sense maker

I thought you have CenBond?

2014-03-26 01:23

kcchongnz

Yes, I still have Cenbond. I also have other money losing stocks such as Johore Tin, Zhulian, MMode etc and some big money losing call warrants too. But they are not in this portfolio formed on 1st August 2013 and published by Tan KW in i3. Most of the stocks in this portfolio have been sold.

The purpose of referring this portfolio is for the discussions in this topic, ie the benefits of diversification of a stock portfolio. It is not for boasting or whatnot, although I am very happy with the return.

2014-03-26 04:34

houseofordos

do you keep any portion in cash at all ? or all fully invested ? I believe asset allocation is just as important as diversification

2014-03-26 07:55

kcchongnz

Asset allocation or not is a very argument subject. I believe it is good to have an asset allocation; having different assets in equity, property, bond, cash, commodity.

My problem is I don't like to invest in things without convenient yield such as gold and other commodity, and their long-term return has not been attractive. I find property investment troublesome and the long term return may not be that attractive too. I have no worry of cash as I can have lines of credit which I can use, or not to use. If I am interested in fixed income type of investment, I have alternative in stocks which some have high dividend, besides having the opportunity of capital growth.

2014-03-26 14:20

houseofordos

Haha are your "lines of credit" interest free :) If yes I would like to know how to get that too... :)

2014-03-26 17:44

Go4Share

Dear kcchongnz, will u consider placing yr valuable 'eggs' in success, tasco and westport?

2014-03-27 01:03

azog

My uncle invested around 95% of his total fund in only one single stock i.e ql right during IPO many many years ago. Thats only one transaction in his involvement in stock market n he quit as at the moment thats only money that he has. He did not properly do any fundamental valuation for ql during the purchase as the said stock was recommended by his broker who is also a close friend. He did not add any as he did not dare chasing at 'high' when the stock price soar years after years nor he sold even a single unit. After that transaction, he only dare to put his extra money in the fd even for minor profit. We can do the math on how % his gains throughout the years based on ql current price. Sometime a person is just born to be lucky being meeting with the right person at the right time at the right opportunity. And, now he fully enjoyed his life as a multi millionaire with only a single stock in his portfolio and abundance of consistent yearly divvy although ql yield is not that high. He just laughed when I discussed this and that about stock market as he purely a stock market illiterate and not interested at all to know anything about stock market.

Being inspired by my uncle's story I nearly sold 100% of my portfolio to buy the magical stock dsonic at 4.00+ (before split) to invest 90% in that single stock and to subsequently forget everything about stock market thereafter. I have the feeling that dsonic for me is like a ql for my uncle. I'm just tired getting 20% - 30% ordinary return from my portfolio hence I nearly do the plan but eventually ended up invested only 20% of fund in my dsonic due to unnecsseary fear n stupid advise from a broker not to chase at 'high'. If I stick with my original decision to invest 90% in dsonic at that time at any given price, I would be easily retire now. But again, not all person is born to be lucky but the best for us is to learn how to be a grateful person.

Morale of story:

1. Learn to be brave to bet big at the right stock to hold forever. Once we get the said candidate and fully invested in it, we will be able to enjoy our daily meaningful life as an ordinary human and will not to be getting stressed with such boring stock market figures throughout our daily life.

2. We must have the right candidates of our next dksh, takaful, hartalega, dsonic, myeg etc in our portfolio otherwise it will be hard to be rich. Thats the stock market is all about. To do the right thing once but getting the result for the entire life.

2014-03-27 01:05

Icon8888

Azog what you wrote was one of the most buzzare I have ever seen in the forum. It is a real life experience and yet defies logic. I don't know what to say

2014-03-27 02:27

kcchongnz

Posted by Go4Share > Mar 27, 2014 01:03 AM | Report Abuse

Dear kcchongnz, will u consider placing yr valuable 'eggs' in success, tasco and westport?

I have commented on Success before as below. You were in that forum too. I have no problem in placing Tasco as a stock in my portfolio. It is just a matter of investing with a limited amount of resources, and the competing investment such as Freight Management. Westport is too new for me. No record to show except some future expectation which is not the way I invest.


Posted by kcchongnz > Dec 16, 2013 10:45 AM | Report Abuse X

Sure, success has been successful in increasing its revenue and earnings for the last few years. Operating efficiencies in ROE and ROIC are also good, comfortably above the cost of capital.

However, it is just my personal preference. I like FCF. If there is no free cash flow for a year or two because of growth, it is ok with me; but not consecutively for 4 years. Just personal.

2014-03-27 04:44

kcchongnz

Real life example of the benefit of diversification.

A close friend of mine told me three years ago that another friend of us had sold off all his stocks and bought YTL Land. We are talking about millions here. Why YTL Land?

YTL Land has a lot of valuable land mostly next to the proposed LRT, MRT lines, I was told. The value and the land is expected to worth more than RM10 per share for YTL land shareholders, based on the projected value of the land per square unit. So why not?

I bought a little, 10 lots if i am not mistaken at about RM1.60 as I am in no position to value the land myself. Yes, I do follow some investment "gurus" when buying share. But I will not dare to buy much.

Its share price now is at 89 sen at the close of yesterday, for a loss of 45%, while the KLSE has risen by 15% during the same period.

2014-03-27 05:58

kcchongnz

Another real life example of swinging the fence (and not diversified)in investing.

Two years ago there is this article appeared in a very popular local financial blog.

Quote
Last train
"This will be the last time I post something on Jaya Tiasa until it goes to RM13.00 cum basis or RM4.50 on an ex-basis. ........

To me, this is the easiest, no-brainer, for an easy 50% within a short period of time. Possibly the best recommended stock in my 6 years of blogging."

"If you look at the plantation hectarage, IJM Plant's 30,528ha compared to Jaya Tiasa's 61,000ha. If you use that, Jaya Tiasa's valuation should be doubled that of IJM Plant alone. Mind you, that is on hectarage of palm oil, not even counting the 700,000ha of timber concessions under Jaya Tiasa. Of course Jaya Tiasa's plants are a lot more youthful, but it only takes another 3-4 years to catch up.

So, 2.65 x 2 = RM5.3bn
RM5.3bn / 2.7 = 1.96 x 9.56 = RM18.70 (or RM6.20 ex-bonus)

The figure RM18.70 is just on palm oil alone. We did not calculate the timber concessions which is almost 10x the size of Singapore." Unquote


So isn't it a no-brainer to place all your bet here?

Two years have passed and what happen now?

Its share price closed at RM2.75 on 26th March 2014, down from RM3.15 then for a loss of about 12.7%. Not much until you compare with the gain of 17.3%.

2014-03-27 09:11

ryanc

I agree with kcchongnz. His analysis is very good. Keep it up.

2014-03-27 09:14

kcchongnz

Another example of the benefit of diversification here.

You must be often hearing that investing in plantation companies is a no-brainier, a sure make money one. So put all your money just in plantation companies.

Two to three years ago, besides Jayatiasa, there was another sure-win plantation company, Rimbunan Sawit. Here is an extract of an article written by a well known investor, one who I respect a lot because of his immense social contributions.

Quote: R. Sawit: In all my life, I have never been surer of making money than now in buying of R Sawit.

I have studied almost all the plantation stocks and in my opinion R. Sawit is the cheapest in terms of NTA and its profit growth prospect in the next few years. ……

Since the rights issues and the bonus issues were listed on 9th Nov, the daily volume traded has increased to a level that has not seen before. It closed at RM 0.83 on 9th Nov 2011. ……

As you know, I do not or very seldom recommend people to buy any share. But in this case, I am doing it because I strongly believe this share is the cheapest plantation company in terms of NTA and profit growth prospect in the next few years which is the single most important criterion in share selection.

Most of the palm trees are below 10 years old and their plan to continue planting on their remaining about 23,545 ha in the next 3 years. Imagine the increase value of this additional planted area?
………. Which business can give you more than 100% profit margin?

Total planted acreage is 49,300 ha. The cost per ha is 108672 million divided by 49,300 = Rm 21,756.

IOI announces about 3 months ago that they are buying about 11,900 ha of oil palm plantation from Dutaland Bhd for Rm 830 million cash = Rm 69,740 per ha. Unquote

Rimbunan Sawit’s share price has not changed a bit since two and a half year ago. It share price has in fact dropped by 50% from about the adjusted price of RM1.20 if one has chased the stock just before the right and bonus issues two and a half years ago. During the same period, KLSE has improved by 23%.

I must reiterate that I have the utmost respect of the writer, and the mentioning of his article here is just for the discussion of the benefit of diversification in my article here.

Imagine two to three years ago if one just concentrated in investing in plantation companies, a cyclical business with seemingly so much prospect then and so cheap in price per hectare basis. Instead of making so much money because of the growth in profit expectation, he would have lost considerable amount of money, besides the loss of opportunity in other companies.

It really pays to diversify. Don’t you agree?

2014-03-27 13:41

Leesk

basically telling all the good story but there are also bad experiences for those who bet the wrong counters and lost heavily on one stock. Those are not told but i think lesson can be learn from those wrong decision.

2014-03-27 16:02

Icon8888

i might not be the smartest guy in town, but betting everything on one stock doesnt sound smart either

2014-03-27 16:40

Go4Share

Many thanks for yr kind explanation.

2014-03-27 22:31

stockoperator

KC can the efficient frontier be a pool of different asset class? Like Property, bond, gold, commodity together with stocks?

2014-03-28 11:56

kcchongnz

In theory, efficient frontier is in fact a pool of different asset classes.

2014-03-28 12:03

stockoperator

But it would be difficult for you to diversify into other asset class right? Like real property and gold or commodity. I am like that years ago. It takes time and pain to admit my own mistake.

2014-03-28 12:28

stockoperator

More than 50% of my likes and portfolio still in stocks investment. Still I learn that the purpose of other investment class. Like Gold is for Emergency Back up Currency. The most undestroyable asset is Land.Land is forever there and thus the real tangible asse. Supply and demand of Commodity. Look for the scarcity of Resources etc.

2014-03-28 12:36

stockoperator

Look for the purpose first Not so much on return yet. For example purpose of owning good business via stock investment. It is the same as other asset class.

2014-03-28 12:44

stockoperator

Look at our few Generational wisdom of keeping the gold inside the Safe. Also look at the value of our old generational house that we inherited from our grandparents and parents have kept for us. Well they gain some or loss some in stocks.

2014-03-28 13:07

stockoperator

KC from your comment above are you selling the winner and keeping the loser? Winner is there for a good reason and Loser is loser because of good reason as well.

2014-03-28 15:25

stockoperator

A simple metric would be when price moves up or down 20%. What should I do? Is the reason I bought at the first place still there. Am I wrong about the company or management or even business or it is just general market condition or retracement? IF i am wrong, what should I do? The decision is clear. The same as price moves up, is it of Good reason as well? IF i am right, what should I do? Should I hold on and keep investing? The decision is clear as well.

2014-03-28 15:41

kcchongnz

Diversification and my portfolio return (7/4/14)

My diversified portfolio of 10 stocks named “GE 13 Watch” in the appendix was set in i3investor on 21/1/2013. Please see the link below which has adjusted for dividends, share split and bonus issues if any:

http://klse.i3investor.com/servlets/pfs/13147.jsp

The portfolio returns a total of 70% in the fifteen months period compared to the 17% of both the KLSE and FTSE Midcap70 as shown in the table below. Would I be better if I were to have a concentrated portfolio of just a few stocks?

My favourite stocks in the portfolio are Kumpulan Fima, Pintaras Jaya and Prestariang. These stocks still the major holdings in my present portfolio, whereas the rest were all sold long ago. So if I were to just hold these three stocks, my average return would be 123%, much better than the return of the portfolio of the 10 stocks. Did portfolio diversification fail me?

Talking about retrospective event is easy. What if instead I am holding the worst three stocks, Kfima, ECS and SkpReources? The average return is only 17%, just matching the return of the market.

So I still believe in diversification, the only free lunch in investing.

Date 21/01/2013 7/04/2014
Stock Name Ref Price Price now Dividend Gain % gain
Kfima 2.02 2.42 0.08 0.480 23.8%
Pintaras 1.56 3.16 0.125 1.725 111%
ECS 1.06 1.27 0.08 0.290 27.4%
Plenitude 1.85 2.59 0.06 0.800 43.2%
Jobstreest 1.20 2.39 0.06 1.250 104%
Pantech 0.78 0.95 0.07 0.240 30.8%
SKPRes 0.34 0.315 0.025 0.000 0.0%
NTPM 0.47 0.85 0.05 0.430 91.5%
Kimlun 1.25 1.65 0.05 0.450 36.0%
Prestariang 1.21 3.92 0.13 2.840 235%

Average 70.2%
FTSE Mid70 12294 14037 369 2112 17.2%
KLSE 1632 1863 49 280 17.2%

2014-04-07 18:20

Steven Yong

Great stock picking in this bull run

2014-04-07 18:50

stockoperator

Amazing. I don't have this kind of return in One year.

2014-04-09 01:47

kcchongnz

The stocks were picked with financial risk management as the goal, ie take care of the downside by buying good companies at reasonable or low price. The upside will take care of itself. It works most of the time. But don't forget diversify, and not over-diversified.

2014-04-09 08:51

stockoperator

thanks.

2014-04-09 11:21

johnny cash

any of the above stocks that are still on a strong uptrend,,even now at this moment today,,, 8/2/2014 ????? which can surge more

2014-08-02 23:09

AyamTua

@johnny cash: there's a watchlist section of i3 you can use to do comparisons infact the tools here, pretty useful to do "simulation" too..

2014-08-02 23:14