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 The most undervalued investment in 2017

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TSdreamxite
post Dec 26 2016, 07:42 AM, updated 8y ago

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As the year draws to a close and we eagerly look forward to 2017, I've been asked on several occasions on my outlook for next year and the answer is always "I don't know" or something more intelligent like "My guess is as good as yours." Not to disappoint you further, I do have an investment that you might like to consider. It has minimal downside with huge upside potential. How many baggers? I'm not going to tell you or else you'll stop reading right here because it is too good to be true. It has massive growth potential that doesn't require a lot of capital expenditure to grow it. No complicated story, a back of envelope calculation will tell you how undervalued it is. Calling it the most undervalued investment of 2017 is an understatement. But before I get into it, I'll quickly talk about the role of an investor.

Whatever you decide to call yourself whether as a trader, speculator, value investor, growth investor, fundamental analyst, technical analyst, a hybrid of both and so on it doesn't matter. You are a capital allocator. The role of a capital allocator is to allocate capital in the most efficient way that maximizes long-term return. Simple as that. You and my investment strategy can be night and day but our objective is the same - maximizing our long-term return.

Same goes for companies. A company has to decide whether to initiate share buy-back, issue dividends, reinvest for expansion, M&A etc with the limited capital they have with the objective of maximizing shareholders long-term return. How a company, or you, allocate that capital today will have barely any visible result tomorrow, next week or next month, but like everything that compounds, it will be stark in 5, 10 years.

If we take a step back and apply this in a broader context, it is the same, you are a capital allocator of your life. What is the capital of your life? Your time! How are you going to allocate your time today will have little impact on what happens tomorrow, but like every investment that compounds, your decision today will change the course of your future 5, 10, 30 years from now.

So I present you the most undervalued investment of 2017 - An investment in yourself. I can tell you a stock, a theme that has a high probability of success in 2017 and how much are you going to make? I don't want to shortchange you, or your time. I'll give you something that can scale and compound, and something no one can steal from you, for life. You will be a great capital allocator, if not the best. And what is there a better way to invest in yourself than reading books? Note here I mention reading books not reading forums, news etc. They might be great for knowing the latest, but you want something that really advances you, books is the way. Like every other investment, this investment is simple but not easy. Educating yourself is as simple as telling yourself don't lose money in the stock market, but it is never easy. If you never have the habit of reading books, start small. Just like you won't expect yourself to go running marathon straight away, start from 10 pages a day. Too many? 1 page, 1 paragraph, however small, the power is in starting.

Rather than going for the usual investment books, which you probably know most of them anyway, I would recommend some that sits outside the realm of investing but nonetheless will improve your skills as an investor. Good luck for 2017. May the force be with you. "I am one with the force, the force is with me…I am the one with the force..."






How Not to Die - Michael Greger with Gene Stone

How not to die is a book packed with empirical evidence on what kind of food to eat and avoid if you want to live a long & healthy life. What does this have to do with investing? Plenty. Your body is a system that requires nutritious foods to keep it functioning well. Like all the assets in a company that needs capex to maintain its earning power, if you choose to cut down here and there to save up on food cost, what happens? Yes, you'll boost earnings temporarily before it started failing gradually, and eventually, the cost catches up with you. If you want to have the golden eggs, make sure you take care of the goose. Be wealthy, not rich.

Department of Statistics Malaysia recently released "Statistics on Causes of Death, Malaysia, 2014". Out of the top 10 causes of death, 89% are disease-related death i.e heart disease, cancer, liver disease, stroke etc. If you have a life insurance, you are pretty much insuring yourself against the risk of dying from health related complication (unless your job involves something risky), which is totally preventable. Eat healthily and save up on your insurance, medical cost and family suffering down the road. This is a no-brainer investment.

https://drive.google.com/open?id=0B-z8LXDyP...cExKTnhGSmlsSGM


The Education of a Value Investor - Guy Spier

A personal account on how Spier went from a Wall Street trader to a value investor. Before you dismiss this as another book that promotes value investing (value investors thrive as a minority, not a majority), give me a benefit of the doubt and read it. This is more of a psychological than an investing book. One that will show you how you can shut out all the noise and still do well, even better actually. He hasn't used his Bloomberg terminal for years.

https://drive.google.com/open?id=0B-z8LXDyP...ejg1ZDl3V3g0QlU



Outsiders - William Thorndike

Well, we talked about capital allocation. This book looks at how 8 CEOs transform their businesses into the best in class through wise decisions and plenty of hard work. If you can get something out of this book, it will the character of these CEOs, how capital allocation can make or break a business, and how to think independently and never go with the flow just because everyone is doing it.

https://drive.google.com/open?id=0B-z8LXDyP...VG81TjdUdjItWjg



Superforecasting - The Art and Science of Prediction by Philip Tetlock

A must read for every investor. Tetlock examines some of the best minds in predicting and their thinking process. You will learn some of the great tools like think probabilistically, outside view vs inside view, and be a fox, not a hedgehog.

https://drive.google.com/open?id=0B-z8LXDyP...UnlqYXpWZ29IcU0


What I Learned Losing a Million Dollars - Jim Paul

I have not had a chance to read this but a book with great reviews. Jim Paul's meteoric rise took him from a small town in Northern Kentucky to governor of the Chicago Mercantile Exchange and proceed to lost it all - his fortune, reputation, and his job. Something worth a read on psychological mistakes that affect all investors.

https://drive.google.com/open?id=0B-z8LXDyP...WFZiX3IzTzUzU1U



Economic in One Lesson - Henry Hazlitt

If you enjoy all the big economic news then you'll like this. A simple book that will make you question everything. So next time when the government announces that they going to stimulate the economy by creating jobs, you'll smell BS before everyone does. Wait we just had one, HSR.

https://drive.google.com/open?id=0B-z8LXDyP...c1RnSjZjdlNicjA



Sapiens - A Brief History of Humankind

One of the best book I've read this year. Talks about everything from how sapiens went from hunter-gatherer, agriculture, the industrial revolution and the development of religion, language, currency etc. It will blow your mind. You will question everything you've come to believe is the truth. How does this help? Investing is all about looking at things from a fresh perspective or through many different lenses.

https://drive.google.com/open?id=0B-z8LXDyP...OG04d05KMFZqV0U



Into Thin Air - Jon Krakauer

A journalist's personal account on an Everest expedition with a group of climbers that turns into one of the worst Mt. Everest disasters in history. If you can learn one thing from this book, it is to see risk in a new light. On how risk can come at you from totally unexpected ways. And risk doesn't come to you when you're right at the top of the mountain, but in every decision, you made before the climb. That applies to investing. Risk doesn't find you after you buy a stock, it's been there all along.

https://drive.google.com/open?id=0B-z8LXDyP...bzBlcWFiT2RsY00


The Compound Effect - Darren Hardy

A motivational self-help book that will inspire you in whatever you do. Your success lies in the things you do when no one is watching, not when everyone recognizes your achievement.

https://drive.google.com/open?id=0B-z8LXDyP...YmE5c29aUkRxN28









Thinking, Fast and Slow - Daniel Kahneman

Written by a renowned psychologist and winner of Nobel Prize in Economics, Kahneman explores how our mind works and why we are the easiest person to fool. And again, a book that will help you avoid many cognitive biases and improve your decisions and judgments.

https://drive.google.com/open?id=0B-z8LXDyP...YmE5c29aUkRxN28
jackysoo
post Dec 28 2016, 03:43 PM

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Wah.. Good stuff la.. Have to do a lot of homework with these!!
daccorn
post Jan 4 2017, 01:33 PM

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The most devalued post of 2016 - should have been pinned. Thanks buddy!
deadravel
post Jan 6 2017, 11:00 AM

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thanks for the book recommendation.
dont think can finish all in 2017 haha. still got few books queueing
SUSic no 851025071234
post Feb 14 2017, 06:56 PM

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Thanks!
8brian4
post Feb 15 2017, 12:28 AM

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thanks for sharing
duckaton
post Feb 15 2017, 08:13 PM

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long long read....
cheefai7
post Feb 17 2017, 04:51 PM

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Thank you, best outlook for year 2017
Win Win Inspiration
post Feb 24 2017, 01:48 PM

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Thank you for the recommendations.
ooyah98
post Feb 26 2017, 11:13 PM

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Hi Dreamxite, thumbs up, thank You!
subaiku
post Jun 11 2017, 06:30 PM

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Posting so I can bookmark for later. Thanks! smile.gif
Showtime747
post Jun 11 2017, 09:59 PM

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While reading and equip oneself with financial knowledge is important to achieve the elusive "financial freedom", it is more important to put that knowledge into practice.

Honestly, how many of them actually put what they read into practice ? I can speculate that 90% will forget about the content the next day when their day job consumes all their attention. And during the weekends, all they want is a good rest or enjoy the time with the loved ones. To those 90%, reading those books is more about "entertainment" or at best, a way to console themselves they are "doing something about their future"

Knowledge is nothing if they are not put into practice.

So, If you are not :

1. born into a rich family
2. marrying someone rich
3. winning lottery

then, you have yourself, and only yourself to depend on.

If you really want to achieve "financial freedom", the first thing to do is not reading books, but "get yourself disciplined to put away some money for investment every month".

The only "knowledge" you need is this :

1. Set aside an amount consistently every month. With strong discipline and will power
2. Invest in investment vehicles which the risk you are comfortable with
3. Use the return and re-invest together with the set monthly amount in #1

I have one live example. Long story short, my niece joined my company about 20 years ago. One day, she asked me what is good investment. I told her the above. She set aside RM2k every month without fail to invest. Today, her investment already touched RM1.5m. Her investment is part property and part share market.

It is good reading financial books. But the more important thing is to set aside an amount and start investing. Start with FD if uncomfortable with other investment. Then slowly progress. Be patient and allow time to work on your side.

To me, reading books and gaining knowledge is important. But discipline and will power is even more important (and much more difficult to practise) than investment knowledge.


Win Win Inspiration
post Jun 12 2017, 10:59 AM

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QUOTE(Showtime747 @ Jun 11 2017, 09:59 PM)
While reading and equip oneself with financial knowledge is important to achieve the elusive "financial freedom", it is more important to put that knowledge into practice.

Honestly, how many of them actually put what they read into practice ? I can speculate that 90% will forget about the content the next day when their day job consumes all their attention. And during the weekends, all they want is a good rest or enjoy the time with the loved ones. To those 90%, reading those books is more about "entertainment" or at best, a way to console themselves they are "doing something about their future"

Knowledge is nothing if they are not put into practice.

So, If you are not :

1. born into a rich family
2. marrying someone rich
3. winning lottery

then, you have yourself, and only yourself to depend on.

If you really want to achieve "financial freedom", the first thing to do is not reading books, but "get yourself disciplined to put away some money for investment every month".

The only "knowledge" you need is this :

1. Set aside an amount consistently every month. With strong discipline and will power
2. Invest in investment vehicles which the risk you are comfortable with
3. Use the return and re-invest together with the set monthly amount in #1

I have one live example. Long story short, my niece joined my company about 20 years ago. One day, she asked me what is good investment. I told her the above. She set aside RM2k every month without fail to invest. Today, her investment already touched RM1.5m. Her investment is part property and part share market.

It is good reading financial books. But the more important thing is to set aside an amount and start investing. Start with FD if uncomfortable with other investment. Then slowly progress. Be patient and allow time to work on your side.

To me, reading books and gaining knowledge is important. But discipline and will power is even more important (and much more difficult to practise) than investment knowledge.
*
Thank you sir for your kind advice, the perspectives that you have shared is truly constructive.
I myself as a beginner, I do have the discipline to set aside money for savings and investment, as of now, I am still learning the fundamentals and basics of investment, thus far, have not really created any investment portfolio yet, while my savings are increasing (although not very significant at this moment, confident that it will certainly grow as I am growing my career) every month.
I am a very frugal and disciplined person, I track every spending and ensure that I spend only on necessities, and I believe in the notion that "only buy luxuries when we have build the assets to afford that".

What advice would you have for me? As in, what are the avenues/channels that I should be focusing on learning as a beginner?

Have a nice day sir.
icemanfx
post Jun 12 2017, 12:58 PM

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For reasons, only 4% of adults in this country have over us$100k net worth. Following the herd is unlikely to be in this 4%.

Showtime747
post Jun 12 2017, 03:48 PM

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QUOTE(Win Win Inspiration @ Jun 12 2017, 10:59 AM)
Thank you sir for your kind advice, the perspectives that you have shared is truly constructive.
I myself as a beginner, I do have the discipline to set aside money for savings and investment, as of now, I am still learning the fundamentals and basics of investment, thus far, have not really created any investment portfolio yet, while my savings are increasing (although not very significant at this moment, confident that it will certainly grow as I am growing my career) every month.
I am a very frugal and disciplined person, I track every spending and ensure that I spend only on necessities, and I believe in the notion that "only buy luxuries when we have build the assets to afford that".

What advice would you have for me? As in, what are the avenues/channels that I should be focusing on learning as a beginner?

Have a nice day sir.
*
Your attitude is already half way to financial success rclxms.gif

Keep it up and in 2 decades, you will see your fruits grow very big. At that time, you can pamper yourself and be less frugal and enjoy life

I wouldn't say what I wrote here is "advice", but just my opinion only. Different people got different opinion

For beginners, the usual options are :

1. FD (I am sure many are aware of this since young)
2. Amanah Saham. There are many variety. If you are a bumi, then close one eye put in ASB while searching for better return investment
3. Unit Trust
4. Share market
5. Property (when you have more capital)

Don't look at those "scheme" which give you 20% return per month. They are scams. Also I am not a believer of insurance saving scheme either. I would rather put in FD and get similar return with better flexibility. With the exception that if a person is not disciplined, then insurance saving scheme may be a good choice for forced savings

Reading books is sometimes very boring. And it is only 1 way traffic without interaction. I gain a lot of knowledge through interacting with members in forums (like this one). There are many sifus who are generous in sharing information. For 1-5 mentioned above, there are dedicated threads in LYN. If you mix around with the regulars there, I am sure you will benefit more than reading books

The one important and obvious financial knowledge is simple maths. Ie. "% returns". I use FD as a benchmark. Let's say 3.5% as risk free return (although technically it is not risk free, but let's not go into it). Then use FD rate as benchmark to assess other investment viability. Eg. is Amanah Saham giving higher returns than FD ? Is the accessibility as flexible as FD ? What is the risk ? etc etc

Then as you progress, you will go into unit trust, share market, properties....there are many options and varieties in each type, so try to learn the varieties.

I always remind myself about risk and return --> High risk high return. Low risk low return. There is no free lunch in this world. Don't be a smart aleck and thought that you are the first one who found a gem. I don't believe anyone can out-smart the market

Let's involve yourself more in the forums. Use google more often. Choose the investment vehicle you like best. In time to come, you will be a seasoned investment sifu thumbup.gif



Showtime747
post Jun 12 2017, 04:04 PM

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QUOTE(icemanfx @ Jun 12 2017, 12:58 PM)
For reasons, only 4% of adults in this country have over us$100k net worth. Following the herd is unlikely to be in this 4%.
*
Adults = above 21 y/o. So the stat you have is not surprising. I doubt there are any 21 y/o have even RM100k. Unless from parents

You remind me of another important fundamental of investment - don't be too negative / pessimistic. If not, everything also cannot jalan. Nothing is good. As I always said to you last time, negative person always wait for all 10 traffic lights in front of them to turn green, only they step on the accelerator to go ahead.

Of course, too optimistic is also not good. Cautiously optimistic is better. Middle of the road. Being cautious can sail the ship for ten thousand years !

Being negative / overly pessimistic can only stay at the same spot for another ten thousand years
icemanfx
post Jun 12 2017, 07:34 PM

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QUOTE(Showtime747 @ Jun 12 2017, 04:04 PM)
Adults = above 21 y/o. So the stat you have is not surprising. I doubt there are any 21 y/o have even RM100k. Unless from parents

You remind me of another important fundamental of investment - don't be too negative / pessimistic. If not, everything also cannot jalan. Nothing is good. As I always said to you last time, negative person always wait for all 10 traffic lights in front of them to turn green, only they step on the accelerator to go ahead.

Of course, too optimistic is also not good. Cautiously optimistic is better. Middle of the road. Being cautious can sail the ship for ten thousand years !

Being negative / overly pessimistic can only stay at the same spot for another ten thousand years
*
Whenever there is economic recession, it is the optimistic/high confident group ended up under water first.

This post has been edited by icemanfx: Jun 12 2017, 07:41 PM
SKY 1809
post Jun 12 2017, 08:14 PM

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QUOTE(Win Win Inspiration @ Jun 12 2017, 10:59 AM)
Thank you sir for your kind advice, the perspectives that you have shared is truly constructive.
I myself as a beginner, I do have the discipline to set aside money for savings and investment, as of now, I am still learning the fundamentals and basics of investment, thus far, have not really created any investment portfolio yet, while my savings are increasing (although not very significant at this moment, confident that it will certainly grow as I am growing my career) every month.
I am a very frugal and disciplined person, I track every spending and ensure that I spend only on necessities, and I believe in the notion that "only buy luxuries when we have build the assets to afford that".

What advice would you have for me? As in, what are the avenues/channels that I should be focusing on learning as a beginner?

Have a nice day sir.
*
U should get yourself a financial health check i.e to find out what is your own risk profile or own risk tolerance ?

Then only u should venture out into the investments according to what type of risks u can comfortably take...

High return is always associated with high risk ..some went for a 20% return a month, might not get their capitals back...so be realistic too .

Beginners should not expect too much ( returns ) out of their tiny investment initially , but having a good learning mindset and for the sake of getting some good experience ..is vital..
kueyteowlou
post Jun 13 2017, 08:08 AM

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QUOTE(Showtime747 @ Jun 11 2017, 09:59 PM)
While reading and equip oneself with financial knowledge is important to achieve the elusive "financial freedom", it is more important to put that knowledge into practice.

Honestly, how many of them actually put what they read into practice ? I can speculate that 90% will forget about the content the next day when their day job consumes all their attention. And during the weekends, all they want is a good rest or enjoy the time with the loved ones. To those 90%, reading those books is more about "entertainment" or at best, a way to console themselves they are "doing something about their future"

Knowledge is nothing if they are not put into practice.

So, If you are not :

1. born into a rich family
2. marrying someone rich
3. winning lottery

then, you have yourself, and only yourself to depend on.

If you really want to achieve "financial freedom", the first thing to do is not reading books, but "get yourself disciplined to put away some money for investment every month".

The only "knowledge" you need is this :

1. Set aside an amount consistently every month. With strong discipline and will power
2. Invest in investment vehicles which the risk you are comfortable with
3. Use the return and re-invest together with the set monthly amount in #1

I have one live example. Long story short, my niece joined my company about 20 years ago. One day, she asked me what is good investment. I told her the above. She set aside RM2k every month without fail to invest. Today, her investment already touched RM1.5m. Her investment is part property and part share market.

It is good reading financial books. But the more important thing is to set aside an amount and start investing. Start with FD if uncomfortable with other investment. Then slowly progress. Be patient and allow time to work on your side.

To me, reading books and gaining knowledge is important. But discipline and will power is even more important (and much more difficult to practise) than investment knowledge.
*
such a lucky niece that have you!!!! i full agree with all your opinions!
Win Win Inspiration
post Jun 13 2017, 10:14 AM

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QUOTE(Showtime747 @ Jun 12 2017, 03:48 PM)
Your attitude is already half way to financial success  rclxms.gif

Keep it up and in 2 decades, you will see your fruits grow very big. At that time, you can pamper yourself and be less frugal and enjoy life

I wouldn't say what I wrote here is "advice", but just my opinion only. Different people got different opinion

For beginners, the usual options are :

1. FD (I am sure many are aware of this since young)
2. Amanah Saham. There are many variety. If you are a bumi, then close one eye put in ASB while searching for better return investment
3. Unit Trust
4. Share market
5. Property (when you have more capital)

Don't look at those "scheme" which give you 20% return per month. They are scams. Also I am not a believer of insurance saving scheme either. I would rather put in FD and get similar return with better flexibility. With the exception that if a person is not disciplined, then insurance saving scheme may be a good choice for forced savings

Reading books is sometimes very boring. And it is only 1 way traffic without interaction. I gain a lot of knowledge through interacting with members in forums (like this one). There are many sifus who are generous in sharing information. For 1-5 mentioned above, there are dedicated threads in LYN. If you mix around with the regulars there, I am sure you will benefit more than reading books

The one important and obvious financial knowledge is simple maths. Ie. "% returns". I use FD as a benchmark. Let's say 3.5% as risk free return (although technically it is not risk free, but let's not go into it). Then use FD rate as benchmark to assess other investment viability. Eg. is Amanah Saham giving higher returns than FD ? Is the accessibility as flexible as FD ? What is the risk ? etc etc

Then as you progress, you will go into unit trust, share market, properties....there are many options and varieties in each type, so try to learn the varieties.

I always remind myself about risk and return --> High risk high return. Low risk low return. There is no free lunch in this world. Don't be a smart aleck and thought that you are the first one who found a gem. I don't believe anyone can out-smart the market

Let's involve yourself more in the forums. Use google more often. Choose the investment vehicle you like best. In time to come, you will be a seasoned investment sifu  thumbup.gif
*
Good morning sir. Thank you for your kind encouragement. notworthy.gif

Surely I will keep it up for long term to achieve the desired outcome, the fulfilment of the future that we envisioned 10, 20 years later is certainly more important than having instant gratification. 
I will certainly involve myself more in the forums, have been reading the threads in [Finance and Investment House] and [Property Talk] these days, and I have gained so much of Real World information, which I am grateful for, the information shared by the sifus are eye-opening.

I do have a number of questions in mind that I wish you could enlighten me:
1. With the monthly-increasing savings (I religiously practice pay-yourself-first principle), what would be the best way to hedge against the decreasing values of money/inflation? As in, which are the best avenue to put the money into?
2. What should be the optimum split of investment portfolio? Understanding that there is no one-size-fits-all portfolio, however, what would be the optimum split that you would suggest?
3. Is it advisable to take loans for Property Investment, given that the monthly cash flow is sufficient to cover the installment?
4. Unit Trust investment – Get it through online platform (like Fund Supermart) or UT Agent is better? What kind of funds worth looking at?

And thank you for your kind reminder on those “20% returns/month scheme”, that is something that I will stay away by all means. icon_rolleyes.gif
Have a nice and passionate day ahead sir.

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