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kcchongnz blog

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

 

Dr Neoh Soon Kean, The Malaysian Super Investor kcchongnz

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I have written an article articulating the core principles and methodologies used for investing by a number of super investors in the US as shown in the link below:

http://klse.i3investor.com/blogs/kcchongnz/88007.jsp

A reader and one of the most regular contributors in i3investor made the following request.

 

Posted by Icon8888 > Dec 13, 2015 01:12 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

Thanks KC. The articles gave a good summary of various gurus different methods of getting rich, save me the trouble of going through the books one by one. So much more to learn...

Apart from the few highlighted in your article, there are many many other gurus

It would be nice if you can also write about them (just my wish, not imposing on you

I have made this promise:

Posted by kcchongnz

Yes, there are many other gurus who are as good. I will write about some of them. I will also write about the gurus in Malaysia.”

 

Dr. Neoh Soon Kean is a well-known academician and investment guru and adviser during the 1970s and 1980s. There were very few investors who possessed that kind of investment knowledge then.

Actually I don’t know if Dr. Neoh has made a lot of money in the stock market or not because he has remained in low profile. But knowing his investment knowledge and strategies plus the low hanging fruits all around the share market at that time, I have no doubt he had made a lot of money too, although he never goes around boasting about it.

The first investment book I bought and read was the “Stock Market Investment in Malaysia and Singapore” written by none other than Dr. Neoh Soon Kean. That was when I just started to invest in the stock market after just a few years of working.

Frankly I caught no balls from his book then as a young engineer, I paid more attention to playing mahjong and pub hopping and never spend time trying to learn the fundamental aspect of investing. That was the time there were a lot of low hanging fruits then, especially after the October 21 1987 plunge of the stock markets all around the world.

What a pity. Otherwise, I would have been like what Warren Buffett has said,

I had no doubt that I would be rich

But never mind, it was better late than never. I am still okay.

 

I have just recently re-read his book. That is why I said I have no doubts that he has made a lot of money too in the stock market. But making a lot of money is nothing great as it doesn’t contribute to the society. What I am more interested is his investment thoughts as articulated through his book which I will summarize the main points below.

 

Respect Mr. Market

The opening of the book is priceless and timeless. Dr Neoh explained on the speculative manias in the past (both global and local). It serves as a timely reminder to investors that great fortune could be made fast in the stock market, and similarly serious financial misery could result in the same lightning speed. That was even before the 1987 Black Monday.

Subsequently there were a number more of this speculative mania; the October 21 Black Monday, the Second Board euphoria, the Asian Financial Crisis, the Dotcom Crisis and the US subprime housing loan crisis. They all seem to come in regular intervals.

I have written a number of articles on these crises here but generally these topics appear to be “boring” for most “investors” in i3ivestor.

http://klse.i3investor.com/blogs/kcchongnz/73543.jsp

http://klse.i3investor.com/blogs/kcchongnz/73675.jsp

http://klse.i3investor.com/blogs/kcchongnz/73859.jsp

http://klse.i3investor.com/blogs/kcchongnz/74057.jsp

These remind us to be cautious in investing and have feel where the market is. Invest safely to build long-term wealth as there are good opportunities there. But never try to make money following the greater fool theory, and most of all never use OPM to try to make more money. Only invest money which you can leave there for years without having to use it.

Dr. Neoh stressed that for a typical small investor, it is better to take the free lunch of diversification. Diversification means a portfolio of 8-10 shares which is not beyond the capability of many small investors.

 

Value of a share

Dr Neoh emphasizes this a lot,

“The value of a share depends on its future dividend”

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.

He prefers the market valuation metric of dividend yield (DY) than PE ratio as he said, earnings per share fluctuates a lot, unlike dividend, which is generally stable, and more reliable, especially a company has stable earnings and cash flows, and a healthy balance sheet.

I have emphasized this in my post in the link below regarding the relevancy of dividends in investing here:

http://klse.i3investor.com/blogs/kcchongnz/85015.jsp

Dr. Neoh, like other super investors also emphasizes that share has an intrinsic value, investor must have the ability to evaluate a share for its true worth; only buy when the share is selling well below its intrinsic value and sell when the price is above it.

I have shared with you how to evaluate the true worth of the share using the dividend discount model here which I suggest is one of the most reliable methods of estimating the intrinsic value of a share.

http://klse.i3investor.com/blogs/kcchongnz/85828.jsp

 

Bonus issues, share split and free warrants

“THE VALUE OF A SHARE DOES NOT DEPEND ON BONUS ISSUES, SHARE SPLITS, OR FREE WARRANTS.” kcchongnz

Of late many companies offer bonus issues, share split and “free” warrants with the excuse of improving the liquidity of the shares traded. Some shareholders even went to the AGMs and taught the management how to carry out their duties by carrying out those corporate exercises to improve shareholder value.

I have written an article about the good and the bad of these corporate exercises here:

http://klse.i3investor.com/blogs/kcchongnz/79280.jsp

Many shareholders jump with joys when those corporate exercises were announced. But how this could help liquidity further when shares can be bought in 100 board lot of which one can buy 100 shares Maybank for RM830? How this could increase shareholder value when high cost for investment bankers and share registrar are involved with no tangible benefit to the value of the company?

Dr. Neoh acknowledged that local investors/speculators do chase after bonuses, share split and free warrants but he warned investors against it as they are made for the purpose of giving a temporary boast to the price of the share for the purpose benefitting the insiders, the bigger shareholders and their friends.

Citing the numerous research done by well-known academicians in the US, augmented by his own research, he argued that there is strong evidence for the existence of either insider trading or insider-inspired trading prior to those exercises. There is also strong evidence of heavy selling after bonus announcements have been made.

Hence for those investors/speculators chasing those corporate exercises just before and after the announcement has resulted many innocent lambs slaughtered.

 

Conclusions

Dr. Neoh has some valuable core principles in investing like the super investors in my previous post. His philosophies and principles are worth emulating if one wishes to have positive outcome in his investment.

In the next article, I will write about another more well-known and successful local super investor which I have followed his principles and methodologies a lot.

For those who wish to learn about the core principles and methodologies of successful fundamental value investors, again please contact me at

ckc14training2@gmail.com

 

K C Chong

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  8 people like this.
 
calvintaneng ANOTHER GREAT WRITE UP BY KCCHONGNZ

YES! DR NEOH SOON KEAN IS THE LOW PROFILE SUPER RICH INVESTOR - THE BENJAMIN GRAHAM OF MALAYSIA.

My Johor Sifu is a very diligent disciple of Dr Neoh. He said that if he had followed Dr Neoh much earlier he would have made many more millions.

In any case he Made Rm1.5 Millions from Ajiya alone at average cost of 50 cents. He sold all over Rm4.20. He had 400,000 shares of Ajiya. A Check with Ajiya Top 30 shareholders reveal that Dr Neoh at no 18 with 610,000 Ajiya shares under the name of Neoh Choo Ee & Co.

One of Dr Neoh's highlights was the presence of syndicates in Malaysia Market

Dr Neoh's priceless book "STOCK MARKET INVESTMENT IN MALAYSIA AND SINGAPORE" is now in front of me as I quote from pp 19

"It was as if Jaws 1 had been killed and it was safe to go dipping in the water again, Jaws 11 and 111 reared their ugly heads"

I am amazed that even now I keep seeing Jaws 4, 5, 6 & more in KLSE.

So many kena eaten by Jaws like Megan Media, Transmile & Patimas. And now the Show still on is hubline, hibiscus, XOX & many others still to come. In Dr. Neoh's words they are like lambs led to the slaughter batches by batches.

I called Dr Neoh's office years back and asked for a reprint of his book.

They replied that things have changed and some contents are no longer relevant now. So I am still waiting for Dr Neoh's latest update on his book.

I have benefited tremendously from Dr Neoh's writings and for that I am So Grateful

Many thanks for many happy returns
20/12/2015 20:30
PlsGiveBonus Super investor all look same one
20/12/2015 20:33
murali Not really...the real one wouldnt come out to tell everybody that they are super investor again n again
20/12/2015 20:35
PlsGiveBonus The lesson is we ought to follow super investor tips to invest anything.
My Johor buddy very pleased to announce buy call on KPSCB BJCorp PMCorp JTiasa, my buddy is one of the top ten super peasant.
20/12/2015 20:42
Tkoklin My sifu remain low profile, you won't even know it was him passing by as he look so low profile. Pls leave him alone. He is enjoying his time now probably in Japan
20/12/2015 20:50
Icon8888 Thanks KC for the write up

I am a big fan of Dr Neoh, always read his article in Nanyang. One of his favorite was LKT, which is now called SAM Engineering
20/12/2015 21:34
Chin Pin Tan How I wish to get a copy of Dr. Neoh book to learn his methodology. Too bad the book was out of print.
20/12/2015 22:59
Tkoklin Post removed. Why?
21/12/2015 00:10
Tkoklin Post removed. Why?
21/12/2015 00:16
Tkoklin Wtf why remove my posts? My sifu said he dun wanna in limelights
21/12/2015 07:15
dusti It is good to read good people write about good people. Read Dr. Neoh Soon Kean and loads of others when I took my traders licence many many moons ago. Got my licence but didn't have $$$$$ to switch. Enjoy reading the tonnes of "advice" in the various buddy forums and blogs and the syndicates "pluck from the sky" target prices. Many blogs and buddy forums have degenerate to "ego forums" To stay rewarded in the market I have this on the cover of my diary"LISTEN TO YOURSELF". Was fortunate to benefit from a buddy forum of Viz Branz (SGX) a few years ago. Most shareholders of this fine company rode into the sunset together with bags of loot (profit), For a few, enough to retire, but only for a short while before the bug bit again. That's my short story. Please share yours. Cheers
21/12/2015 10:08
MG9231 Hi, Mr.Dusti, after going 3 rounds of your story, I can't grasp what you try to tell us.
21/12/2015 10:27
dusti Hi MG9231 try #4 then ..........Cheers!
21/12/2015 10:40
calvintaneng Whoa,

MG9231,

The Champion of Champions is here.
Better share your story now.

You and your brothers are richer than kyy yet you guys are so low profile
21/12/2015 10:45
ProfitMan One of the first book i bought on the stock market was by Dr Neoh, a book which I have preciously kept till this day. It was a well written book and imparted many important investing principles. I am a great fan of his and its amazing that he recognizes the changing environment and in the process, his thoughts evolves with the change which is very admirable. Many many many years ago, I emailed him on the relevancy of some his contents and he very sincerely and honestly replied that some of them are no longer applicable due to the changed environment. His writings shaped a lot of my investment strategies.

KC, thank you for featuring Dr Neoh.

calvintaneng, yes, the Jaws quote is one of my favourite and is always at the back of my head.
21/12/2015 13:30
paperplane great.
21/12/2015 17:19
kcchongnz Posted by ProfitMan > Dec 21, 2015 01:30 PM | Report Abuse
One of the first book i bought on the stock market was by Dr Neoh, a book which I have preciously kept till this day. It was a well written book and imparted many important investing principles. I am a great fan of his and its amazing that he recognizes the changing environment and in the process, his thoughts evolves with the change which is very admirable. Many many many years ago, I emailed him on the relevancy of some his contents and he very sincerely and honestly replied that some of them are no longer applicable due to the changed environment. His writings shaped a lot of my investment strategies.

Most of Dr. Neoh's principles still are relevant in today's environment. Just that one has to have independent thinking. For example his use of the Graham earnings formula using

V = EPS*(8.5+2*g)* 4.4/Y

A 5% and a 15% growth rate makes hell of a difference for the value of the stock. Hence I only use it to check if a hot stock is selling at a reasonable price, rather than using it to value a stock.

Another example is the use of dividend yield. i always check if a high dividend stock can sustain by checking its balance sheet and the stability of earnings and cash flows. Paying dividend from additional borrowings, rather than from free cash flows, is a no no for me.
21/12/2015 19:45
稻田·* 片片绿青~粒粒芳香 Dear Kc Chong,

祝你冬至快乐。。。。
21/12/2015 20:26
kcchongnz Duit,

A beautiful song for you and others

https://www.youtube.com/watch?v=YcxXXWKdKOw
21/12/2015 20:33
kkw812004 Hi Kcchongnz ,the book by Dr Neoh, is it still available in book store? Do u have an electronic variant? can u share it with me?
21/12/2015 20:38
kcchongnz Posted by kkw812004 > Dec 21, 2015 08:38 PM | Report Abuse
Hi Kcchongnz ,the book by Dr Neoh, is it still available in book store? Do u have an electronic variant? can u share it with me?

I don't think it is available now. This is an old publication and hence I don't think there is any electronic copy.
21/12/2015 20:48
稻田·* 片片绿青~粒粒芳香 Thanks Kc Chong senior.

Chat again.
21/12/2015 20:51
paperplane No need buy the book! My sifu is always with me, in my heart
21/12/2015 21:29
稻田·* 片片绿青~粒粒芳香 KC Chong....

Ohh nooo... It is enchanting.... Love her voice but its my first time to listen her Eng song..... Thanks for that.
21/12/2015 21:31
Icon8888 Post removed. Why?
21/12/2015 21:31
paperplane Any problem oldman? I told all tht I knew Dr.Neoh in person!
21/12/2015 21:35
稻田·* 片片绿青~粒粒芳香 KC Chong....

Ohh nooo... It is enchanting.... Love her voice but its my first time to listen her Eng song..... Thanks for that.
21/12/2015 21:42
稻田·* 片片绿青~粒粒芳香 Paperplane bro,

祝你冬至快乐。。。健健康康。

今晚停战一天。。。只有群英宴。。。预祝冬至。。。
21/12/2015 21:44
donfollowblindly paperplane2016 why billionaire Dr Neoh so low profile? In i3 I keep seeing kcchong highlighted his high return portfolio of RM 100K.
21/12/2015 21:45
paperplane What? 100k? U kidding me? His profit calculated in millions! If not billions! He is x10000000 better than tht old guy kyy who wanna act! He is low profile as u know in !Malaysia not safe.
21/12/2015 22:10
contango this chap used to have an investment column in the old malay mail. old timers tell me his performance was nothing to shout about. but i agree with him. dividends is the key determinant in stock selection.
22/12/2015 10:20
Icon8888 ya sifu contango, both at Malay Mail and Nanyang Siang Pao at same time (same article)

last time no internet no blog, I follow his tips

but now I follow the Koon Bee System. Very powerful
22/12/2015 10:25
Jonathan Keung good write up on investment scenario. nice to re-read certain parts of the print.
22/12/2015 10:26
contango @Icon8888, me no sifu, just learning everyday from real sifus like you. one stock tip and the price shoots up.

one thing i noticed about you is that you do not comment on the management of the companies that you write about, qualitative factors such as integrity, greed, etc.
22/12/2015 12:52
Aaron Ho Hi KC, I am looking for the book written by Dr Neoh and really hope to read it. Do you have any source of the print? Thanks!
08/04/2016 21:29
Junichiro That was also the first book I read way back in the 1980s. It is more about fundamental analysis. Those days they are no internet. And it is hard for the man in the street to have the advantage of looking at charts n doing technical analysis. Everything moves at a slow pace.

These days charts are easily available n would be an advantage to know technical analysis. Due to internet, prices, news travel at the speed of light. Just fundamental analysis is not enough.

Dr Neoh himself have acknowledge times have changed. Making money is harder now.
08/04/2016 21:46
yfchong re visit the times
18/01/2017 13:20
king36 Sifu Icon8888
Can share Koon Bee System to us?
TQ.
18/01/2017 13:41


 

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