kcchongnz blog

Young people and the five important things in investing kcchongnz

kcchongnz
Publish date: Fri, 19 Feb 2016, 05:22 PM
kcchongnz
0 408
This a kcchongnz blog

I wrote an article about “The ten “Don’ts” in stock investment” ten days ago in the link below:

http://klse.i3investor.com/blogs/kcchongnz/90999.jsp

I truly appreciate a number of kind comments as below:

Posted by Probability > Feb 9, 2016 02:10 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

This is another simple guide to made into a portrait and placed beside PC.
Thanks KC... despite learning quite a bit from you...I still got influenced. Affected by no.4. Somehow still surviving...

Posted by Alphabeta > Feb 9, 2016 09:06 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

Good medicine taste bitter. Once you know it works, your endless appetite to learn more to search for the source of lasting wealth is unimaginable.
Your writings and advices are invaluable to those who wish to create wealth by investing in businesses that can produce sustainable earning growth, positive free cash flow and EVA. Keep up the good work.

Posted by moneySIFU > Feb 11, 2016 02:09 AM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

An article with true wisdom & honest words, I salute you from my heart, Mr Chong.

 

Posted by Ntpboon > Feb 11, 2016 02:56 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

KC, 新年快乐!
谢谢分享!
这十将成为我的座右铭。
这也是游览 i3 股市新手的新年礼物。
若能领悟,必有所获

 

There are many more other kind comments which I appreciate always but have not listed down here. Thank you very much.

However, I did have my share of criticisms such as below:

Posted by Koon Bee > Feb 9, 2016 11:01 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

13th: Dont follow kcchong

And below is my ‘favorite” regular critic who never seem to understand what message I am trying to transpire in any of my articles:

Posted by donfollowblindly > Feb 10, 2016 03:37 AM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

BIMB-WA recommended by KC Chong at 66 sen saying it is undervalued as in attached blog. Now 28.5 sen losing 56.82% in less than 2 years.
 

Anyway, someone has jumped the gun and responded on my behalf. Thanks Frank.

Posted by Frank Soweto > Feb 13, 2016 05:53 AM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

another new year another great article from Kc :)
Maybe missing no 11 - donfollowblindly especially if you're extremely suwey (bad luck) LOL but can also do with No 5 as a close replacement LOL
Anyway thanks KC n gong Xi Fa Cai to u :)

I am happy when I received this request here:

Posted by engeng > Feb 14, 2016 03:23 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif

KC, heard tat u gv online FA training, can gv some info about that?

And my response

 

Posted by kcchongnz > Feb 14, 2016 04:40 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gifX
Please contact me at

ckc14training2@gmail.com

 

I actually received quite a number of enquiries about the course after that, and almost all signed up. Sorry for this advertising which I truly believe is good. One very good thing about it is most of them are youngsters. This prompted me in writing this article for those youngsters who wish to invest in the stock market.

Before I start, I would like you youngsters to read the above article again on the “Don’ts” in stock investment, in particular, my favorite no. 1 “Don’t”; Never use margin financing in stock speculation, or investing, whatever you call it. It is a wild jungle out there; many people peddling hot stocks, continuously encouraging you to use increasing margin financing.

It is hilarious to read that margin calls are good! You are probably attracted to how seemingly immense wealth was created, but have not heard the full story that a lot more wealth, family and life were destroyed with margin financing. A young and innocent mind of yours may not be able to evaluate and fathom what is right or wrong. Do read about my various articles on the perils of margin financing listed in the article above for a different view point.

Margin financing in stock investment is the weapon of mass destruction” kcchongnz

Instil that into your head, no kidding young man. With that I would like to start on what a youngster like you should do the five things in investing in the stock market.

 

  1. The Magic of Compound Interest

“Start saving now”. Those are the three most powerful words in personal finance. Learn to pay yourself first by socking some saving each month before expenses, not save what is left after all expenses. If you start saving $5000 a year starting at age 24 now, or less than 20% of the salary of a young graduate, and increase your saving every year by 4% when your salary increases, and earning 10% compound annual returns, by the time you retire at 60, you would have saved $2.2 million. Figure 1 below shows how your saving grows from year to year in an exponential way.

However, if you just put your money in bank deposit earning about 4% interest, the money will grow to only about RM730000, a third of what you would expect from equity investment.

But wait until age 45 to start saving for that $2.2m and you'd need to sock away $60,000 a year in equity investment. Hence start early in investing and make sure that you put money into your investments on a regular, disciplined basis. This is what Albert Einstein said:

 

Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

With the growing Employee Provident Fund, plus your saving and investment in a safe manner, your total retirement sum can to a handsome $4-5 million when you retire.

 

How to compound your saving at 10% a year? It is definitely not from putting your money in the bank.

 

How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”                - Robert G. Allen

 

  1. Invest in business, good business, and selling cheap

The long-term compounded annual return of the stock market has been around 10% a year compared to about 4% for fixed deposit in banks. Hence if you wish to earn a higher return, you have to consider investing in the equity market as proven by its long-term return.

In investing in the equity market, the only reliable way to earn that kind of return consistently is through fundamental value investing by looking at the business as buying a stock is akin to investing in part of a business. You must know the business and understand its economics and performance. I know of no other investing strategies which are as plausible and can provide that kind of good and consistent return in the long term. In this article appended below, I have given all the reasons why fundamental value investing work, together with statistical significant evidences that it has worked in US and other major markets around the world, and it continues to work.

http://klse.i3investor.com/blogs/kcchongnz/50988.jsp

I have also provided my own personal experience that fundamental value investing also works in Bursa. We know it works in the long-term, it also works in the medium term as appended below.

http://klse.i3investor.com/blogs/kcchongnz/89516.jsp

 

  1. Invest in the stock market with reasonable expectations

There is no free lunch in investing. Risk and return are intertwined with each other; the higher the return expectation, the higher the risk.  A nominal return of 10% would provide me with a real return of 6% which is pretty good, assuming an inflation rate of 4%.  

Return expectations must be reasonable. Anything else will get you into trouble, usually through the acceptance of greater risk than is perceived.”   Howard Marks

Investing is about building long-term wealth slowly but surely. It isn’t (or shouldn’t be) speculating or gambling. It is taking calculated, prudent risk to achieve a decent return over time. Overnight or short-term windfalls are nice, but they aren’t dependent goal. 

Take care of the downside first, and let the upside takes care of itself.” Mark Seller

“Look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.”       Joel Greenblatt

 

Investing in the stock market with reasonable expectation doesn’t mean you cannot get outsized return.  In fact, my established records in i3investor have shown that this principle also can provide outsized return way above the broad market as shown in the link below:

http://klse.i3investor.com/blogs/kcchongnz/89516.jsp

 

  1. Diversify your investment

Make sure you take advantage of the only free lunch in investing, diversification, but not over-diversification as explain in the eighth “Don’t” in stock investing in my previous article here:

http://klse.i3investor.com/blogs/kcchongnz/90999.jsp

I have also discussed about the purpose and advantage of diversification in here:

http://klse.i3investor.com/blogs/kcchongnz/86153.jsp

Yeah, I have been repeating many things in value investing. So I don’t repeat this here anymore.

 

  1. Invest in yourself in investing knowledge

In the article appended below, we have seen that investing on their own for retail investors is not easy.

http://klse.i3investor.com/blogs/kcchongnz/75376.jsp

Most retail investors unfortunately lost money, often lost big money investing at their own in the stock market as it is not a level playing field, and most of all, very few retail investors have the necessary fundamental knowledge in investing which is essential for the success of investing. Hence if you wish to invest in your own and hope to have good investing outcome, you have to equip yourself with the proven successful fundamental knowledge and experience in investing.

With the necessary knowledge, you would be able to read and understand analysts’ reports, and sharing from internet and have your independent thinking and make your own independent decisions. You would be able to avoid the lemons, and overpriced stocks peddled all over the internet:

http://klse.i3investor.com/blogs/kcchongnz/89007.jsp

You would also be able to understand and capitalized on some of the good recommendations by analysts and bloggers such as some of them in i3investor. There are a few very good investment bloggers in i3investors. You can also analyze yourself and select good investments on your own.

For those who wish to learn the basics of fundamental value investing in a structured manner to build long-term wealth for a small fee can contact me at

Ckc14training2@gmail.com

 

The Bottom Line

Young men, Time is at your side. Start investing in the equity market early to build up your wealth for retirement with the extra money you have saved up. Invest in a diversified portfolio of good businesses at reasonable or cheap prices with safety in mind and let the potential extra-ordinary profits take cares of itself.  

In order to achieve the above goals, you have to depend on the most reliable person, that is yourself and no one else. Make sure that person is well equipped with the necessary knowledge, and experience guided by the good principles of investing.

Don’t just pay money to join my course. Be committed and spend some time and effort for this very important thing in your personal finance.

Tis goeth down to a fundamental aspect that “An investment in knowledge pays the best interest” Benjamin Franklin

 

K C Chong

Still on Chinese New Year 2016

Discussions
7 people like this. Showing 50 of 381 comments

Desa20201956

Post removed.Why?

2016-02-21 21:19

Desa20201956

Koon bee and gang.......wives, girlfriends, daughters are all open season for them....all low class people.

2016-02-21 21:22

Desa20201956

Post removed.Why?

2016-02-21 21:28

BenBlurBlur

Desa the result if compound rm 100,000 at +15% −10% +25% for 3 consecutive years is not the same as compounding 3 years at average 10% (+15%−10%+25%)÷3 per annum is it? Thank u

2016-02-21 21:29

BenBlurBlur

ManiManiONGG the result if compound rm 100,000 at +15% −10% +25% for 3 consecutive years is not the same as compounding 3 years at average 10% (+15%−10%+25%)÷3 per annum is it? Thank u

2016-02-21 21:29

BenBlurBlur

Koon Bee the result if compound rm 100,000 at +15% −10% +25% for 3 consecutive years is not the same as compounding 3 years at average 10% (+15%−10%+25%)÷3 per annum is it? Thank u

2016-02-21 21:30

Desa20201956

Yes you bee bee....


To drag other people wives, daughters and daughters...into the forum ....you and your gang really low class.

2016-02-21 21:30

manimaniONGG

Post removed.Why?

2016-02-21 21:33

Desa20201956

Bee bee.....you and that icon.....why so obsessed with 83 years old man....


People 83 years old already ....

You want a turf war and a monopoly also do it in style la .......

2016-02-21 21:35

Desa20201956

Post removed.Why?

2016-02-21 21:36

kcchongnz

Posted by BenBlurBlur > Feb 21, 2016 08:35 PM | Report Abuse
Mr Chong the result if compound rm 100,000 at +15% −10% +25% for 3 consecutive years is not the same as compounding 3 years at average 10% (+15%−10%+25%)÷3 per annum is it? Thank u

Yeah, they are not the same. RM100000 invested with the return given by you will become RM129375 at the end of third year; whereas a compounded annual return (CAR) of the same 10% will become RM133100 as tabulated in the table below.

The gap becomes bigger if the average return is more volatile. Read this:

http://www.investopedia.com/articles/investing/041114/most-accurate-way-gauge-returns-compound-annual-growth-rate.asp


Year 0 1 2 3 Average
average return 15% -10% 25% 10%
Amount 100000 115000 103500 129375
CAR 100000 110000 121000 133100

2016-02-21 22:15

Desa20201956

Wan......on forex, on realized, unrealised,
Earnings or reserves, EPS or not

I wouldn't worry so much if I am you....

Accountants are smart people, they know what they are doing and the reports are meant to show a true and fair view of what happened.

Most of the time you can accept the findings as they are presented without further adjustments in order to understand what is happening.


You will find lots of self taught analysts do this and that adjustments.......and done inconsistently.......you will only get confused by these self taught analysis.......

Stick to what professionals do, you will be fine.....and you will slowly master every thing....not that mysterious.

2016-02-21 22:21

CKWan11d

Desa20201956, thank you very much for your time and effort in answering me.

I appreciate that.

2016-02-21 22:26

Desa20201956

Icon is talking through his ass as usual.


You not shame meh accusing me of things I am not guilty of.....?


To me, you are just a shameless smiling tiger......people killed by you also don't know why......


A lying, shameless icon.......and talking about accountants.

Some thing about accountants shameless icon will never be.....accountants are mostly honest people.
......except that ongggggggggggggg, no idea who he is.

2016-02-21 23:07

JN88

You can get your professional cert, but when you using professional cert in stock...confirmed die gao gao....

2016-02-21 23:12

Desa20201956

Post removed.Why?

2016-02-21 23:14

Desa20201956

None of my business whether you delete or not....


But that icon is a useless bastard.

2016-02-21 23:20

duitKWSPkita

Desa bro,

calm down pls...
I already apologized to you last nite...

Posted by duitKWSPkita > Feb 20, 2016 11:50 PM | Report Abuse X

One sincere last words and then I will delete all mine...............

Desa bro: Sorry if I had offended you. My bad. Just want everyone fren fren in i3 nothing else... I wish you Happy New Year and doing well in trading ....

My respected KC CHONG, once again sorry to disturb and polluted your thread with my idiotic & silly comments. I shall delete it and return the harmony ground to you all.... I wish you happy always and profiting in every field .............

2016-02-21 23:22

Desa20201956

I am not be rich like Koon , but I have no financial incentives for any of my posts here nor do I depend on Mr Koon for any thing.


Only a shameless person writes what Icon writes.

2016-02-21 23:23

Desa20201956

Post removed.Why?

2016-02-21 23:47

Desa20201956

Icon.....Koon money is Koon money

I have no desire, no intention and no need to take any money from Koon. I have retired a long long time ago already.

I say f you to your accusations.

2016-02-21 23:58

Desa20201956

Icon....you know nothing about me....

It is just I do not want my biography to be the subject......let what I write about to be the subject.

2016-02-22 00:03

Desa20201956

Posted by Desa20201956 > Feb 22, 2016 12:04 AM | Report Abuse X

I say f you.......

I have not contacted Koon .....and no need to.

2016-02-22 00:05

Desa20201956

I write the rules how I write.

2016-02-22 00:06

Desa20201956

Post removed.Why?

2016-02-22 00:13

Desa20201956

master story teller icon....

you depend on your smiles to help you push stocks...You think I don't know?

2016-02-22 00:16

Desa20201956

I have accountant friends who are very good ...extremely good in every aspect including stock picking, timing, interpretation of world news and events....have been good since young.


every thing we say about some thing...it all depends.

the profession do not determine every thing.


....as for me...I have very high levels of confidence in my own abilities in the stock market.....extremely high levels of confidence.

I do not consider my self second to anyone. extremely confident is the right word.

2016-02-22 00:24

Desa20201956

24 years already CPA.....young graduates work under me when 24 already.

so what you talk?

how much a person knows depends on the person....

plenty of Form 5 people who are very capable.

2016-02-22 00:30

Desa20201956

my track record not that good.

not to worry....another 23 years to KYY age.

2016-02-22 00:31

Desa20201956

I can quote exceptions to what ever you say....of course it still has to depend on the people's experiences.

there are people with no more than Form 5 who are extremely intellectual, extremely well read.

anyway...since we are talking about a CPA since 24....it is extremely silly to think I am second to anyone ....what is it I have not done?

2016-02-22 00:37

Desa20201956

I intend to reach $ 100 million by 83....extremely confident it will be done.


con8888 > Feb 22, 2016 12:35 AM | Report Abuse

There you go. Typical accountant - detach from reality

2016-02-22 00:39

Desa20201956

looks like you have no idea what is article clerk and what is CPA.....lol.

why would a CPA feels he needs university?



Icon8888 > Feb 22, 2016 12:23 AM | Report Abuse

Another thing is that u have never been to university

That is a big handicap

The level of thinking is different.

Secondary grad is secondary grad

2016-02-22 00:41

Desa20201956

I don't feel master story teller icon can teach me any thing about the market. I don't even feel billionaire KYY can teach me any thing about the market............

I write my own rules, remember that.

Icon8888 > Feb 22, 2016 12:39 AM | Report Abuse

Another reason I said u detached from reality is because you impose on the market what you think is right

2016-02-22 00:44

Desa20201956

Post removed.Why?

2016-02-22 00:45

Desa20201956

I left KPMG in the early 1980s.......I have not been accountant since.




Posted by Icon8888 > Feb 22, 2016 12:44 AM | Report Abuse

Don't try, you won't succeed

You have been hard wired to fail in stocks

So many years being accountant... I have not seen one that can thrive

2016-02-22 00:48

Desa20201956

ks....just go away....you are very irritating.....

surprised this Icon don't even know CPA.

2016-02-22 00:49

Desa20201956

can't afford to send to Australia, study in Monash KL is good enough.

2016-02-22 00:53

Desa20201956

I am not that rich. but not poor either.


Icon8888 > Feb 22, 2016 12:58 AM | Report Abuse

Can't afford to send to OZ ? Wtf ?

Ha ha ha ha

2016-02-22 01:01

Desa20201956

I do not need to write my biography before I can post.

I am not that rich, but I am not that poor either....lets just say 3 meals no problem.

2016-02-22 01:04

Desa20201956

If KYY's billions don't bother me...why should little story teller money bother me?



Icon8888 > Feb 22, 2016 01:03 AM | Report Abuse

Poverty didn't irk me

Arrogance irked me

I am easily 10 times richer than u

2016-02-22 01:06

paperplane2016

Here come the -20% conman icon8888 performing his face vul
Gar speech agaim

2016-02-22 01:07

Desa20201956

Post removed.Why?

2016-02-22 01:07

Desa20201956

well..I qualified as an accountant in the early 80s......

I am not an engineer, not a lawyer...My professional qualification is I am an accountant.

2016-02-22 01:10

Desa20201956

good...just disappear. You are less than dirt in my eyes.

My son graduated from Sunway...that is called twinning...with Lancaster , UK....

Monash KL is called a branch campus...they do not call it twinning.




ks55 > Feb 22, 2016 01:06 AM | Report Abuse

Really wasting my time.
Go fly kite Desa Tak Cemerlang!!!!!!!!!!!!!!!!!!!!!!!!!!!

2016-02-22 01:13

Desa20201956

Post removed.Why?

2016-02-22 01:22

Desa20201956

good enough for me.....


Icon8888 > Feb 22, 2016 01:17 AM | Report Abuse

Same lah... cheapskate schools...

2016-02-22 01:22

Desa20201956

look at these pretentious Icon and ks....makes me sick and vomit.

2016-02-22 01:24

Desa20201956

so full of pretentious people like this icon and ks here.

2016-02-22 01:42

Desa20201956

2000 posts here already..............

how many times have I been wrong / incorrect in my comments about people, about stocks, about the market ?

why shouldn't I be confident? Be extremely confident with my kind of abilities?

if not 100% , at least 99% correct.

2016-02-22 05:01

Desa20201956

definitely correct, Icon and his gang of little people are bastards.

2016-02-22 05:02

Post a Comment