kcchongnz blog
Mark Twain and Investing/Speculating kcchongnz
In my last article,” Do you want to be a super investor, and can you, and should you?” in the link below,
https://klse.i3investor.com/blogs/kcchongnz/145665.jsp
I elaborated about the “7 traits of a super investor” and concluded that
“None of these traits can be learned once a person reaches adulthood. It can be honed, but not developed from scratch because it mostly has to do with the way your brain is wired and experiences you have as a child.”
In conclusion, I said “it is better to put in some effort to be an above average investor following some proven success process and strategies to build long-term wealth, slowly, steadily but surely. It is good enough. Follow some of the traits but forget about becoming a super investor. Instead, focus on other important things in life, such as your business, career, family, friends, hobbies, health etc. Money and wealth is important but it is not everything in life. It may not be the most important thing in life.”
Today, I read some sayings by Mark Twain, one of which is below,
“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain
When I wrote and published my article in a public forum such as that of i3investor, I aim to educate the public on the proper mindset and process in investing to build long-term wealth slowly, steadily but surely. I discuss about concept, methodology, and use of fundamental ways of investing. Notice I never tout any stock in my articles, although sometimes I may have discussed my thesis of investing in a certain company. I propagate this to the public so that hopefully more people can be steered to the “right path” in investing and become above average investors. It is very hard, as a responsible citizen, “to keep my mouth shut, and appear to be stupid”, another saying of Mark Twain, when I read something which is seriously wrong, like propagating margin finance to speculate in a stock which has been touted relentlessly, and its price has risen sky high, with the “intention to help you become rich”. This is as the saying goes,
“The world is not dangerous because of those who do harm, but because of those who look at it without doing anything”. Albert Einstein
The above saying of Mark Twain makes me ponder whether I am belonging to the “small people” who is “belittling your ambitions”. I think I have to make some clarifications to avoid misunderstanding.
Let me use trait No. 5 to illustrate.
Trait #5: Great investors have confidence in their own convictions and stick with them, even when facing criticism.
The cognitive bias of overconfidence
Confidence is a quality personal trait for our career and whatever we do. When we have confidence, good results can be achieved easier. For example, if we are confident, we can do better in public speaking or networking. In investing, I believe one can do better too if he has the confidence to stand away from the crowd, provided he has the right experience, knowledge, the correct mindset and the proper and proven successful approach. Overconfidence may be a healthy attribute too. It makes us feel good about ourselves, creating a positive framework with which to get through life's experiences. This I strongly encourage everyone to go, to be confident, for it as it is good for you.
Unfortunately, being overconfident of our investment skills can lead to some disastrous results in investing in the stock market. Investors think they know more than they do or they can interpret information better. You can overestimate your ability of predicting the future, the probability of the success of your investment thesis, or underestimation of the role luck played in your investment performance.
Seth Klarman said, “You need to balance arrogance and humility… when you buy anything, it’s an arrogant act. You are saying the markets are gyrating and somebody wants to sell this to me and I know more than everybody else so I am going to stand here and buy it. I am going to pay an 1/8th more than the next guy wants to pay and buy it. That’s arrogant. And you need the humility to say ‘but I might be wrong.’ And you have to do that on everything.”
A lot of naïve investors also over-confident on the “kindness” of others who would help them to make money in the stock market, buying stocks touted by them, even after the share prices have gone sky high. Worse still, they are enticed by the purported oversized gain of others who borrow heavily to speculate, and they continuously harping on their success without mentioning of their failures.
Leverage, the fatal blow
What about if one combines overconfidence with leverage, say 50% in margin finance?
I had used Henyuan as an example of the peril of margin finance in the link, “Are you a super investor?” here,
https://klse.i3investor.com/blogs/kcchongnz/144864.jsp
The article shows how so many people enticed by the numerous article about Hengyuan with “good intention” to help you make money, and chasing the stocks from RM12 to RM15, to RM17 and even to RM19. Many started buying at around RM12, and “continued to buy using margin finance. As the price goes higher, they can borrow more to buy”.
Looking at the share price movement of Hengyuan recently, the average price of buying may be around RM17.00. The volume of trading spiked, with the above “good” advice of using other people’s money (OPM). This was also evidenced from the sources in the market that there was huge increase in margin financing for Hengyuan during that period.
About three weeks ago, the share price of Hengyuan started to fall from RM17.00 and plunged to less than RM12.00, with heavy volume. Those who bought Hengyuan during the peak of RM19.00 when it was hyped up and relentlessly touted, would have lost a whopping 37%. Even those who bought at an average of RM17 would have lost 30%, in less than three weeks. If one “continued to buy using margin finance. As the price goes higher, they can borrow more to buy”, say using 50% margin, they would have lost more than 70%.
When you combine overconfidence and leverage, you get some pretty interesting results.
It is also very interesting to ponder on the statements below,
“Remember the stock market is not like your rich father who would simply pay up your debts. You cannot get rich if you are stupid.”
“To be able to make money from the stock market, you must outsmart the losers.”
“There are more losers than winners. Losers are born every day. Otherwise, there will be no more ikan bilis for big sharks to eat.”
So, what do you think? Who are the “smart” speculator, and who are the “stupid” being branded?
Who are the “winners” and who are the “losers”?
Who are the “sharks” and who are the “ikan bilis”?
Other questions,
Am I belittling you when I told you to try to be an above-average investor to build long-term wealth slowly, steadily but surely, rather than taking the unnecessary risks above?
Am I “small people” by doing so, or you still prefer to listen to the “great” that makes you feel great too, even tough you may have lost your pants?
Can you feel my “kindness” to try to guide you from falling into the pitfalls in investing and am I a “small people” advising you to be an above-average investor and focus on other important things in life, such as your business, career, family, friends, hobbies, health etc.
Just ponder and wonder.
Happy investing.
KC Chong at ckc13invest@gmail.com
Please note that this article is about issues. It has nothing to do with personality. Discussion in issues are encouraged, but personal attack is highly discouraged and uncalled for.
More articles on kcchongnz blog
Insas Warrants WC and Its Valuation kcchongnz
Created by kcchongnz | Jan 22, 2024
Which to buy, Insas or Insas WC?
Isn’t this the most undervalued stock in Bursa?: Insas Berhad by Kcchongnz
Created by kcchongnz | Jan 15, 2024
2024 New Year Reflection Investing in the Stock Market: Timing the Market
Created by kcchongnz | Jan 01, 2024
2023 Christmas reflection on pitfalls of investing in the Malaysian stock market kcchongnz
Created by kcchongnz | Dec 25, 2023
Introduction: The Complete Dividend Investing Guide That Works by K C Chong
Created by kcchongnz | Oct 02, 2022
Discussions
6 people like this. Showing 50 of 84 comments
I dont usually agree with kcchong but I must say there are many PLP people in i3
2018-01-31 13:49
You talk with facts, no one will delete your posts.
Many readers do not like to read nonsense or argue without fact writing.
2018-01-31 13:50
I have no issues with uncle sharing his knowledge or whatever he wants to talk about. But I do have issues with pump and dump operation. To my knowledge,that’s market manipulation and it’s illegal in Malaysia or anywhere else in the world. So the more uncle talk and boast and leak how he operates, the more evidence the authorities have in nailing his nuts to the wall when and if they close in on him. His loud proclamation of wealth has already landed him kopi sessions with the tax man. Maybe the next visit will be the criminal investigation department. Now don’t go and complain how he is victimised becoz he’s a pakatan supporter when he himself left a nice paper trail for criminal prosecution. Good luck uncle, there’s a reason why God gave us only 1 mouth and that’s to talk less.
2018-01-31 14:55
KYY: The movement of any share is due to the number of the buyers or sellers. If there are more buyers than sellers the price will go up but if there are more sellers than buyers, the price will come down.
many blamed uncle, very few learnt and benefited from his wisdom
What have you learnt from the above statement by uncle?
He had warned us many times already, "I have no obligation to tell you first before I sell"
You choose to flow his buy call but too greedy, want to earn more than him, of course, you will suffer at the end.
Why?
You are not as rich as him. Market is kind to rich man. Very cruel to poor man
do not hope to be a super investor because you are not rich
2018-01-31 15:40
Be happy to be an average investor
You may not be rich tomorrow
But
You will be richer next year
2018-01-31 15:43
Learn from my good friend, Murali,
turn your frustration into happiness
He is very positive and creative
Posted by CharlesT > Jan 31, 2018 01:59 PM | Report Abuse
You may safely assume that many here likes u..
2018-01-31 15:54
Those who sailang Sendai already since-die.
Those who sailang Since-die with OPM already OTW to bankrupt.
Those who sailang Since-die and Redchip HY with margin finance will disappear very soon from i3, may include KYY.
At so advanced age, why still need to have sleepless night?
DJ down more than 500 points last 2 days.
Can he sleep soundly without margin-call?
2018-01-31 16:43
Hello, Such a nice forum!!! Thanks for sharing and provides wonderful information.
Thank you
2018-01-31 17:04
make use of OPM to win money may not last long.
make use of own popular ship to win the money is bad doing
grow rich with bad investing doing about a professional thief doing!
be an average investor with this good statement:
“I a “small people” advising you to be an above-average investor and focus on other important things in life, such as your business, career, family, friends, hobbies, health etc.”
2018-01-31 19:40
Dear all,
When I am a child I always wonder what I will do and what I will be, when I growth up? I remember during my primary school graduation day, the school board of director tells us: “Children whatever you do just remember these three Principles:
损人利已，不为。
利人不利已，可为。
利人利己，应为。”
Its mean:
Enriching own self by destitute others. Don’t Do.
Enriching others without thinking of any tangible return. Can Do.
Enriching others at the same time enriching own self. Must Do.
I am glad I growth up to become an engineer and now working for PT MM, a fully integrated palm oil corporation that subscribed fully to the principles of RSPO and committed to the production and use of sustainable palm oil for People, Planet and Prosperity. We are in an industry that brings benefit and prosperity to all stakeholders. We believe we are “Enriching others at the same time enriching ourselves” a Must Do Principle. It is this believes that drive us to do more, to do our best, to be the best and passionate about our work. Together we do make a different to this world. That a life worth living for.
I always believe that share investment is not a zero sum game. Your win is someone loses is gambling. Share investment supposed to be a win win for all. Am I too idealistic? Or is this too much to ask for?
Mr. Koon is right to point out the cruel reality of share investment; “There are more losers than winners. Losers are born every day. Otherwise, there will be no more ikan bilis for big sharks to eat. To be able to make money from the stock market you must outsmart the losers.” But my question remains why it must be so? Can’t it be a must do passionate endeavour of Enriching others at the same time enriching own self?
As of quote, “The fear of death follows from the fear of life. A man who lives fully is prepared to die at any time.” – Mark Twain
I would like to quote ancient Chinese writer Szuma Chien; “Though death befalls all men alike, it may be weightier than Mount Tai or lighter than a feather” To die for the people is weightier than Mount Tai but to die for exploiters and oppressors is lighter than a feather/ (Worthless death).
I extract from my comment in Tun Dr. Mahatir blog, “Our forefather had fought the Japan, the British and later during the confrontation with Indonesia and the communist insurgency fought as comrades alongside with our Malay and Non-Malay brother and pay with our ultimate sacrifice.” A scarified that our forefather prepared to pay for the common good of all.
My question; Are we now selfish us or selfless we? I leave this for all to ponder.
For those fence sitters that have not yet decided who to vote for the coming GE14. I attached below the link to my comments to Tun Dr. Mahathir blog:
http://chedet.cc/?p=2737#comment-140223
http://chedet.cc/?p=2762#comment-140389
http://chedet.cc/?p=2653#comment-139824
Thank you.
2018-01-31 20:11
Posted by Sslee > Jan 31, 2018 08:11 PM | Report Abuse
“损人利已，不为。
“利人不利已，可为。
“利人利己，应为。”
Me: Yes, the above principles in life were instilled to us as a good person. That I would expect an ordinary respected person in the society at such an age, and already with such wealth will do. But unfortunately, that was just an expectation, but the outcome is just completely the opposite.
Not only that. When someone tried to educate the public on some useful things which would save the naïve and newbies in avoiding the pitfalls in investing, he ridiculed him.
Sad, isn’t it?
“I always believe that share investment is not a zero sum game. Your win is someone loses is gambling. Share investment supposed to be a win win for all. Am I too idealistic? Or is this too much to ask for?”
Me: Fully agree with you. And that is what I am propagating; find good companies and invest for long term. Everybody will profit from its growth in the long-term.
However, not everybody thinks like us looking at long-term, although they tell you to do so. Many prefer to have big gain in the short-term, and the only way to do is manipulating, of course only when you have the means to do it; with huge monetary resources, buy up the shares first, write articles to promote it relentlessly, leverage on the “reputation” one has, encourage leverage so that more buying, tell you to hold for long-term, and then Boom, dump.
And then what to say?
“Why you so stupid?”
“Why you so greedy”?
What was said was actually true too.
Only Chinese educated people like you and me knows about Szuma Chien, and the Tai San.
2018-01-31 23:14
In stock market: Divided into two parts.
Part 1: Loser + Winner = 0
Part 2: Business. All Win (Dividend and good business counter)
2018-01-31 23:28
In stock market: Divided into two parts.
Part 1: Loser + Winner = 0
Part 2: Business. All Win (Dividend and good business counter)
______________________________________________________________________
Outcome:
Part 1: You cant sleep well.Die within 1-3 years
Part 2: Sleep well v happiness.Last until you last breath.
2018-01-31 23:42
Posted by stockmanmy > Jan 31, 2018 11:59 PM | Report Abuse
jn
lots of idiots in the stockmarket
to win, I just have to be better than the idiots
shouldn't be too difficult.
See the ruthlessness. It is a reflection.
By the way, who was the stupid idiot who sailang on Sendai at RM1.37 with huge margin and lost close to 100% now?
2018-02-01 00:13
Posted by stockmanmy > Jan 31, 2018 11:56 PM | Report Abuse
I want .01%.....
I want to be the 1%
So, where are you now?
How old are you now?
I am sure you aren't the 0.01% yet. Those who are in the 0.01% won't be talking nonsense in a public forum like i3investor, I am sure.
Do you see Coldeye talking or posting nonsense in i3investor?
From what you have commented, I have doubt whether you are even 50%.
2018-02-01 00:19
stockmanmy: you can be idiots if you money no big enough.
I had sold Topglov shares during year 2003 when the price at Rm2-3. That time I was 15 yo.
After 15 years,today if I still choose part 1 then I must the idiot.
2018-02-01 00:21
If you choose part 1: I saw and experience many sifu level involved in part 1.... so basically your successful rate almost closed to 0%.
You only have one hand, not able to fight the 10 sifu level once they combine.
Only coldeyes rule can work.
2018-02-01 00:27
“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain
2018-02-01 15:07
Well cooked Food will always attract flies, that's the reason stockmanmy always in KCChong's blog's forum, spoiling the mood of reading.
2018-02-01 15:17
Never expect stockman is still that popular after he went missing for a while...i guess the legend will never die
2018-02-01 16:30
If flags can be converted into money he shall b the richest man in i3...far more richer than koon...
Salute
2018-02-01 16:31
Post a Comment
Featured Posts
New Update. Discover investment communities that resonate with your ideas
Apps
Top Articles
2
THE INVESTMENT APPROACH OF CALVIN TAN
3
BFM Podcast
4
5
BFM Podcast
6
MQ Market Updates
7
save malaysia!
Putrajaya reviewing need to slash RON95 subsidy, says Rafizi
8
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
Stock
Time
Signal
Duration
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
kcchongnz
HOW MUCH HAVE YOU LOST SAILANGING SENDAI AT RM1.37?
BUT THAT IS NONE OF ANYBODY'S BUSINESS.
BUT HOW ABOUT YOUR GREAT ADVICE TO THE NEWBIES TO SAILANG IN SENDAI AT RM1.37?
CAN DO SOME MATHS AH?
2018-01-31 13:46