Stevent Hee
A good entry is more important that picking a good stock?
StallionInvestment
Publish date: Mon, 18 Feb 2019, 09:51 PM
StallionInvestment
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My picks will be based on both Fundamental (Minor) and Technical Analysis (Major)
Having experience in the financial industry, we still hope that readers would trade at their on risk and look in your own risk appetite before trading.
Happy Trading!
Having experience in the financial industry, we still hope that readers would trade at their on risk and look in your own risk appetite before trading.
Happy Trading!
I am writing this blog for a discussion when look at the recent stock market development.
The topic is that a good stock is it really matter?
Yes, it is really important when you adopt buy and hold strategy which allow you to ride on the uptrend waves. However, people who learn about fundamental they tend to ignore the noise as they say noise will not affect the nature of the business. Is it such thinking can really make you profit in long run.
Investment world is getting sophisticated day by day and thing is getting more vulnerable as Malaysia adopt open economy and globalization.
we have seen many value trap when they adopt fundamental investing. there is nothing wrong of fundamental investing but there is some thing wrong when they ignore totally of the technical. When they totally ignore the important of technical. When thing get sour, they gonna bite the bullet and swallow the pain.
Its very simple, if this a fundamental good stock, it should not move against the technical trend. If they move opposite direction, there must be some thing wrong with it.
One thing i am pretty sure. There will not be every lasting forever going up stock. If they have not drop for the past 10 years, will they continue going up for another 10 more years. Those day people adopt buy and hold and keep it for long term is easy. But these day business environment is getting more competitive.
Given one example :
20 years ago, Genting is the only CASINO operator in SouthEast Asia.
Today, we already see the evoluation for phsycial gaming into online gaming. On top of that, we also see more casino is building up in SouthEast Asia. Let me share with you some statistic on this.
You may refer to this to understand better gaming industry.
https://urbanasian.com/news/2018/11/top-5-best-gambling-destinations-in-south-east-asia/
XL
65 casino in 32 cities.
Can you imagine how many competitor coming out?
One thing for sure is business environment is getting more challenging when a business is really profitable. Very simple, outside there is plenty of multi billionaire holding lot of cash is waiting for a good investment opportunity
Remember those day when we are chatting during 90 era.
Evolution Stage 1
People are using ICQ
Evolution Stage 2
Later people go to Yahoo Messenger, MSN messenger.
Evolution Stage 3
Whatapps/ Line
Evolution Stage 4
Skype/ Slack
HP Evolution Stage
1. NOKIA - FAMOUS MODEL 3310
2. MOTOROLA - FLIP MODEL, VERY COOL AND PURPOSELY FLIP IN FRONT OF FRIENDS
3. SONY ERICSON - SONY CARRY FAMOUS BRAND. THOSE DAY SONY LAPTOP SELLING DOUBLE THAT THEIR PEER SUCH AS COMPAQ, DELL, ACER.
4. BLACKBERRY - CORPORATE HP
5. IPOHONE SERIES
6. SAMSUNG
7. HUAWEI/OPPO, XIAOMI
Can you see the same product but company has change down the road. If a company can't maintain their market and keep on growing. A day their competitor will overtake them.
So, as a retail investor, do you really have much time to study in depth about this? I doubt so. Are you rich enough to get a good dealer/analyst to monitor for you?
Let be frank, this is the society which people talk about benefit. You can't expect a good service from dealer when you are talking about position investment. Therefore, you only can rely on research report or those boutique house research report. In some cases, people might rely on forum such as I3Investor to give opinion and outlook. In other word, you are putting your faith into other people hand. If anything go wrong, don't put the blame on other as this is your money. Your responsibility to ensure it is profitable. Not to wait for the person to inform you when to sell.
So, if you are busy with work and can't do short term trading. Yeah. I know that. But i am sure you have a minute just look at the price of the stock you are holding. It is go below a certain price level. Regardless how good is the future of the stock. you should just sell if off. You might miss the opportunity of making big money if the stock resume the momentum going up further because you refuse to chase high since you sell low. Again, is it a profit 30% is not consider money compare to 50% or 100%. If you know what to do, if you have the knowledge. Then you will plan how to reinvest. A person who regret is a person who have no knowledge and let the greed control their emotion. End of the day, your mind is full of regret and negative thinking. I would rather you invest zero amount and never step into investment world. At least you still live happily.
Wealth and Health, I will choose health. health is not about physically healthy, is also mentality healthy as well.
A person who aim to make position investment of 30%- 50% in 1 - 2 years time frame into fundamental stock.
Another person who spend a little bit more of time to do short term trading with the aim 5-10% within 2 weeks time frame. If you can have a success rate of 80% for several stock that you are trading. Will you be making more than a person who aim 30-50% in 1-2 years time.
I guess the answer is pretty clear. Unless you know your stock can surge more than 100% to 300%. Then i would suggest you stick to your current approach which can deliver 3 digit return in term of percentage.
So, here come to the end of my discussion about this topic. A good entry is more important than a good stock. That really depend how you plan your trade.
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4 people like this. Showing 19 of 19 comments
I think a big misconception is also that playing stock market is easy.
Buy and hold and forget what you are doing!
Just buy special indicators based on modified stochastics and moving average, buy when signal is right and uptrend detected, sure win!
Warren advocates long term investing yes, but not buy and forget. Monitor quarterly reports to see how the business of performing, then make your next choice.
One plays on psychology the other plays on business results. Both need careful study.
Stock market is not for the lazy. Actually, nothing worthwhile is.
Author is very right saying we should have enough information at our control which includes technical and fundamental.
But I think the more important ingredient is how to build up your second level thinking (Howard marks) of removing unnecessary information, trading a detour understanding of the information given, and making the right choice.
2019-02-19 07:44
I believe a good entry is never as important as picking the good stock at a fair price.
Why? Even if you have the best entry you will never sailang. It's not feasible because best entry is usually for lowest point of a stock in its history, meaning problems in the horizon. Optimism in the face of problems is admirable, but usually fatal.
Picking a good stock(at a fair price) you are able to sailang, because you are participating in the growth and success of a company without any stormcloud in the horizon. Sure it will come, but if is not there yet, why be pessimistic? Pessimism when things are looking very good is a sad way to live.
Having said that, it is almost impossible to buy great companies at liquidation prices, you always have to pay a premium for quality. Nestle,dutchlady, topglove, Hong Leong, QL, yinson, PCHEM, hartalega, are all companies that have returned multibaggers throughout the years but have always been under the radar of short term traders. Thank God.
I wouldn't have it any other way.
2019-02-19 08:00
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.
2019-02-19 08:32
In market there is different player that adopt different strategy and different time frame. putting up this article is to make people think what are they doing right now? Which method is suitable for them? 3iii. I hope you get the message from the article. Philip, if you are the person who adopt long term and you identify at a good price. Yes you can say so. Happen if you hold on TM, MYEG, GAMUDA, BSTEAD. Just less than half a year, you 3-5 years position holding which ride on profitable investment end up become a losses. So, conclusion is still back to the entry. Even Nestle, i can say it will drop as well. Because there is no forever up counter if you look back in the past. Even Public Bank in the history also drop tremendously during financial crisis. So, if you pick up good counter at a good entry price that is good. Which mean it has to be both. If you pick up NESTLE at current price, I think very high probability you will be losing money after 2 years if you look into the shares price itself.
2019-02-19 09:16
TM, MYEG, gamuda and bstead is not good stocks. Never have been. Never will. Those are companies which are only based in Malaysia and can only compete locally. Political stocks, construction stocks that can only compete locally I don't really see any point in following long term.
For me, the stocks that I bought and held for 10 years now since 2009 was QL, topglove, pbb and YINSON. Those are Malaysian companies which I saw growth and are competing regionally and internationally. I have bought and held these stocks, and have been average buying continuously after every quarter for 40 quarters.
Obviously you need some technical knowledge if you want to buy, you need to buy at a fair price. Like right now ql and NESTLE is pe50, true but it is unfair to assume that just because the price now is high didn't mean you will lose money.
Just ask Amazon. Facebook. Coca cola in the 90's. There are exceptions to every rule. Buy high can go higher, just as buy low can go lower.
I'm sure trading will make money. But thinking that only good price to enter is a dangerous consideration if you don't look to the business itself first.
If we just look at simple price movements, sapura:
2017 was rm2.20(adjusted)
2018 was rm0.65
Today it is rm0.30 cents.
Is this a good time to enter? If simply based on price momentum sapura seems to be all time cheap. Buy!
But if you look closer, when a company starts printing free share issues to "borrow" money, and use it to pay their billions of dollars of debt instead of growing their business, I would say this is the most dangerous time in its history as a company.
Trading can definitely make small money. But I doubt anyone will have the temperament (or the balls of platinum) to sailang millions of dollars into sapura sell house sell family.
Warren buffet put 99% of his net worth into 1 stock. Berkshire.
Chia song kun put 99% of his net worth into 1 stock. Ql.
Bill gates put 99% of his net worth into 1 stock. Microsoft.
I put 90% of my networth into 4 stocks. In 10 years holding and building my exposure ql, topglov, pbb and YINSON they have done wonders for me.
Which is better in the long run? I may be wrong you may be right, but I'm still trying to find a short term trading sifu who has a portfolio over 10 years and growing consistently 20% compounded average yearly who is willing to show his portfolio gains and strategy for scrutiny.
2019-02-19 09:44
Yes Raider totally agree with this important statement...Get your entry price right...and u r in the route of successful battle loh...!!
What is a good entry price leh ??
1. Stock price undervalue with big margin of safety like insas.
2. Stock price at a reasonable margin of safety on the verge of breakout.
3. All time low price stock with blood in the street but make sure the stock has high margin of safety and low gearing that it can stand the temporary tsunami mah....!!
4. Stock with good growth potential at reasonable price.
U notice everything raider say there is a "margin of safety" word, why leh ??
Answer This what surewin investment all about mah ....if u buy undervalue & prepare to hold u will win mah....!! Do not do anything stupid in the mkt without 1st checking the margin of safety loh..!!
2019-02-19 10:13
>>>
Posted by (S = Qr) Philip > Feb 19, 2019 08:00 AM | Report Abuse
I believe a good entry is never as important as picking the good stock at a fair price.
Why? Even if you have the best entry you will never sailang. It's not feasible because best entry is usually for lowest point of a stock in its history, meaning problems in the horizon. Optimism in the face of problems is admirable, but usually fatal.
Picking a good stock(at a fair price) you are able to sailang, because you are participating in the growth and success of a company without any stormcloud in the horizon. Sure it will come, but if is not there yet, why be pessimistic? Pessimism when things are looking very good is a sad way to live.
Having said that, it is almost impossible to buy great companies at liquidation prices, you always have to pay a premium for quality. Nestle,dutchlady, topglove, Hong Leong, QL, yinson, PCHEM, hartalega, are all companies that have returned multibaggers throughout the years but have always been under the radar of short term traders. Thank God.
I wouldn't have it any other way.
>>>>
In 2005, Nestle traded at 26.00. When China stock market fell suddenly by 20% during that year, the stock markets of the world reacted in sympathy. Nestle got sold down to 22.00.
I bought some Nestle at 22.00. Soon, the market became rational again, and Nestle climbed back to 26.00.
Today, 2019, Nestle is 150.00.
Assuming, one was able to time your buying perfectly and bought at 22.00 and another just bought at 26.00 in 2005, what are the returns to them respectively today?
The answer is, the difference in gains between them is not significant. There is a difference but it is not significant.
More significant is when you did not buy in 2005, whatever the price in 2005?
Therefore, a good entry into Nestle in 2005 for a long term investor is not as important as picking a great stock. I understand this is right from my perspective as a investor into great companies at a good price for the long term.
[A trader with short term perspective will need to find his own philosophy to guide his difficult strategy.]
2019-02-19 10:43
3iii! I beg to differ. I sold my PBB at 25. Haha.
PCHEM i bought start from 8.15-8.33. Today it is 8.87. Do I sell with 5% gain?
Why sell at all? Buy and forget? No. Buy and read every quarterly report.
For short term trading, it is a very careful strategy that needs to be micromanaged. I'm sure steven is very good at what he does. I wish him all the best. I put my trading philosophy in the too hard pile almost 19 years now thanks to halim bin saad and renong and aokam perdana. And it hasn't been for the lack of trying.
I just realized that trading strategies seem more akin to buying black on the roulette table and it working out ten times in a row. But when the red color comes, there is just no way to predict this. Which is even funnier when the baccarat tables start showing me the previous results of banker/player like it means anything.
I finally found out that short term trading depends on psychology (thats what momentum is). Herd psychology is by definition irrational. How to make money from crazy people?
I just gave up and decided buying businesses on the possibility that great businesses will make more money over time than lousy business makes more rational sense.
2019-02-19 11:19
>>>Posted by (S = Qr) Philip > Feb 19, 2019 11:19 AM | Report Abuse
3iii! I beg to differ. I sold my PBB at 25. Haha.
PCHEM i bought start from 8.15-8.33. Today it is 8.87. Do I sell with 5% gain?
Why sell at all? Buy and forget? No. Buy and read every quarterly report.
For short term trading, it is a very careful strategy that needs to be micromanaged. I'm sure steven is very good at what he does. I wish him all the best. I put my trading philosophy in the too hard pile almost 19 years now thanks to halim bin saad and renong and aokam perdana. And it hasn't been for the lack of trying.
I just realized that trading strategies seem more akin to buying black on the roulette table and it working out ten times in a row. But when the red color comes, there is just no way to predict this. Which is even funnier when the baccarat tables start showing me the previous results of banker/player like it means anything.
I finally found out that short term trading depends on psychology (thats what momentum is). Herd psychology is by definition irrational. How to make money from crazy people?
I just gave up and decided buying businesses on the possibility that great businesses will make more money over time than lousy business makes more rational sense.<<<
Yes, Mr. Philip. You did a switch from PBB to PChem. That is of interest to many in this forum. I did have a look at PChem after you highlighted.
2019-02-19 11:21
PChem is a big cap counter at RM70 bil and 8 billion share.
In order to make a leap for a 100% return , may require a decade or even more.
But nevertheless it's a blue chip, stable with consistent dividend.
Good call!
2019-02-19 11:26
What Philip did switching from stock A to stock B is a strategy in my book?
In general, I do not sell my shares. Often, I will switch from A to B. However, this switching will be guided by certain criteria.
1. B must be a high quality company, just like A. It must have a great business with durable competitive advantage.
2. At the present price, B must have significant upside reward to downside loss ratio, compared to stock A.
3. At the present price, B must have a higher potential return over the next 5 to 10 years compared to stock A.
2019-02-19 11:35
Steven Hee bro ,
Shud more often sharing your view here.
I follow all your articles... which i find they are pan out with professional way .
Keep it up bro !
2019-02-19 21:50
VenFx, now resign from my ex company. will often publish my view on stock market here. Also will mention when is my upcoming preview and seminar in the future..
2019-02-20 12:18
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3iii
A post with very muddled thinking.
2019-02-19 07:21