kcchongnz blog
Luck or Skill, who is lucky and who is skillful? kcchongnz
Yesterday, I wrote an article on this topic, “When everyone is making (big) money, and you don’t.” in the link below and just overnight, it has received 155 comments with 23 “likes”. Thank you very much for all the “likes” and comments. I love to open for comments. I love opposing views too, not just those who agree with me. This is how an open and democratic society is about. That is how one can learn from each other. We can further discuss on the diversity of investing views. That is what I am going to discuss here regarding the following comment.
[Posted by stockmanmy > Apr 4, 2017 08:42 PM | Report Abuse 
there is no way I can see that KC has a better grasp of the stock market than KYY.
no way.
Playing share market KC way is almost same as fixed deposits.
if lucky makes 10%.]
For his first comment, I have no comment as it involves another person. We will leave it to the readers to judge themselves.
As for the second part, it is about me, only me. I would like to make a little clarification and elaborations.
First, in my investment, and when I teach people about investing, I have never ever used the term “play” the market. We “invest” in stocks, as if we are investing in part of a business. Well I don’t know how those “Dynamite investing”, of “Panic moment”, or “Sailang” people “play” the share market. We don’t.
I never treat investing in part of a business as if putting my money in “fixed deposit”. Is that the way you guys treat it? So, you want to get return of investing in a business to be similar to that of fixed deposit? And your fixed deposit gets you a return of 10%?
Yeah, if I make a compounded annual return of 10% for a long period of time say 30 years, I would be happy. This is because if I could put aside RM1000 a month and invest in the share market for a return of 10%, I would have accumulated a total of about RM2m in 30 years, a tidy sum of money.
Don’t be antagonized by the numbers I used, and going to use, as I know you are a simple man of no formula, no numbers, no ratios, and “no” nothing. I know you are very good that nothing is needed in your investing, but just some strange human behaviour. But for us, we are not those who just pluck things from the sky. We need to substantiate what we say, and what we do, with records, research, numbers, and figures to back us up. Unlike what you have been doing all this while, we must do that, and that is precisely what I am going to do, to show you documental proof, a history of records.
In your last statement, “if lucky makes 10%”, maybe I am not lucky, I have two long-enough established portfolios set up in i3investor, all using fundamental value investing: Magic Formula, ROE, ROIC, PE, EY, CY, DY, margin of safety, taking care of the downside etc., which you will see, none of them had return of just 10% as mentioned by you.
Again, I just don’t like to make sweeping statement, like some people always do, but to provide evidences, and established records, numbers etc.
My portfolio returns using fundamental value investing
I was active in i3investor since five years ago. Tan Kian Wei, one of the major contributors in i3investor, asked me some time in January 2013 what were the stocks I was holding and I gave him a portfolio of 10 stocks I was holding then as shown in the link below.
http://klse.i3investor.com/servlets/pfs/13147.jsp
He compiled it and set up a portfolio to monitor the return of the stocks in the portfolio. This represent my first documented, and tracked portfolio of stocks in i3investor which everyone can check and verify even now. Tan KW termed this as “GE 13 Watch – kcchongnz” portfolio. The stocks in my portfolio were not merely put in a documented portfolio. There were many analysis, valuations and discussions on why those stocks were chosen as my investments.
That is always the way we fundamental value investors do; to provide a proper process and deliberate them, rather than just shouting “take risk”, “Sailang”, “Dynamite Investing”, “Panic moment” etc. and all other fuzzy slogans.
How is the return of this “GE13 Watch List” after four years and three months?
Return of GE13 Watch
Table 1 in the Appendix shows the performance of the stocks and the portfolio for the last four and a quarter years’ investment period for “GE13 Watch” up to today on 4th March 2017, a reasonably long period of investment.
During this period, the average return of the portfolio of ten stocks is 143.3%, or a median return of 92.5%, widely out-performed the gain of the broad market KLCI of just 20.6%. The compounded annual return of the portfolio (CAR) is high at 24%, not just 10% as mentioned by you.
All 10 stocks in the portfolio have positive total returns which varies from 4.0% for Plenitude to 384% for Prestariang. There are 4 other stocks returned more than 100%; SKP Resources at 319%, Jobstreet, which had sold its core business, had an estimated return of 200%, Pintaras, +235% and NTPM, +103.6%.
On 1st August 2013, Tan KW requested me to put up another portfolio of stocks, which he termed as “Stock Pick Challenge 2013 2H”. This portfolio can be viewed from this links below.
http://klse.i3investor.com/servlets/pfs/19386.jsp
I have provided detail analysis on the stocks chosen and their investment thesis in i3investor following the links above. I discussed a lot about the Magic Formula, cash flows, growth etc. for these stocks. Various valuation methods were used to estimate the intrinsic values of those stocks.
Return of Stock Pick Challenge 2013 2H
Table 2 in the Appendix shows the performance of the eleven stocks and the portfolio for the 3 years and 7 months’ investment period for “Stock Pick Challenge 2013 2H”.
During this period, the return of the broad market was up by 8.4%. The portfolio of stocks out-performed the broad KLSE market with an average return of 145%, or a median of 71%. The CAR of the portfolio is 30%, even better than the “GE13 Stock Watch” above. if I could put aside RM1000 a month and invest in the share market for a return of 30%, I would have accumulated a total of about RM9m in 30 years, a huge sum of money.
Again, all eleven stocks were in the positive territory. There were four multi-baggers; Homeritz at +482% and Datasonic +504%, Fibon at +159% and Willow at +113%.
This again demonstrated that value investing has yielded superb return, not just your 10%, and more importantly, with very low risk as again with none of the stocks loses money.
I have at least a couple more shorter-term portfolios set up in i3investor, and they all yield a few times more than the mere 10% mentioned by you. They are all documented with established records, with proper process deliberated. But of course, we have been through a bull market.
Nevertheless, if you wish to see how fundamental value investing can ride through the bull and bear, you may read my experience here.
http://klse.i3investor.com/blogs/kcchongnz/113300.jsp
Conclusions
I have just shown fundamental value investing (FVI) is not just academic or merely “theory” as alleged by this guy here,
[Posted by Kukuman > Apr 4, 2017 02:22 PM | Report Abuse
the theory guy is back.... with more theories]
I have given many academic research and proof that it works all over the world, and from my very own experience investing in Bursa as just shown, with all the documented proof, and not just hearsay.
Well, let us hear from you your documental proof on how good is your “Dynamite Investing”, or “Panic moment”, or “Sailang” or whatever.
But remember, don’t just talk, show documental proof. If you do not have any of your own, you are welcome to show whoever’s portfolios too.
I hope you are convinced by all my documental proof on fundamental value investing that it works. For FVI is logical, intuitive and plausible. it works well for long-term as well as for the short-term. And if you wish to learn about FVI and have good outcome in your investing, you may contact me at
ckc13invest@gmail.com
KC Chong
Appendix
Table 1: Return of “GE13 Stock Watch
Table 2: Return of Stock Pick challenge 2H 2013
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Discussions
14 people like this. Showing 50 of 56 comments
Manny is a plain clown, worst still idolized one person as if his way is the only path. All the best to your dynamite investing, don't cry when you trigger this bomb by your sailang
2017-04-05 06:38
i have little bit luck , my CAGR to date is more than 40% since 2013.\(^-^)/
2017-04-05 07:06
still need to learn hard from sifu-sifu Icon888, kc chong, OTB, Uncle koon & koko888.
2017-04-05 07:09
I don't think stockmanmy should condemned KC for writing article with good intention. I agree with KC that investing is for term. The way Stockmanmy comment about others shows that he belongs to the same group as old man KYY.
2017-04-05 08:11
05/04/2017 07:37
MoneyFace88 I don't think stockmanmy should condemned KC for writing article with good intention. I agree with KC that investing is for term. The way Stockmanmy comment about others shows that he belongs to the same group as old man KYY.
I think Kukuman n PLPman are Oldman's mah chai. And a few others too but cant remember the names now.
2017-04-05 08:39
when I first joined, this forum is dominated by people teaching, applying and using 20 formulas and valuation methods all based on historical data....and proud to have made millions , worth millions. A generation of number crunchers.
As if investing is so simple, that when I point that out, I became a fake accountant.
It is easy to see that the more rules, the more strict the rules, the higher the likelihood the whole portfolio will be full of stocks of the same characteristics.
FA and TA are tools. These are not guarantors of success. But sometimes presented as magic wards that will turn poor people to rich people ...what rubbish.
2017-04-05 08:41
Here is another very good article.....
HONG Kong-based Value Partners Group chairman and co-chief investment officer Datuk Seri Cheah Cheng Hye, also known as the Warren Buffett of Asia, is a former Star journalist who becomes one of the most influential fund managers in Asia.
http://klse.i3investor.com/blogs/moneymoney/119599.jsp
extracts
"So you believe more in quantitative methods when buying stocks?
No, although we also use that for ourselves. Remember what I said about our formula for investing?
Its based on the 3Rs. The right business, the right people and the right price. The most difficult R is the right human being."
When I first join i3 last year, this forum is dominated by OTB and KC and their quantitative formulas and ratios....hardly any discussions on business and people.
But this forum also have great bloggers such wealth wizard and bones......their writings are easy to read, and addresses business, people and numbers with equal competence.
As Datuk Sri Cheah says, numbers are the easiest, it is all in front of you....but all his mistakes comes from misreading the people.
2017-04-05 08:42
https://klse.i3investor.com/blogs/koonyewyinblog/
See how many rubbish threads he posted during that time
2017-04-05 08:45
until he appointed OTB N KC (for a short while, and never pay his fee) then he sold all his most undervalued stocks quietly and switched to OTB n KC's picks...thats how he made so much money to buy almost 30% JAKS
2017-04-05 08:47
Let’s find a solution - Koon Yew Yin
Author: Koon Yew Yin | Publish date: Sat, 3 Dec 2016, 06:38 PM
Koon Yew Yin 3rd Dec 2016
As you all know, Mr. KC Chong and I have a problem. I slept with the problem last night and when I woke up this morning, I found a solution in my hand. It is not a wet solution. It is a solid one that can really resolve our differences.
For a start we both are old and we should know that no one can win an argument, if we continue arguing. We must find a solution. Let me tell you an interesting tale by which we can find a good solution.
A rich father left 17 gold coins to his 3 sons and the rest of his asset to charity because he knew he could not take any money with him when he passed away.
When the man passed away, his 3 sons opened up the will.
The will stated that the eldest son should be given half of the 17 coins.
The middle son should be given one third of the 17 coins.
The youngest son should be given one ninth of the 17 coins.
As it is not possible to divide 17 by 2, or 17 by 3 or 17 by 9, they started to fight with each other.
So, in believing there was a solution, they decided to find it. They went to see a wise man, who lived in a nearby cave. He listened patiently and thought for a while. He gave one of his gold coins to help them solve the problem. With the addition of 1 coin the total number of coins was 17 + 1 = 18.
He gave each of them their share as according to the will.
The eldest son was give half of 18 = 9 coins
The idle son was given 1/3 of 18 = 6 coins
The youngest son was given 1/9 of 18 = 2 coins.
Totaling 9 + 6 + 2 = 17 coins.
The wise man took back his coin and everyone went away happily.
Moral: The attitude of negotiation and problem solving is to find the 18th coin i.e. the common ground. Once we are able to find the common ground, the issue is resolved. It is difficult at times.
However, to reach a solution, the first step is to believe that there is a solution.
I trust KC Chong will forgive me for all the bad things I said that caused the misunderstanding.
2017-04-05 08:49
@stockmanmy
OTB same same......always come here tell us how much money he made from i3 competition portfolio.
Your remarks on me !!
Choose high risk stock.
Not diversified portfolio.
Do not know how to select stock.
I am just a lay man in the street, I choose the stocks base on my stock selection criteria.
The below are stockmanmy's pick and Ooi Teik Bee's pick based on the closing price on 29/4/2016.
Let us check the performance on 30/12/2016.
Bornoil 0.15 X 14,000 = 2100
CBIP - 2.25 X 900 = 2025
Ekovest - 1.42 X 1500 = 2130
Ecoworld - 1.29 X 1500 = 1935
Taan - 4.79 X 200 = 958
Jtiasa - 1.35 x 700 = 945
Total capital = 10093
Actual performance on 30/12/2016
Bornoil 0.18 X 14,000 = 2520
CBIP - 1.97 X 900 = 1773
Ekovest - 2.38 X 1500 = 3570
Ecoworld - 1.34 X 1500 = 2010
Taan - 3.95 X 240 = 948 (1 for 5 BI)
Jtiasa - 1.34 x 700 = 938
Total capital = 11759
Total gain = +1666 or +16.50%
My pick
Gamuda-WE - 0.995 X 4,000 = 3,980
Gadang - 2.08 X 600 = 1,248
Gkent - 1.71 X 800 = 1,368
Kimlun-WA - 0.705 X 1,600 = 1,128
Pohuat-WB - 0.675 X 2,000 = 1,350
WTK - 1.20 X 1,000 = 1,200
Total capital = 10,274
Actual performance on 30/12/2016
Gamuda-WE - 1.21 X 4,000 = 4,840
Gadang - 1.05 X 1500 = 1,575 (1 split into 2 and 1 for 4 BI)
Gadang-WB - 0.42 x 300 = 126 (Free WB)
Gkent - 3.04 X 1000 = 3,040 (1 for 4 BI)
Kimlun-WA - 0.67 X 1,600 = 1,072
Pohuat-WB - 0.775 X 2,000 = 1,550
WTK - 0.995 X 1,000 = 995
Total capital = 13,198
Total gain = +2,924 or +28.46%
Summary
stockmanmy gain +1666 or +16.50%
OTB - Gain +2,924 or +28.46%
I wish to post this record here for reference to avoid future argument. I want to talk on facts and figures only.
Thank you.
Ooi
2017-04-05 09:03
otb
I am a free agent.
I don't have students and I don't collect subscription fees.
I can comment whenever and wherever I like.
and I certainly do not have your kind of stress.
2017-04-05 09:50
OTB
My remarks on you !!
Choose high risk stock.
Not diversified portfolio.
Do not know how to select stock.
But those remarks were directed at a different portfolio from the one shown here.
In fact those remarks were made when your competition portfolio shows a negative return > 20 % early in the year.....not the revised portfolio shown here.
2017-04-05 09:54
ks
the market rewards you only for risks taken ....no risks , no return, simple as that.
=============================
To protect your hard earn profit in bull, just follow kcchongnz stock selection.
For he won't bring you to holland...........
2017-04-05 10:24
I have one main message....take it however you like...Icon
That when I first joined late 2015...this forum is dominated by people who wants to teach you number crunching. That is the easy part.
The role that number crunching especially the complicated and esoteric stuffs, and margin of safety...( hate to see that term ) has on a person's success in the stock market is grossly exaggerated as a result.
A good buy is one with a good business ( business sense), good people and good price , in that order....not any other order.
Pivotal moments are a very useful concept in maximizing wealth...understanding self and psychological factors are essential . For there is no use if the share go up but no more skin in it.
Over the last few months, I notice people pays more and more attention to non accounting factors...and that is a good development.
and I am not a fake accountant.
2017-04-05 12:12
Accountants normally are trained with figures, ratio analysis, thier mind set can't change much after many years of computing with figures. They are trained to be kiasu n kiasi.
They will make decisions mostly based on figures. Not likely to be using qualitative thinking for decision making. So, how to perform dynamic investing style, sailing etc. this is my hamble conclusion
2017-04-05 12:46
haha.... well said icon, especially on this one:
attack OTB non stop so as to displace him
it is super obvious that every one can notice this "super-PLP" fellow is trying to get some job from the "Super_investor"...
his motive/personal agenda is super obvious... can the old man see it? haha...
2017-04-05 12:48
You have no other comment to make than whether I am an accountant?
well...there are all kinds of accountants, all kinds of engineers and all kinds of lawyers...and yes, I am at the top of my profession in my mid twenties, a fully qualified CPA ( M) by then.
y MG9231 > Apr 5, 2017 12:46 PM | Report Abuse
Accountants normally are trained with figures, ratio analysis, thier mind set can't change much after many years of computing with figures. They are trained to be kiasu n kiasi.
They will make decisions mostly based on figures. Not likely to be using qualitative thinking for decision making. So, how to perform dynamic investing style, sailing etc. this is my hamble conclusion
2017-04-05 13:23
I think plpman is likely a retired senior ac clerk,basing on his records here.
2017-04-05 13:28
Can I just say I like KYY approach to the stock market?...A very focused guy.
Can buy 30% of Jaks at age 85 is not a bad role model for me.
d by Dolly_Chai2 > Apr 5, 2017 12:48 PM | Report Abuse
haha.... well said icon, especially on this one:
2017-04-05 13:31
charles, you are a person of no morals.
This is not my first day here....I have said enough to show I know my stuffs.......
CharlesT > Apr 5, 2017 01:28 PM | Report Abuse
I think plpman is likely a retired senior ac clerk,basing on his records here.
2017-04-05 13:34
Koon made big money following otb n kc's advice to chop all his rubbish picks n switched to those export co on fm 2014 onwards...thats how he made big so as to hv money to buy 20%+ jaks
2017-04-05 13:41
Pre otb/kc (2014) :xinquan /jtiasa/mudajaya/rsawit n plantation co
U think holding these co can make money to buy 20%+JAKS?
2017-04-05 13:43
charles
I certainly don't think OTB is God although he probably thinks so himself....but very stressful job he got.
2017-04-05 14:10
He aint god but he helps koon to make big money so as to buy 20%+ JAKS....
2017-04-05 14:12
I agree with Icon8888's comment on manmy. I am not a regular here. Came here occasionally. It's easy to identify good one from the bad. Ooi is not GOD,but he got experience.
2017-04-05 17:17
Stockmanmy, you already said yourself 3rs are right business, right people and right price. We have never seen you writing any proper way to discuss right people management, right pricing to evaluate any companies. All you want to emphasis is business senses and your right timing. Everyone has his point of view which is really a good thing, but why can't you be more generous and respectul to others? Cmon, you can be nice.
2017-04-05 17:42
If OTB is so stressful becoz of subscription fees, then he must be a very responsible man with strong integrity isn't?
2017-04-05 17:47
Hi manmy, I am actually quite confuse with you insisting ppl to buy 30% of Jaks...what can it really prove? A focus portfolio does not say anything, and in fact it's worse when you are focusing on the wrong stock.
You see, it is just common sense to buy a counter with right business, right management and at the right price. But how do you evaluate or justify all these mentioned factors? Even TA also has to look at the volume and trend to decide if it's time to buy...
2017-04-05 19:51
so any of you lose to your performance in the competition portfolio ?You should review your own performance, see what went wrong, where you can improve.
That would be better than all the margin of safety rules, all the esoteric formulas and ratios.....
2017-04-05 22:01
insisting people to buy 30%? what is that?
by yenhui_koh > Apr 5, 2017 07:51 PM | Report Abuse
Hi manmy, I am actually quite confuse with you insisting ppl to buy 30% of Jaks
2017-04-05 22:04
phew...think yourself sailang earning 50% in bull market consider good? can you still earn as much in bear? choose your stock just by any others recommendation or by luck wont take you longg
2017-04-05 23:02
Can, you can also pray him like a God everyday, hoping that this "God" will give you some brokerage jobs or "dynamic investing tips"... haha...
Yeah, having a lot of $$$ at age of 85 is indeed not a bad role model for anyone of us here... but that is a matter of how this wealth was created. I would rather benchmark against Warren Buffet, Jack Ma, Robert Kuok, etc...
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
stockmanmy: Can I just say I like KYY approach to the stock market?...A very focused guy.
Can buy 30% of Jaks at age 85 is not a bad role model for me.
2017-04-06 13:16
KC Chong, thank you for your informative articles to teach us investing. You are a great teacher!
2017-04-07 20:45
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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....
Frank Soweto
I noticed for a long time de some fellas is i3 during bull mart all oso claimed making tons but when bear hits some went missing some kept quiet n some of course NO buy even after promoting kuat2 WTF Thipu manyak terror lucky these r juz the minorities n the smarter ones will filter out which one is the real deal n which is the sinkalans LOL
2017-04-05 03:55