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Stevent Hee

Author: StallionInvestment   |   Latest post: Mon, 15 Apr 2019, 2:12 PM

 

What do you think about Short Term Trading and Long Term Investment?

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Today i face another tough question which raise up by my customer. Stevent, will this counter go up further? Should i hold longer to aim higher profit? I guess those dealer/remisiers facing many repeated question in their work when dealing with clients.
 
So, let take 1 case as example.
 
If a person bought a stock who  fell from as high as 1.00 to about 0.25. This person keep on average down all the way as he believe this counters will never die. Possible he been making good money in the past as this stock trading at 4.xx at the peak. So, he is having a thought this counter will go back as high as 0.80 which i guess is above his average price with a decent profit.
 
So, i have thought my student if using my 1 cross 4 approach. So, it is totally wrong to make big profit. You should not be making more than 20% profit even there is more upside to go up as high as 80-100%.  Listen carefully, it is TOTALLY MAXIMISE PROFIT and it is a DISASTER. How can a profit maximization is a disaster?
 
It very simple, the original plan was mean for short term and later switch to long term due to change of macro outlook or fundamental of the stock itself. So, there is a change of the method from short term trading to investment holding approach and using short term trading method. So, does it sound right over here?
It is totally wrong. It is a person who got no discipline in trading plan and keep on changing. Therefore, if a person benefit from the so call profit maximization. They will tend to change their trading plan in the future and their gut become bigger and trade with bigger risk appetite, end up losing money at the end.
 
Do not let your greed control your emotion. Everyone want to earn big money? It is easy to pick 1 super stock with high target price in term of percentage or a few stocks with a lower target price  in term of percentage but require more trading.
 
Obviously, the answer is the counter who have a lower target price in term of percentage is likely to hit compare to higher target price in term of percentage.
 
Let play a game.
Scenario 1
1 counter with target price 50% upside but in order to achieve 50% it may take 3 months to 1 years time frame
 
Scenario 2
1 counter with target price 10% upside but in order to achieve 10%, it may take 1 week to 1 month time frame
 
As we know, long term investment will be subject to more uncertainty factor compare to short term. This is for sure. 
 
If you look into bond yield, fixed deposit, people are getting higher interest rate? Why, because they are losing opportunity cost and time value factor take into consideration. Therefore, a person who put into safe investment for long term, they will be getting compensation with higher interest rate.
 
So, if we take such statement put into stock market. It mean there is more risky if you adopt long term investment unless you invest into AAA grade stock such as HLB, PBB, NESTLE in the past.But with such high valuation at this current price, it is still worth to do enter this so call fundamental good stock for value investing. I can't comment much on this as i am not a fundamental guy, but i know one thing for sure you already  miss a good entry point in the past. That mean you are having higher risk/reward ratio. That is all i can tell. Remember one thing, if recession come, there is not a single stock so called AAA stock can maintain their shares price even the nature of business was not affected by recession. Why, because there is no standard PE in the industry. It just a reference PE for the industry. Let take GLOVE sector, average PE was around 25-30. Who say it can't go as low as the PE OF 10 when recession come even revenue still showing positive growth and growth in the profit. It is the problem of the company itself. It is the market being hurt painful and people wish to cash out from the capital market.
 
If you can pick the right counter and making 10% profit each trade. 5 consecutive winning trade which equal to your 50% target profit already achieve using relatively shorter time frame, but this require more commitment for stock monitoring. If a person don't have such time to monitor then is not easy to achieve.
 
So, if you look into it. People are telling the success story of long term investment. True,there is such story and it really happened in our daily life. 
Let see those so called fundamental stock such as GAMUDA, MYEG, TM, AXIATA, BSTEAD, GENTING. Is it all this stocks being hurt badly since change government after the GE 14. 
 
I am not saying value investing is bad, i am not saying fundamental is not good. What i am saying there is no perfect approach for every market cycle. Even my method is not perfect as well.
 
But, we need to flexible to adopt the changes of the investment environment.
 
when market is heading for recession. Half way toward the end of recession is the good timing to adopt value investing. Meaning those people able to collect shares slowly at low price with small quantity transaction but slowly accumulate the quantity. To me, value investing is buying a good company at discounted price. Not during the uptrend with high valuation price. That is call fundamental trading.Not value investing.
 
Market is heading consolidation and start the bull trend is the time for the so call fundamentalist enter market.
 
When market 25% -75% of the uptrend, the so call swing trader will come into the picture.
 
when market 50%-100% of the uptrend, more player such as intraday player, contra player, swing trader, punter all will be coming in. So, this time is the good timing for those people who accumulate at the low to dispose their holding.
 
Therefore, when we notice super huge volume trading at the higher price range it is the time we should be aware even there is more upside to go. It is always be safe rather than later regret.
 
This is just my personal opinion. It may not suit your investment strategy, but i am here to create the awareness to let people see thing from different perspective.
 
Happy Investing or Trading Journey.
 

Telegram Link : https://t.me/steventhee628

FB Link : https://www.facebook.com/Steventheeinvestment/

 

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  VenFx likes this.
 
qqq3 the truth...the truth is that 99% of the stocks are rubbish....The job of the real investor ( who is there to participate in the long term growth of quality companies) is to learn to say NO to 99% of the stocks ................................
18/02/2019 10:34 PM
targetinvest So which is the 1% ?
List down pls
18/02/2019 10:50 PM
qqq3 Posted by targetinvest > Feb 18, 2019 10:50 PM | Report Abuse

So which is the 1% ?
List down pls
================================

1% literally means u got to learn to say NO.......

say YES only to the best of the best.......its easy to find out the 20 best stocks of last 10 years.......not so easy to list down best 20 stocks for next 10 years........but u got to try if u want to be a genuine investor as opposed to gambling and speculating.....
18/02/2019 10:55 PM
4444 Talk is easy when ask question why cannot answer?

qqq3 Posted by targetinvest > Feb 18, 2019 10:50 PM | Report Abuse
So which is the 1% ?
List down pls
================================

1% literally means u got to learn to say NO.......

say YES only to the best of the best.......its easy to find out the 20 best stocks of last 10 years.......not so easy to list down best 20 stocks for next 10 years........but u got to try if u want to be a genuine investor as opposed to gambling and speculating.....
18/02/2019 22:55

targetinvest So which is the 1% ?
List down pls
18/02/2019 22:50
19/02/2019 1:02 AM
qqq3 mr4. if u cannot find new list, the list of 20 best stocks of last 10 years can still use one.....
19/02/2019 1:42 AM
(2.6m shares buyback April ) Philip I'm sure trading stocks can make money. But I think the reason why it is rare(almost never) to hear famous short term traders over a long period being successful as compared to longer term value investors (Howard marks, Peter lynch, walter Schloss etc etc) I think the reason is simple. George Soros is not a short term momentum trader. He is a contrarian trader if I ever saw one.

Almost all momentum trading is based on capital protection first, earnings second. By default you can't put more money into play, because of the inherent risk of not knowing deeply the asset you are trading. And to diversify the risk ( I never understand this part), they have to put money into more and more stocks they don't understand which they only analyze based on momentum charts ( things that has happened before) to guess what will happen tomorrow.

To be honest, most of the trader friends I know, they do not go into big active fund management. Majority of them trade small amounts. The biggest I know trades with 10% maximum exposure per trade aof a group fund of 10 million. He has averaged 10-15% over 8 years. The amount of stress he gets to achieve that level of success is tremendous. He does not trade bursa.

And Steven is exactly right. The biggest cause of fund failure is when they forget that they are doing speculation and trading activities and suddenly convince themselves they are doing long term investing halfway through their trading. Then they chase bad trades with more money and it becomes a ball of fire.

So far I have yet to find an official fund manager in Malaysia with big fund size (assets bigger than 500 million) successfully using short term trading methodology as a way of investing with a success rate 5-10 years+. Any sifus who firmly believe in this strategy out there making trading gains with big sums of money over long periods of time out there?
19/02/2019 7:00 AM
3iii >>>
Majority of them trade small amounts. The biggest I know trades with 10% maximum exposure per trade aof a group fund of 10 million. He has averaged 10-15% over 8 years. The amount of stress he gets to achieve that level of success is tremendous. He does not trade bursa.

>>>>


Raider identifies insas as his most undervalued stock to invest today.

How much he invest into it today?

Only 200k.


Philip’s observation is true. Majority of them trade small amounts.
19/02/2019 7:14 AM
(2.6m shares buyback April ) Philip I take umbrage with this conception. Based on very long experience I have realize this to be false. Short term is subject to far more uncertainty than long term.

Let me talk football terms. Which is harder to do and achieve success for the club?

Offer Lionel Messi a massive contract when he had won a balon de oro, most goals scored in a season a few times and go big with him as your most expensive signing with a long term contract?

Or offer a few undersized kids needing growth hormones but with potential in Argentina a contract to play in Liga? How many actually turn out? If you bring in a hundred of those kids with 1% of Messi salary, you probably won't even know their names, much less how they will turn out tomorrow.

In stock terms, if you hold NESTLE long enough, your risk and uncertainty factor inherently become less, because your earnings and profits have far outweighed any incoming risk. In the long term, if you held nestle long enough, even if meteor hits Malaysia and destroys entire population and all factories, you would still be up on dividends gained.

I think short term trading has far greater uncertainty and risk compared to long term. I keep trying to find someone to do the Warren buffet 10 year bet between active investing and passive investing, to no avail.

>>>
As we know, long term investment will be subject to more uncertainty factor compare to short term. This is for sure.
19/02/2019 7:16 AM
3iii A simple question I often ask is: “Will this company be a bigger company 10 years from today?”
19/02/2019 7:26 AM
Outliar If Lionel Messi gets injured, you're royally screwed by the way
19/02/2019 9:07 AM
(2.6m shares buyback April ) Philip Lionel Messi track record still far better than those 17 year old Argentinian kids from God knows where.
19/02/2019 9:18 AM
Icon8888 hei philip, I I bought some petronas chem yesterday

thanks for the idea
19/02/2019 9:19 AM
Icon8888 didn't buy much though
19/02/2019 9:20 AM
Icon8888 but will keep long term like you see how it turns out
19/02/2019 9:20 AM
StallionInvestment Rajachulan, i am training newbies. So, for a start. I dont want they aim big profit. I want them aim consistent profit. Then slowly improve their trading skill and profit margin. Therefore, i alway prohibit my student who is newly join to take profit at the peak. Follow the trading plan. Then when they master it, then profit in their hand. They are taking risk on the profit that they have secure to aim bigger profit. If turn out they are wrong, at least it wont hurt their capital. If i allow my student aim big at the beginning, later they will aim even bigger profit. Get caught then seek for solution i also can't do much. As i mentioned earlier, risk management, capital management also in play. Not pure technical.
19/02/2019 9:23 AM
StallionInvestment Icon8888, it is one of the famous blogger and produce good article for i3investor followers.
rajachulan
it just a two different approach. Evil when those counter sudden plunge and people are touching some counters which is fundamental poorly perform. Everyone has their own believe, else whey there is exist of technical at the first place.
19/02/2019 9:38 AM
StallionInvestment true, short term trader mostly remain secret and low profile as they plan to buy and sell. Therefore, they can't reveal position to the public just like those who adopt fundamental approach. It is fine to share their position as they adopt long term approach.
19/02/2019 9:39 AM
qqq3 trading for fun
investing for dough....

unless u are KYY......hundreds of millions worth all from trading.....


he also must have done things different from the masses to be in such a unique situation.


and if you want to be like kyy.....then keep it simple.


it may work, it may not work, but keep it simple and find a time and a stock of the moment.
19/02/2019 9:48 AM
kelvin Post removed. Why?
19/02/2019 9:51 AM
qqq3 discipline in protecting capital and follow strictly the cut loss is most crucial in TA........hahahaha.....


It is important because 99% of the stocks are really rubbish. Don't listen to all the margin of safety stuffs......Because 99% of the stocks are rubbish.
19/02/2019 9:53 AM
stockraider Raider like to highlight this 3iii misconception mah.....!!

1.When raider buy with margin of safety insas hathaway...raider is investing and not trading mah...!! B Graham define margin of safety investment is truly investing mah...!! But don get me wrong loh...it is still a good practise to buy with margin of safety whether u r investing, speculation and trading & loh...!!

Why raider don say gambling with margin of safety leh ??
Bcos gambling has no margin of safety, u r going agst probability with expected negative value mah....!!

2. Raider invested in insas 400k units at about Rm 250k & not Rm 200k mah loh.....!!

Why raider don sailang like Philip leh ??

a} Raider not so rich like Philip mah...!!
b) Raider is not a gambler like Philip, raider is conservative as Calvintan says any black swan event make happen, hence raider need to manage risk mah...!!

3. Remember margin of safety investment usually can beat buy hold investment over a period 1 to 3 yrs...take for example raider's insas already up 30% within a period of 1 mth ....if u compare to Philip QL less than 5% loh....!!

Posted by 3iii > Feb 19, 2019 07:14 AM | Report Abuse

Majority of them trade small amounts. The biggest I know trades with 10% maximum exposure per trade aof a group fund of 10 million. He has averaged 10-15% over 8 years. The amount of stress he gets to achieve that level of success is tremendous. He does not trade bursa.

Raider identifies insas as his most undervalued stock to invest today.
How much he invest into it today?
Only 200k.

Philip’s observation is true. Majority of them trade small amounts.
19/02/2019 10:01 AM
(2.6m shares buyback April ) Philip After a certain amount, money becomes the scoreboard to keep track. To be honest depending on your lifestyle, 200k is more than enough. I survive in far below that.

Rick or not is simple matter of not having to cut loss or take profit too early for 10 years. I started with 200k, end up with reinvesting and retain earnings into QL for 10 years in one stock. Is that gambling? If you know what you are doing and you know what your stock is doing you are not gambling. You are investing.

I bought 1.4m shares in PCHEM, I made 1.2 million in a month in paper profit. Is that gambling? Not if you can see what the future will be. All I can say is the simple the business, the clearer the future. You buy or sell based on what the future business will bring. Not the sudden increase in share price.

I would instead say buying 0.25 of sapura the very definition of gambling. You don't see any earnings future to give it profit. The business it has is inherently loss making for the next few years because of the contracts it has. You KNOW that sapura will continue to lose money, but you still buy because you HOPE someone will pay more for it than you did.

That is the essential definition of gambling. Hope that things will work out, instead of rational judging of the most likely future possibility coming out.
22/02/2019 9:43 PM
(2.6m shares buyback April ) Philip My own experience in investing (and gambling) for 20+ years is realizing that when you value a stock, the best way is still to assume the share price not there.

When you stop seeing share price first, all you see is businesses. You start comparing which business works the best, who has the best profit margins, who has the competitive advantage, who has been growing for the longest period, and more importantly why are they growing. After you analyze the business itself on the strength of its business model, then when you decide this is the stock than I am going to buy,

Then you look at the price. If the price fits, then the stock will work out.

Then when the quarterly report comes out, forget about the share price and understand the business model itself again. Is it on track? Has it changed? Did something new happen? Then when you decide to buy mor(e or sell you position, then you look at the price.

That's how it finally clicked for me.

That's why I don't get ta or momentum investing at all. How does the study of price action in the past prepare you for future results? A stock can keep going down for a long time, longer than your margin call can bear before suddenly shooting up without warning. Or a stock can keep going up for a long time then suddenly drop like a rock.

And you don't even know why(except after it happened). Isn't that kind of investing stressful? Imagine trying to use ever larger sums of money to chase those gains.

Crazy.

If I had to invest 12 million that way, I think I would lose everything in 3 years.
22/02/2019 10:00 PM
stockraider If raider has Philip this type of reasoning....raider will be kick out of margin of safety investment committee... for poor reasoning loh...!!

Just bcos u make some monies about in Pchem less than 10%...short term..u r u so convince & dead sure that u can forever hold ur gain ah ??

Even General Raider make 30% on Insas....today the gain has been reduce to 20%....raider also don dare tell the whole world...the gain is forever sure gain mah....!!

Usually gambler will speak like Philip...bcos they are dead cock sure loh...!!


Posted by (S = Qr) Philip > Feb 22, 2019 09:43 PM | Report Abuse

After a certain amount, money becomes the scoreboard to keep track. To be honest depending on your lifestyle, 200k is more than enough. I survive in far below that.

Rick or not is simple matter of not having to cut loss or take profit too early for 10 years. I started with 200k, end up with reinvesting and retain earnings into QL for 10 years in one stock. Is that gambling? If you know what you are doing and you know what your stock is doing you are not gambling. You are investing.

I bought 1.4m shares in PCHEM, I made 1.2 million in a month in paper profit. Is that gambling? Not if you can see what the future will be. All I can say is the simple the business, the clearer the future. You buy or sell based on what the future business will bring. Not the sudden increase in share price.

I would instead say buying 0.25 of sapura the very definition of gambling. You don't see any earnings future to give it profit. The business it has is inherently loss making for the next few years because of the contracts it has. You KNOW that sapura will continue to lose money, but you still buy because you HOPE someone will pay more for it than you did.

That is the essential definition of gambling. Hope that things will work out, instead of rational judging of the most likely future possibility coming out.


(S = Qr) Philip
626 posts
Posted by (S = Qr) Philip > Feb 22, 2019 10:00 PM | Report Abuse

My own experience in investing (and gambling) for 20+ years is realizing that when you value a stock, the best way is still to assume the share price not there.

When you stop seeing share price first, all you see is businesses. You start comparing which business works the best, who has the best profit margins, who has the competitive advantage, who has been growing for the longest period, and more importantly why are they growing. After you analyze the business itself on the strength of its business model, then when you decide this is the stock than I am going to buy,

Then you look at the price. If the price fits, then the stock will work out.

Then when the quarterly report comes out, forget about the share price and understand the business model itself again. Is it on track? Has it changed? Did something new happen? Then when you decide to buy mor(e or sell you position, then you look at the price.

That's how it finally clicked for me.

That's why I don't get ta or momentum investing at all. How does the study of price action in the past prepare you for future results? A stock can keep going down for a long time, longer than your margin call can bear before suddenly shooting up without warning. Or a stock can keep going up for a long time then suddenly drop like a rock.

And you don't even know why(except after it happened). Isn't that kind of investing stressful? Imagine trying to use ever larger sums of money to chase those gains.

Crazy.

If I had to invest 12 million that way, I think I would lose everything in 3 years.
22/02/2019 10:27 PM


 

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