kcchongnz blog
What Is Value Investing kcchongnz
“The secret to investing is to figure out the value of something – and then pay a lot less.”
Joel Greenblatt
I wonder how many retail investors dabbling in Bursa know what value investing is. My hunch is that when asked the reply, if any, would be buying cheap stocks – those that are trading at low price to earnings or low price to book value.
If you read a comment below about his poor understanding on value investing. You can’t stop laughing at his naivety,
{Posted by qqq3 > Aug 13, 2018 11:28 AM | Report Abuse 
too bad for all the value investors....value investors specialize in buying lousy shares at low PE.
Posted by qqq3 > Sep 11, 2018 05:26 PM | Report Abuse
firstly, to practise Bufalology, you really need to buy the bigger companies, the more established companies, those with some history as guidance...
i3 forum members what they chase? go ask KC the fake Bufalo man....he likes the small caps, easier to go up, ...or ask OTB, the adventurer....the FA and TA man.....all hang pig head sell dog meat.
Posted by qqq3 > Sep 11, 2018 06:24 PM | Report Abuse
smallish companies, no track record....want to talk about Bufalo man....
pure rubbish.]
Value investing mans must buy big companies?
Value investors only buy low PE companies?
Only Buffett is a value investor?
Value investors are all buffalos?
Value investors hang pig head sell dog meat?
But this is far from truth in the perspective of a true value investor.
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.”
Munger explained further,
“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. It is not just about buying cheap stocks. You must know about the business and hence the value the business. It is still a gamble, not a riskless endeavour, but by knowing the business and its value, and a little diversification, the probability of winning is higher.
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).”
“Whether appropriate or not, the term ‘value investing’ is widely used. Typically, it connotes the purchase of stocks having attributes such as a low ratio of price to book value, a low price-earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments.”
“Correspondingly, opposite characteristics – a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield – are in no way inconsistent with a ‘value’ purchase.”
Warren Buffet and Charles Munger are the two most successful and well-known value investors in the world, along with thousands of them spread all over the world.
So, it’s the ‘processes of picking up bargain stocks that value investing is all about. You must know what you are getting into. The above never mention about low PE, big or small companies.
It is about buying a mispriced stock, a stock selling way below its intrinsic value. You must know about the value of a company, or have a good estimate of it. It is an intelligent investing.
Value investing may connote the purchase of stocks having attributes such as a low ratio of price to book value, a low price-earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments.
What are the key principles of value investing? Does it work? What are the evidences that it works?
Do I have the experience on value investing and if it has worked for me?
Of course, value investing has worked. I have shown you all the evidences that value investing work. Otherwise what is the point of talking so much about it, bullshit ah?
This I will present you with the next article.
For those who wish to know more about value investing, or wish to follow some stock picks I Bursa following the principle of value investing may contact me at,
KC Chong
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Discussions
Be the first to like this. Showing 35 of 35 comments
I bought mfcb, tongher, johortin. Kept 5 years. Rewarded well. Qqq3. U get lose ba
2018-09-13 22:20
cheoky...don't talk cock....after 2008 crisis....every share also experienced doubling from 2009 to 2018.....
front view drive, not rear view drive.
2018-09-13 22:23
Plenty of undervalued counters in Bursa these days especially property and construction companies. Sometimes you got to ask why arent these value investors buying? Are they momentum speculators in disguise?
2018-09-13 22:32
cheoky...don't talk cock....after 2008 crisis....every share also experienced doubling from 2009 to 2018..... (AT SOME POINT)
front view drive, not rear view drive.
Moral of the story........timing is the most important factor.
2018-09-13 22:45
Plenty of undervalued counters in Bursa these days especially property and construction companies. Sometimes you got to ask why arent these value investors buying? Are they momentum speculators in disguise?
===================================
everybody who visits forums talk East go West.....all hang pig head sell dog meat....all hang Bufalo flag because it makes them sound respectable.
2018-09-13 22:47
rigid is death, flexible is life
https://klse.i3investor.com/servlets/forum/600173349.jsp
margin of safety? if u are so interested in margin of safety, go invest in mutual funds/FD.....see the discussions with that Bufalo wannabe.
2018-09-13 22:55
He bought Latitude 3 years ago @5.50, as a value investing strategy, he is estimated to make bumper profit in 3 years time (3+3 years)....I had joint the wagon
2018-09-13 22:56
SALAM > Sep 13, 2018 10:56 PM | Report Abuse
He bought Latitude 3 years ago @5.50, as a value investing strategy, he is estimated to make bumper profit in 3 years time (3+3 years)....I had joint the wagon
==================
good luck to him.....he got 2 years to break even from $ 3.40.
2018-09-13 22:59
value investing can fall into 2 categories....
luck or narcissistic personality disorder.....
if you think it is not luck, then must be narcissistic personality disorder.
2018-09-13 23:32
mutual funds don't buy 3 different shares, they buy 100 different shares.
this is to show they don't think they have God like qualities and also don't suffer from narcissistic personality disorder
2018-09-13 23:37
everybody thinks he is a better driver than the average.....can everybody be right?
everybody who is a stock picker thinks he is a better stock picker than the average...and the average is made up of directors, fund managers and others equally competent......if not, why do it?
there is third way....Do it differently......
2018-09-13 23:46
take MI for illustration. Doubled from IPO, new share.
Can you buy them for 5 years or at least doubling? Mutual funds can...mutual funds can meet them, mutual funds have 100 different shares, they don't mind some failures.
The guy from NZ? what edge he has? what he knows of young companies? what do you know of young companies? U can buy this as one of your 3 picks?
2018-09-14 01:52
take Serba Dynamics as illustration. A popular listing. More than doubled....well....the investment community were right about this share.....have been very popular from the word go.
As an individual, how much u know? U met them? Use your maths and buy?
can u buy some thing for 5 years without meeting the people behind it? without knowing much about the people behind it?
so what Bufalology you want to talk about?
don't even pretend you are a value investor if you are not prepared to hold a share for 5 years or at least double.
2018-09-14 02:01
value investor? go and buy up all the dead shares la....a Lot of the dead shares have discounts of up to 70% from the "revaluations"/valuations of assets.
2018-09-14 02:15
@Flintones - Value investors don't necessarily have to buy property/construction counters just because they are undervalued for many reasons.
1. Outside circle of competence - You don't buy if you're not familiar with the industry even though there is indication that there is undervaluation
2. Opportunity cost - There are better opportunities out there than owning property/construction counters.
2018-09-14 09:08
Hi kcchong,
This auntie Ven is really good in stock trading, I'm really envy her loh
She said layhong is a good buy now, but I disagree with her view, then she said cpteh is better than me....I really feel sad now.....*sob*......lol
Posted by VenFx > Sep 14, 2018 11:58 AM | Report Abuse
See what stop Tom from making bucks of money ?
Now i3 readers know why Me better by trade return, even CP Teh is better than him now.
Tom will probably say the same thing for the rest of his life.
2018-09-14 12:07
tom....next time some ones says good, bad or ugly, ask them to set time frame and target.....that way, it can be tested, falsifiable,
no time frame, no point talking
2018-09-14 12:12
qqq3 rigid is death, flexible is life
https://klse.i3investor.com/servlets/forum/600173349.jsp
ME: JUMBO MUMBO. DON'T KNOW WHAT THE HELL YOU ARE MURMURING ABOUT THERE!
margin of safety? if u are so interested in margin of safety, go invest in mutual funds/FD.....see the discussions with that Bufalo wannabe.
ME: WHY INVEST IN MUTUAL FUND/FD FOR MARGIN OF SAFETY? CAN ELABORATE AH?
2018-09-14 14:49
kc....margin of safety should refer to what is worse case scenario.....
buy mutual fund la....most mutual funds in Malaysia are well managed and will not suddenly lose 50 sen on the dollar......
2018-09-14 18:00
Posted by stockraider > Sep 14, 2018 06:03 PM | Report Abuse X
YES WHEN THE SHARE SAPNRG IS LOW...U MUST HAVE BIG BRAVE IRON BALLS TO BUY & HOLD LOH....!!
WHEN SPNRG SHARE PRICE IS HIGH SAY AT RM 1.20...U MUST HAVE CHICKEN SOFT BALL....TO SELL LOH....!!
THIS HOW WE CALL BUSINESS SENSE LOH....!!
BELOW IS WHAT WE CALL MARGIN OF SAFETY IN PLAY MAH;
Posted by stockraider > Sep 14, 2018 06:09 PM | Report Abuse X
remember this loh....50% stake usd 1.5b...means rm 6.4 billion mah...!!
Sapnrg still hold balance 50% worth more than Rm 6.4 billion after disposal mah.....!!
This is just a part of sapnrg mah...!!
And mkt cap is only Rm 2.7b for whole company loh....!!
So current price Rm 0.455 is a steal loh....it use to trade at Rm 4.00 mah.....!!
2018-09-14 18:18
BELOW IS WHAT WE CALL MARGIN OF SAFETY IN PLAY MAH;
Posted by stockraider > Sep 14, 2018 06:09 PM | Report Abuse X
remember this loh....50% stake usd 1.5b...means rm 6.4 billion mah...!!
Sapnrg still hold balance 50% worth more than Rm 6.4 billion after disposal mah.....!!
This is just a part of sapnrg mah...!!
And mkt cap is only Rm 2.7b for whole company loh....!!
So current price Rm 0.455 is a steal loh....it use to trade at Rm 4.00 mah.....!!
============================
u know how much borrowings they still have or not?
goes to show...make money and correct , complete information is not necessarily co related........
2018-09-14 18:44
Posted by qqq3 > Sep 14, 2018 06:00 PM | Report Abuse
kc....margin of safety should refer to what is worse case scenario.....
buy mutual fund la....most mutual funds in Malaysia are well managed and will not suddenly lose 50 sen on the dollar......
Is that the your understanding on what "Margin of safety" is in value investing?
And you base on your completely wrong understanding and go everywhere to "bash" others mentioning about MOS?
You have become a laughing stock without knowing it.
That is why I said the more your talk, the more you expose your backside.
2018-09-14 18:46
kc....so keen on margin of safety, why do stock picking?....go buy mutual funds......
2018-09-14 18:46
Posted by kcchongnz > Sep 14, 2018 06:46 PM | Report Abuse X
Posted by qqq3 > Sep 14, 2018 06:00 PM | Report Abuse
kc....margin of safety should refer to what is worse case scenario.....
buy mutual fund la....most mutual funds in Malaysia are well managed and will not suddenly lose 50 sen on the dollar......
Is that the your understanding on what "Margin of safety" is in value investing?
And you base on your completely wrong understanding and go everywhere to "bash" others mentioning about MOS?
You have become a laughing stock without knowing it.
That is why I said the more your talk, the more you expose your backside.
2018-09-14 18:47
WHAT TYPE OF COCK THIS QQQ TALKING LEH ??
BUY MUTUAL FUND WHERE GOT MARGIN OF SAFETY LEH ??
THE PURCHASE PRICE OR ENTRY PRICE OF MUTUAL FUND IS PRICE FAIR VALUE PLUS A SMALL PROFIT PREMIUM ENTRY PRICE MAH...!!
Posted by qqq3 > Sep 14, 2018 06:46 PM | Report Abuse
kc....so keen on margin of safety, why do stock picking?....go buy mutual funds......
2018-09-14 18:49
stock raider....mutual funds are very diversified....u will not suddenly lose 50 sen to the $ like you margin of safety PE 3 Heng Yuan and LionInd........
2018-09-14 18:51
DIVERSIFY IS NOT MARGIN OF SAFETY LOH....!!
DIVERSIFY IS PORTFOLIO VARIETY & NOT MARGIN OF SAFETY MAH....!!
Posted by qqq3 > Sep 14, 2018 06:51 PM | Report Abuse
stock raider....mutual funds are very diversified....u will not suddenly lose 50 sen to the $ like you margin of safety PE 3 Heng Yuan and LionInd........
2018-09-14 18:54
stockraider > Sep 14, 2018 06:54 PM | Report Abuse
DIVERSIFY IS NOT MARGIN OF SAFETY LOH....!!
=================
who say Not?
diversification is the main tool professionals use to make sure of margin of safety.....that your EPF funds still around when u need it.....
2018-09-14 18:58
Posted by qqq3 > Sep 14, 2018 06:58 PM | Report Abuse
diversification is the main tool professionals use to make sure of margin of safety.....that your EPF funds still around when u need it.....
Holy cow, you are continuously showing your backside, and front side too in the public.
Not shame ah?
2018-09-14 19:00
kc.....shame on u.....u have masters in finance....don't throw every thing away just because u want to sound like a Bufalo......
2018-09-14 19:02
kc.....shame on u.....u have masters in finance....don't throw every thing away just because u want to sound like a Bufalo......or maybe u want to sound like a God? have God like powers?
2018-09-14 19:04
kc....look at the margin of safety guy, that raider and his PE 3 Hengyuan....His valuation for HY, $ 40.....plenty of margin of safety according to his calculations.....
too bad, personal valuations as margin of safety is fool's gold, its self deception, its misleading, its dangerous, its arrogant.....and its rigid is Death, Flexible is Life........
2018-09-14 19:20
kc
allow me to expose your fraud....the margin of safety of a stock lies in its history and the charts....not in your maths formulas, not PE, not NTA.
2018-09-14 23:01
valuations are not written in stone...valuations are subjective, have large allowances and variances....10 experts will arrive at 10 different valuations of a stock.
2018-09-14 23:03
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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....
qqq3
talk so much for what? Just go and buy 3 shares, any 3 shares and keep for next 5 years or at least double....and I will tell you why should not.......
2018-09-13 21:48