hmm..interesting again for frontkn

Dai gor, thanks for update.

Online lot of people share his book. I am thinking to get too in book fest.
Or any other books to recommend ?

Ya it is good to start with his books ...though some say they are too simple n he does not come from Investment schools and so on...

The important thing is he shows us the correct and simple ways to invest ..so why not...

U are not going to read the books and go for a Master degree in Investing..right ?

I am open minded ..so long I can pick up some skills from others ..I appreciate them...Not the type going around to shoot these people down...weird world isn't it

This post has been edited by SKY 1809: Jul 15 2015, 02:26 PM

Cold Eye’s 5 yardsticks for investment

Author: Intelligent Investor

Cold Eye listed 5 important criteria on his talk on 16-March-2013.

1. Return on Equity (ROE)
2. Cash Flow from Operations (OCF) and Free Cash Flow (FCF)
3. Price-Earning Ratio (P/E)
4. Dividend Yield (DY)
5. Net Tangible Asset (NTA) per share

Return on Equity (ROE)
* Investor want to have a reasonable return from the capital for the equity put in.
* The return rate depend on the business risk.
* You would want to have a risk that higher than a risk free rate. Says, bank FD provide interest rate of 4%, you will target for a min return say 10%-15% (6% - 11% above FD rate) for the risk you take.
* [Note]: There is some issues and pitfall on ROE, do perform DuPont analysis on the ROE, or alternately I prefer to use ROIC.

Cash Flow
* Business owner would expect debtors pay you promptly and you don;t have to stock up a lot of inventories which tied up your capital.
* Else, you have to put in more capital each year even you make one.
* Do expect the hard cash received must be about the earnings each year.
* For each year, the business need capex to keep it going (so the owner can ear more in future) - e.g. buy more/relenish equipment, buy/open more shops.
* It would be good if the capex can be met with the cash I receveid from operations and owner no need to come up with more money.
* It will be fantastic if there is still leftover money to draw out (diviend), or the company can have extra money to invest in other lucrative business.
* Check

* Average OCF same as reported earnigns over the years?
* Is FCF in genral positive over the years?
* Is the average FCF >= 5% of Revenue?

* [Note]: You may want to read more on Cash Flow Statement Analaysis.

Price-Earning Ratio (P/E)
* A business might not be a right investment if price is nor right. If you buy a business with good ROE (say 30%) on P/E of 33 will only give you a earnings yield of only 3%.
* If the yield is less than FD, you may want to put the money to bank to earn risk free return.
* The prowess in investing is not knowing how to buying great companies at any price, but good companies at a cheap price.
* We should look for company < 10 or < 15 (good company with growth prospect)
* [Note]: P/E will ignore the debt an cash on the balance sheet. EV and EBIT is a good alternative if an investor want to take care on this item.

Dividend Yield (DY)
* How nice if my bussiness can have extra cash (FCF) after CAPEX investment and the left over money send back to owner as Dividend. (You may want to read more on Cash Flow Statement Analaysis.)
* This way, the owner can have additional money to spend while the business is still growing and the dividend is likely ti increase in the future.
* DY = Dividend per Share for a Year / Stock Price
* It could be a good investment if DY > FD rate.

Net Tangible Asset (NTA) per share
* Investor can recoup the initial investment if the NTA worth more than what he put in.
* If the NTA per share > stock price, you may be in for a bargain.
* More valuable (e.g. hard cash, property, land) asset is better.
* Receiveables - debtors might not want to pay me.
* Inventories - it may be outdated.
* Some business (e.g. service industry) where the important assets is not tangible e.g. its technology, brand name, people......
* [Note]: This is align with Benjamin Graham Net Net & Negative Enterprise Value.

Thank you Sky for sharing.

appreciate this sharing, thank you

0128 is in accumulating mode ........sharks usually do...

Take the chance to accumulate some before the next big wave up...above 40sen

Sori for the hard sell..might not sound pleasant to some .......

This post has been edited by SKY 1809: Jul 15 2015, 03:15 PM

pleasant??

this aint "hard sell"..
appreciate such information sharing [ALWAYS..]

Ya u are right ..perhaps I am too emotional about it. Thanks for pointing it out...

Thanks for sharing, Sky Gor. Hope I can learn more from you and Bone gor.

It is specially true for new starters......get bullied by the market forces :-

Time is the Friend of the Individual Investor

Time is the friend of the wonderful company, the enemy of the mediocre. – Warren Buffett

Time is also the advantage that an individual investor has over traders, institutions and other professionals.

An individual doesn’t have much of a chance against institutional investors when it comes to short-term trading. Trading is a zero-sum game so a successful trader’s win comes from another trader’s loss. Small investors can’t compete with the machines and the tools that institutional investors have.

These pros have color coded keyboards so that they can put in an order with a single keyboard stroke, they have access to information much quicker and their trading fees are much lower.

But as an individual investor, time is a key advantage.

Institutions have offices and employees they have to pay, they have quarterly performance reviews, and if something doesn’t work out in a few months, they are forced to liquidate despite how promising an investment is.

This post has been edited by SKY 1809: Jul 15 2015, 03:38 PM

Using Cold Eye's method, what shares in KLSE would fit in?

Very simple..the moment when a company announces a windfall Dividend ,,u jump in like SAM...

Probably SAM factored in most of coldeye's methods......

Of course many out there wanted to prove he Coldeye is wrong.......but not my concern too......

This post has been edited by SKY 1809: Jul 15 2015, 04:17 PM

Sky sifu,

still holding your KIALIM ?

Bursa open for morning session today

Siapa still got T+4? Settle it early lo... Some broking firm 11am force sell

Yes

Volcano erupted.....