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Author: kcchongnz   |   Latest post: Sun, 23 Jul 2017, 12:12 PM

 

The Incredible High Dividend Yield Investing Strategy kcchongnz

Author: kcchongnz   |  Publish date: Sun, 23 Jul 2017, 12:12 PM


Most investors want high return from investment with little risks. They want good return but shun risk and try hard to avoid risks most of the time. The behavior of risk averse in investing is a good thing, as preservation of our hard-earned money is more important than trying to make big, and incur unnecessary risks. Hence, many are attracted to the sale pitch of “Capital Protected Funds”, (risky) bond funds etc., which are poor investments which cap the upside potential of investors, with not much better downside protection than equity. Think about the structured products of the late 2000 during the US subprime housing crisis, CDS, CMS, CDS2, etc., when investors lost most of their capitals in those derivatives.

Fundamental investing in investing for high dividends is a much better alternative and inherently a low risk investing strategy suitable for most people.

Dr. Neoh Soon Kean, in his book “Stock Market Investment in Malaysia and Singapore” gave dividend as the only reason that drives the share price as shown in his statements as follow:

THE VALUE OF A SHARE DEPENDS ON ITS FUTURE DIVIDENDS”

“THE VALUE OF A SHARE DEPENDS ON ITS FUTURE DIVIDENDS

Note there is no mistake in the double sentence. It just shows the heavy emphasis of dividend in investing.

He said, share is just a form of investment. Except for special situations, the return that they can provide must bear some relationship to the alternative returns that investors can get, for example fixed deposit rate, return from rental in property investments, etc. The dividend yield (DY) investing in a share must bear some resemblance to the returns from alternative investments. 

 

Why is dividend important

“A stock dividend is something tangible-it is not earnings projection; it is something solid, in hand. A stock dividend is a true return on the investment. Everything else is hope and speculation.” Richard Russell

Dividend is a real thing. Jaycorp’s share at RM1.49 now, and with 10 sen dividend a year, its dividend yield at 6.7%, is twice that of bank interest rate. You pocket it, use it for consumptions, or reinvest in the same or other dividend shares and in return, get more dividends.

During the bear market, Jaycorp share may go down to RM1.00, but you would not feel too scare as the dividend yield is 10%. In other words, it can provide a “floor” for share price when bear stampedes, and you won’t get too worried and still can sleep well:

When the market is too hot, dividend yield keeps us in close touch with the real world. You won’t buy XingQuan shares despite they have announced beautiful earnings, increased in earnings, and even good cash flows, and have heaps of cash in their balance sheet much higher than its share price, will you?

Finally, dividend yield prevents you from being side-tracked by events which have little or no real benefits to you as a shareholder, such as bonus issues, share splits, free warrants, property injections by major shareholders, merger and acquisition, high growth, and getting of big contracts which keep on losing money like before etc. like these ones:

http://klse.i3investor.com/blogs/kcchongnz/63777.jsp

What would have happened to your investment outcome if you have chased the bonus issues and shares split plus “free warrants” of Asia Media, free warrants from XingGuan, the numerous bonus issues of EAH, Instacom/Vivocom, etc. when these companies hardly pay any dividends.

 

Why not capital gain?

But why haven’t I talk about capital gain, which is the second part of the total return equation?

Total return = Dividend + Capital gain

Capital gain is of course important. But what logical reason you can give for the share price to go up? I know share price, especially those illiquid shares with very little free float in the market, can go up when someone “fries”, or manipulate it.

The share price will go up because of the growth in dividend. The management must manage the company well so that the company can pay growing dividends.

The dividend of Padini ten years ago was 1.4 sen in 2006 when it was trading at an adjusted price of about 35 sen. The dividend yield then was 4.0%. Its dividend has increased to 12 sen now and at RM3.71 at the close on 21st July 2017. The DY is still attractive at 3.2%, better than the FD in banks, when the share price has risen by more than 10 times.

 

Does buying high dividend stocks always work?

Not really. Table 1 below shows that if you have purchased HBGlobal with a dividend yield of 6.9% on 30/5/2012, you would have lost a whopping 84% as on 23rd July 2017, while the broad market has gone up by about 25% during the same period. AEGB, the former high flier Master Skill Education Group suffered the same fate with 80% loss. Even a seemingly good stock, JCY is not spared with a loss of 55% over the last 5 years, when it was at its high price of RM1.50 and giving 15 sen dividend then.

Table 1: High dividend stocks in 2012

 

The caveats on high dividend stock

High dividend investing strategy can very well be a winning strategy if the company has a stable business with consistent and proven cash earnings power that can grow over time. It may not be good for the company if there is inadequate normalized earnings and free cash flows. It is especially so if there is no excess cash in its balance sheet, and instead with significant debts.

This dividend payment is hence unsustainable as the company has to borrow or issues new shares in order to pay dividend. Paying too much dividend also negatively affect growth as less money is spent on capital expenses for the future growth of the company. A company with low return on reinvested capital is also unlikely to sustain high dividend payment.

When embarking on a high dividend investing strategy, it is better if you carry out the following checks:

  1. Dividend yields at least the same as the bank fixed interest rate, currently average about 3.0%.
  2. Dividend pay-out ratio should be less than a cut-off, say 65-85% so that there is money left and the business can still grow with the reinvestment for potential increase in future dividend.
  3. A business model that doesn’t require massive amounts of capital outlays relative to its earnings power.
  4. Reasonable expected growth rate in earnings at least matches the overall economy, say >4%, also for the potential growth in dividends in the future.
  5. Strong balance sheet for sustainability of dividend payment.
  6. High return of equity and capitals > 12% such that the dividend payment is not only sustainable, but grows from internally generated funds.
  7. Good free cash flows from where dividend is paid from internally generated funds
  8. Shareholder-friendly management dedicated to treating shareholders as owners

 

Taking the above into considerations, especially points 2, 3, 5, 6 and 7, the dividend payment is likely sustainable and growing as shown in figure 1 below for the growing dividend payment for Padini, which meets all the criteria above, over the years.

 

My experience in dividend investing strategy

I have used this dividend investing strategy for some stocks since end of year 2015. The portfolio of 5 stocks picked and written by me based on dividend investment strategy, and published in i3investor less than two year ago, as shown in the link below has gained 80% as on 23rd July 2017 as shown and summarized in Table 2 in the Appendix, while the broad market gained only 7.6% during the same period. The excess return is a whopping 73%.

http://klse.i3investor.com/blogs/kcchongnz/92727.jsp

 

There are two stocks, Padini and Scientex, gained more than 140%, followed by Perstima at +82%, in less than 2 years. The more interesting thing is there is not a single loser. The only underperformer in ECS ICT in share price was compensated by the high dividends shareholders receive every year.

The dividends for all the stocks were made up of about 10% return of the portfolio over the period.

This again shows the low risk feature of this high dividend yield investing strategy, specifically and in particular, the fundamental value investing.

Heads we win; Tails we don’t lose much.

 

Conclusions

Investing in high dividend stocks is my core investing strategy. It can be a winning strategy but it is not full proof strategy. However, it is a viable and low risk strategy if you can separate the chaff from the wheat, as you can see from my published portfolio here. Companies seldom cut their dividend, if they can afford to, as they do not want to send a negative signal to investors when their earnings drop a little temporary.

For those who are interested to get some good ideas of high dividend stocks to invest in for building long-term wealth, you may contact me at,

ckc14invest@gmail.com

You will learn about the fundamentals of investing along the way, and eventually able to scout for good high dividend stocks and evaluate yourselves to invest in using this incredible proven successful investing strategy.

Best of all, you would be able to avoid falling into the traps of the pumped and dumped syndicates which is clearly, very common nowadays.

Happy investing.

 

K C Chong

 

Appendix

 

Table 2: Return of dividend stocks as on 23rd July 2017

 

  12 people like this.
 
stockmanmy Post removed. Why?
23/07/2017 19:56
kcchongnz Posted by cheated > Jul 23, 2017 07:04 PM | Report Abuse
Why no FL Bhd? Bought above RM 2 now RM 1.73.


Come on,I have shared hundreds of stocks in i3investors. You can only name one stock which lost money? I am sure you can do much better than that.

Regarding Focus Lumber, how you know I bought at RM2+?

This post of mine shows bought at RM1.603 and it returned +7.87% in 7 months.

http://klse.i3investor.com/servlets/pfs/71070.jsp

Where did you see I bought at RM2+?
23/07/2017 21:37
cheated The way you replied meaning you really own FL? Why your blog above show you own none? That's why I said you are a cheat.

Posted by kcchongnz > Jul 23, 2017 09:37 PM | Report Abuse

Posted by cheated > Jul 23, 2017 07:04 PM | Report Abuse
Why no FL Bhd? Bought above RM 2 now RM 1.73.


Come on,I have shared hundreds of stocks in i3investors. You can only name one stock which lost money? I am sure you can do much better than that.

Regarding Focus Lumber, how you know I bought at RM2+?

This post of mine shows bought at RM1.603 and it returned +7.87% in 7 months.

http://klse.i3investor.com/servlets/pfs/71070.jsp

Where did you see I bought at RM2+?
23/07/2017 21:44
kcchongnz Posted by cheated > Jul 23, 2017 09:44 PM | Report Abuse
The way you replied meaning you really own FL? Why your blog above show you own none? That's why I said you are a cheat.


this post is about the few stocks posted in i3investor at the end of year 2015. there were only 5 stocks posted as summarized.

I have two more published portfolios in i3investor, plus one stock picks for my participants for the past one year.

For all the above, there are already about 30+ stocks.

I have already shown you the fantastic returns of those portfolios recently.

In addition, I have posted numerous analysis on hundreds of stocks scattered in i3investor.

So, you only found Focus Lumber which lost money, but did it?

By the way, whom you were cheated? Why do you come after me? How did I cheat you?
23/07/2017 21:51
cheated https://klse.i3investor.com/blogs/kcchongnz/97079.jsp

So, you only found Focus Lumber which lost money, but did it?
23/07/2017 21:56
kcchongnz I3investor <service@i3investor.com>
7:58 PM (1 hour ago)
to me

stockmanmy has left a new comment on your post "The Incredible High Dividend Yield Investing Strategy kcchongnz":

people with losers attitude
people very scared of losing money or lesser winnings

they can never keep their winners.


How do you know they did not keep their winners?

Maybe instead of talking nonsense, try to learn from me here,

https://klse.i3investor.com/blogs/kcchongnz/115857.jsp
23/07/2017 21:56
kcchongnz Posted by cheated > Jul 23, 2017 09:56 PM | Report Abuse
https://klse.i3investor.com/blogs/kcchongnz/97079.jsp
So, you only found Focus Lumber which lost money, but did it?


I wonder what is the level of your English proficiency. Did you pass LCE english?

The post asked a question,

[Focus Lumber announced its first quarter 2016 results ending 31st March 2016 on 20th May 2016. Its revenue jumped by 77% to RM53.3m and gross profit doubled to RM14.9m as compared to the corresponding period in 2015. However, its net profit remains flat at RM3.3m compared to the corresponding period the previous year. When compared to the preceding quarter, net profit sinks by 69% from an EPS of 10.4 sen to just 3.2 sen.
As expected, the share price of focus Lumber sank by 33 sen, or 14% at the opening bell on 23rd May 2016. It closed at RM2.07 at the end of the day, for a loss of 11%, in just one day.

Is Focus Lumber worth investing with the steep correction of its price now?]


And you went to buy at RM2.07, and now you said you were cheated. OMG!
23/07/2017 22:03
VenFx Manmy,

I do sailang also, but always know where is my
Boundary & Limitations and I know what is my appetite .

Juz theories/conceptual is not enough, u must know what kind of investor u are NOW .
23/07/2017 22:04
VenFx I learnt fast, but I let my practice guided me slowly.

For example, I use to trade daily when I was a greenhorn;
I evolved slowly by trimming down my number of trades,,,
Now I'm still doing sailang for 2-3 counters per year.

I opt to futhur trim down my trades to 2 counters only per year..
It suit me, I give my self to find the gem slowly and reducing my errors as I could.
23/07/2017 22:11
cheated If you are not interested in FL why bother to create blog on 24th May 2016 only to buy it on 1st Jan 2017. Why your blog wasn't created on 1st Jan 2017?

The post asked a question,

[Focus Lumber announced its first quarter 2016 results ending 31st March 2016 on 20th May 2016. Its revenue jumped by 77% to RM53.3m and gross profit doubled to RM14.9m as compared to the corresponding period in 2015. However, its net profit remains flat at RM3.3m compared to the corresponding period the previous year. When compared to the preceding quarter, net profit sinks by 69% from an EPS of 10.4 sen to just 3.2 sen.
As expected, the share price of focus Lumber sank by 33 sen, or 14% at the opening bell on 23rd May 2016. It closed at RM2.07 at the end of the day, for a loss of 11%, in just one day.

Is Focus Lumber worth investing with the steep correction of its price now?]


And you went to buy at RM2.07, and now you said you were cheated. OMG!
23/07/2017 22:11
VenFx Beside that,
I always trying to look for at least 2-3 con counters per year and study it .
Of course , I'm recently learnt how traders react to such tragedy as well.

And chat with fellow Sifus in i3; most of them willing to share if we are genuinely. .

Less trade , and more time to study ... that keep me feel exciting about the traders & market.
23/07/2017 22:18
kcchongnz Posted by cheated > Jul 23, 2017 10:11 PM | Report Abuse
If you are not interested in FL why bother to create blog on 24th May 2016 only to buy it on 1st Jan 2017. Why your blog wasn't created on 1st Jan 2017?


My "blog" in i3investor was formed in 31st December 2013. I did not "create a blog" on 24th May 2016.

I have written and shared 291 articles, or 291 "threads" in i3investor. One of them was about Focus Lumber on24th May 2016. I have in fact share more of that before and after that, including one on 1st January 2017 for the stock pick in i3investor.

So, when I wrote about Focus Lumber has nothing to do with you.

No, I didn't buy Focus Lumber on 1st January 2017. By the way, when I bought it has nothing to do with you.

But if you were cheated buying Focus Lumber at RM3+ has nothing to do with me too.

Suck it up man!
23/07/2017 22:21
stockmanmy Post removed. Why?
23/07/2017 23:08
stockraider Put it this way loh....!!
The one who cheat "cheated" is KYY loh.....!!
Raider remember KYY was promoting FLB strongly...saying strong cashflow, good earnings, dynamic investment but behind the scene KYY was selling loh....!!
23/07/2017 23:11
stockmanmy stockraider

the stockmarket is a million times bigger than KYY.
23/07/2017 23:18
stockmanmy people buy and sell all the time.

including KYY.......
23/07/2017 23:20
apolloang nah, bursa where got worth so many trillions? if kyy net worth a few hundred millions X 1 mil= many trillions already....hahaha
23/07/2017 23:25
stockraider PETALING JAYA: Investor Koon Yew Yin (pic) has emerged as a substantial shareholder in Focus Lumber Bhd since last month.

However, disclosure was only made yesterday, with filings showing that Koon had acquired a 6.71% stake, representing 6.93 million shares, in the Sabah-based hardwood manufacturer on April 11 at an undisclosed price.

Focus Lumber said it only received notification from Koon over his emergence as a substantial shareholder in the group on May 9.

Focus Lumber’s shares closed one sen higher yesterday at RM2.05.

Read more at http://www.thestar.com.my/business/business-news/2016/05/11/koon-discloses-substantial-stake-buy-in-focus-lumber-after-4-weeks/#FVuqYBLjDDTWiVHE.99
23/07/2017 23:25
Powerstock Power up your knowledge
Power up your decision making

Sailang power up stock
Sell power down stock
23/07/2017 23:26
stockraider See above...notice KYY disclose he bought FLB but disclose late mah..!!

Notice FLB is at Rm 2.04 when KYY disclose mah...!!

How can we blame KC for the bad deeds of KYY leh ??
23/07/2017 23:27
stockmanmy KC is not responsible for KYY

KC is maths teacher with loser attitude

People with loser attitude can never make good money from stock market.

similarly, I believe stock raider cannot make good money from stock market.
23/07/2017 23:33
stockraider This confirm KYY cheat on "cheated" mah....!!

Cheated follow KYY naively....but behind the scene KYY is selling loh...!!

See how bad KYY behavior ?
Disclose buying on FLB and emerging above 5% shareholding late...!!

But when KYY start disclosing he is the major shareholder of FLB, he already start selling FLB when his followers are buying loh...!!
23/07/2017 23:36
kcchongnz Posted by stockmanmy > Jul 23, 2017 11:33 PM | Report Abuse
KC is not responsible for KYY
KC is maths teacher with loser attitude
People with loser attitude can never make good money from stock market.



kc remains loser? You base on what to make that conclusion? Your panic moment? seX factor? Dynamite?

If you understand English, read these threads on the portfolios of stocks I have been holding, and check their returns, and evaluate yourself if I am a loser, rather than talking nonsense all the time. or is it you?

http://klse.i3investor.com/blogs/kcchongnz/128386.jsp
http://klse.i3investor.com/blogs/kcchongnz/127935.jsp
http://klse.i3investor.com/blogs/kcchongnz/127825.jsp
http://klse.i3investor.com/blogs/kcchongnz/127559.jsp
http://klse.i3investor.com/blogs/kcchongnz/127444.jsp

These are all established records in i3investors since more than4 years ago.
23/07/2017 23:37
stockmanmy Post removed. Why?
23/07/2017 23:56
stockraider Mammy is just a conman loh...!!

Accusing people don make monies....in fact the way...he talk...like only 2 person kyy and mammy only make monies in klse...the rest are soochai..especially kc and raider...as if... sit there waiting to be slaughter by kyy and mammy loh...!!

Common wake up loh...alot of value investors also make monies mah...!!
24/07/2017 00:01
stockmanmy Post removed. Why?
24/07/2017 00:08
stockmanmy Post removed. Why?
24/07/2017 00:09
stockraider Sustain long term stock investors...are based on kiasu investment concept mah....!!

Quote Dr Neoh of Dynaquest
Stockmarket is a loser game if u push too aggressive loh...!!
To win U Need to be contraian, do not chase stock ...especially goreng sailang stock which has gone up mah...!!
Do proper fundamental research.

Warren Buffet
1st principle of investment is not to lose monies
2nd principle of investment is to remember the 1st principle.

SO DON BE A SOOCHAI SIMPLY SAILANG LOH....!!

Invest big after u have done superb research, when u can say u r as good as insider loh...!!

Do not simply follow people without doing proper research, and remember margin of safety the central core of your investment loh...!!
24/07/2017 00:18
stockmanmy Post removed. Why?
24/07/2017 00:21
stockraider We keep very good stock that passed the stringent fundamental & margin of safety test loh....!!
24/07/2017 00:23
stockmanmy Post removed. Why?
24/07/2017 00:25
stockraider Just look at Singapore...why so successful leh ??

Bcos Spore Believe in Kiasu concept loh...!!

Why Penang people successful leh ?
Bcos penang people believe in kiasi concept mah...!!
24/07/2017 00:26
stockraider Posted by stockmanmy > Jul 24, 2017 12:25 AM | Report Abuse

raider

even you find a good stock...it will be sold the moment it moves up a bit.

Raider comment,
Not true loh....!!

Raider hold KESM until now mah...!!

Bcos $$$$$$$$$$ big gain loh...!!
24/07/2017 00:28
stockmanmy Post removed. Why?
24/07/2017 00:31
stockmanmy Post removed. Why?
24/07/2017 02:31
tellmewhy to me KC is a guru, he spotted magni and scientex. 2 wonderful counters. KC, nothing wrong being a math teacher, to me teacher is a highly respected profession. DR, CEO, lawyers etc are train by teachers no matter how high their position. Teacher may not make millions but they help many to make millions, let's don't forget their contribution.
24/07/2017 05:52
Alex Foo tq KC sifu for teaching. please post more to educate us on regular basis. we need that
24/07/2017 08:05
Alex Foo I find that most good div with mos surrounds around property, furniture...maybe because I apply the 22.5. in fact I just started buying them and to test it for myself. hope I can hold longer to see the fruit.
24/07/2017 08:07
gohkimhock What i would like to emphasize on is good dividend shall be on a consistent basis.
24/07/2017 08:18
kcchongnz Posted by stockmanmy > Jul 24, 2017 02:31 AM | Report Abuse
raider / kc
very normal for people to write good things about shares they hold......nothing sinister there..........why must KYY be held to a different standard?
I think both of you are people of no morals.


Good. Lets talk about morality.

Some people here bought large amount of shares of certain companies. Then they came up to promote them furiously, even collaborate with other major shareholders, fund managers, syndicates etc to fry the share. They even encourage newbies and the naive people to borrow money, use margin finance, and sailang on the stocks promoted by them. To me, that is highly irresponsible and immoral, especially for some people who have some social standing in the society, because most people tend to follow them. Did they manage to drive Rolls Royce, or have most of them lost money, huge amount of money as a result?

There are plenty of trails in i3investor alone you can follow and make a judgment by yourselves.


I have written 291 posts so far in i3investor. Most of them trying to teach people the proper way of investing propagated by all the real super investors in the world and at home. I urge them to learn those skills. With those skills, they can avoid falling into the traps of the manipulators and syndicates.If they have followed my principles, I am very sure they would have made reasonable returns from the stock market over the last few years. Just look at those stocks I shared in my portfolios, and the detail analysis I have done and posted in i3investor over the last 4 years +. Just follow all the trails.

So, tell me, who are the "immoral" people mentioned by the loud mouth?
24/07/2017 08:26
Sslee Dear Andry007,
Well said.

Dear all,
Life is not solely about receiving (Profit/loss) but everything about giving. You are all a respective Sifu in i3 community. Please do not be too mean to each other. No one is a perfect person all have their own weakness, so please find in our heart to accept our and other people imperfections. There are many teachers in my life some are bad some are good. But it took only one good teacher to touch my heart and moulded me into the person I am today. My forever grateful thanks to all the teachers that have touched my heart.
Mr. KYY had said humility is not his strong point, he likes to write in a boastful, provocative and at time humiliating way to counter his critics. That is his ways of saying or teaching that have cause many resentments in this i3 community (understandable). But to say that he intend to cheat your money is a bit stretching your imagination too far from the reality. Yes Mr. KYY can move share price as he buy in big quantity but no matter how big he bet on that particular share, it will still came down to that company showing result in order to move the share price further. He himself cannot move the mountain. I can only wish him well on JAKS and SENDAI? By the way Mr. KYY does have a vintage classics Rolls-Royce.
“一个真正的强者,不是收入高,不是开豪车,也不是能说会道,更不是自以为是,而是帮助了很多人,服务了很多人,凝聚了很多人,感染了 很多人,成就了很多人! 未来的世界,一定属于善良,共享,快乐,拥有正能量,帮助别人,以诚相待, 懂得感恩, 懂得包容,懂得付出,懂得慈爱的人!他像水,像气,溶和万物而不争,这就是人生的主导者。”
Extracted comment from khatulistiwa1234 for all to ponder upon.
Thank you
24/07/2017 09:10
kcchongnz Sslee,

You are one of the most impartial and respectable persons around here.

I hope (sincerely) you are right in your assessment.

By the way, normally I do not say something, which is not good, if I am unsure about it.

So in this case, I hope I am wrong.
24/07/2017 10:51
kcchongnz Posted by stockmanmy > Jul 23, 2017 11:56 PM | Report Abuse
yes...but People delete my answer
the real question is...........can a loser keep their winning positions?
paper portfolio with bluff money maybe can.


Do I keep my winning position? Since you talk about it, here are my winning stocks, now, right now! See who is a loser.

1) KESM bought at RM5+
2) JHM at RM1.20
3) Willow at 60 sen. Those bought at less than 40 sen sold already.
4) Padini bought at RM2.30. Those bought at less than RM2.00 sold already.
5) Magnitech bought at less than RM4.00. Those bought at less than RM1.00 sold already.
6)Vitrox bought at RM3.70 before corporate exercise. yeah this one sold too early.

Wlllow, Padini and Magnitech were bought using your so-called "20 century" strategy.

I can't simply write here because I will lose credibility from so many of my stock pick participants if I bluff.

So what do you have?
24/07/2017 11:37
probability http://www.businessinsider.com/easier-con-smart-perople-confidence-game-artist-maria-konnikova-2016-3?IR=T

the moment anyone use their confidence, or social status-success as a prove to persuade into buying something an entice a huge reward...

better run away far far!


Posted by kcchongnz > Jul 24, 2017 10:51 AM | Report Abuse

Sslee,

You are one of the most impartial and respectable persons around here.

I hope (sincerely) you are right in your assessment.

By the way, normally I do not say something, which is not good, if I am unsure about it.

So in this case, I hope I am wrong.
24/07/2017 13:53
probability http://www.thestar.com.my/news/nation/2017/07/24/651-msians-duped-of-millions-singaporebased-aussie-property-firm-under-probe-over-ponzi-scheme/
24/07/2017 14:07
ronnietan If Jaycorp's price tanks, it's because industry conditions changed. Prices don't tank for no reason.
If Jaycorp's earnings drop, how can it be assumed the dividend will be maintained? That's not a reasonable assumption.
24/07/2017 16:11
PlsGiveBonus Invest in Bitcoin and get 15% dividend or more
In good time also have more than 100% dividend
And Bitcoin cannot be killed or delisted like conventional stock market
24/07/2017 19:55
PlsGiveBonus 'Dean of Valuation' Believes Cryptocurrencies Are Replacing Gold

Aswath Damodaran, a professor of finance at New York University's Stern School of Business, is widely respected as an expert in valuing companies, so much so that he has been dubbed the "dean of valuation" by the finance industry. Thus, when he makes a prediction about a major financial matter, he tends to draw a great deal of attention from those interested in the investment potential his statements might suggest.

Now, Damodaran revealed in an interview with CNBC that he believes digital currencies will reach an equal level of importance to traditional paper currencies. He also feels cryptocurrencies have already replaced gold among a younger sect of investors.

Cryptocurrencies Supplant Lack of Trust in Gold

When asked why digital currencies like Bitcoin and Ethereum have taken the place of gold for some investors, Damodaran said "all currency is...based on trust. If you don't trust paper currency, historically what you've done is, you dumped paper currencies [and] you bought gold. Cryptocurrencies have taken the role of gold at least for younger investors because they don't trust paper currencies."

The numbers suggest Damodaran is correct: digital currency prices have surged throughout the year, with Ethereum up more than 24 times by the middle of this week, and Bitcoin up nearly 150%. And those levels aren't even the peaks, as the two leading digital currencies actually reached higher records earlier in the year before dipping somewhat.

Damodaran Defends Virtual Currencies

Damodaran defended digital currencies against skeptics who may be inclined to portray the mining process that generates the coins as a misallocation of resources like electricity or computing power.

"If you think about it, the print presses that run paper currencies. It's kind of a useless transaction," he said. "You're just printing paper. In a sense, all currency creation, it's not creating real economic growth by itself. The only reason currencies exist is for us to transact...if a digital currency can do it more efficiently than paper currency can, I think there is going to be a digital currency sooner or later that competes with the major paper currencies. Whether it is one of the existing cryptocurrencies, I don't know."

Damodaran holds a great deal of sway when it comes to valuation and general opinions about the state of the financial world. He now joins a growing list of major financial players and institutions that are increasingly trusting that digital currencies will be an era-defining technological innovation. As this is new territory for the finance world, the exact way in which the growth of the cryptocurrency industry will play out remains to be seen.
24/07/2017 20:32
Sslee Dear Kcchongnz,
I am newcomer to this i3 community and I am still humbly learning from all the Sifus in i3.
Just for sharing on subject: Important of dividend.
China Securities Regulatory Commission (CSRC), Chairman Liu Shiyu's Speech at the 2nd Assembly of CAPCO Members' Representatives dated: 24-04-2017.
http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwdd/201704/t20170408_314862.html
http://www.csrc.gov.cn/pub/csrc_en/informations/phgall/201706/t20170608_318016.html
“Listed companies are allowed to withhold dividend payments if it is for long-term considerations and with approval by the shareholders' meeting. However, indefinite and unjustified withholding is not acceptable. In international practices, steady and stable cash dividend payout often signals financial health and operational soundness of a listed company. In other words, sustained failure to pay dividends for no reason could be signals of accounting fraud or internal mismanagement. There are listed companies who generously pay out dividends. We commend the practice. However, there are also "iron roosters" who haven't plucked a single feature for many years. The CSRC has been noted of this problem. We won't fail to ensure accountability and will respond with firm measures as warranted.”

I believe it is the duty and responsibility of Minority Shareholders to attend Company AGM and asks for reasonable dividend if the company is doing well and can afford to pay dividend. This is what I intend to do when I attend the next Insas AGM, asking for a reasonable dividend.
Equally if there is any accounting fraud committed, it is the duty and responsibility of Auditor, SC, Bursa and Minority Shareholders to hold BOD accountable and to put an end to such practices.

Thank you.
24/07/2017 21:00
ashrelniko Dear kcchongnz, i am a newbie investor and always enjoy reading your well written blog post. I just wanted to thank you for spending your the time and effort to share your thoughts with us .There are few who make such worthwhile contributions to educate and enlighten the rest of us. Thank you again :)
28/07/2017 12:15

“Three years” and investing 李香兰三年 kcchongnz

Author: kcchongnz   |  Publish date: Sun, 16 Jul 2017, 06:53 PM


I was born and grew up in a Chinese New Village where we had a lot of fun in catching spider, fighting fish, playing hide and seek, cigarette boxes, long and short stick, jumping around squares drawn on the ground etc. We played a lot of ping pong, badminton and basketball too.

Another past time we did was singing song in our Village Library, and more often in the bathroom. You know at that time we did not have karaoke. One song I remember very well is this song “San Nien” by the then songbird Lee Siang Lan. Here is a link of this beautiful song.

https://www.youtube.com/watch?v=ICL061nPcA8

I like the song so much that I have even incorporated in my investing timeline, that investing for building wealth is a long-term endeavour, a minimum of 3 years, using fundamental value investing (FVI).

In the following recent article “Invest in good and cheap” in the link below,

http://klse.i3investor.com/blogs/kcchongnz/127444.jsp

I have shown a portfolio of ten stocks named “GE13 Stock Watch”, followed the principle of investing in good and cheap, as published on 21st January 2013, have had an investing period of four and a half years, i.e. more than “San Nien”. It gave very good long-term return of an average of 151% as on today, widely out-performed the gain of the broad market KLCI of just 19.1% during the same period.

Just 5 days ago, Again, I introduced a value investing strategy of buying good companies cheap in Bursa, the “ColdEye 5 yardsticks” investing strategy as shown in the link below.

http://klse.i3investor.com/blogs/kcchongnz/127559.jsp

A portfolio of 9 stocks meeting the criteria above and were chosen as good investing candidates at about the time on 17th March 2013 basing on the 5 metrics. After four years and four months, andof course more than “San Nien”, and as on 10th July 2017, the portfolio returned an average of 325%. This return way out-performed the total return of 18.3% of KLCI over the same period.

Two days ago, in order to provide evidence that FVI works again, I have shown another FVI strategy of Magic Formula Investing in the link below,

http://klse.i3investor.com/blogs/kcchongnz/127825.jsp

It shows 11 stocks chosen mostly using the Magic Formula investing strategy from 1st August 2013 to the end of the month. More than “San Nien” but slightly less than four years have passed and as on 13th July 2017, the average total return of the 11 stocks chosen is 175%, way out-performed the total return of 10% of KLCI during the same period.

As you can see, evidence from my personal experience in FVI did provide high extra-ordinary return over a period of more than “San Nien”.

That is the reason why I still love the song “San Nien”.

However, it is really very hard to convince people that FVI works, more so to tell them to wait for a minimum of 3 years investing horizon. I can easily say less than 5% of the people here have an ear to hear this, even though I have provided ample personal evidence that it did, and continues to work.

That is also why I have kept on harping about FVI and stubbornly providing my personal experience that it worked. Otherwise what else can I do to substantiate it?

Recently, I received this comment in my mail box after I wrote the article above.

 

[Blanked has left a new comment on your post "Invest in good and cheap kcchongnz":

do you know why you have less subscribers than OTB?
OTB's strategy is 3 to 6 months to see money come, your strategy takes 3 to 6 year to see a good result if we are lucky ……..]

OTB does have a lot of subscribers, no doubt about it. If someone has been very successful in stock pick in the last few years, and the money really “come” in 3 to 6 months, it is natural that he will have a lot of followers. Yes, he made a lot of money in the 3-6 months’ time frame as he has shown us that. But bear in mind that although he emphasizes on technical analysis, he also checks with fundamentals. Hence, we can say that he also believes in FVI. He certainly has his niche. If you have not subscribed to his service, you should do so.

But is this statement on my investment strategy that “your strategy takes 3 to 6 years to see a good result if we are lucky” correct?

I had started my stock pick service about a year ago as an additional service to my FVI course participants who are busy in their work as many of them are in senior positions in companies. Let us look at the return of those stocks picked following FVI with detail analysis and valuations, specifically those meeting the principle of the Joel Greenblatt’s Magic formula investing, for this short time frame.

Please note that those stocks were picked some time ago and prices have changed, many have changed substantially, and hence the investment thesis may be different now.

 

Return of Stock Picks in the last one year

Table 1 in the Appendix shows 12 stocks met the criteria of good companies selling cheap then, especially using the Magic Formula Principle, were chosen as good investing candidates starting a year ago. How has the portfolio performed?

 

As on 15th July 2017, the average total return of the 12 stocks chosen is 36%, way out-performed the total return of just 7.6% of KLCI, or the broader FBM Emas Index of 9.5% over the same one-year period.

KESM, picked exactly a year ago, has the best total return of 186%, followed by Magni-Tech at 80.3%, picked just 7 months ago. Superlon, picked just 4 months ago, had a return of 67%. OKA and Luxchem, picked 1 to 2 months ago, returned 22%.

There are 3 stocks, or 25%, making negative returns ranging from just -10.9% to -1.3%.  Incidentally, WTK, the worst performer at -10.9%, was selected based on deep value asset-based investing.

Again, as other portfolios I have posted before,

Heads we win; tails we don’t lose much.

That is the very essence of FVI, low risk and potentially high return, even in the shorter term.

 

Conclusions

Again, and repeatedly, I have shown you, with my own personal experience, that FVI, whether using the ColdEye 5 yardsticks investing, the Magic Formula, or other FVI strategies of buying good companies cheap, have worked, and worked very well, and I believe it will continue to work. Furthermore, these strategies are low risk investing strategies.

It is intuitive. It is logical. it is plausible. It provides potential high return with limited downside.

It is easy to pick up the FVI skill. However, most people do not have the interest nor time to learn the skill. Here is where people like us are providing this service of stock picks for them to consider investing to build up long-term wealth, safely but surely.

More importantly, while you are investing, you are also learning about FVI simultaneously in a structured manner. You would understand the process and rationales of why certain stocks are picked. Eventually, if one has the interest and the determination to learn about this special skill of FVI, he would be able to invest confidently by himself.

Here are a couple of testimonials,

[Blanked

Jul 3 (13 days ago)

Hi K C,

I am delighted the NAV broke the RM1m hurdle, both Foreign (in 8 months) & Local ( I a year) Portfolio return more than 41%.  

Thank you for the continue good performing of the portfolio.

Blanked]

[Blanked

Jul 3 (13 days ago)

 
 

Well done KC.

Pleased to have made the PD trip and to have met up with you.

The growing fellowship inspired by you is testament to your efforts in promoting FA, particularly benefiting the young but still not too late for old guys like me and Swee Loh!

Keep well.

Blanked]

 

Again, if you are interested in getting some guidance on what to invest in Bursa and at the same time, to learn up the FVI skills, you may contact me at

ckc14invest@gmail.com

K C Chong

 

Appendix

Table 1: 1-year return of stock picks

  10 people like this.
 
3iii How long will the individual shares be held? When will the individual shares be sold?
16/07/2017 20:13
eyewitness "I had started my stock pick service about a year ago."
How does one subscribe to your stock pick service?
16/07/2017 21:07
4444 "I had started my stock pick service about a year ago." Sure 1 year ago not 2-3 years back?
16/07/2017 21:09
4444 If KC good he already multi millionaire. So how rich is he? Which annual report got his name?
16/07/2017 21:09
VenFx Kcchongnz excellency .... keep it up :)
16/07/2017 22:12
stockraider Raider totally agree loh....someone can make 50% to 100% 3mths to say 12mts...but stretched it longer term 3 yrs, 5 yrs, 10 yrs and 20 yrs...the return of most of the great investors would not beat 20% pa compound loh....!!

Even the world greatest investors...W,Buffet only make less than 20% pa compound over 20 yrs mah...!!

So the point...is.. if u think...stockmarket....will help u be very rich..in the long run and u expect to make 30% min compound pa for next 20 yrs...raider says forget it loh...!!

Raider says stockmarket is a place for steady accumulation of wealth loh....!!
It is marathon runner rather than a sprinter mah...!!
16/07/2017 22:22
lching like
16/07/2017 22:23
cheoky give a like
17/07/2017 01:21
angelol Who is OTB?
17/07/2017 12:52
jackfruit Raider u are right. Stock investment is long term n steady acclamation of wealth. I bought my first stock in 1982.It took me 35years for my stocks value to hit one million. It also all about financial planning too.
17/07/2017 13:01
Ooi Teik Bee My stock selection criteria is based on good TA and strong FA.

I spent a lot of money to learn FA, it ends up I learned most of my FA knowledge from My Sifu KC Chongnz.
I knew KC Chongnz through I3 in 2013. If I knew him a bit earlier, I should have made more money in KLSE.

After I learned FA from this excellent Sifu, my investment performance improve tremendously after 2013.
I want to say a big "Thank You" to him for helping me to achieve fantastic results in my investment.

Thank you.
Ooi
17/07/2017 13:32
abang_misai After reading i3 for so many years, I can conclude that OTB is far better than kcchongnz. Good work OTB.
17/07/2017 13:34
LL Cheng OTB, you are a true sifu

like the Chinese saying : green is originated from blue and better than blue (青出于蓝而胜于蓝)
17/07/2017 13:41
Lewis Lee Ooi Teik Bee, you are very humble and a real gentleman, I salute you ^^
17/07/2017 15:57
Investingold Buy Dufu as well. It's a good tech stock with a P/E less than 8.
17/07/2017 22:19
Tom what a joke...... totally not agree with you, I think kcchong is a lot better than otb in term of FA


Posted by LL Cheng > Jul 17, 2017 01:41 PM | Report Abuse

OTB, you are a true sifu

like the Chinese saying : green is originated from blue and better than blue (青出于蓝而胜于蓝)
20/07/2017 23:04
unknown kia ora sifu kcchongnz....."catching spider, fighting fish, playing hide and seek, cigarette boxes, long and short stick, jumping around squares drawn on the ground etc. We played a lot of ping pong, badminton and basketball too"....all these activities were very normal.

my peer did extraordinary stupeed thing =!=....we catches scorpions, got stung by scorpions, we catches centipedes to sell it to the rich taukeh for their pet arowana feeding, almost end up lying in the hospital for the centipede's venom.....the most stupeed thing, we go "cuci mata" tengok sexy lenglui....lenglui with 36"24"36", kena dikejar itu lenglui punya bapak dengan parang =!=

baru-baru ini, ada satu lenglui lalu-lalang.....tangkal 21hb Jun 2017, lenglui kasi flaunt sama dia punya body, fuuyoh !!!! terpancut darah hidung macam aliran air paip.....earning ada quantum leap!!!

You intai-intai tengok body lenglui ada cun tak ? hidung darah I masih mengalir....

lenglui body measurements :

1) 3 years continuous revenue improvement with net profit improvement

http://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=2127

ini makin lama makin langsing wor itu body....

2) Profit margin > 10% , data ft.com bagi 14.93%

https://markets.ft.com/data/equities/tearsheet/financials?s=COMFORT:KLS

3)ROA = 19.99% , ROE = 23.46 %

4)Debt/ Equity = 0.0457, almost negligible

5)current P/E = 12.8 sahaja....

ini macam punya measurements, itu value investor hamsap lou sama itu grow investor punya hamsap lou akan mali......itu TA punya hamsap lou akan mali juga....

tengok-tengok, jangan tak tengok, nanti lenglui pakai baju sudah tak dapat intai sudah lor....
31/07/2017 23:26
unknown there are just too many factions of investors in the market ecosystem

some faction practices value investing (value hamsap lou). they buy the undervalue counters irregardless the quality of the company. As long as the counters in discount, value investor will come.

some faction practices growth investing (growth ham sap lou ). they buy the growth counters with quite a high PE with the expectation the future coming earnings will bring down the PE of their entry. growth counter will most of the time will remain in high PE, there just hardly and window of opportunity for the buyer to buy at the low PE because of the quality, normally the BOD are very competent & trustworthy, they will continue to bring the company through a new height.

some faction practice momentum investing / technical play (TA ham sap lou ). They buy & sell of the counter purely base on the technical analysis.

there greatest counter or the king maker counter is the counter that are going to attract all these factions to come together.....all the hamsap lou coming for 2127...wahahahaha

my 三年 leng lui
01/08/2017 14:25
Dolly_Chai2 Hi KC.
Appreciate if you could share with us how you calculate the intrinsic value of Zhulian & OKA.
For these 2 shares particularly, did you base on DCF or DDM?

Please share with us your calculation so that we can understand your assumptions in the parameters used as well.

Thanks again for your good sharing
02/08/2017 15:55

Search for The Holy Grail in Investing: The Magic Formula kcchongnz

Author: kcchongnz   |  Publish date: Fri, 14 Jul 2017, 12:46 AM


https://www.youtube.com/watch?v=I7GBHGg3pds

In my article “Stop being a patsy in the stock market in the link below,

http://klse.i3investor.com/blogs/kcchongnz/127246.jsp

I suggested that one should not speculate in the stock market following rumours, hot tips, hypes and fads as most people doing so have lost money. In the above article, I have shown you some example of speculative stocks which I talked about them from 4 years ago. The portfolio of 9 speculative stocks lost an average of 54%, with 70% of them lost more than 43%, one up to a loss of 92% over the 4-year period.

Instead I advocated investing following the “right path” to build long-term wealth. That involves looking at the stock as owning part of the business of the company which issued the stocks. The “right path” of investing will involve the plausible logic of buying good companies at reasonable or cheap price. Your investment grows with the business of the company.

In the following article “Invest in good and cheap” in the link below,

http://klse.i3investor.com/blogs/kcchongnz/127444.jsp

I have shown a portfolio of ten stocks named “GE13 Stock Watch”, followed the principle of investing in good and cheap, as published on 21st January 2013 some four and a half years ago in i3investor returned an average of 151% as on today, widely out-performed the gain of the broad market KLCI of just 19.1% and the FTSE Bursa Small-Cap Index of 58.2% during the same period.

But how to identify good companies? How do we know if a company is good and selling cheap?

Just 2 days ago, I introduced a value investing strategy of buying good companies cheap in Bursa, the “ColdEye 5 yardsticks” investing strategy as shown in the link below.

http://klse.i3investor.com/blogs/kcchongnz/127559.jsp

The strategy identifies a good company with high return on equity, or ROE, and cheapness from some metrics such as P/E, P/B, P/Cash flows, and dividend yield. P/E is a very common metric to determine if a company is selling at reasonable price.

A portfolio of 9 stocks meeting the criteria above and were chosen as good investing candidates at about the time on 17th March 2013 basing on the 5 metrics. After four years and four months and as on 10th July 2017, the portfolio returned an average of 325%, with the median return of 222%. This return way out-performed the total return of 18.3% of KLCI over the same period.

As you can see, investing in good companies cheap did provide high extra-ordinary return over a medium period of four to five years.

However, there are some problems of using ROE and P/E ratio blindly.

 

Pitfall of ROE and P/E ratio

For the metric of ROE,

ROE = Net profit / Common equity

The first problem of the ROE formula is the net earning is the bottom line of the Income Statement which may include some one-time-off items and non-operating items such as foreign exchange gain/loss, revaluation gain, gain in disposal of assets, etc. These items are non-recurring and can distort the true performance of the company.

There are other problems about this metric of ROE as discussed in the thread below,

https://klse.i3investor.com/blogs/kcchongnz/63417.jsp

Similarly, the P/E ratio, with “E” the net profit can also distort the true value of the company.

 

Remedies

One way to minimize this problem is to look at the earnings before interest and tax (Ebit), a number before all the extra-ordinary items such as gain in revaluation of assets, gain in foreign exchange, gain from sales of land and other assets etc which are one time off and non-recurring.

As Ebit is the income for both the equity and debt holders, to be consistent, enterprise value (EV), which includes all capital providers, is used instead of the market capitalization. This ratio of EV/Ebit replaces the simplistic P/E ratio to determine if a company is worth buying.

In place of ROE, which measures the performance for the equity shareholders only, we use the metric of return on invested capital, or ROIC. This return of Ebit is the return for all shareholders as well as debt holders, and Invested capital includes all capitals provided by the equity holders as well as the debt holders. That is the essence of the Joel Greenblatt Magic Formula Investing.

 

The Magic Formula Investing