It's already in Post #1 in the most layman-friendly presentation. I will not re-post again.

This post has been edited by Pink Spider: Oct 2 2016, 10:29 PM

Come on be a man. dont come barking madly and then run away with tail in between your legs so fast.

I am sure the following post is very easy to prove or disprove by simple maths, any Tom Dick and Harry can do it.

if you with ACCA or CFA and still dont know how to disprove that, better you go resit again.

These are simple clear straight forward hypotheses:

1) If you buy at 10% cheaper, later when the price picks up, you will earn 10% more than your friend any time.
2) The higher the UT price moves up, the more you will win over your friend, by 11%,12%,13% etc. i call it multiplying effect even though you just bought 10% cheaper, you can win your friend by more than 10% at the end.

Come on prove it wrong, by simply putting in some numbers and test them!

This post has been edited by guy3288: Oct 2 2016, 10:45 PM

This kind of mathematical what-if discussion is not adding much value, simply because noone knows the future movement of the price. NAV fall by 10℅ and you buy in, thinking that you will do better than yklooi. He instead sold all and lost 10%.
What happens next noone knows. Let's say NAV drop another 20%, and you buy in again. Yklooi took his earlier cash and buy all now. Are you sure you're still better off than him in all circumstances? Are you really sure? Well, we haven't even considered how much % you topup in round1 and round2. See how this can be an endless discussion going nowhere?

A mutual fund is a COMPOSITE of cash and other securities. It's dynamic i.e. it's composition can change every now and then. It's TOTALLY different from a stock.

Understand this and you will see the futility of all these NAV price what-if questions.

This post has been edited by Pink Spider: Oct 3 2016, 12:12 AM

On the one hand you acknowledge "what happens next no one knows" but on the other hand you contradicts yourself using an example that clearly implied yklooi "knows", so that he can sell and buy back later at a much cheaper price.

Similarly i can also say what if the UT goes up ,of course yklooi who sold at a loss earlier will lose even more
now if he were to buy back again. Is that some great argument? NO!

You are wasting my time making circular arguments like that!

But then go think about it again (not that i agree with your untenable presumption there)
you tell me why your yklooi can win there??

I am sorry to say it again, it is because he has bought at a LOWER NAV price!

Now what? Enter at whatever NAV price does not matter as long as you choose the correct UT?

You're 150% right. You win. I'm sorry to have wasted your time engaging you in this pointless discussion. I should go back being a silent reader.

So heat up discussion here...

Treat UT as long term.. if feels the particular region or sector that UT is invested in has potential, then just top up regularly or once a while without letting the NAV affecting ur decision to top up

Heated debate, no problem, but please tone down the word and don't use the word of "barking" (it is a disrespectful word to call people like that), and or whatever similarity word.
Just focus on the fund issue discussion.

Ty.

Friend Azam,

So you are taking CFA, the undisputed gold standard education for financial analysis. This program is only available as post-graduate and is akin to taking a Masters in Finance.

Do it well my friend, pay heed to your lecturer. Learn well, for in future who knows you might end up on the BUY side of things, as a Fund Manager.

Who knows, perhaps in future, I could be participating as unit holder in the fund that you manage or I would be telling my friends and relative to participate as a unit-holder in the fund you are managing.

Manage well the money that belongs to your client, you have a high responsibility to shoulder.

There will be unit-holders that will need the money to fund their kids' education, some will need the money to pay their medical bills, some to provide for during their retirement period, some need the money to go Little Saigon Jalan Alor to meet up with Viet-Mois friends.

Xuzen

Less TALK; MOAR NUMB3RS!

Scenario A
Guy A transacted MYR 1,000.00 of Fund A at NAV RM 1.00: Units hold = 1,000 units

Guy B transacted MYR 1,000.00 of Fund A at NAV RM 0.90 (dropped 10%): Units hold = 1,111.11 units

After sometime, the NAV becomes RM 1.10 per unit

Guy A value = RM 1.10 x 1,000 units = RM 1,100.00

Guy B value = RM 1.10 x 1,111.11 units = RM 1,222.22

Guy B value is 11.11% more than Guy A. Guy B = Winner!

=====================================

Scenario B

Guy A transacted MYR 1,000.00 of Fund A at NAV RM 1.00: Units hold = 1,000 units

Guy B transacted MYR 1,000.00 of Fund A at NAV RM 0.90 (dropped 10%): Units hold = 1,111.11 units

After sometime, the NAV becomes RM 0.80 per unit

Guy A value = RM 0.80 x 1,000 units = RM 800.00

Guy B value = RM 0.80 x 1,111.11 units = RM 888..88

Guy B value is 11.11% more than Guy A. Guy B = Winner!

Either way, buying at lower NAV = winner in both scenario.

=====================================

The above is clear from a mathematical point of view, but opps we have a problem. In real life, we do not know when the NAV will go up, if goes up, until how high? If it goes down, until how low? if you want to wait and wait and wait to buy at the trough and sell at the peak, one word = GOOD LUCK!

That is why rational / logical / unemotional investing is to do DCA to take away the guess work and let average takes its course naturally.

Xuzen

hey thanks! haha yeah things are crazy right now with CFA, and work back in the office. We're almost reaching year end, so everyone's scrambling around trying to meet their KPI and ROI targets. Wonder if boss will approve my study leave

lol brother why you seem to find lots of heated argument centered around you? something good must be happening

I'm responding to you not because I feel the need to argue with you, but I do not want this meaningless argument to take over this board and we are unable to move on to more meaningful discussion. Why do I say it's meaningless? Simple. You are only looking at investing into 1 single fund. Then of course your example is mathematically correct, there's no disputing that.

But wait, is our life ever so simplistic? At least mine is not

Here I'll give an example using our MY small cap market crash 1month+ ago. So uncle Looi bought into RHB Small Cap Opp right before it crashes (ouch, sorry, but it's a good comparison), and say you bought into it after the crash, so you are better off than uncle Looi by 10% like your example. And then here I am, buying into EI small cap instead, it only fell by 4%. So Am I worse off than you? Let the graph do the talking now



Everything else equal, uncle looi would still be -8%; while you are better off at +2%; and I'm at +3%. So are you the smartest of the bunch now? Actually I don't know the answer as it's less than 2 month; lets take a look again 6 months later then it would be more meaningful

But the truth is, would you be buying at the lowest point? Or somewhere when it's still falling, or only when it rose back to normal.... no one really knows. Not something we can have 100% control over.
Hence what we advocate to do is, control what you can; in this case - buy the fund that has a better risk to return ratio and have good track record; and VCA or DCA to not be in the worst situation, somewhere in between is good enough since we cannot catch the lowest point most of the time.

Don't be intimidated by the loudest voice in the room. Once a wise man told me that tin kosong make the most noise. You can always throw in idea and if you are right you help others, if you are not and being corrected you'd learn something. Don't just be a silent reader

Hi, I just join fundsupermart doing DIY on UTs.
I have make a purchase and the system show transaction date is 29 Sep.
So, my purchase NAV is based on 29 Sep or T+1 (30 Sep) or ??

Can sifu advise ?

if my statement is wrong ,you think that can stand in a lions den without being torn to pieces?
you dont have to agree with me, you only need to see if that is a fact or not.

Anyone who is reasonable enough should know there is hardly any need for argument on a simple statement that says
if you buy cheaper you win over another who buys it at higher price.

common sense, yet it seems that is not so common to many in here...sigh. they put too many compounding
factors in it. What if i buy and he sells, what if I buy Fund A and he buys Fund B etc....That is ridiculous! How can
you compare the effect of price difference on 2 totally different scenarios, you buy he sells etc etc, 2 different funds worse!

Of course it must refer to SAME UT, both stay same invested , or else how can you compare? Basic stats man!

That is a very reasonable comment, as long as the UT can go up, even if you buy a little higher you still can make money out of it. I am not telling people dont go buy it. High can go higher still.

But that is besides my point.

What I am saying all this while is: if you buy at a higher price (eg KGF at RM1.0175 last week), you are losing out to someone who bought it cheaper at RM0.9855 last month. He got more units than you for the SAME amount of money invested.

But that seems to ruffle quite a few feathers here. Because the self-called sifus want to drill into you guys' head,
buy KGF at RM0.9855 or RM1.0175 or whatever other prices, it doesnt matter!.It makes NO DIFFERENCE etc etc.........in other words, you just buy it ,if you think that UT is good, so dont go TIME the market, blah blah,.......

That is what i find plain boolshit and must be rebutted at all costs.

Tell me you agree or not it DOES NOT matter if pay RM10,000 for KGF at RM1.0175 and get only 9828 units whereas another who paid same amount at RM0.9855 got 10147 units?

Who cares if KGF holds stocks XYZ at the time when you buy it at RM1.0175, and KGF holds stocks ABC at the time I buy it at RM0.9855??

Of course if you insist you dont mind lose 3.2% to him, then that is your own problem, not the problem of my statement's veracity.



i hope next time you read idiots, orang hutan, put you in zoos, lembu etc...you also let him know as well..


I fully agree with you there Xuzen.

One would be silly to say he knows when is the best time to buy and when is the best time to sell.
No body knows, but that does not mean in that case, you buy it higher or you buy it cheaper, it makes no difference, it doesn't matter, so just buy la.

Two different things totally.

I hope more people can see my points there.

You can say you cannot control the weather, i can agree.
But you simply cannot say rain or sunshine it is all the SAME, if you know what i mean....
(this is a lousy example, as rain or shine you may not lose out, unlike buy high or buy low in UT there)


You are missing the point maam. Of course it is meaningless if you put me and yklooi to buy RHB and you go buy Eastspring wanna come and compare with us.......That sounds more like a tin kosong to me, Basics step - ask your self
first -are you comparable there!!

This post has been edited by guy3288: Oct 3 2016, 03:14 PM

Depends on what time you execute the transaction. If purchased on 29th before 3pm, the price is the closing price on 29th. If after 3pm, the price is the closing price on the next business day.

Hello there sifus! Been lurking in the forum for some time, not sure if it's the right time to pop out and say hi in the midst of this heated debate! But anyway here goes..i have no financial background knowledge whatsoever, a complete novice here but I have learnt a lot from this thread regarding UT. Truly appreciated.

IMHO, I think what guy3288 has been trying to point out may have been misinterpreted by most. Yes it is impossible to time the market, yes we will never know when and where the trough will be, NAV at point of purchase should not be a hindrance to top-up/invest as long as proper DCA is done. However there is no doubt that someone who purchased at a lower NAV will benefit more compared to someone who bought at a higher NAV, simple arithmetics. But if and when there is a dip in NAV, I believe that we can take advantage of that by topping-up a fund to bring the weighted average cost down (also to rebalance the portfolio if criteria are met) if we believe in the popotential upside of the sector/region invested, and it is a fund with good track record and fund manager. This, I believe is the only advantage we would get from a dipping NAV. On the other hand if one is deciding whether or not to start investing in a fund, then again one should be doing so regardless of the NAV, and (needless to say) to DCA into the said fund!

Please correct me my understanding is incorrect. Here to learn 😁

this. felt the argument is over the same thing but in different perspectives.

After a couple of pages dedicated to the topic buying at Lower NAV pawns those who bought at higher NAV, so what usable info can we derive from this new and profound information?

How can we add value as investors to our portfolio?

Buy at lower NAV?

Xuzen

You're right.

Investing into a fund solely based on NAV prices is not a good idea because the NAV is an arbitrary number derived from the total value of the fund's holdings spread out over an arbitrary number of units -- the fund manager could have decided that every RM1 value equals to 4 units. Instead, we should be looking to see if the market (or underlying holdings if you're diligent) that the fund invests in is expensive or cheap. In other words, buy when the market is undervalued.

Here's a simple example:


Topping up when "NAV is cheap" is essentially trying to take advantage of a temporary dip in market value (i.e. taking advantage of a sentiment-driven movement). We do this because we believe the market is cheap and that the market will correct itself soon. Note I said "believe" -- it is our hope that the movement will trend upwards again. A more experienced investor (like Xuzen with his balls) will rely less on hope, but more on research and actual data. Still, we'll never know what the future holds, thus we try to reduce the effects of timing by doing DCA.

That said, since most mutual funds invest in a diversified portfolio of stocks in a specific sector/region, it's NAV movement is likely to reflect the movement of indices that most closely matches it. Sometimes these indices are used as the benchmark for the fund. As most investors have no way to influence the stock picks of fund managers, experienced investors will choose to invest in mutual funds that outperform this benchmark consistently.