kcchongnz blog
A 2016 new year reflection on 10 characteristics of stocks to avoid kcchongnz
"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1." - Warren Buffett
[Posted by blank > Sep 24, 2013 06:18 PM | Report Abuse
Sorry fundamentals not my style haha. I'm more of a trader, using technicals and behavioural finance. I made 700% last year.]
In the stock market, we always hear about success stories like the above. They are glorifying and morale boasting. Seldom do we hear people telling us they have lost money investing/speculating in the market. It is demoralizing and not good for the self-esteem. People would look down on you and say that you have no standard, a loser etc. However, the fact remains that most people lost money in the stock market. In the above case, the same speculator actually lost two thirds of his bet since then until now with that particular stock. But he never mentioned it in anywhere now.
Let us assume we have a portfolio of two stocks equally weighted, one good stock and one bad stock. Over a period of say 5 years we made a profit of 200% for the good stock but we lose 100% on the bad stock. Our portfolio return would be 50% (50%*200% - 50%*100%). However, if we have two good stocks, one makes 150% and the other 50%. Our portfolio return would be 100%, twice better than the first one. That is because although the positive return is lower for each stock, we have no loser.
My basic principle in investing is always to be prudent;
“Focus on the downside and the upside will take care of itself.” Mark Seller.
If you can avoid losing money in any stock you buy which is not possible, but at least minimize the chance of losing money, half of your battle in investing is won.
What are some of the things to look for to guard against risks and minimize or avoid the downside?
Let us look at some of the hot Bursa stocks which some people in i3 forums asked me about three years ago when I posted a few threads on value investing.
I started to write about them as “A Christmas reflection of the pitfalls in investing in Bursa in 2013” on Christmas day 2013. I have updated them on the Christmas day in 2014 as “2014 Christmas Reflection of Pitfalls Investing in the Stock Market kcchongnz”. Subsequently I have written about them in a number of occasions in my blog,
http://klse.i3investor.com/blogs/kcchongnz/blidx.jsp
Many i3investor forumers said these are boring and repetitive stuff. For me, they are interesting and there are numerous investing lessons we can learn from them. I believe a newbie in the stock market can learn much more from the pitfalls of investing and learn how to avoid and guard against them, for the reasons I have mentioned above, rather than listening to how much whom and whom have made in the stock market.
Return of portfolio and individual stocks
The portfolio has lost a total of 43% since about three years ago since I first wrote about them, while the broad market has gone up by about 10%, a negative alpha of a whopping 53%! Almost all the stocks incurred heavy losses up to more than 80%, with the heaviest losses in Hibiscus, one of the biggest hypes two years ago. There are only two “winners”; London Biscuits and KNM, up by 22% and 12% respectively since three years ago.
The three-year “winner” of KNM has actually lost a whopping 95% of its value at its peak about 10 years ago, while the other -68%.
Compared to their peak prices, half of the 9 stocks have lost over 90%, with the Median loss of the portfolio at 80%! Gosh, we are not even near any bear market yet.
What are the characteristics of these stocks which grossly under-performed and have fallen so much in prices from their peaks? How should we guide against these risks?
Characteristics of lemons
Characteristic 1 Hypes, rumours, fads and hopes
They are hypes, rumours and fades, and investing in them is based on hope.
Investing in Hibiscus is based on hope; hope of the opportunity to strike oil big while other bigger international companies are denied of that opportunity. Hibiscus share price was chased up by 80% from RM1.50 to RM2.70 in just four months from August to December 2013 just because of rumours that when or when the drilling machine would reach the destination, and when it started drilling, as if oil would definitely ooze out as soon as the drill rig is lowered. Its share price just jumped because they were given some licenses to explore oil in some countries, presumably they are more deserving than many other bigger and more established international oil exploration companies. Well, we are still in the dark when it will strike oil, but already many retail punters were spilling blood everywhere as its share price has dropped by 32% to RM1.84 in just three days just before the Christmas of 2013. It closed at 23 sen the last day of 2015. Those who have bought it at the peak of RM2.70 would have lost a fortune of a whopping 90% in just two years while the market is falt. Not a single drop of oil has been extracted yet.
Investing in Smartrack and Asia Media Group are also based on hope, hypes, rumours and distorted positive feelings; Smartag has been hoping that with their political connection, the Royal Customs Department would give them the ultra-lucrative contracts of RFID tracking the containers which eventually fell through. Asia Media has been hyping that its advertising in trains, LRT and buses would earn them extra-ordinary profits, which eventually did not materialize.
MP Corp is another company which investors live with hope; hope that the management sells their land, which they valued the same high value as the neighbouring one which was transacted, and distribute the cash to them.
Characteristic 2: High growth, even extremely high growth
Many of those lemons listed above were and still are growth stocks.
KNM’s growth for the last ten years outpaced Microsoft, an international conglomerate. KNM’s was the darling of the market during the mid-1990s. It had big plans; foraying and making its foot prints all over the world with big acquisitions (and lose big money). Its revenue grew by 30 folds from less than RM65m in 2003 to a RM2 billion revenue company now. The CAGR is a whopping 41%.
LonBis’s growth is also very high. Its revenue grew by 5 times since 10 years ago from RM82m to RM403m as at 30th June 2015. It’s earnings, as that of KNM, has not been very exciting, but it also has never lost any money since listing.
Guan Chong Berhad, GCB’s revenue grew by fourfold from about 464m 7 years ago to 1.82b for financial year ended 31st December 2015, or a CAGR of 22%. This is also a very high growth rate and another billion-dollar club member.
Others were not with high growth but the “hope for high growth”
Characteristic 3 Low return on capital
Alas, the growth of these companies above were such a poor quality growth with the return on capital way below their costs, and in a clear deteriorating manner.
The return on equity, ROE, for London Biscuits was in an as-clear-as-crystal unabated downward trend from 12.8% ten years ago to just 3.7% last financial year ended June 30 2015.
It is the same trend for KNM.
GCB had very good ROE from 2010 to 2012 when ROE was from 35% to 54%! However, those high ROE remain as illusion as there is never ever any free cash flows except in 2014 when they made losses.
CSL of course was having high ROE but that is another story. The rest ae loss making and of course no ROE to talk about.
Characteristic 4 Poor cash flows
Besides GCB which has negative FCF every year since 8 years ago, London Biscuits and KNM behave exactly the same, all with poor cash flows from operations (CFFO) as well as free cash flows (FCF).
Huge amount of inventories and receivables build up way above the increase in revenue were common phenomena of these companies.
These companies also spent huge amount of money in purchasing property, plant and equipment, without yielding any positive results, no increase in profit or cash flow, and yet deteriorating ROE, a value destroying act.
Characteristic 5 Poor quality balance sheet
It is clear that the balance sheet has to be deteriorating with persistent negative free cash flows.
- Where can they get money to pay down debt without FCF?
- Where to get money to pay dividend without?
- How to keep its doors open for business without FCF?
- Where to find money to do investing without FCF?
You can see their debts keep on increasing unabated to the extent of the high risk of bankruptcy with high debt-to-equity ratio, below unity current and quick ratio, and negative cash flow coverage. This is despite that they have been putting out their hands to ask shareholders to give more and more money in rights issues and “free” warrant issues until the share capital increases in huge amount.
Yeah, making money (for own self) is so great from other people’s money. Borrow more baby and issue more rights issues and give more “free” warrants!
These companies may have low price-to-book value of below 0.5. However, the quality of the assets, mostly in receivables, property, plant and equipment, tax assets, and intangible assets which when liquidated, are worth little or even nothing at all.
Characteristic 6 The red chip
The Chinese listed companies are notorious for their questionable financial account. Chines Stationery Limited, CSL’s annual report shows they are making tons of money with plenty of cash flows and cash in bank, a few times higher than its market capitalization. And yet the major shareholders dumped the shares, millions of them at a fraction of the cash per share in hand.
Its share price was RM1.66 three years ago. The loss is a whopping 83% in three years when the broad market has gone up by about 10% during the same period.
Another Chinese listed company XingQuan not covered here, also has hundreds of millions of cash in hand. However, it never, or just pay a pittance in dividend, and yet putting out its hands recently to ask money from shareholders for rights issues and “free” warrants, for some dubious capital expenses. What a joke!
This red chip phenomenon happens all over the world, the US, Singapore, and Malaysia. There is hardly any exception.
Characteristic 7 A lot of corporate exercises
KNM has made numerous corporate exercises; right issues, “free” warrants, share split, share consolidation after split, share value reduction etc. Its major shareholder even talked numerous times about taking it private because of its grossly “undervaluation”.
London Biscuits follows suit. It has numerous rights issues, private placements, and “free” warrants too. It never loses out in this respect.
It was the same for Asia Media; bonus, rights, share split and consolidation. What a wonderful corporate world!
Characteristic 8 Favorites of analysts’ coverage
Recently, I have received a recommendation from a fund manager and professional analyst to buy KNM at 57 sen on August 3 2015 as below. Oh my God, haven’t we gone through that before many times in the 1990s?
“Dear Investor
With legacy issues resolved, KNM is now on a stronger footing to bid for bigger projects. We are sanguine on KNM's plan to go big into renewable energy where the recurring earnings have better visibility. KNM is currently trading at FY16 PER of 7.7x, at 41% discount to average Malaysia O&G PER of 13x. KNM share price has retraced to a bargain hunting level. Hence, we have a Trading Buy call.”
Yeah man, anything related to O&G is great. Also a low “Per”. More on this below.
I also read and commented on this “Irresistible bite” here regarding a rosy report from an investment bank on London Biscuits:
http://klse.i3investor.com/blogs/kcchongnz/60180.jsp
These are some catchy headlines from the investment bank.
“LonBis has registered 12 consecutive years of profitability”
What use is this “profitability” when the company eats cash like nobody’s business resulting increasing share capital and ballooning debts?
“Historically, LONBISC earnings decline from FY10 to FY12 is caused by its high investment to upgrade its capacity and expansion to modernise its equipment and machinery. However, the period of high capex should be coming to an end”
After the writing by the investment bank, its capital expenses almost doubled again from RM22m to RM41.4m. Heck, its net profit only amounted to RM17.3m that year!
“its cashflow has improved and is now being used to pare down debt to a healthier level.”
Really ah? The FCF has actually worsen to its historical worst at RM49.3m in the latest financial year as I can see!
There were also many favorite reports on GCB previously and recently when its earnings spiked. However, if you look at its negative cash flows from operations, you would get very scared.
Asia Media also had many favourable analysts’ reports some years ago when it was carrying some corporate exercises. Investors lost their pants following those buy recommendations.
Characteristic 9 Low price-to-earnings ratio, and price-to-book
London Biscuits, KNM, GCB, KNM and Ivory Properties have always been traded with low single-digit PE ratio. The PE ratio of CSL was even more ridiculous at 2 or 3.
The rest of the stocks return “NA” when you check their PE ratios, as they have negative earnings most of the time.
This low P/E or P/B ratios only can deceive naïve investors, or those who don’t even bother to examine the financial statements, thinking that they are cheap. Smart investors and institutional investors will know the poor quality of the earnings and the poor quality of assets and avoid them.
Characteristic 10 High volatility
Many of those hot stocks are volatile in their share prices as insiders, syndicates treat those individual investors as easy meat, frying the share price up and down, resulting many individual investors losing their hard earned money.
Check the share price movement of KNM, London Biscuits, GCB, Hibiscus etc. and you will know what I mean.
Do you think the individual investors can beat these insiders, manipulators and syndicates in this zero-sum game of speculating and gambling?
Conclusion
It is always not easy to predict if a company would do well in the future and that its share price would rise. If someone is so confident to tell you that his recommended stock is a sure and can’t miss thing, think twice, or even 10 times.
However, it is much easy to see if a company is likely not to do well. The evidences are all over the walls. I seldom get wrong in this respect, may not be in the short-term, but often in the long-term.
For individual investors, it is best to take care of the downside first and let the upside takes care of itself. Guard yourself against risks. This should be the golden rule in investing.
The interesting thing is you can do it by yourself you are willing to spend time and effort to learn about it. And I am very sure you will be able to avoid falling into the pitfalls in investing, and will have better chance of getting extra-ordinary return from investing in the stock market.
“You don’t have to pee on an electric fence to learn not to do it.” - Charlie Munger
If you are interested to make a decent return on your investment in the stock market and guard against risks, please contact me for a flexible online investment course for a small fee at
KC Chong
Appendix
Table 1: Return of Lemon as at 31st December 2015
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Discussions
21 people like this. Showing 45 of 45 comments
Why is KC Chong keep repeating same article but different title only. So boring.
http://klse.i3investor.com/blogs/kcchongnz/83399.jsp
http://klse.i3investor.com/blogs/kcchongnz/86227.jsp
2016-01-02 20:55
Humpreyliew I agree with you. If KC Chong so good and always make high return as he "claim" he must be very rich. Why still want people to join his course for "a fee". He should give it free like KYY and even donate some of his wealth.
2016-01-02 21:09
Even when KC Chong was wrong, he keep repeating the same VS articles
http://klse.i3investor.com/blogs/kcchongnz/83784.jsp
http://klse.i3investor.com/blogs/kcchongnz/80998.jsp
http://klse.i3investor.com/blogs/kcchongnz/77938.jsp
http://klse.i3investor.com/blogs/kcchongnz/77884.jsp
http://klse.i3investor.com/blogs/kcchongnz/77720.jsp
http://klse.i3investor.com/blogs/kcchongnz/77274.jsp
http://klse.i3investor.com/blogs/kcchongnz/77138.jsp
http://klse.i3investor.com/blogs/kcchongnz/76875.jsp
2016-01-02 21:20
hahahah ... who want to join my course ? it is not free ... i will pay u money to join my course.
2016-01-02 21:50
Right medicine is always bitter
Good advices is always unheard
Your grandmother doesn't like to tell you many times
But you never learnt
You father never feel bored to tell you the right things
But you always think you are better than you father
2016-01-02 22:30
What is he talking! people already saying it is a trading buy calling on knm. it means trade at your own risk. what a cock talking and spinning !
[ Characteristic 8 Favorites of analysts’ coverage
"KNM is currently trading at FY16 PER of 7.7x, at 41% discount to average Malaysia O&G PER of 13x. KNM share price has retraced to a bargain hunting level. Hence, we have a Trading Buy call.”
Yeah man, anything related to O&G is great. Also a low “Per”.]
2016-01-02 22:48
I noticed this chap like to run down on other analyst's report and promote himself as a better one. what an idiot !
2016-01-02 22:51
XinQuan become a new target
So I will expect a new come back thread soon.
2016-01-02 22:57
Good sharing KC, thanks again, the important of FCF highlighted in this article.
Happy New Year, heng ong huat :)
2016-01-02 22:58
very good sharing KC, but i guarantee supporter of those stock u mentioned ll bising. but i totally agree wif u. Keep sharing your experience pls!!
2016-01-02 23:19
KC
What you said is right and true
But one type of rice hundred types of people
There are people who like huhuhaha more than fact.
Market should have huhuhaha
Without them who is going to buy from us if we want to sell
2016-01-02 23:47
BINTANG, agree with you.
For those huhuhaha folks, Please prove KC is wrong if you guys have any proof/data/evidence, else just keep your mouth shut... Amount of cash in you bank didn't help to prove how good you are. One could be a beast/murder/pervert with billions of cash in its bank. There's no single bad words in KC's articles, please respect yourself and a guru like KC.
Sir, happy new year. May you always in a pink of health. So that, we could continue to have more insight in value investing.
All those advice shall always bear in our mind. And I shall pass them along to family and friends around. Millions of thanks :)
2016-01-03 00:36
Posted by donfollowblindly > Jan 2, 2016 09:09 PM | Report Abuse
Humpreyliew I agree with you. If KC Chong so good and always make high return as he "claim" he must be very rich. Why still want people to join his course for "a fee". He should give it free like KYY and even donate some of his wealth.
Thanks for your comment in my thread. I like comments, whatever it is. That is what a writer usually looks for.
I must repeat (yes it is boring) that you always follow blindly without understanding what I try to convey to you in my articles.
I did say the return of investment following some core principles in fundamental investing does provide good return, and more of reducing risks. I didn't "claim" of "always making high return" as there were published records in i3investor. It may disappoint you that the records exist, but I can't help you that.
I have never "claim" to be rich, not I yearn to be very rich, and I am not motivated to be very rich. I also do not idolize very rich people, unlike you. We are different, aren't we?
"Want people to join for a fee"?
This is what I have learned too, wise words:
Posted by Hierarch Artanis > Jan 2, 2016 09:42 PM | Report Abuse
If you're good at something, never do it for free.
People don't appreciate free things. Just like you here, do you appreciate some good lessons on how to avoid losing money in the stock market here, even though i have written so many times before?
I share about investing principles and methodologies, what to look for and how to avoid lemons. It is all about issues, things, subjects.
Sadly, you only know how to make personal attack without any substance.
2016-01-03 04:31
Posted by Humpreyliew > Jan 2, 2016 09:20 PM | Report Abuse
Even when KC Chong was wrong, he keep repeating the same VS articles
http://klse.i3investor.com/blogs/kcchongnz/83784.jsp
http://klse.i3investor.com/blogs/kcchongnz/80998.jsp
http://klse.i3investor.com/blogs/kcchongnz/77938.jsp
http://klse.i3investor.com/blogs/kcchongnz/77884.jsp
http://klse.i3investor.com/blogs/kcchongnz/77720.jsp
http://klse.i3investor.com/blogs/kcchongnz/77274.jsp
http://klse.i3investor.com/blogs/kcchongnz/77138.jsp
http://klse.i3investor.com/blogs/kcchongnz/76875.jsp
Can you tell me specifically what is wrong with my analysis based on the financial statements?
2016-01-03 08:32
The speculators will said you wrong since she price keep going up for one yr.
2016-01-03 10:48
I must say that KC has pointed out valid facts that one should look out for so that one can avoid mistakes made in losing money.However though the things said are valid but some syndicates still maintain the price or further ramp up for further distribution before finally comes down.It's very difficult to understand in the market and sometimes there is no logic to it.As long one stay cautious and not overly confident,you have a higher chance of not being burnt!Even one is still sometimes it's unavoidable as market is very dynamic and we are only human beings.
2016-01-03 11:16
Leno,your ego must as huge as the sky as you just admit that you made no mistake in the stock market hence you made gain in every trades?
2016-01-03 11:26
Posted by ks55 > Jan 2, 2016 09:43 PM | Report Abuse
Hi kcchongnz. Happy New Year to you, and pray hard you will achieve even better return for the Year of the Monkey King.
Just wonder if you care to share your opinion on Parkson Holding Berhad.
ks55, I really don't know many stocks in Bursa, including Parkson. It used to be a growth stock before the US subprime crisis. But since the cool down of China economy, its business has been deteriorating.
However,a not good stock may not be a bad investment. You have actually told me about this when you speculate on Kheesan, or LonBis. At RM1.01 now, I seriously think the downside for Parkson is limited.
Looking at its last two years financials, it has been making operating profit, except went to losses the last one quarter. Its balance sheet is healthy with net asset backing per share of RM2.73. Even its tangible asset per share is more than RM1.00. Besides it is in a net cash position.
It used to be having good cash flows too.
The steep drop of the share may be due to personal reason, the problem with its major shareholder, but may not because of the company.
2016-01-03 16:22
In Malaysia's stock market,very good stocks can become lousy ones e.g asuprem used to be a hugh dividen and good earnings stock.See what happens now?Can never underestimate the downside of a 2nd/3rd liner stocks when things change.Have to monitor every announcement very closely.
2016-01-03 16:41
Posted by Kukuman > Jan 2, 2016 10:51 PM | Report Abuse
I noticed this chap like to run down on other analyst's report and promote himself as a better one. what an idiot !
This article is about sharing about how to avoid losses in the share market by knowing the characteristics of lemons so that investors can avoid. It is critical about some analyst reports no doubt, but I did provide with my arguments.
This article was first written 2 years ago, and if those speculators in those stocks would have avoided heavy losses, for example, Hibiscus a loss of 88%, CSL -83%, Asia Media 80%, MPCorp 67% etc. Even if punters cared to heed my concern in KNM and not chase its price when it went up to RM1.00, they would have also avoided heavy losses.
So i think there are many who appreciate my sharing.
Remember when you set up a thread trying to gossip about some contributors in i3investors including me which could put us in bad light? Talking about people? Rather discussing about subjects?
You did not manage to demean us. No one badmouth us. You failed.
Idiot me?
So genius, what is so smart of you? Please list down your smartness and contribution here.
2016-01-03 18:26
Followed the trend of the market , but not the golden rules which simply suit one opinion that he is better than others . I make consistent profits from stocks market does not depends and rely on such sources of informations from the author and indeed l earned more than what they recommended .
2016-01-03 19:22
I believe that we shall change the rule no 1 and 2 in Bursa:
No1: Don't buy red chips!
No2: Follow rule number 1!
Happy new year KC
2016-01-03 19:49
Now you are talking about 2 years ago article. but you quoted someone analysis which you said was on 2015 Aug 3.
"Recently, I have received a recommendation from a fund manager and professional analyst to buy KNM at 57 sen on August 3 2015 as below. Oh my God, haven’t we gone through that before many times in the 1990s"
I will mark this comment of yours ! If KNM really go up, you should apologize and stop promoting yourself by running down on someone analysis.
Admit it ! that is your SOP! You are a person who like to promote yourself by finding fault on someone's analysis.
2016-01-04 00:47
Firstly, A Happy New Year to @KC Chong and everyone who often follows the posts here, and may 2016 bring food fortune to us all.
This is another post, the content and essence of which are worth serious consideration by everyone trying to make money in the stock market. Or to avoid losing a huge chunk of his capital when the main goal doesn't materialise. It doesn't matter too much even if some of the points are `repetitive' - often, some critical and fundamental aspect needs to be drummed in again and again before we "get it".
Have to admit here that I do have two of the lemons mentioned here. Plus one or two others. Hibiscus and Amedia. There is always this "hope", of course. But with these two, and others I have in my "Speculative" portfolio, there's a strategy. Whether it works out or not, only time will tell, of course.
I do look at the downside risk first before buying these. Plus having a "Get Out" plan either way (including should they go down below a certain level). Hibiscus was bought at 0.245 while Amedia at 0.025 (before the most recent exercise. I didn't subscribe to the rights). The strategy is like what the portfolio's name suggest - wait for the time when it gains favour with speculators again. That might be in weeks or months. Possibly more than a year. But I'm prepared to wait.
I also have one counter which most everyone wouldn't even think of buying - HB Global (0.065). "Are you out of your mind?! It's a PN17 counter!" Well, can't claim to be too sane but... :-) This one is "calculated risk". Nothing too hot about the company but I noticed its NTA is 80-plus sen. And the shareholders include Datuk Shahidan Kassim and a unit of PNB. The company had made losses the last few quarters but these aren't too severe. Anyway, the PN17 status is more of technicality rather than an "ICU-type" of balance sheet.
My speculation is premised on these: (1) When the PN17 gets lifted, it will be seen in an entirely new light. (2) Should the majority shareholder get fed-up with the various technical requirements of being a public listed company, he can make a general offer to buy back the outstanding shares and take it private again. And the offer certainly can't be 0.10, 0.20 due to the NTA.
With these counters, I'm not under any illusions. No hope of "growth", "dividend" etc. These are all speculative. I should also add that the speculative portfolio forms only a smaller part of the capital. Should things not pan out as I am expecting, and even if the share prices go down to half of what they are now, my capital won't suffer too much. Sure, I will be exasperated. But not crippled.
2016-01-04 15:03
look like none of stock can be invested, unless he said cannot buy the stock if meet 100% of 10 rules. Else any stock will also hit one of the rule, so keep cash lo
2016-01-04 22:16
very good wo, 3/20 from yr2015 top 20 is kc students....
(NOBY, II, soojinhou)
http://klse.i3investor.com/blogs/stock_pick_2016/89039.jsp
@kcchongnz, do you want to share yr pick for reference?
2016-01-05 23:11
yeah right...for the 'party spirit'...
come on KC!...there is a child in all of us...:)
2016-01-05 23:38
Posted by Tan KW > Jan 5, 2016 11:11 PM | Report Abuse
very good wo, 3/20 from yr2015 top 20 is kc students....
(NOBY, II, soojinhou)
http://klse.i3investor.com/blogs/stock_pick_2016/89039.jsp
@kcchongnz, do you want to share yr pick for reference?
Tan KW, remember when you first initiated the so-called challenge in i3investor in 2013, there were only two entries. I didn't look at them as "challenge", but merely sharing of investing strategies.
I came up with a portfolio of 10 stocks in each occasion, one in January 2013 and the other in August 2013. Remember how much time and effort was needed with all the detail analysis, not only the Magic Formula, but also discount cash flow analysis. A selection of one stock may take a couple of days in research of the business, analysis, and another day writing the report and thesis.
This time, because of personal reasons, I do not have that kind luxury to do it. So, sorry, I don't have anything to share right at the moment, and it is meaningless to me to simply give you a few shares without proper justifications. Most probably, the shares I am going to share do not suit the kind of 'challenge" going on. And if I have any, I will be duplicating some of them here. Hence there is nothing new from me.
What about my own investment? Don't I have new shares to invest in? of course I have, and I have been doing reasonably well. That is because I don't have to do it all by myself now.
I have been following the analysis of my previous course participants, and they are actually better than me now.
Enjoy yourself and have fun in the stock pick challenge 2016. I am also enjoying it by looking through those recommendations and make some investment based on them.
2016-01-06 15:51
@Jester, I don't dare to participate in this kind of thing. For one thing, my analysis doesn't have much sophistication. And this isn't fake humility. I'm still learning on the financial metrics beyond the bare basics like PE, DY free cash flow and such.
Right now, I'm basing my trades on these key words: "Buy Strength". Whether I like the company or not shouldn't matter. If the indications are right, then I'll buy. But with a "get out" point specified. This is especially so when a counter fools us with a false breakout (quite often). If it gets below the short-term support, I'll take the loss there and then instead of comforting myself "It will perform next week..." No more of this.
That's the main aspect of my TRADING. But I also have some capital allocated to INVESTING. This will be the counters that have some quality. Which means they MUST pay out dividends. Like Media Prima. However, they have to be at a good price first before I buy.
One more portfolio are the speculative shares I mentioned in the earlier post. These may be dumbass counters (like HB Global) and the dozens others that we see. I have no illusions about their business potential. And that includes Parkson and many of the oil n gas counters. But must acknowledge that they do have their moments, and coming in and going out at the right time will bring satisfying results.
For good measure and as insurance, I buy some put warrants too. Specifically FBMKLCI-H37 (for now). Must always remember the market fools us a lot of the time. There could also be sudden shocks, like what we saw in August last year. Having put warrants make me less tense and I sleep better at night. Should the market suddenly crash, at least I would have some protection to mitigate against the possible losses.
2016-01-06 16:18
Maybe I should add this: before buying, always consider the downside risk. First and foremost. While we can't see the future, we can visualise the possibilities. In this case, a counter's support line could be of great help. Calculate how much we'd lose should it go below that point...and ask whether we can take the loss.
With trading, the key is in keeping the losses small. Even if 4 out of five trades result in a small loss, one winner which is allowed to run to its near maximum is often enough to cover the losses AND provide us with an overall profit.
2016-01-06 16:36
@kcchongnz, no problem.....
maybe next year... i will always remember u & otb.... it won't have this yearly event if it is not started by you both....
2016-01-06 22:59
@kcchongnz, anywhere you produce 3 students (maybe more???) that share their pick with us.... and they do very well in last year....
good sifu produce good student...
2016-01-06 23:00
Posted by Kukuman > Jan 4, 2016 12:47 AM | Report Abuse
Now you are talking about 2 years ago article. but you quoted someone analysis which you said was on 2015 Aug 3.
"Recently, I have received a recommendation from a fund manager and professional analyst to buy KNM at 57 sen on August 3 2015 as below. Oh my God, haven’t we gone through that before many times in the 1990s"
I will mark this comment of yours ! If KNM really go up, you should apologize and stop promoting yourself by running down on someone analysis.
Admit it ! that is your SOP! You are a person who like to promote yourself by finding fault on someone's analysis.
I have a report on recommendation to buy KNM at 57 sen dated August 3 2015, which is 5 months ago.From August 3 2015 to January 3 2016, as I have counted,is 5 months, certainly not two years.
If you do not have the report, of course you do not have, then how to you come to your conclusion of the report is two years ago?
If KNM really go up, I should apologize?
What logic is that?
I have made constructive and negative criticisms on many reports, which the prices have gone up. So every time I must apologize for giving my opinion on the sharing of what I think is about the company business?
And you consider sharing a different opinion about investment as promoting myself by running down others?
What kind of mentality do you have?
2016-01-08 16:55
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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10 appetizers for the start of 2016! Good reminder. Know what you buy and sell what you know. Happy New Year KC.
2016-01-02 20:43