if u buy for long term..who cares?

as long as the price is in ur tolerance level, just grab it, if u play short term...i go genting play big and small...50%-50%, faster results..and high return lagi best~

like i mention lo...its up to ur own tolerance level

how you will know the fair value of the stock? if those researcher or analyst is so damn accurate...why they not 1st to get that?

somemore, how u know whether this price is in so called fair value? like cherroy mention, when this is the fair value, but then suddenly other factor affect and it drop below the so called fair value. how u say about that?

for eg, i brought AIRASIA at RM 2.2, most of the ppl tell me it is very high already, not worth to buy, but for me RM 2.2 is fair for me, even got ppl tell me, aviation stock is not safe, once the aircraft crash one time, then gone...it is true, but for me is what a stupid reason.... 

for me, my own consideration is = profit stop / lost stop % + duration to hold + news/announcement

either one of the reason which make me think i need to sell, then i will sell...which ever reason comes in first that get my attention...

unless i buy just want to gain the dividend from time to time....

Theories & talk, talk, talk is fine. Now, pls recommend at least 5 counter in klse & we'll see its performance & judge with our own eyes. Thank You!

Folks,

Let me throw in my 2 cents...

"Fair Value"??

1) Looking at the industry that GUARANTEED to make money. -> Bank, Unit Trust, and Insurance

2) Look for the Best Managed company in that industry. --> PBBank

3) How do they LOSE MONEY?? --> Political Loan

4) What price to buy?? When the Dividend Yield is high enough as compare to FD.  2 x to 3 X FD. 6% to 8% will be a good number..

5) When to sell??

      A) Dividend stop growing.

      C) Condition (1) to (3) changes...

This is probably dividend based investing...

Dreamer

able to apply theory into practice & sharing with us

1duit is a lot of construction activities, I looking at this

[attachmentid=1872653]

got a spike in its volume, but its not available in the above graph. look at its accelerating eps
http://biz.thestar.com.my/marketwatch/fin_...?searchstr=5703

Fiscal Year                        12/31/2006     12/31/2007   12/31/2008
Net Turnover/Net Sales    1,086,414        1,411,533     2,033,535
Net Profit                          33,800           70,180          21,800

sky1809, thanks for the compliment. for every pov, there r the supporters & those anti    I am fine with arguments as it allows a neutral viewing. do keep up the flame war 

I think Dreamer's strategy is actually the same as your strategy of buying below intrinsic value, cause by definition, if we use the dividend yield as the measures of market return, a 2X-3X spread over FD means the market risk premium is high. This tend to happen during a crisis and prices tend to fall below intrinsic value. It is just a layman and easily understandable ways to say the same thing.

I use to think like you too. But, now, I prefer a certain amount of dividends. It is hard to find management that can deploy capital into something that have incremental return on capital. Even you take the most fantastic company the world have ever seen- Microsoft, they have some fantastic return on equity. Although they pay dividends and buy back a lot of shares, the cash flow generated from its Office, Windows and Server division is still amazingly large. So, the dividends is less than its cash flow. Thus, Microsoft keep some of the cash flow it generated. Since Microsoft have above average ROE, you may think that it is good for Microsoft to retain the earnings to do R&D. But, most of Microsoft R&D is on things that they lose a lot of money, like Bing and they are throwing a lot of money into Windows Phone 7. So, even though MSFT itself have fantastic return on equity, the retain portion is wasted on those that do not generate that high of return of equity. You may say that this is a good deployment of capital in tech industry, but, if XBOX is anything to go by, Microsoft need to throw 8-10 years of cashflow into something before it can generate some decent result. So, not sure whether this is good deployment of capital. The point is, even companies with high Return on Equity, the portion retain may not be reinvested into division that have that high ROE, so, the cash, in a sense is better return to shareholders.

As you mention that you manage to do 20+% compounded growth for 5 years now, the benchmark should be a company that can return 20+% ROE in its reinvested earnings just to match your performance. Very few companies manage to pull that off, yes, even Microsoft can't do that because the money is thrown into division with lousy returns. The historical ROE of US is about 12%, I guess, for Malaysia, it should be around there or lesser as our leverage should be a bit lower due to some Chinese businesses tend to have a more conservative capital structure. So, in your case, since your return is 20+%, I think, most if not all of the time, you should hope companies to pay you dividend because you can actually do better with the money.

So, if you have some good stock picking skill like foofoosasa, one should hope for dividend.

The retention ratio is not that important in this discussion as I am comparing between your own incremental ROE vs the companies incremental ROE. In addition, it is not the average ROE that matters, it is the incremental ROE that matters, that is what ROE the incremental retained earnings manage to generate.

I believe the company you talk about that churn out 30-80% ROE are tech, pharma and recently IPO-ed companies. I am not sure how you define ROE, but, if you define it as accounting ROE i.e. Net Income/ Accounting Net Book Value rather than finance ROE i.e. Net Income/ Market Cap then, the company are most likely in the industry I mention above. This is due to the fact that there are certain accounting rules that require them to expense R and D rather than keep it at the books, so, the ROE is actually not a good reflection of true economics of the business because a lot of asset are actually off the balance sheet.

Another possible explaination for such a high ROE is that it is a human resource based business. For example, it is a pure play investment bank (i.e. no trading) or consultancy firm. Again, such companies have a lot of off balance sheet assets that is not reflected in the balance sheet.

In any way, businesses above should not be judged on ROE because their profitability and growth is not a function of their capital allocation decision. It is more of a function of how they increase their brand awareness, customer loyalty and retaining their best talent. All this are off balance sheet assets. So, accounting ROE become unimportant in such businesses because their key success factors is not capital allocation. For example, take coca cola, a management should be judged on how much its retain its brand awareness and image or even increase it as such action would result in an increase in bottom line. He should not be judged on how good he is spending money to build the factory. The damage done on the coca cola brand image on its bottom line  should be much more severe than a wrong capital allocation decision.

Another type of companies with such an impressive ROE is those with a recent IPO, but, those advantage tend to fade within 3 years.

I ran a stock screen using Capital IQ with a very basic requirement of non-tech and non-pharma, sustainable >30% ROE of 10 years, debt to equity less than 1.25, out of the universe of 500k companies worldwide, only 200 fits the bill.

In any case, I would like to hear the list of companies you have mention. If it is cheap, I may even buy it. Not necessary need to be in Malaysia. I have access to most markets as long as it is not companies that is listed in Timbaktu.