


How much time u spend looking at a company and the "return" u get from ur time is scalable. There is no set return, if u play with 100k u will get 90k, If u play with 5k u will get 4k. The returns u are looking at depends on the certainty u have on ur call of whether it is a fantastic company or not.

PS: MFCB's policy is to give out dividends on whatever the fixed deposit is paying. I'm looking forward to my 3%+ out of RM1.70. Which is about 6 % on my original investment.


EDIT: The only period where public bank was at RM7 was last year, so ur dividend after taking away tax is probably less than 50 cents. Not the RM2 u said. Unless u bought it 4 or 5 years ago.

This post has been edited by flight: May 18 2010, 10:40 PM

flight,

<<Ur tactic is simple and effective.>>

Bingo. KISS -> Keep It Simple and Stupid. Why be complicated and complex when simple works???

<<But just because it is simple does not mean that it is the only correct technique nor is it the best. >>

Best is the enemy of GOOD ENOUGH.

<<Saying there are only 5 good stocks worth investing is just blatantly wrong. To be frank its actually quite ignorant. >>

As per MY DEFINITION.

<<Buying a stock like public bank right at its lowest point is frankly speaking, a lot to do with luck.>>
<< EDIT: The only period where public bank was at RM7 was last year, so ur dividend after taking away tax is probably less than 50 cents. Not the RM2 u said. Unless u bought it 4 or 5 years ago.>>

I bought 4 to 5 years ago. No, it does not have to do with luck. I know my entry price. When it reaches that point, I buy. If not, I don't.

<< How much time u spend looking at a company and the "return" u get from ur time is scalable. There is no set return, if u play with 100k u will get 90k, If u play with 5k u will get 4k. The returns u are looking at depends on the certainty u have on ur call of whether it is a fantastic company or not. >>

This is a load of BS!!! Let's me ask you a SIMPLE question. Will MFCB give you 10X to 20X return?? Aka, it will go up to RM10 to RM20?? Yes or no?? If not, it is NOT worth my effort to spend much on those kind of stock. My time is worth a lot more than that.

<< PS: MFCB's policy is to give out dividends on whatever the fixed deposit is paying. I'm looking forward to my 3%+ out of RM1.70. Which is about 6 % on my original investment.>>

Which fits the definition of "buy and pray" investment. You buy and pray that it went up high enough for you to sell and make GOOD money. If I want dividend rate of FD, I do not need to buy stock. I buy FD.

By the way, RM0.50 out of RM7 is about 6% too. And, I do not have to take risk on a SMALL company.

So, I still do not see how your COMPLEX approach is BETTER than my KISS approach. It looks like a lot of wasted time and effort. I have better thing to do with my life.

Dreamer

Apparently ur lacking in this area called manners. Now I've shown u the good will to explain to u my perspective, if u cant take ur head out of ur ass to smell the fresh air then its just ur loss.

Public Bank was trading at RM6,50 for several years before it broke into RM7, there was no "entry price", u saw it going up and bought it, the priod before that it was LOWER than RM7, so how is it ur entry price is higher than the average price at the time? U got lucky. Pure and simple, and it was luck that came from watching a stock rise. When I said the technique of taking shares that is simple, I assumed that u bought it DURING THE DIP, which u didnt, u bought it when it started rising. So where is the technique? You saw a blue chip company and u thought it was good, and u bought it and got lucky. Saying that the whole field of investment is obsolete because u got lucky ONCE is just so ridiculous its hardly even worth debating.


The SMALL companies are where the 10x are at. You have neither the capacity nor the knowledge to be able to run research on these shares, so u say its useless. Your public bank's return over 5 years is a little less than 15%. It's nothing to shout about, and like I said, it had a lot to do with luck.


By saying that a stock provides regular dividends matching the fixed deposit I am "buying and praying"? Buying and praying is when u buy in with no knowledge of the company and hope it goes up, well im sorry but isnt that what u did? As opposed to my in depth research, which btw u also acknowledged?, btw my return is around 90% in less than a year, thats more than 4 times urs.



So if ur house is GOOD ENOUGH, u dont want to get a better house? If you can walk 10 km it is good enough? U dont need transport right? BTW, the technique I acknowledged as SIMPLE AND EFFECTIVE, was buying blue chips on dips, thats not what u did. So u have no business saying that. Since u got lucky.



Ur ignorance is just mind boggling. u want 10x and 20x returns? Well Im sorry but that doesnt help without waiting for a long time and putting a great deal of time into SPECULATING. There is no research that can guarentee u a stock will move up 10x. it's just not something that can be done consistently. LOL
But on the flipside, let me just tell u what doubling 10 times can do to RM10k, it adds 3 zeroes behind it, RM10,000,000. Now does that sound attractive enough to u?



Well, let me tell u why its better.
1) It doesnt rely on luck, its backed by FACTS and plans.
2) It provides u with the know how to go in BIG. If ur not sure ur not going to put in ur hard earned money are u?
3) It is CONSISTENT, which means the returns can be COMPOUNDED.
4) AGAIN, u have no "KISS" approach, just because u got lucky once doesnt mean that u can keep doing it. Where were u when the market went down 50%?
5) Doubling works by doubling ur money, if u can double ur 40k 3 times, u will have 320k. Are u telling me thats not worth it?
6) Of course this sort of research takes a lot of time to LEARN, applying it is simple.



Anyway Im just enjoying this, so excuse me for hijacking the thread.

@Flight,

Thanks for sharing with us.

Your contributions are indeed greatly appreciated.

Lot more to learn from Sifu like you.

Happy Investing.

This post has been edited by SKY 1809: May 19 2010, 12:15 PM

flight,

Just a simple question:

How much do you have in your investment portfolio?
6 figures? 7 figures? 8 figures? 9? Or more?

BTW, what I mean here, a RM1 million portfolio would be 7 figures.

Please enlighten us!


You are most welcome!


This link will show you on daily basis the NAV:

http://announcements.bursamalaysia.com/EDM...AYSIA+KLCI+ETF+


The price should be tracking near that, as the fund manager will have to cater to the fluctuation in price, and according to demand to buy or sell.

Why does this matter?

My portfolio is in the 6's. I started in the 5's.

edit: i've been doing my own research for about 4 years, I went in during 2008 and late 2009.

This post has been edited by flight: May 19 2010, 12:35 PM

flight,

<< Apparently ur lacking in this area called manners. Now I've shown u the good will to explain to u my perspective, if u cant take ur head out of ur ass to smell the fresh air then its just ur loss.>>

You have TWO choices. Either

A) You believe there is MORE THAN one way to invest

B) You don't.

If you believe in (A), then, there are more than ONE RIGHT WAY. I KNOW your perspective. I am showing you my PERSPECTIVE.

MY APPROACH is KISS. Aka, for people not interested in spending that much time on the market.

On the other hand, I spend 4 to 5 years studying PBBank and the industry before I decide to invest on PBBank.

<<Public Bank was trading at RM6,50 for several years before it broke into RM7, there was no "entry price", u saw it going up and bought it, the priod before that it was LOWER than RM7, so how is it ur entry price is higher than the average price at the time?>>

You STILL do not get it. In my system, it does not matter whether it was RM6.50 or RM7. I am looking for dividend yield versus FD. At that time, my criteria was the dividend yield has to be 2 X FD. When it reaches the point, I buy. Then, I go to sleep for a few years.

<< Ur ignorance is just mind boggling. u want 10x and 20x returns? Well Im sorry but that doesnt help without waiting for a long time and putting a great deal of time into SPECULATING. There is no research that can guarentee u a stock will move up 10x. it's just not something that can be done consistently. LOL>>

You got IT. It is SPECULATING.

There are 2 sides to my investing:

A) Slow and steady -> 95+% of my investment is in this area.

B) Speculative and aiming for 10X to 20X return. -> 5% of my asset

It is NOT worth my time to watch a stock unless it is (B). For (A), I may be watching it 3 to 4 times a year.

I am showing you my perspective.

It is NOT worth my effort to watch a stock for the kind of return that you are talking about.

So, you have YOU WAY and I have MY WAY. It is based on how much that our time worth. So, how could you say that I am WRONG and IGNORANT?? It is all based on the ROI of our time.

<< it's just not something that can be done consistently>>

You are RIGHT. But, why do I need to be done consistently?? I only need ONE. I could lose all 5% or win 10 X to 20X on 1% of my investment. And, that will be ENOUGH for me.

Dreamer

P.S.: Below is 30X return. Those are the kind of stock that I am aiming for (B). I am only play (B) in US Stock market.

http://finance.yahoo.com/q/bc?s=TASR&t=my&l=off&z=l&q=l&c=



This post has been edited by dreamer101: May 19 2010, 07:08 PM

im just a part time investor , and just starting to buy share = =

I said ur comment on how the stock market only has 5 shares worth investing is wrong and ignorant. Dont take my words out of context.


Actually no u werent.

What u said was,


im not going to stray further from the topic.

flight,

1) So, why is it SO HARD for you understand that is MY PERSPECTIVE???

2) In my system, ANYTHING that you cannot buy and go to sleep for 5 years is NOT INVESTING.

3) So, 99+% of what you are buying as per YOUR SYSTEM is NOT INVESTING in my opinion for a SIMPLE REASON. You have to watch the stock in YOUR SYSTEM.

There are TWO DIFFERENT styles of investing: YOUR WAY and MY WAY.

No, this is NOT OT. We are discussing about different kind of investors on this thread. And, we are TWO DIFFERENT kinds with different way of looking at things. There are NO REASONS why both cannot be CORRECT at the same time.

MY WAY is for people that DO NOT WANT to watch the market. They want to buy and go to sleep for 5 years.

YOUR WAY only works for people that are WILLING to spend a lot more time watching the market than my way.

Dreamer

Perspective is not as ambiguous as u think. Just because u say it is ur perspective that that there are only 5 stocks worth investing doesnt mean its not dead wrong and pretty damn ignorant. Saying well this is my way just doesnt cut the cake.

Some things are more certain than others, saying apples are purple might be a new perspective, maybe ur looking at it from another angle, maybe its the lightning, maybe its because its been painted purple. But that doesnt take away from the fact that there are no purple apples.


Well damn right then, in that case state very clearly that it is in your system, not investing per say, but ur system of investing. Im also not sure where u got the idea that Im not comfortable in buy and holding for 5 years or more.


What ball are u sucking on. Where did u get the idea that I NEED to watch my system. I dont NEED to watch anything. If spending 10 minutes to check ur portfolio in a week is watching the market, then I think its pretty damn idiotic.



Jesus christ... What exactly is my way may I ask u? Since u seem to know exactly what it is that im doing. Do u think its technical analysis? Charting? Buying random stocks?

Again, a simplified version of what i do is looking for good undervalued companies with unlimited room for growth. If the stock becomes overpriced selling it is just common sense.

flight,

Bingo. Then, you ARE NOT in my system. As per my perspective, you ARE NOT investing. I check my stock at most twice per year. In most years, I never even look at them.

Dreamer

P.S.: The GOAL of investing in stock is to make money. For people that ONLY WANT to look at their stock at most twice a year, they need a different kind of system versus people that check portfolio every week. You are the KIND that check every week. My system is not for you.

1) Now, are you INSIST that a person MUST look at their stock every week in order to invest on stock???

2) Are you insist that YOUR WAY is the ONLY WAY to make money in stock market??

This post has been edited by dreamer101: May 21 2010, 06:40 PM

I am not INSISTING anything, I am not saying a person MUST look at their stock every week. I am saying I spend about 10 mins a week looking at my portfolio.


I am not INSISTING that my way is the only way to make money in the stock market. I am saying u r ignorant and irritating. If u give a general comment that is wrong and ignorant, and try to pass ur own opinion as fact, I'll damn well point it out.

DO you comprehend?????

---

Added on May 21, 2010, 10:34 pmlike chicken and duck.. im not continuing this.....

This post has been edited by flight: May 21 2010, 10:34 PM

flight,

<<I am saying u r ignorant and irritating.>>

Which is YOUR OPINION and NOT NECESSARY a fact.

<<If u give a general comment that is wrong and ignorant, >>

Which in YOUR OPINION is WRONG and IGNORANT and NOT NECESSARY a FACT.

<<and try to pass ur own opinion as fact, I'll damn well point it out.>>

Where did I CLAIM that MY OPINION is a FACT?? I am showing people on MY WAY of thinking and going about in investing. How could that be ANYTHING but AN OPINION??

Ditto on everything that you had posted. It is YOUR OPINION. Aka, YOUR WAY of looking at things. It may work for you. It may not work for OTHERS.

So, DO YOU UNDERSTAND the difference between FACTS and OPINIONS??

Dreamer

Somehow Dreamer always brings out the best debates of right and wrong.


Anyway..... there a lot of type of investors/traders. Some are more profitable than the other. Some are more safe than the other etc.

Poll shows a lot are value investors, and with the recent sell down, I bet a lot of you will be waiting for your chances to jump in the market in force.

What way is not so important either trading or investing. THE most important part is the end result which is the % return

For example some may like to follow Warren Buffett type of value investing. I like his way of investing but we cannot follow blindly. We have to understand that Warren buffett type of investing is buying the whole company but for us we are buying the company shares only.

This post has been edited by darkknight81: May 22 2010, 10:34 AM

I would say there is never right or wrong in investment.

If one has lesser risk appetite, then settle for a 5-8% return rate, which invest in big cap or bond area, then it is "right" for him/her

If one has higher risk appetite, then want to chase for 20-30%, then opt to invest in second liners, smallcap or whatever riskier asset, then it is "right" for him/her also.

We cannot say the 20-30% potential gain asset is better than 8% one, as the risk associated with is different to start with.

Just invest suit to individual risk appetite and preference. Investment is never a 1+1=2. There are plenty of unforseen circumstance or some risk we never expect nor foresight, as future is never known.

We always welcomed any taught/opinion, which is beneficiary to all which open out our mind, view regarding the investment field.
The more we know how others invest, the more better we equip ourself.

Some experience investors may totally dislike glc, which is understandable. (Just need to look through the historical performance of GLCs stock, then explain it all)
Some experience investors may not prefer smallcap, which is understandable. (Look back second board counter history as well as Mesdaq)
Some may opt to his/her own liking stocks, which is understandable (because over the decade, they consistently give good dividend, and improving)

Having said that, surely not all counters as above mentioned perform the same or has poor performance one, as there is never a generalising case.

But there is nothing wrong with their personal experience and opinion.
Everyone come out with opinion has their own reason, and experience associated with it.

The most important is to look why others have such an opinion. One not necessary agree with the opinion, but look through why there is such opinoin arise is always good and beneficiary in term of future decision making, and serve as own reminder.

True words Master Cheeroy.

I like this part

As for me, the divvy cheques I received time after time will make me a happy person. My Target Entry is that the counter must have PE of less than 15, Div above 8% and ROE in double digit figure. And most importantly the business model must make sense to me.

Xuzen

hell yeah homey

meh feelin yoh, there aint no right or wrong shit dawg, as long as that investment brings in returns, then its good aite dawg.

8% return is good.

20% - 30% also good.

cherroy,

I would like to add 2 more items beyond Risk Appetite.

A) Willingness and Ability to spend time monitoring the investment. Certain counter and strategy requiring more time and effort to monitor than others. A person may not willing to commit that much time into this effort.

B) Know how to calculate. Just because a person has the Risk Appeite, it does not mean the person has the NECESSARY SKILL and CAPABILITY to evaluate the stock.

Somebody may have a GOOD WAY but it may not be RIGHT for YOU.

Dreamer

some people get it, some people will never get it.

Risk appetite has nothing to do with this, 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.

It has nothing to do with monitoring the market, ideally the best stock is the one u nvr have to sell.

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. To give u a very good example, i just need to point u at the recent market crash, to some people it was pretty much a sure bet that their returns would be fantastic while the risk they had would be low.


dreamer as much as id like to pull out every single one of the things u said wrong and point out why its so blatantly wrong, i dont think i want to turn this into an ugly flame war.

Let me just provide this analogy.
If I were to claim that the sky is green in at night and there are pink hamsters dancing on saturn, anyone with half a brain would know i had no idea what i was talking about. If I went the way dreamer101 has been going and claim that it is my opinion that there are pink hamster dancing on saturn, and that if anyone was to disagree with me, it would only be their opinion, and since their opinion is not a fact. That they would have no case against my pink hamsters on saturn. This world would be a funny place indeed.

Some things are more certain than others, and some things less certain. If u are going to take the stand that just because it is an "opinion", then there is no argument. I would like to call it out as being what it is, which is a strawman argument and frankly speaking it has probably something to do with self denial as well.

This post has been edited by flight: May 23 2010, 05:51 AM

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