kcchongnz blog
The role of luck in investing kcchongnz
I was in a guided tour trip to USA when we stayed overnight in a casino city of Laughlin in the year 2000. A group of us played some Black Jack in the casino for some fun. You could bet $5 for a hand. There was really a lot of fun when your “comrades” on the table shouted “Picture, picture, picture” for you when you have 11 points in your hand. One of the ladies in the group was having a streak of good luck and she had been winning a couple of thousand dollars. In our last bet, a bigger one, she had a hand of eighteen. After a “deep” thought, she asked for another card. Everyone was shouting “sam chai, sam chai, sam chai” and the croupier had no idea what this group of Asians were shouting for. And sure enough, she got it and got 21 points, or Black Jack. The house, after having to take another card, was 20. What a great hit for her. Everyone, including me congratulated her and praised her for such a great Black Jack player. In the journey back to San Francisco, she was talking non-stop about how clever that she had decided to take the extra card.
However, when we asked her how did she make such a decision so that we can learn from her skill, she just couldn’t come out with a reason, besides saying it was just gut feeling. Too bad, can’t learn a thing from her how to play Black Jack to make money, and her “gut feeling” added no value to us.
A few days later, we met her again in PJ and she talked about it her smartness in the game, non-stopped. Again, she couldn’t tell us how she made the decision. So, her bragging added no value to us. Instead, we got bored of the continuous boasting, without any substance.
That was what Nasim Taleb discussed in his book, “Fooled by Randomness”. Or what Warren Buffett talked about the national coin flipping contest many years ago here,
https://klse.i3investor.com/blogs/kianweiaritcles/67466.jsp
But at least this lady is a nice lady. She never criticises others how they make their own and different decisions on the Black Jack table; for example, she didn’t scorn me when I stopped taking any card when I got 16 points in Black Jack and the croupier happened to get 17 points.
I happened to read many boastings by someone else in his stock trading adventures. Today, he even came out with an article, boasting about it here,
https://klse.i3investor.com/blogs/qqq3/181627.jsp
In his comments, he even made another jibe to others as below to "siok sendiri",
Posted by qqq3 > Nov 8, 2018 08:09 PM | Report Abuse 
well...beary...I am still around....what has happened to the forum value investors?
This brought back my memory about my trip to Laughlin 18 years ago. Just wonder when the writer will write a book on “How I turned RM100k to RM200m trading stocks”.
But like someone famous in i3investor once said, "If he is so good, he would have been a millionaire already", even though a millionaire is nothing to shout about nowaday.
Luck in the stock market
“Luck is a combination of circumstances, events, etc., operating by chance to bring good or ill to a person.” Dictionary.com
In the stock market, you often hear players making millions of Ringgit, 60% in half a year, 500%, 700%, or even 1000% return from Bursa in a year; even in months punting hot stocks. They will brag about how they have made those extra-ordinary return by “sailanging”, by the use of margin financing, or other people’s money (OPM), to make the exaggerated return, and at the same time, encouraging others to do so. However, more often than not, we cannot figure out how their decisions are made, and if the process in making the decision a plausible one, and a proven successful one.
“Ha ha, go and invest in your BAT and Nestle for your 10% return. I made millions using other people’s money in such a hot stock. You take 30 years to make what I can do in a year. You are not in the same league as me. No ambition”
That “hot stock”, MP Corp, was traded at 55 sen at that time about 5 years ago. It was last traded at 4.5 sen and it is now a PN17 stock, likely to be of zero value. Nestle was traded at about RM60.00 then. It is now RM144, not including the large amount of dividends received the last 5 years.
In reality, luck plays a much greater role, especially in short-term investment results than many investors may think. Making mone once in a while by luck is “siok” to boast about in parties, but it is not dependable in investing to build long-term wealth, and hence adds no value to others and nothing to be proud about.
Focus on Process in Investing
“Watching the Olympics and listening to several of the successful athletes, one of the inane questions from the interviewers often seemed to be, 'What was going through your mind before the event? Were you thinking of the gold?' The response time and again was the competitor was focused on the process, not the outcome. So it should be in investing as well. We have no control over outcomes, but we can control the process. Of course, outcomes matter, but by focusing our attention on process we maximize our chances of good outcomes.” Mind Matters 1st September 2008
In the stock market, most players are too obsessed with outcomes which no one has direct control of. However, we do and can have control over the process by which we invest, don’t we? And shouldn’t we focus on what we can control (process), rather then what we have no control (outcome) of?
A proper and proven successful process in investing, such as that of value investing, will not guaranteed success in investing in the short term when there are many uncertainties which one can’t control. However, it has been proven by rigorous academic research, as well as true and practical experiences of many well-known successful super investors in the world. It is definitely better than basing on “gut feeling”, just by simple logic.
I have also provided with my own experience and in records I have shown in i3investors in the last few years. I have also deliberated the process I used, shared through 342 articles I have written here.
Happy investing.
KC
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Discussions
2 people like this. Showing 50 of 103 comments
Contrary to hstha's misinterpretations, I never claim to have a 100% success record - I have paper losses just like practically every professional fund manager in the world today, merely stating that I managed to find at least ONE stock(sometimes up to SIX in a day) to lock a paper profit on every single Bursa session since Jan 10th 2017.
But after my Huaan experience, I don't fear paper losses =)
Even my Daiman purchase @ 2.61 in '15 & SPB purchase @ 4.557 in '16 became profitable only by sheer luck...but I knew what I was buying into.
2018-11-10 17:00
I have never talked with dompeilee before. But i believe that he did not buy Kesm and Huaan at a very low price a long time ago. He did not write about Kesm and Huaan at that time. Plus he is a swing trader.
2018-11-10 19:36
Hi KC, would love to know your opinion on Fundmyhome.
Smells like asking newbies to invest on warrants....if the mother share price (house price) appreciates in 5 year plus (warrant expiry) warrant owner gains...
if the house depreciates, damage on the buyers are significant.
frankly i did not understand the concept well
It would be nice to have your article on this as you would be able to articulate it well for everyone's understanding...especially the newbies
2018-11-10 20:31
The below is a nice graph giving summary:
https://media.malaymail.com/uploads/articles/2018/2018-11/distribution-of-sale-proceeds.jpg
2018-11-10 20:34
appears like more than the buyer the investors are the one taking the risks.... if the house price drops, they will lose a lot.
property sellers secured a value to their properties while these investors may risk not even having a normal return of 5% per annum...
the property sellers have passed the risk of their properties value appreciation to these innocent investors i guess...
2018-11-10 20:47
I am laughing like no tomorrow . This Kc look cheap ,feel shame to his student.
2018-11-10 21:27
in a nutshell its like the buyer is the equity provider and the investors are the debt provider for a business of property investment (with income being the rental or appreciation)...
if the returns are much higher than the cost of debt in 5 years (5% per annum i guess), the equity providers made a wise decision...
else, both equity and debt provider would be losing...and the damage is higher on the equity provider
guess all boils down to the judgement of the equity provider on the expected return...
being first time home owner...meaning probably very young...might not make the best decision
and being more gullible, they are probably capitalized by the properties sellers to catalyze the purchasing activity and pull in these investors...
2018-11-10 21:35
Posted by Nonare > Nov 10, 2018 04:41 PM | Report Abuse
Hi KC, won't disagree completely with focusing on the process but the market can reward a wrong process for a long period of time e.g. someone investing in gold (for whatever reason), would have done 10x from 1970-1980 only to lose 80% over the next 2 decades.
Me: Focus on the process of course means the right process. I don't know what gold investors' process is, is there one?
Also I'm not sure if value investing has been proven by academic research. After all, CAPM and not value investing is still the standard curriculum at university. Furthermore, I hardly think EPF or KWAP or PNB has or would state that they invest based on value investing.
Me: You can actually read many of those research through scholar goggle, I think, which have many of them proving value investing works in the long term.
The curriculum in university in investing is not necessary the right approach in real life investing. I don't use it although I have gone through the curriculum and very good at it. I never use CAPM in investing myself.
EPF is not necessary following value investing. I actually doubt so.
There are people who knows that they are gambling but there are also people who truly believes that they have an "investment process". For example, a prominent investor (who laid his case for one of the stocks in your Appendix) has clearly enunciated his investment process and has made his money. I suspect though you would have disagreed with his investment process and vice versa.
Me: Is his process plausible? has it been proven successful rigorously? Do you find it is a successful process from his record, not from his wealth which he claims? You are right, I don't buy it.
So I'm just wondering, and I don't mean any disrespect here, but I'm really curious as to how you convinced yourself your process is correct because I also struggle with this. I presume you would have to derive from first principles because quoting other successful investors (e.g. Buffett) or stock market returns won't be convincing.
Me: Just goggle and read the numerous articles I have written on value investing in i3investor, and the records I have shown you there. There are hundreds of articles there. Then see if they can convince you. It is entirely up to you.
Value investing is buying good companies at cheap or reasonable price. Don't you think it is pure simple logic? So we have to have a good process to find good companies, and have some valuation techniques to determine price versus value.
There are also other investors that don't adopt value investing that has shown tremendous success e.g. Stanley Druckenmiller, George Soros, James Simons. In short, how do you know your alpha factor was "value investing" and not say "malaysia small cap" or "high volatility" or something else?
Me: I don't deny there are other ways of investing which can also be very successful. You must understand them and see if they suit you. For me, I am only propagating value investing.
2018-11-10 22:15
Posted by BuahCiku > Nov 10, 2018 08:51 PM | Report Abuse
Aiyo...uncle koon still writer no 1 enemy kah...why why why...move on lah...why why why ...keep writing uncle koon story...writer not boring kah...or...too boring baru write uncle koon story...sound like very petty leh..why why why ....aiyoyo...kikiki
Whose no 1 enemy?
Where does this person appears in my article?
How is this article his story?
Why is this person so great that I "keep writing his story"?
This article so "petty"? In what way?
2018-11-10 22:19
Posted by BuahCiku > Nov 10, 2018 10:39 PM | Report Abuse
Aiyo....why why why...everytime...qqq3...or...sendai..or ...jaks...not petty meh....read also can sense....pettyness...sourness...why why why...all...also....related to uncle koon....why why why..keep writing same companies...once enuf lah..why why why... cannot move on lah...never ending one keep writing lah....why why why....btw...can ask something...what you think about HRC...any comment on this company...can buy or not...aiyoyo...kikiki
Where do Jaks and Sendai appear in my article?
But very frankly speaking, Jaks and Sendai are perfect examples which good to be used again and again to illustrate how some people tout those shares and encouraging the public to use margin to sailang. A good lesson of the fall from RM1.80+ to less than half the value in less than half a year, that margin finance should never to be encouraged.
I seriously won't get bored using these same examples.
2018-11-10 22:47
In answer to doubters of my claim to have purchased KESM early, before anyone in this forum, when no one wanted it, a screenshot of my contract statement from '13:
https://3.bp.blogspot.com/-xcqwBlEZ7hY/WTX3VXB3-oI/AAAAAAAAC-Y/IJDCH8ub-1IlNceKOBOfjK3cRPZeHK_FwCLcB/s1600/KESMpurchase.png
Unfortunately, the biggest promoter of KESM, hstha, chose to buy when it had already risen +783% from my entry level...LOL!!!
2018-11-11 08:07
dompeilee, you have been struggling in life. You are very poor!
The amount you buy for each stock is like you are still a student, not a top trader!. How do you make a living???
-----------------
This very poor jobless person claims that he is a genius and a top trader. What a joke!! In 2016 he bought the amount of MYR 1374.11 for one stock He is broke!!
2018-11-11 11:53
domp...I also can show contract note i bought at $ 4.....too bad I sold at $ 4.70...(I think)
2018-11-11 11:59
Don't expect that the worst thing will happen. It will never happen. People have tendency to avoid the worst thing.
I informed you that the worst thing would not happen before the Malaysian budget announcement.
During Greek government-debt and DRB-HICOM crises, i was very optimistic because I knew the worst thing would never happen.
2018-11-11 12:15
This KC very low class keep aim an old man to attack ,feel shame to your mom and your student, Kc your mom teach you attack a charity old man? I am laughing like no tomorrow.
Koon koon not a good investor but he have donate his money to help poor students, how about you KC? Did your mom got educate you? Kc your mom sure very proud la look what you have done Hahaha.
2018-11-11 12:47
hstha
stock market is about Games People Play....
who can play the game better.?
take the Budget or the US mid term elections,
people may have opinions about its likely outcomes ...and people starts discounting, buying or selling....and when the out come comes....how would the markets behave? Its games people play that determines stock prices......not the economic implications.......
so, we have buy on news, sell on news....we also have buy on news and goes higher and higher after the news.......which is it? would u care to punt?
whichever it is....until we have short selling ...no body makes any money unless he has a positive attitude......and willing to pay the price in risk.......
2018-11-11 12:59
same too for kc.....the talkative value investor but no guts to buy shares can never make money.....
stock market is about Games People Play....
who can play the game better.?
take the Budget or the US mid term elections,
people may have opinions about its likely outcomes ...and people starts discounting, buying or selling....and when the out come comes....how would the markets behave? Its games people play that determines stock prices......not the economic implications.......
so, we have buy on news, sell on news....we also have buy on news and goes higher and higher after the news.......which is it? would u care to punt?
whichever it is....until we have short selling ...no body makes any money unless he has a positive attitude......and willing to pay the price in risk.......
2018-11-11 13:00
dompeilee, don't show us your empty bag. You have bought the amount of MYR 1374.11 for one stock. I have never bought such a small amount. That's the way a poor man buys stocks.
----
2018-11-11 13:20
hstha.. if you are really not DISHONEST,stop avoiding the question everyone has been asking - How many lots at each price above $15 did you buy? Now is the time to show off how much $$$ you USED TO have..c'mon c'mon c'mon..WahAAHAHHA!!!
2018-11-11 17:00
dompeilee, No top traders buy the amount of USD 300 - 400 for each stock. Haha
---
2018-11-11 17:28
Kesm is for my long-term investment. I don't mind a short-term paper loss for Kesm.
In FY208Q3 Kesm's revenue dropped compared to the previous quarter, but before that, Kesm's revenue had increased in 13 consecutive quarters!!
That's because a demand for vehicle electrification has been surging, so you can still expect Kesm's revenue will increase consecutively for a long time.
2018-11-11 17:38
Low class KC every day and night think of something to attack uncle Kyy.
Salute uncle Kyy did so much if charity by sponsoring hundred of students and to pg USM rm50 mil. Thumbs up!!
2018-11-11 21:21
stock market.....its adapt or perish. This kc, the value investor, shows no ability to adapt.....sure to perish.
Traders are different. Traders always adapt. Traders always have to keep thinking and keep adapting.
2018-11-12 03:20
Posted by qqq3 > Nov 11, 2018 11:59 AM | Report Abuse
domp...I also can show contract note i bought at $ 4.....too bad I sold at $ 4.70...(I think)
Can show this contract note ah?
Posted by qqq3 > Nov 11, 2018 12:17 PM | Report Abuse
I also sailang UMW $1 at that time sold soon after at $ 1.80.....went out to celebrate
2018-11-12 12:07
kc...why would I want to show any thing? u think this is MACC investigation? This is only a forum.......
2018-11-12 12:12
Why? Here is why.
Posted by calvintaneng > Nov 11, 2018 07:11 PM | Report Abuse
This qqq3 is Questionable queer gundu!
UMW WHERE GOT RM1. 00 IN YEAR 2008
I OWNED UMW SINCE YEAR 2004 UNTIL NOW - 14 YEARS ALREADY
I BOUGHT 10 LOTS OF UMW IN YEAR 2004 FOR RM4. 80. AND IT GAVE A ONE FOR ONE BONUS SO I HAD 20 LOTS OF UMW AT RM2. 40
Next year in 2005 UMW dropped to a low of rm2. 32. After that it shot up all the way to Rm16. 00 by year 2013.
For year 2008 UMW highest price was Rm7. 65 and the lowest price was rm4. 82
So you better keep your mouth shut if you don't know the history of UMW
2018-11-12 12:16
Ops...someone kena tangkap
If wanna tell lie do some homework first lah
Wanna do something do it properly
Ahjib is yr best example
2018-11-12 12:18
Posted by qqq3 > Nov 11, 2018 12:17 PM | Report Abuse
I also sailang UMW $1 at that time sold soon after at $ 1.80.....went out to celebrate
Posted by qqq3 > Nov 12, 2018 12:12 PM | Report Abuse
kc...why would I want to show any thing? u think this is MACC investigation? This is only a forum.......
Posted by calvintaneng > Nov 11, 2018 07:11 PM | Report Abuse
This qqq3 is Questionable queer gundu!
UMW WHERE GOT RM1. 00 IN YEAR 2008
I OWNED UMW SINCE YEAR 2004 UNTIL NOW - 14 YEARS ALREADY
I BOUGHT 10 LOTS OF UMW IN YEAR 2004 FOR RM4. 80. AND IT GAVE A ONE FOR ONE BONUS SO I HAD 20 LOTS OF UMW AT RM2. 40
Next year in 2005 UMW dropped to a low of rm2. 32. After that it shot up all the way to Rm16. 00 by year 2013.
For year 2008 UMW highest price was Rm7. 65 and the lowest price was rm4. 82
Recorded.
2018-11-12 12:22
Maybe u can try to twist saying u bought UMW at RM1.00 at 1957 or 1960+ or 1970+ after searching for the price history...
Still can win yr case....
2018-11-12 12:25
Posted by qqq3 > Nov 11, 2018 07:23 PM | Report Abuse X
ok...UMW $1...was the 1997 crisis......but the point is....all these tabulations are a form of trickery....
does not apply to active participants...and certainly does not apply to sifus or to kc..........
people forgot......every day stock market also got positive and negative reasons.....
https://klse.i3investor.com/servlets/forum/600181853.jsp
2018-11-12 12:25
Posted by CharlesT > Nov 12, 2018 12:25 PM | Report Abuse X
Maybe u can try to twist saying u bought UMW at RM1.00 at 1957 or 1960+ or 1970+ after searching for the price history...
Still can win yr case..
Posted by qqq3 > Nov 11, 2018 07:23 PM | Report Abuse X
ok...UMW $1...was the 1997 crisis......but the point is....all these tabulations are a form of trickery....
Fast learner...I like it..u are smarter than Koon coz u can learn fast
2018-11-12 12:27
Anyway KC is also not as smart as I thought...what for wasting a lot of time on a Idiot?
Better look for value stocks to hentam
2018-11-12 12:31
Posted by CharlesT > Nov 12, 2018 12:31 PM | Report Abuse
what for wasting a lot of time on a Idiot?
You are absolutely right!
2018-11-12 12:36
When mkt is high tide, everything float up even including pebbles, stones n giant rocks ! Then, luck counts very much.
2018-11-12 12:37
CharlesT > Nov 12, 2018 12:31 PM | Report Abuse
Better look for value stocks to hentam
=======================================
hantam your nuts. This is not the time to hantam shares. Hantam value investors can.
hantam all the inflexible people , hantam all who cannot adapt.
its not survival of the fittest, its survival of the most adaptable........, Neathethals, I was told used to be very fit.
2018-11-12 12:41
the problem of value investors fighting the last war.......
https://klse.i3investor.com/blogs/guru/181971.jsp
2018-11-12 12:52
supermax, layhong, FLH.......
all companies expected to do well in current environment ...and shares reflecting it.....
luck or skill?
stock market so easy......
2018-11-14 09:55
by rajachulan > Nov 14, 2018 10:04 AM | Report Abuse
Very interesting! if I may add
Fundamentals can go against price (stock go up on bad news)
By the time fundamentals is out, it’s usually too late to enter
It’s difficult to manage your risk based on fundamentals
=============
buy on rumor sell on news is well known....one of the first lessons people learn......but this is not the lesson here.....
the lesson here is really about front view drive vs rear view drive.......
2018-11-14 10:34
kc....
this week, whole market down...my two big investments Layhong and Supermax becomes super stocks......luck or skill? u tell me.....
2018-11-14 13:31
qqq3 yesterday, it was Layhong and Supermax....today , it is the turn of Elsoft....first day the bonus shares are credited......
kc....luck or skill?
15/11/2018 16:54
https://klse.i3investor.com/blogs/qqq3/181627.jsp
2018-11-15 16:55
First Bentley Car
Bentley EXP1 was the first car produced by the brand in 1919. Founder W.O. Bentley used his knowledge and expertise from the aircraft industry to build world-class cars. Everything from the 3.0 L 4-cylinder engine to the bodywork and design of the EXP 1 was developed by him.
The car had a lean-long front hood, with slender spoke wheels and two seats. It featured a monobloc engine with four valves for each cylinder, double magnetos and twin spark plugs. This engine produced a total of 100 horsepower and could reach a top speed of 65 mph. The car is now exhibited at Bentley’s headquarters at Crewe for visitors to take a glimpse into the history of this legendary brand.
Who makes Bentley motor cars?
Bentley motors have been owned and managed by the VW group since 1998. Hence, all the production operations and distribution of Bentley automobiles have been overseen by them. In 2022, the management of Bentley was consolidated by Audi, another premium automaker owned by Volkswagen Group.
“Bentley cars showcase artistic designs both on the exterior and the interior.”
Moving forward, the company aims to adopt eco-friendly technology in all their vehicles to create sustainable automobiles. They have also announced the reduction of leather in their cars by using recycled materials.
Top 6 historically popular Bentley models
For over 100 years, Bentley has been producing different cars for various segments. Here are some of the popular models produced by the brand that are highly valuable and rare to find:
Blower by Bentley
The Bentley R-Type Continental
Bentley Flying Spur S1 Continental
Mark V & VI by Bentley
Bentley XP 2
Blue Train by Bentley
Bentley 8 liter
The Bentley Blower
Bentley Motors - An iconic British automobile company
Bentley has stood the test of time, overcoming its challenges during the great depression and emerging as a successful automaker. Moving from Rolls Royce, VW to Audi, the company has been associated with some of the largest brands in the automobile industry. From the very first EXP 1 to the more recent Bentayga, Bentley has come a long way in producing refined cars that deliver performance and luxury.
2022-09-28 02:26
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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....
dompeilee
Thanks, Musangking...you have been to Huaan thread & know the genuineness of my buy call there in Feb '17 when the price was still 3-3.5c.
Yet, LUCK was also a big factor in my Huaan trade - was stuck with big paper losses averaging down from my first purchases @ 15.5c in Sep '14 - yet when I bought 100,000+ shares at the time in 2017, I had already done my homework digging up everything I could find out about the biz(Good Process) & knew what I was buying by then...
2018-11-10 16:54