Return of Value Investing: My established records Part 1 kcchongnz

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Return of Value Investing: My established records Part 1 kcchongnz

kcchongnz

Publish date: Thu, 04 Oct 2018, 09:01 PM

In a recent gibberish article, someone posted this comment with the purpose of mocking value investors again,

[Posted by qqq3 > Sep 30, 2018 01:34 PM | Report Abuse

where is that NZ guy?
long term investments work for him or not?

why no defender of value investing and buy and hold?]

Before I proceed, I would like to reiterate that value investing is not about buying a cheap stock, or a good stock, and hold it for long time. Value investing is about buying a stock at a price below its intrinsic value (IV), and with a margin of safety, and sell it when price goes above its IV. IV changes as business conditions, competitions and macro-economy changes. Also, monetary resources of individual investors are limited and existing shares, whether they are great or still undervalued, may have to be sold in order to purchase better company with higher MOS for better expected return.

In my recent article, “Does “value investing” work and what are the evidences?” in the link below,

https://klse.i3investor.com/blogs/kcchongnz/174215.jsp

Warren Buffet showed the track records of nine disciples of the father of value investors, Benjamin Graham. They all generated annual compounded returns (CAGR) of between 18% and 29% over track records lasting between 14 to 30 years. Those CAGRs were from 2 times to more than 4 times the CAGR of the broad markets over the same period.

In Malaysia, most of us know that Mr. Fong Si Ling, popularly known as Coldeye, is a successful value investor who has built up a substantial wealth through value investing in Bursa over the years.

In my subsequent article, “Does “value investing” work in Bursa?” in the link below,

https://klse.i3investor.com/blogs/kcchongnz/175060.jsp

I have also shown some big cap stocks chosen randomly returned an average of 379% over the last 10 years, or a CAGR of 16.5%, more than 3 times the 5.2% of the broad index during the same period.

The Busy Weekly also compiled a list of 20 “bull” stocks which returned over 1000% over the 10 years, or a CAGR of more than 30%. They were mostly small and mid-cap stocks listed in Bursa.

Here, I will provide my own experience in value investing in Bursa with established records which are verifiable from i3investors. Note that articles on these records had been published a number of times in i3investors. This repetition serves to answer the question posed by the commenter above, and bring awareness to those who are new to this forum, that value investing works, not only in overseas markets, but also right in our doorstep.

My stock picks sharing in i3investor

In this article, I would like to summarize all the portfolios of stocks which I shared in i3investor over the years and their returns after the portfolios were formed. With this, you can make your judgment if value investing works in Bursa.

In my article, “Investing in Bursa for 5 years: 5 年的等待”in the link below,

https://klse.i3investor.com/blogs/kcchongnz/138098.jsp

I have shown that the portfolio of 10 stocks named “GE13 Watch” established in i3investor on 21^st January 2013 returned 146%, more than seven times the return of the broad market of just 20% in the same period of about 5 years. All stocks in the portfolio made positive returns. There was not a single loser.

My second portfolio of 11 stocks named “2013 2H Stock Pick Challenge” established in i3investor on 1^st August 2013 and as shown in the link below, “Search for The Holy Grail in Investing: The Magic Formula” returned 175% in about four years against the return of the broad market of just 10% during the same period.

https://klse.i3investor.com/blogs/kcchongnz/127825.jsp

The excess return of the portfolios of stocks was huge.

The stocks in the two portfolios were chosen following the principle of the Magic Formula of Joel Greenblatt; buying quality companies with high return of capital of the firm when they are selling cheap as valued at the enterprise level.

My third established portfolio in i3investor was done at the end of year 2015 for investing for year 2016. This was using a different value investing strategy; the high dividend yield investing strategy as documented in the link “Tips for Dividends Investing: A sure cash flow for investors” below,

https://klse.i3investor.com/blogs/kcchongnz/122285.jsp

This portfolio of 5 high dividend stocks has gained an average of 67.4% for the one-and-a-half-year period as on 5^th April 2017, compared to the gain of the broad market of just 3.8% during the same period, again with huge excess return.

My last established record in i3investor was in the stock pick challenge for 2017. I did not do that well in this portfolio of stock, but it is still a positive return of 5% at the end of the year.

It is noted that the stocks chosen in the four portfolios above came with detail investment thesis, qualitative and quantitative analysis published in i3investor.

It is also noted that although the stocks in the portfolios above were assumed to be held over the investment period, it doesn’t mean I held them for the whole duration. As mentioned above, value investing is about buying, and selling of stocks basing on the prices and their intrinsic values, the change in macro and micro conditions, and not the least, the alternative opportunities available.

In general, my experience and outcome in value investing in Bursa shows,

“Heads I win big; tails I don’t lose much”

Conclusions

My experience with value investing in Bursa as shown in the established portfolios in i3investor above have shown that it consistently provided extra-ordinary return, in the short term, as well as the long term. More importantly, the risks involved were low. The principles, strategies and methodologies are plausible. They are simply logic. They follow established and proven successful process.

Despite of all the positive results of my experience, I still have to say that value investing, like any other style of investing, does not guarantee that it works in the short term, and it does not mean that it works all the time.

What about my “real” experience in my own, or asking my stock pick services participants putting hard cash investing in Bursa?

Next, I will provide results for my stock pick services to show if value investing works in Bursa. It works well and so far, works all the time in my personal investment.

Why do people continue to ridicule FVI despite all the evidences that it has worked, it is still working, and that it is continuing to work?

I can borrow what Seth Klarmen has said below,

I would also like to reflect what Thomas Gayner said,

"I’m always amazed that someone would say they weren’t a value investor – I wouldn’t admit it even if I wasn’t. It just seems silly to think about investing any other way." Thomas Gayner

If you are interested in my online investing course to learn the nitty gritty of value investing, or if you have no time but still wish to invest in Bursa safely, slowly but surely to build long-term wealth, you may also participate in my new stock pick service by contacting me at,

ckc14invest@gmail.com

KC Chong

Discussions

1 person likes this. Showing 50 of 74 comments

kcchongnz

Posted by qqq3 > Oct 5, 2018 12:31 AM | Report Abuse
kc
what I don't like about your approach to stock market is you like to teach people to look for low quality but "cheap" stuffs.
I think most people are better served if they stick to good quality stuffs.

How do you look at Jaks and Sendai; these two stocks you have been asking people to sailang and margin.

Are they good quality stuff, and why?

2018-10-05 15:30

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