kcchongnz blog
Value investing Again? kcchongnz
I read about an article in i3investor “so you also want to become value investor? (6)” as below.
http://klse.i3investor.com/blogs/stockman/98587.jsp
As usual, this author always criticizes value investing and ridicules those who are embarking on it. He has written 6 parts, including the one above.
However, always simply shoot here and there in generality, and nothing is specific. These are the things he keeps on muttering about.
“I bring it up because I read so often sifus and bloggers in i3 place way too much attention to net cash position. They call it margin of safety.
Way too much attention to net cash positions and accounting ratios and not enough attention to the actual business.
20 accounting formula, 5 valuation methods will not help you to make to make money. Valuations are too sensitive to the assumptions used. Its like the tail wagging the dog., the ends justifying the means.”
My questions are:
Does he understand what value investing is?
Does he know what “Margin of safety” is?
What these “20 accounting formula, 5 valuation methods´ is he is talking about so much?
Does a value investor always use the “20 accounting formula, 5 valuation methods” before investing?
Does he know anything about what valuation is?
I saw the first comment in the thread below from the author himself:
Posted by stockmanmy > Jun 18, 2016 03:47 PM | Report Abuse 
KC Chong...you asked what is gut feeling and what besides your trusted formulas?
Here is the answer above.
Huh, this article is targeting me? “That is the answer”? What answer?
Nevertheless, it gives me an opportunity to present you what value investing is, and does it work. Sorry, this is a repetition of what I have written before, done to explain and show you evidences on the following.
- What is value investing?
- Is value investing simply buying cheap stock, less than 10 sen stock?
- Is value investing about just looking at how much cash the company has as what the author above understands?
- Is value investing ignoring what the business of a company is about?
- Does value investing not worked?
- Can you just use a fuzzy example of Parkson and conclude that value investing doesn’t work?
What is value investing?
“Twice and thrice over, as they say, good is it to repeat and review what is good" Plato
Charlie Munger, who has influenced Buffet in purchase of Coca Cola and other seemingly high price acquisitions mentioned it out clearly.
“All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock.”
“You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing.”
So, value investing is intelligent investing. Value investing is about looking for a mispriced gamble, getting more than you are paying for. You must know about the business and hence the value the business.
What did Buffett say about value investing?
In his 1992 letter to Berkshire Hathaway shareholders, Warren Buffett wrote…
“We think the very term ‘value investing’ is redundant. What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value – in the hope that it can soon be sold for a still-higher price – should be labelled speculation (which is neither illegal, immoral nor – in our view – financially fattening).”
Don’t you think having an estimate of the value of a stock from some kind of valuation is important so that you can justify the amount paid? Or it is better just basing on your “gut feeling”?
Buffett never mentioned about your this “gut feeling”, nor any other super investor, I mean real super investors in the world. Or you think you are better than all these super investors because you have this “gut feeling”?
Does value investing work?
As a firm believer in fundamental value investing (FA), let me try my best to convince you again here, using some vigorous academic research studies.
Before dismissing academic research as pure theory or useless information, please note that unlike most stories telling and sweeping statements, all yours included, academic studies are the product of months or years of work; they carry out econometric analysis of large sets of data and provide empirical evidence, rather than basing on a few observations to make an inference. It gives answers; not just yes or no, but also why and how and has to be proven with precise weighing of evidence. The essence of the scientific method is to come up with a hypothesis, test it, and then make sure it can be repeated — and not skewed by external factors.
Tweedy, Browne Company LLC (TBC), a well-established investment advisory group in the US managed approximately $21.4 billion for individuals, institutions, partnerships, off-shore funds and four mutual funds as of September 30, 2014, had published a little booklet on “What Has Worked In Investing”, latest edition 2009. It is a collection of about 50 studies of investment approaches used in the US and the world, including Malaysia, for many decades. Each of the studies evaluates the results of following a particular value-oriented strategy in a particular market over a particular period.
The studies evaluate cheapness relative to current assets, to book value, to profits, to cash flow, and to dividends. They also look at other indicators sometimes related to cheapness, such as insider buying and market capitalization.
The studies revealed that when stocks in any exchange are lumped into groups of the lowest vs. highest of the three multiples, P/B, P/E, or P/CF, the groups of lowest multiples consistently outperform the groups of higher multiples, usually in a linear pattern (that is, the lowest outperform the preceding higher group). The degree of consistency is astounding.
A couple of them looked at the performance over 1, 3, and 5 year periods. surprisingly the lower multiple groups outperform about 70% of the time over a 1-year period, expectedly about 85-90% of the time over a 3-year period, and astoundingly 100% of the time over a 5-year period. Over the long term, the lowest multiple groups outperform the highest multiple groups by about 4-6% annually for any of the three multiples of P/B, P/E, or P/CF.
For those who are sceptical of what is the big deal of the excess return of 4%-6% a year for value stocks over the broad market, $100k invested with a CAR of 15% would have grown by 1637% to $1.64m, 2.43 times more compared to $673k for CAR of 10% for the same investment outlay in 20-years’ period.
The conclusion of the above studies is buying cheap in any form, be it be low P/B, P/E or P/CF (and also P/D) give better return than the broad markets, and in contrary to theory of investment, the better return doesn’t come with the price of higher risk as value stocks decline less than others in a bear market.
Some of the studies also show that combining small market cap value stocks with one of the low P/B, P/E, or P/CF leads to the best performing class of stocks. One of the very famous study by Eugene Fama, the Three Factor Model, is shown in this link below:
http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/39934.jsp
This lends additional credence that small-cap, value-based stocks are the best way to go in investing.
A couple of studies surprise the momentum investors with the conclusions that stocks that have underperformed over the previous 5-years period tend to outperform over the succeeding year-long period, by a whopping 18%. For value investors who believe in the power of mean reversion in the capital market, that is no surprise.
These studies have consistently providing empirical evidence that Benjamin Graham’s principles of fundamental value investing, first described in 1934 in his book, Security Analysis, continue to serve investors well and have provided the best returns over long periods of time.
Few mentioned about cash in the balance sheet as mentioned by you. And they do not use “20 accounting formula, 5 valuation methods´ as harping by you all the time.
Allow me to show you some fantastic extra-ordinary return of real life established records in investing basing on this value investing.
The super returns of super value investors
I showed the track records of each of nine disciples of the Master of Fundamental Value Investing, Benjamin Graham, who had generated annual compounded returns (CAR) of between 18% and 29% over track records lasting between 13 to 28 years as shown in the link below, out-performing the broad market by wide margins. All of them using fundamental value investing basing mainly on financial reports, and none using other methods of investing.
http://klse.i3investor.com/blogs/kcchongnz/92412.jsp
Take for example of the investing experience of Walter Schloss who just invested in low price-to-book stocks and just by referring to the balance sheets, yes, historical figures, had made a CAR of 21.3% over a 28 years investing period. $100k invested in a 28 years’ period becomes $22.3m, or a gain of 2220%!
More recently more investors such as Joel Greenblatt, who just uses two accounting ratios (not your 20) of ROIC and Earnings Yield, Seth Klarmen, Howard Marks, Mohnish Pabrai, Peter Lynch and many other fundamental value investing fund managers have all generated high return of over 20% CAR over an extended period of time of 20 years or more, purely using value investing.
http://klse.i3investor.com/blogs/kcchongnz/88007.jsp
Many of the investment strategies used are quantitative investing basing on the financial statements.
Still not convinced? I do not expect to convince you, Mr. Stockmanmy as what Seth Klarmen said,
“in value investing, either you get it, or you don’t.”
What about the statement below by this guru stockmanmy?
“Put all the time in looking for Companies with great earnings growth, ballistic earnings growth. Hints and indications can be obtained from price movements, industry analysis, company expansions, capital expenditures.”
Great points, but please elaborate and show us some evidences, I mean vigorous research and evidences, and better still, your records of success in investing, and not just sweeping generality.
Looking forward to your sharing.
As usual, for those who believe value investing can build long-term wealth, which I have been showing you all this while that it can, including my own experience, and are keen to learn about value investing, please contact me at
ckc14invest@gmail.com
The next course will commence soon.
KC
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Discussions
10 people like this. Showing 50 of 81 comments
Using 20 formulas and 5 valuation methods and advanced Maths is fine when applied to portfolio theory, how a portfolio will perform in uncertainties.
But in predicting the projection of any particular stock, I think I will rely on my trusted guts.
Reminds me of the quantum theory and uncertainty Principles
Don't forget, academia have given on stock picking..
They like to tell the story of the darts and the monkeys.
So why you keep pestering me for academic research on my methods?
2016-06-20 04:39
To those who always like to use mathematics and called themselves value investors. Let me explain to you how mathematics does not work for investing. A horse that can count from 1 to 10 is a very smart horse but the horse is still the horse and why can horse pick stocks that are of value to investors in the long term. A horse only picks anything that looks green, a horse eat grass, probably. If you learn from the horse you will become a horse by picking everything that look only green, you think only grean color you buy, in the end of the day, you only buy a bunch of grass, and grass cost very little in Malaysia.
2016-06-20 08:27
I hope you don't take his next course of mathematics or else you become a horse that buy what is green and only buy grass, what for aha?
2016-06-20 08:30
lots of formulas and maths gives the impression of certainty. ...where none exists.
2016-06-20 08:36
value is doing something on good fate, doing something out of necessary, doing samething out of kindness, and doing something out of compassion, anything that is doing something out of statistics or mathematics has nothing to do with value. Value is something you provide to people realistically, statistics or mathematics don't do that, because investors are only interested in collecting money, and investors are not interested in learning statistics or mathematics. That is why statistics or mathematics are worthless when your intention is collecting money.
2016-06-20 09:41
Posted by sostupid > Jun 20, 2016 08:27 AM | Report Abuse
To those who always like to use mathematics and called themselves value investors. Let me explain to you how mathematics does not work for investing. A horse that can count from 1 to 10 is a very smart horse but the horse is still the horse and why can horse pick stocks that are of value to investors in the long term. A horse only picks anything that looks green, a horse eat grass, probably. If you learn from the horse you will become a horse by picking everything that look only green, you think only grean color you buy, in the end of the day, you only buy a bunch of grass, and grass cost very little in Malaysia.
Are you talking about this thingy "sostupid"?
Surely it can't be those super investors who use value investing which I have shown the fantastic long-term return they have proven to make, can it?
2016-06-20 09:47
Give you mathematics or statistics lessons for the purpose of taking your money away from you is not value investing. You take value from people (the money) away from people is not value investing, it is called daylight robbery.
2016-06-20 09:48
Posted by stockmanmy > Jun 20, 2016 04:39 AM | Report Abuse
Using 20 formulas and 5 valuation methods and advanced Maths is fine when applied to portfolio theory, how a portfolio will perform in uncertainties.
But in predicting the projection of any particular stock, I think I will rely on my trusted guts.
Reminds me of the quantum theory and uncertainty Principles
Don't forget, academia have given on stock picking..
They like to tell the story of the darts and the monkeys.
So why you keep pestering me for academic research on my methods?
"20 formulas and 5 valuation methods". Which ratios and methods you are referring to?
"advanced Maths", What advanced Maths you are talking about?
"predicting the projection of any particular stock, I think I will rely on my trusted guts." What "guts" is yours?
"Reminds me of the quantum theory and uncertainty Principles, Please elaborate!
"Don't forget, academia have given on stock picking..
They like to tell the story of the darts and the monkeys."
Don't you think your above two statements contradicting each other?
"So why you keep pestering me for academic research on my methods?
Why? Because just simply talk and use one or two examples to approve or disapprove something is useless.
"Before dismissing academic research as pure theory or useless information, please note that unlike most stories telling and sweeping statements, all yours included, academic studies are the product of months or years of work; they carry out econometric analysis of large sets of data and provide empirical evidence, rather than basing on a few observations to make an inference. It gives answers; not just yes or no, but also why and how and has to be proven with precise weighing of evidence. The essence of the scientific method is to come up with a hypothesis, test it, and then make sure it can be repeated — and not skewed by external factors."
2016-06-20 09:54
Value investing is providing value to people out of good faith, out of necessary, out of compassion, and not for the purpose of teaching old people how to do mathematics or statistics. I know linear regression and statistics I also don't use those complicated garbage to teach people.
Value investing: for example, when there is a river and there is no bridge, if there is a bridge there would be a value when it is urgent for people to cross the bridge. Value investing is investing is something that people has urgent needs. Like investing in Coca-Cola, Wells Fargo, American Express, Geico, and duracell and others, all of these companies give people urgent needs.
Investing in companies that provide urgent needs are value investing in Warren Buffett's dictionary but not in Kcchong's dictionary because only mathematics are value investing.
You believe somebody that tell you the mathematics that they don't even understand themselves.
You allow somebody to teach you value investing when he does not even understand meaning of value investing.
You ask a blind man to help you to cross the river with dangerous water.
This guy is imposter. Up to you, I don't know mathematics because I know how to count money. You want to learn mathematics from him is your own business.
At least get the defintion of value investing right yourself, because that imposter does not even understand what is value investing and he is always taking about he is the only one who knows what is a value investing but other people don't know, top secret, I think the mathematics are even bigger top secrets that you should keep away.
2016-06-20 10:00
Posted by sostupid > Jun 20, 2016 09:48 AM | Report Abuse
Give you mathematics or statistics lessons for the purpose of taking your money away from you is not value investing. You take value from people (the money) away from people is not value investing, it is called daylight robbery.
Do you consider this as "Daylight robbery"?
Posted by Intelligent Investor > Dec 21, 2015 08:24 PM | Report Abuse “An investment in Mr. Chong course provide me the ever best return.”
Posted by coolio > Oct 22, 2015 11:58 AM | Report Abuse I just want to take this opportunity to say thank you again because recently I have achieved 7 figure in my investing journey...hehehe.. Thanks for your investing methods, no 8 wonders in the world is really amazing!
2016-06-20 10:01
"I know linear regression and statistics I also don't use those complicated garbage to teach people."
"I don't know mathematics"
Which is which; do you know linear regression and statistics, or don't know?
Who uses linear regression and statistics to teach value investing? I do know those thingy,but do I use them to teach value investing?
"Value investing: for example, when there is a river and there is no bridge, if there is a bridge there would be a value when it is urgent for people to cross the bridge. Value investing is investing is something that people has urgent needs. Like investing in Coca-Cola, Wells Fargo, American Express, Geico, and duracell and others, all of these companies give people urgent needs."
What "urgent needs"?
Why "urgent needs" in Coca Cola, American Express, Geico, duracell? Because people will die without them?
"At least get the defintion of value investing right yourself, because that imposter does not even understand what is value investing and he is always taking about he is the only one who knows what is a value investing but other people don't know, top secret, I think the mathematics are even bigger top secrets that you should keep away."
I have written numerous articles on value investing in i3. Mind to gives some specific comments to prove your above statement?
So we must follow your definition of value investing that "Investing in companies that provide urgent needs are value investing"?
2016-06-20 10:16
Why "urgent needs" in Coca Cola, American Express, Geico, duracell? Because people will die without them?
You need people to inform that no drinking water, no money, no car insurance, no battery, all these will not die when you don't have them but you will die if you don't have these when you need them.
Even this also I need to tell you, you are more kindergarten in investing than I thought you are?
2016-06-20 10:20
Posted by sostupid > Jun 20, 2016 10:20 AM | Report Abuse
Why "urgent needs" in Coca Cola, American Express, Geico, duracell? Because people will die without them?
You need people to inform that no drinking water, no money, no car insurance, no battery, all these will not die when you don't have them but you will die if you don't have these when you need them.
Even this also I need to tell you, you are more kindergarten in investing than I thought you are?
So investor must invest in Coca Cola because you need to drink its water. Must have Amex card, must buy duracell, insurance must be from Geico, if not "you will die if you don't have these when you need them"?
Really?
And also must buy no matter what prices are they selling?
"Even this also I need to tell you, you are more kindergarten in investing than I thought you are?"
I can understand why you refer yourself in your above statement now.
2016-06-20 10:36
Posted by sostupid > Jun 20, 2016 10:32 AM | Report Abuse
Which is which; do you know linear regression and statistics, or don't know?
All statisticians used linear regression, I believe you need to brush up on your mathematics.
Who is a statistician? I don't claim myself to be one,and I don't use, although I have learned it before.
Yes, all statisticians have learned linear regression, but are you sure all statisticians use regression in their work? i highly doubt so.
2016-06-20 10:41
For example, american express, you said you don't have american express you will not die? If you go traveling overseas, you have no money to buy, you die there in Turkey or what. Or, you go to New Zeland without an american express, when even taxi fare also you can not afford, without the american express you die or not. american express has a global network, you go to Africa or Shahara desert also you can use. Get it. Insurance included if you have american express for traveling when luggages are stolen. Value investing is invest in people's urgency, get it. At that time there is no uncertaintly and there is no need to use mathamatics when people are very urgent, at time, when you are urgent even calculator also is redundent.
2016-06-20 10:48
Posted by sostupid > Jun 20, 2016 10:48 AM | Report Abuse
For example, american express, you said you don't have american express you will not die? If you go traveling overseas, you have no money to buy, you die there in Turkey or what. Or, you go to New Zeland without an american express, when even taxi fare also you can not afford, without the american express you die or not. american express has a global network, you go to Africa or Shahara desert also you can use. Get it.
WHY GO TRAVELING OVERSEAS WHEN YOU DON'T HAVE MONEY?
NO MONEY TO PAY TAXI FARE CAN DIE AH? UHH!
MUST GO TO SAHARA DESSERT, SOME MORE DON'T BRING OR BUY WATER AH?
WHY GO TO SHARA DESSERT IN ORDER TO USE AMERICAN EXPRESS?
MASTER CARD, VISA CARD NO USE AH?
NO COKE TO DRINK CAN DIE AH? WHAT ABOUT DRINKING PEPSI, WATER(FROM TAP NOT FROM COKE, I DIDN'T KNOW COCA COLA SELLS WATER)
NO,I DON'T GET IT.
Insurance included if you have american express for traveling when luggages are stolen. Value investing is invest in people's urgency, get it. At that time there is no uncertaintly and there is no need to use mathamatics when people are very urgent, at time, when you are urgent even calculator also is redundent.
LUGGAGE LOSS CAN DIE AH? WHY MUST HAVE INSURANCE, AND PARTICULARLY FROM AMEX? SO URGENT TO HAVE INSURANCE TO COVER LUGGAGE LOSS AH?
NO,I STILL DON'T GET IT!
2016-06-20 10:58
Even if you are very stupid please do not assume that other people are very stupid like you, try to change the focus, try to ask everybody to speak in your language, when somebody says something else, you try to say garbage to change the focus, you start to act like you are not a man anymore. Today, you can go home and wear a skirt, nobody see it also never mind. I don't blame you just because you like to wear a skirt. That is your own rights. Wearing a skirt, dancing like a baboo, it is your own rights.
2016-06-20 11:19
Posted by sostupid > Jun 20, 2016 11:19 AM | Report Abuse
Even if you are very stupid please do not assume that other people are very stupid like you, try to change the focus, try to ask everybody to speak in your language, when somebody says something else, you try to say garbage to change the focus, you start to act like you are not a man anymore. Today, you can go home and wear a skirt, nobody see it also never mind. I don't blame you just because you like to wear a skirt. That is your own rights. Wearing a skirt, dancing like a baboo, it is your own rights.
I counter your arguments point by point. But what do you do? "Wearing a skirt, dancing like a baboo". Your above statement fits you very very well.
Btw, who gives you such a wonderful and befitting name.
2016-06-20 11:48
KC...enjoy the debate... as I know you scientists can never win religious dogma. You just proved his point. I have never say anything bad about people to prove my point, you just did. You are so good at criticizing other people for the sake of proving that you are right and other people are wrong. You did not read his lips. You are always trying to prove that you are right by being a scientist even if you are going to tell a lie you are going to do it just to prove your point.
2016-06-20 11:55
Probability
Have you done your research on accounting policy for biological assets?
No hurry. The stock is not going anywhere.
2016-06-20 12:05
Probability
Another for the budding value investors......this one no need to learn about accounting for biological assets.
L&G NTA 70 sen of which 50 sen is cash., price 40 sen.....every year got 2 sen dividend. Which matches your FD rates.
Go buy la......
So many companies with sleeping directors in Malaysia.
Should make it illegal for them.
Hahaha
2016-06-20 12:33
Go do research and tell me whether value investors are rewarded in Malaysia.
2016-06-20 12:39
Based on gohku many years of experience value investment is still the best.
This is because it is business like way of investing.
2016-06-20 12:40
If you buy L& G and WTK.......since when have the investors been rewarded?
Gorky....talk is easy......real life experience shows almost all of them are value traps.
2016-06-20 12:44
this 'sostupid' guy is such a philosophist.
"Let me explain to you how mathematics does not work for investing. A horse that can count from 1 to 10 is a very smart horse but the horse is still the horse and why can horse pick stocks that are of value to investors in the long term. A horse only picks anything that looks green, a horse eat grass, probably. If you learn from the horse you will become a horse by picking everything that look only green, you think only grean color you buy, in the end of the day, you only buy a bunch of grass, and grass cost very little in Malaysia."
New method of investing. BE LIKE HORSE. laugh die me.......
2016-06-20 12:48
I bet any formula you use for investment to make money is not easy.
That's why making money from the stock market is difficult.
I prefer to use value investment because it is business like and easy to understand.
Same like business, value investment need to make monies, if not we will close shop.
2016-06-20 12:48
Americans like to go for overseas vacations every year. American express is an American company that provide a lot of benefits for traveling overseas including traveling checks are from American express. Value investing is investing in company providing good faith (traveling checks), necessary (booking fights), and compassion business (in urgent situation). Your family can wire money through American express when you have an emergency in overseas countries.
2016-06-20 12:55
Philosophist..talking number 1. Investing also number 1 but counting from the last. We normally develop our expertise through what we are focusing.
2016-06-20 13:04
Investors mind is mostly wiring with logical thinking so obviously they would not able to defend against sostupid. lol
2016-06-20 13:18
Different channel but still can pick up something new from sostupid for thinking not logically.
2016-06-20 13:28
Up_down I saw you in may counters (quite active)I am also have some shares. I like to buying dying counters and hope they go up by not dying eventually. Do you have any good recommendations or not. What is a dying counter by appearance but in fact may not die eventually. Your logic die (appearance)and not die (logic, wisdom).
2016-06-20 13:32
I don't have a lot of time to spend on research for stocks. I usually buy stocks which are 30 years of business operations or more. To be realistic now, old stocks not performing, may be, you can recommend some younger stocks. I want to buy younger stocks (those that people don't expect the price to go up) and your logic (I don't want market news (everybody knows becoming a trap or else how can everybody also knows)). Let me know, I read the column later on I have go out to get some air. Just put down the names, I go to the counter to look. Many Thanks.
2016-06-20 13:38
stockman...on Fixed asset such as property valuation for L&G its subject (highly sensitive) to demand (future demand) and buying powers of consumer.
Land at a price of 24K....forget about the risk of devaluation.
CPO...price can never go further down. Cash yield can easily exceed 10% even if the price of FFB goes down by half...
The only issue on WTK is how much patience you have? :)
2016-06-20 13:49
Sostupid. No time to do research and monitor. The best is to invest in FMCG companies Dlady, F&N and Nestle in enjoying its moderate sustainable long term growth. If you don't like blue chips, You may consider some coma counters with higher potential i.e Kawan, Yspsah, SAM, MSM.
2016-06-20 14:00
sostupid...you have now justified yourself that you can now invest without cracking your head on 'mathematics + logics'...though the future of artificial intelligence depends on this...( note that AI had won the Korean genius on Go!)...based on your 'feel' + 'faith' + 'gut feeling'...
you have now relieved yourself from a lot of unnecessary burden...
you have too much brain cells that now you can afford to kill some with a few pints of beer, relaxing and laughing at those who had been doing a lot of 'maths + logical thinking'...
as value investors...I can only say that we need more and more people like you...before AI start getting overly involved in stock market and snatch away our strategies. I now have to rely on faith...just like you. :)
2016-06-20 14:02
I am not pro or taking any side of anyone here of which theory is better. After reading all the comments I think some distorted view of some of the examples given and over complicate things.
What is value investing?
Can we summarize as:
***Investment that will create greater value or appreciate from your initial cost of investment over time.
2016-06-20 14:15
Than it SHOULD NOT limited to ONLY: (keep the UPPER CASE words in mind when you read the below)
1)Super cheap like 20-30sen - because the share could already have reach higher price when the true potential for greater appreciation start increase exponentially.
2016-06-20 14:17
2) Not limited to basic necessity products or products that require urgent needs - Of course products that always in demand should able to sell more creating higher sales/volume hence increase revenue or p.rofit in general for sustainability.
3) Using empirical data, past performance, past demand data, future demand analysis, population growth data, future trend analysis, etc will require statistic, mathematics calculations - But some common sense, gut feeling, great understanding of social and lifestyle change taking or will become a trend, future demand, etc can be great help also. Many dot com companies started with what seem ridiculous or will never take off made it big.
4) It does not matter which method or methodology is correct or better; nor does it matter whether you use 20 points calculations or 5 values to differentiate or just 2 values. Bottom line is to identify which share counter will be a potential 'value investing' counter is. Any or all of those mathematical or stats help or not is not for this round of posting.
Most welcome to share your inputs for the above. May we all learn and enrich our understanding together.
Cheers.
2016-06-20 14:19
L&G
1 billion shares
500 million cash
40 sen share price.
Who cares what revaluation for properties?
2016-06-20 14:28
Probability
Please forget about WTK....
They lost money on the matured areas........see WTK forum
2016-06-20 14:30
Value investing is not as sexy as some other style s of investing such as momentum trading. Value investor profits are made by investing in quality businesses, not by trading.
Market factors that drive volatility assigns an incorrect price to a stock with strong fundamental in term of earnings, dividends, book value and cash flow. By applying a proven screening process for value stocks, a value investor will buy into a sound business at bargain price due to market inefficiencies.
It is undeniably true that whatever method you applied, investment decision required judgement based on past performances and underlying future growth drivers. Businesses with strong fundamental will give value investor a conviction to buy and hold to enjoy both the consistent dividend payout and capital gain from sustainable earning growth. Margin of safety by its name is an extra measure to mitigate the unknown risks.
The elasticity of demand of goods or services is only one side of the story. How productive, innovative, cost effective and ability to manage its cash, borrowings and tax play a part in achieving a competitive edge and sustainable growth. The corporate culture the management trying to promote also play an important role.
It is vital to differentiate a value company and a company that simply has a declining price. If Co. X has been trading at RM 2 per share but suddenly drops to RM 0.80 per share, it does not automatically signal that Co. X is selling at a bargain. All we know is that Co. X is less expensive. The drop in price could be due to market respond to a fundamental problem. We need to compare current share price to intrinsic value and not to historical share prices. The fundamental question we need to address is whether Co. X actually worth more than RM 0.80 per share.
2016-06-20 14:36
Facbind is another classic value trap! Can see cannot eat! Must know who behind certain companies!
2016-06-27 01:25
But i think hor, wtk can buy if below rm1. Nta near 3, low debts,, good cashflows. Duno what the problem. Also div yield ok
2016-06-27 01:26
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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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Is the ringgit undervalue?
I'm surprise to know that BNM didn't make much noise lately after the newly appointed gabenor, it should be safe to assume they are very comfortable with it, should I conclude it is a fair value and it is still overvalued at this rate, what is the confident the BNM can assure to the world especially to me? NOTHING!
But the MAS can assure the world the sgd will continue to practice currency appreciation.
2016-06-20 00:52