kcchongnz blog
How to lead a comfortable retirement life through investing in the stock market? Part 2
Avoiding Lemons
I wrote an article on “How to lead a comfortable retirement life through investing in the stock market?” which described how some well-known super investors in the US and here have accumulate enormous amount of wealth through their long-term investment in the equity markets following the fundamental investing principles.
http://klse.i3investor.com/blogs/kcchongnz/59971.jsp
I also presented my own experience in the last few years and provided facts and figures that value investing is the way to go for long-term wealth building.
I also mentioned about “If one doesn’t invest the right way but by simply listening to rumours and punt on hot stocks, instead of building wealth for retirement, can end up as a pauper.”
I think awareness of avoiding Lemons is a more crucial in long-term wealth building. For me, to choose a good stock to invest and obtaining extra-ordinary return is not easy because there are so many factors, especially regarding the future of the company and its industry is highly unpredictable, whereas avoiding investing in a lemon is much easier; and you can achieve that, half of your battle in investing is won. Hence I feel I should deliberate about it more here.
The Lemons
I first wrote about lemons in an article on the perils of speculating on some hot stocks in Bursa last Christmas in the appended link below:
http://klse.i3investor.com/blogs/kcchongnz/45373.jsp
Those stocks mentioned in the article such as Hibiscus, KNM, Guan Chong, London Biscuits, Smartag, Asia Media, China Stationery, Ivory, MPcorp were darlings of those days and they were some of the most talk-about stocks then, and even now for example for KNM and Hibiscus.
I have given all my reasons form the information obtained from their financial statements that there was no single evidence to show that they were investible, by any measure.
Just a month ago, I have also done some analysis, written a report and published here after the release of their latest quarterly financial results two months ago.
http://klse.i3investor.com/blogs/kcchongnz/59866.jsp
My analysis shows that there was really no compelling reason at all to think that any of the stocks has turnaround, despite the rosy reports written by some investment bankers and others.
Return of the Lemons
It is good to revisit the return of these lemons after a relative serious pullback recently. The broad market in Bursa returned 7.9% two years ago and 1.5% a year ago as on 20/10/2014. What is the return of those Lemons in the list within the last 1-2 years?
Table 1 in the Appendix shows that the average return of the portfolio of nine Lemons was a loss of 27%. The more relevant comparison is the median return, which is much worse at a whopping loss of 40%. Seven out of nine stocks have negative return; the worst is CSL at a loss of 87%, followed by Smartag (-50%), AsiaMedia (-44%), GCB (-42%). The other hot stock Hibiscus also has lost a whopping 40% despite its huge amount of news in securing licenses all over the planet.
There is only one outperforming stock out of the nine stocks, KNM, the “shining star”, which at 74 sen now, has a total return of 63%, not bad at all. That is because it was so happened that when somebody asked me about it, its share price was 45.5 sen, almost at its lowest historically and that price was used as the reference price. Its share price actually shot up to RM1.13 less than three months ago with all the hot news about securing big contracts, privatization of Borsig, getting a big loan (wth?) and all the bullish analyst reports when it is in the mist of going through a rights issues to get more money from shareholders. Since then its share price has fallen by 30%.
I always wonder, how one could resist from “investing” in a shining star KNM if you refer to all the bullish analysts’ reports here. Let us just take this investment banker’s report and try to dissect KNM and see how we can study analyst report with scepticisms.
http://klse.i3investor.com/ptservlet.jsp?sa=pts&q=knm
The only shining star, KNM
Three investment banks, Maybank, HLG and MIDF gave an average target price for KNM at RM1.33 on 8th August 2014 when KNM was at RM1.03. Today KNM is trading at 74 sen for a whopping loss of about 30% in less than 3 months. On 20/10/14, the bankers still affirmed their target price. Let us see the report written by HLG titled “KNM - Too Cheap to Ignore!”
My comments are in italic.
HLG “KNM - Too Cheap to Ignore!”
[At current share price of RM0.745, KNM is only trading at 8.8x FY15 P/E despite strong earnings growth prospect (CAGR of 55% from FY14-FY16). In our opinion, without any change on the fundamentals, we believe the sell down is overdone and this provides bargain hunting opportunity for investors. Its owner Ir Lee Swee Eng also shows his confident on the company by progressively increased its share stake in open market with price ranging from RM0.69 - RM0.815.]
Strong earnings growth prospect? CAGR of earnings growth of 55% from FY14-FY16 blah blah blah. What did HLG based on? Ir Lee Swee Eng told them so? Based on KNM’s “great” past performance and great delivery of their projects? HLG has done a profit analysis of KNM’s future prospects and came up with those great forecasts? Or HLG has a crystal ball of KNM’s future (a big deviation from its past) in front of them? One really has to know how to read and interpret financial statements in order to judge what HLG said if it has any truth in it. To me with the data at hand, they all totally bullshit.
Ir LeeSwee Eng also shows his confidence buying KNM’s share? Of course. To me General Lee is the most confident man in KNM. I remembered him telling the whole world a few years ago he was going to privatize KNM numerous time because according to him, KNM is way undervalued, even when KNM was trading at a few Ringgit at those times. Not only that, didn’t EPF also confident in buying KNM share recently?
Just bear in mind that the world may not be as simple as what HLG professes to be.
[Despite dry newflows for upstream sector in next few months, we expect more EPCC contracts from RAPID. We understand KNM has been actively negotiating for few subcontractor jobs from the refinery packages and bidding EPCC contract for tank farms and other associated facilities. We expect continue contract newsflow for KNM until 1Q15.]
Oh, newsflows is also so good for KNM’s share price. No wonder so much news about KNM nowadays. Actively negotiating for subcontract job is good enough for KNM’s future? Have they secured them? Let me tell you this, even KNM gets a few more packages, I believe the chance of losing money is higher than making a tiny profit. Well I am just basing on the past performance when it was not short of multi-million or even billion contracts at all. History may not repeat itself, but it rhymes. By the way, do you know what the gross and operating margins of KNM’s jobs are, HLG?
[Catalysts
i) Announcement of more RAPID contract win(s);
ii) Financial closing of EnergyPark Peterborough;
iii) Strong quarterly earnings due to lower finance cost.]
More contracts mean more profit? Isn’t that too simplistic? Financial closing of its subsidiary also a catalyst, what the hell? I couldn’t even see how the performance of its overseas subsidiaries and associates in its quarterly report. Strong earnings, where from? Can substantiate ah, HLG?
[Valuation
We maintained our BUY call with unchanged target price of RM1.35 based on 16x FY15 P/E. Our TP have not factored in value from EnergyPark Peterborough yet.
Despite weakness in oil price, we advise investors to stay invested and subscribe to the rights. KNM is one of the alpha stocks that will benefit from the mega RAPID project for the next few years with commencement of UK Peterborough project to provide long term recurring income.]
Source: Hong Leong Investment Bank Research - 20 Oct 2014
Wow, use PE ratio of 16 times FY15 earnings, fantastic! Why 16, why not 5? Looking at its precarious balance sheet, poor earnings, little CFFO, no free cash flows for years, dismal ROE, ROIC blah blah blah, I think a PE ratio of 5 is also too high already. What say you? And what about earnings? How much and how do you substantiate earnings in 2015? I guess must be from General Lee again.
Alpha stocks? Wth? Talk until using Greek already. Really dangerous!
I don’t know about you, I have no faith, none at all with HLG’s report, do you? This is especially when the right issues of KNM is on the way. You must know whose interest the investment bankers care about. Certainly it is not yours, believe me.
Yes, you need a strong foundation in fundamental investing in order understand what are the messages the financial statements convey to you in order to have a better chance to survive and thrive in the market, rather than reading and believing in investment bankers reports.
This was the question I asked in my previous article above less than three months ago,
“So how long more this share price of 95 sen of KNM can be sustained?”
Conclusions
Know how to avoid the Lemons in the market is as important as trying to make extra-ordinary return from the stock market, if not more important, especially in this volatile market. It is utmost necessary for the wellbeing of your personal finance and for retirement planning and wealth building for the long term. There is a jungle out there. Are you equip with the necessary skills? If not, are you prepared to join me in my new online finance and investment course to be held soon?
If you are interested, please email me at
K C Chong (22nd October 2014)
Appendix
Table 1: Return on Lemons past 1-2 year
|
No. |
Company |
Ref Price |
22/10/2014 |
Gain |
|
1 |
GCB |
1.800 |
1.040 |
-42% |
|
2 |
Ivory |
0.550 |
0.510 |
-7% |
|
3 |
LonBisc |
0.680 |
0.690 |
1% |
|
4 |
KNM |
0.455 |
0.740 |
63% |
|
5 |
MPCorp |
0.550 |
0.375 |
-32% |
|
6 |
CSL |
0.750 |
0.095 |
-87% |
|
7 |
Smartag |
0.180 |
0.090 |
-50% |
|
8 |
Amedia |
0.135 |
0.075 |
-44% |
|
9 |
Hibiscus |
1.900 |
1.140 |
-40% |
|
|
|
|||
|
|
Mean |
-27% |
||
|
|
Median |
-40% |
||
|
|
KLCI |
1685 |
1796 |
6.6% |
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Discussions
8 people like this. Showing 50 of 75 comments
hi stockoperator, enough already loh.if rapid project success, what also enough loh. But success or project is future thing, mainly is get the project first. kakaka.... Then, who care the later story..... kakaka....... Dont think too much.
2014-10-23 12:48
they already foresee get the project in next 2 years should not be a problem. Price should able to fly. then how to operate that project is another continue story. Who care too much. Understand?
2014-10-23 12:51
kcchong always promote this ptaras. I do not deny this is a good stock. Quite correct he promotes. But how about another 10 years? Dont forget knm also a bluechip in long long time ago. So dont foresee too far. kakaka....
2014-10-23 12:55
kcchong, ganasai, frank soweto, stockoperator
I am rather intrigued by your discussion. It appears that everyone has their favorite stocks to make money. To cut a long story short and to test your future capability of stock selection and be accountable for your stock buy decision, would all of you please select two stocks each which all of you think will outperform up to 31 Dec 2015. You can select and buy any two stocks from Oct 1st 2014 till 31/10/2014 and you can sell anytime or hold till 31st December 2015 as long as you are satisfied with the profits or lack of profits. Lets fix the investment capital to RM 10,000 for each participant.
So please advise the following:
kcchong- what is your stock selected? Uchitec, Tongher?
ganasai- what is your stock selected n buy in price? I assume its KNM, BJCORP unless u advise me otherwise
frank Soweto- what is your stock selected and your buy in price? stock 1, stock 2??
stockoperator- what is your stock selected and buy in price? Is it Padini, other??
2014-10-23 13:14
Haha i wont join. Because my knowledge and analysis skill still poor. But i just want to say something where i see this salt fish may got chance alive. But long or price will maintain i not sure. But rapid project may be turnaround for them.
2014-10-23 13:22
ganasai, whatever skill you have, it is still your own skill right? Please remember that 75% of the sifu's and stock investment experts got it wrong and it had been proven. So do reconsider your decision. So can I put down your stocks as BJCORP and KNM??
2014-10-23 13:31
Hope he can reply in this forum, so that all we know he based on what fact to analyze. For me, haha follow big fish move loh. Seems like banks and EPF quite active in this knm, So.... just dance together loh.
2014-10-23 13:54
haha sunztzhe, no point for that. Better we still follow forum topic and discuss. What I talk here may not for long term like those promote by kcchong.
2014-10-23 13:58
Posted by ganasai > Oct 23, 2014 12:55 PM | Report Abuse
kcchong always promote this ptaras. I do not deny this is a good stock. Quite correct he promotes. But how about another 10 years? Dont forget knm also a bluechip in long long time ago. So dont foresee too far. kakaka....
I never promote any stock in i3. I do analysis of company and share my views here.
Firstly good companies no need huha huha in this kind of forums. Their value lies in their business, not promotion by anyone.
Secondly I seriously doubt there is any clout here to jack up the price of stocks. All of us combined is just kuching kurat compared to the insiders, syndicate players, manipulators,institutional investors etc.
2014-10-23 14:41
Good Write Up kcchongnz. There are tonnes of Lemons in Malaysia to avoid. Stick with the High ROE, High Growth, High Margin, Good Management, Sustainable Biz, Reasonable PE. As long as we get 7 out of 10, I believe, it is not bad.
2014-10-23 15:37
Posted by sosfinance > Oct 23, 2014 03:37 PM | Report Abuse
Good Write Up kcchongnz. There are tonnes of Lemons in Malaysia to avoid. Stick with the High ROE, High Growth, High Margin, Good Management, Sustainable Biz, Reasonable PE. As long as we get 7 out of 10, I believe, it is not bad.
Well said sosfinance
2014-10-23 15:44
Posted by sunztzhe > Oct 23, 2014 01:14 PM | Report Abuse
kcchong, ganasai, frank soweto, stockoperator
I am rather intrigued by your discussion. It appears that everyone has their favorite stocks to make money. To cut a long story short and to test your future capability of stock selection and be accountable for your stock buy decision, would all of you please select two stocks each which all of you think will outperform up to 31 Dec 2015. You can select and buy any two stocks from Oct 1st 2014 till 31/10/2014 and you can sell anytime or hold till 31st December 2015 as long as you are satisfied with the profits or lack of profits. Lets fix the investment capital to RM 10,000 for each participant.
So please advise the following:
kcchong- what is your stock selected? Uchitec, Tongher?
ganasai- what is your stock selected n buy in price? I assume its KNM, BJCORP unless u advise me otherwise
frank Soweto- what is your stock selected and your buy in price? stock 1, stock 2??
stockoperator- what is your stock selected and buy in price? Is it Padini, other??
Sunztzhe,
When I teach people about investing, I am talking about value investing for the long-term. Value investors have no ability to predict share price in 1 month, 6 months, 1 year, 3 years. They only look at the business of the company, whether it is good, durable etc. If it is they won't buy yet until look at its price; is it expensive relative to its earnings, cash flow, with other similar companies, what is its price relative to its value, how risky is the company, and a whole lot of question.
Even after that, the price may take a long time to reach its potential, if they are right about the business. But they can be wrong too, but generally not as often as they would be right.
So you see a value investor won't win in your kind of competition. But in the first place, they invest for long-term to build wealth,not aiming to compete with anybody.
2014-10-23 15:57
And also value investors don't just buy one or two stocks, knowing very well that they could be wrong or overconfident in just one or two companies. They also know that they are not Warren Buffet. So they own a portfolio of generally ten to twenty stocks to capitalize on the free lunch offered by diversification. They also aware that the market is unknowable and unpredictable. So they don't like to use margin financing in investing or other form of leverage.
And then they wait patiently, and happy to obtain a compounded annual return of 10%-20% for a long period of time, hopefully.
2014-10-23 16:06
"You must know whose interest the investment bankers care about. Certainly it is not yours, believe me."
Damn true! At market high, pls totally ignore them, rubbish
2014-10-23 16:39
Mr. Chong have provided us a good write up on the portfolio diversification at http://klse.i3investor.com/blogs/kcchongnz/48946.jsp
The only free lunch in investing.
2014-10-23 16:39
I would be indeed very surprised if the analyst agrees to comm here to give his views on KNM !
2014-10-23 20:32
kcchongnz,
Thanks for sharing your views on Value Investing. I do see your risk management logic in diversifying into more stock picks of min 10 to 20 stocks or more stocks as due to uncertainty one does want to be overly exposed to any one of the selected stocks although it fulfills your financial selection criteria. This begets the question of whether one has done a thorough work on qualitative and financial evaluation criteria tools checklist prior to stock selection.
Have you ever asked yourself how do you and why do you want to occupy your time to monitor the financial performance of 20 or more stocks in your portfolio? How do you find the time to monitor each individual stock performance, perform good qualitative and quantitative work on each of the 20 or more selected stocks. Wouldn't that begets the second question of whether one is indeed diversifying one's focused attention cum competency away as a result of overseeing and monitoring too many stocks?
Wouldn't it be better to further fine tune on one's stock selection criteria on qualitative and financial performance checklist requirement before investing in any stock thus reducing the no of stocks selected to more manageable situation? Wouldn't that mitigate the risk of selecting an "undervalued gem" that later on turned into a "lemon"? Even if that is so, wouldn't one who is as financially skilled and adept as you are be very fast and responsive in averting an "undervalued gem turning into a lemon" catastrophe as surely that will take some time to do so and one will have enough time to respond in an appropriate and fitting manner before it becomes a "TRUE FINANCIAL LEMON". Unless this may be attributed to subjective rationalization that interferes with well thought out objective financial decision making and it opens up an entirely new chapter on "How to avoid falling in love with one's selected gem stocks"
2014-10-23 20:52
Thanks Sunztzhe for the invite. I think you're mistaken -
1. I'm sharing my story based on the very bad experiences in this longkang shit KNM. hopefully others will not fall in to the same trap as I'm seeing the same script being play now - the only difference is the share prices are lower than when I got in.
2. even if I were to give u my 2 picks n won it is meaningless to me as I know my own capabilities n they're no where near the ability ( not even close )to like kcchongnz which I regard highly n also another fellow sifu kcloh that taught me many2 valuable insights with regards to successful investment. I based my investment philosophy like kcchongnz focusing mainly on diversification,good companies n long term.
3 lastly Kc said very well in his reply to u -
Sunztzhe,
When I teach people about investing, I am talking about value investing for the long-term. Value investors have no ability to predict share price in 1 month, 6 months, 1 year, 3 years. They only look at the business of the company, whether it is good, durable etc. If it is they won't buy yet until look at its price; is it expensive relative to its earnings, cash flow, with other similar companies, what is its price relative to its value, how risky is the company, and a whole lot of question.
Even after that, the price may take a long time to reach its potential, if they are right about the business. But they can be wrong too, but generally not as often as they would be right.
So you see a value investor won't win in your kind of competition. But in the first place, they invest for long-term to build wealth,not aiming to compete with anybody.
2014-10-24 02:56
Sunztzhe,
You have sound investment philosophy, just lie two super investors I know; they are Warren and Buffet and Phillip Fisher. Buffet actually transform himself from a farmer to a hunter in investing, guided by his deputy, Charles Munger. Berkshire Hathaway owns relatively very few stocks, actually he owns companies in a strict sense because it is a very substantial shareholder of companies it owns. Hence he can control the operations of the companies he chooses to, but he rarely does. He does made “thorough work on qualitative and financial evaluation criteria tools checklist prior to stock selection”, the same as what Philip Fisher did with his scuttle butting. It is not that they never make mistakes, they did often do. Their overall results are still very good.
I fully aware my own limitations that I can never be like Buffet (I mean his ability in finding companies and concentrate and control the investments in them), nor Fisher. Hence I took the other approach, ie diversifications. Well I have written an article here about it and I don’t expect you to agree with me.
http://klse.i3investor.com/blogs/kcchongnz/48946.jsp
I do more detail analysis for companies I want to invest in, but never thorough to the extent of what you described, especially the qualitative aspects. I can never certain that I am absolute right. If I am right 70% of the time, I would be very happy. Well, I am just a small time retail investor.
Once I have invested in 10-20 stocks, I don’t spend hell of time to monitor them as you know, I am not a trader. I do look at their quarterly reports, but that is only 4 times in a year. Sometimes I don’t even care much about the quarterly reports.
“Wouldn't it be better to further fine tune on one's stock selection criteria on qualitative and financial performance checklist requirement before investing in any stock thus reducing the no of stocks selected to more manageable situation?”
Sure, that is the essence of value investing, seriously. Go ahead and do it as much as you like and as much as you can.
2014-10-24 05:22
Posted by Tan KW > Oct 23, 2014 01:39 PM | Report Abuse
@kcchongnz, i have email the request to yttan@hlib.hongleong.com.my
It is fantastic if he can provide his view to us.
Yeah, we all can learn from him.
For a start, let me ask
1. “Strong earnings growth prospect? CAGR of earnings growth of 55% from FY14-FY16”
Based on what?
2. “We maintained our BUY call with unchanged target price of RM1.35 based on 16x FY15 P/E.” How come such a fantastic PE, why not 5?
3. “KNM is one of the alpha stocks”
What do you mean by alpha stock? Alpha to me is a positive return over the index.
While waiting for his reply, why not we discuss it here among ourselves? There seem to be a lot of people here know a lot of KNM.
2014-10-24 15:18
KC stock preference is quite personal much more than food music and clothing selection. You can write about it But discussion is not easy one.
2014-10-24 17:35
Posted by stockoperator > Oct 24, 2014 05:35 PM | Report Abuse
KC stock preference is quite personal much more than food music and clothing selection. You can write about it But discussion is not easy one.
I seriously don't see a stock can be akin to food, music and clothing.
Investing in a stock is investing in a part business of a company. It is a financial asset with certain expected cash flow, and hence determines its value.
"There are many areas in valuation where there is room for disagreement, including how to estimate true value and how long it will take for prices to adjust to true value. But there is one point on which there can be no disagreement. Asset prices cannot be justified merely by using the argument that there will be other investors around willing to pay a higher price in the future."
Aswath Damodaran, Investment Valuation
2014-10-24 17:43
Kc invest for long term in stocks that r fundamentally sound n wants to become a long term shareholder n expect above market dividend yield over time.
Others r just traders but there is a amorphous line between trading, punting or gambling. However in today's society... being called a stock trader or a Swing trader gives one some form of respectability rather than being called an outright gambler
2014-10-24 17:58
Agreed.
Too much emphasis on speculative earning by HLG which forms the Basis of valuation. The reports is misguiding to the true value of a company.
Anyhow the investing community has put too much emphasis on Quarterly and yearly earning until it sways the price too much in such a big volatility. Thus create unnecessary fear and greed.
Slowly and eventually, investing public starts to speculate earnings and believe the quarterly earning has the predictive power into the company futures and thus determine the company core valuations.
That is Not totally true.
2014-10-24 20:06
stock selection and preference will mostly depends on a person character and personality, comfort zone, risk appetite, competency and investment philosophy and i respect that.
2014-10-25 00:57
And if you are a trader be a top one. Please have risk management and money management at all time and I have to respect that as well.
Anyhow, i have yet to see a Good trader that can last long enough.
2014-10-25 01:12
Honestly for trading purpose, i can only see a few trading opportunities in a whole year. A good trader will seize that kind of opportunity.
Really A good trade is Only a few time in a whole year ya.
2014-10-25 01:19
Lots of investors like to invest in hype, turnaround, transformation, or next big things,or high tech stocks that sometimes we don't even understand the Business. So you see sometimes we are looking for high rate of failure ourselves if not betting our lucks.
A long lasting and boring durable business which has been proven to last in good and bad times which has been Winners all along will Most likely to remain as Winner again and again. You see we are looking for High Rate of Success. A small range of diversification or a small basket of Good Business is a good approach.
Maintaining a such a portfolio should provide a safe net for retirement.
2014-10-25 16:28
See what counters you buy, at KLSE the longer you keep the shares, the more you will lose!
2014-10-25 20:25
andychucky28, If you had gone in when the market crashed last week, you will have a different perception as you will be "IN THE MONEY"
2014-10-25 20:31
Surely i can understand the frustration of investing as we can't take control of investment climate, growth rate, inflation rate, long time horizon of investing period and price volatility and speculative nature of market and Sometimes Price does not move for years. What else?
Will all these create confusion and doubt? Yes.
What can we do about all these, Nothing.
2014-10-25 21:34
sunztzhe, going into the market last week and selling this week is not call an investment. It is called trading.
2014-10-25 21:54
andychucky28, going into market last week to buy undervalued investment stocks and holding it is called "investment"
2014-10-25 22:04
Sunztzhe, please tell us what counters you can buy last week and hold them for long term? And what are the profit % you can make holding them long them. Most of the KLSE counters are meant for trading.
Do you know that the SHARKS have all our buying information. They know which counters to push and which not to push.
2014-10-25 22:12
If investing is participating in a Business of a company, then lets understand:
what kind of business that we are investing into and Why this company is doing better than the rest? It is an important question. Lets give some thought into its business operation efficiency, business philosophy, its Business model and so on.
There you will find something there is different than the rest.
Lets understand the most basic thing first and there is no free lunch ya.
2014-10-25 22:39
action is all that u need la kawan kawan ...sighhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
2014-10-25 22:47
If you are confident of the intrinsic value of any stocks that you had bought at much lower prices before the market correction, you should buy some more during the market correction as despite the crash the latest low prices during the market correction that one buys is still higher than the original investment cost. So the market correction accords one the opportunity to buy some more at relative lowest price. You will need to worry about SHARKS if you trade with the hi volume speculative counters with the SHARKS but then again the SHARKS can also be your friend .
2014-10-25 22:48
friends, if we understand that the most a good business will do is about 10-15% growth rate and improving its margin by a few points, we can't expect a lot of action unless there is change of Business direction.
Also don't get panic easily as Most of time it is Business as usual.
2014-10-25 23:12
If you are confident of the intrinsic value of any stocks that you had bought at much lower prices before the market correction, you should buy some more during the market correction as despite the crash the latest low prices during the market correction that one buys is still higher than the original investment cost.
_______________________________________________________________________
I do buy the idea of buying when you have MoS and buy when it is cheap. But I certainly do not buy when the market is under correction or when it is downtrend.
You never know that today, the PE 6 looks cheap or expensive. It's just a number.
A wise investor will take advantage of ups and downs of the market to make profit.
2014-10-25 23:36
tat y i say talk doesnt make u rich ... action tat make u a different person ... u take the risk and if mr market agree .. u huat huatttr ... as simple as abc .... dont need fortune teller or crystallball ... action is wat u need ... remember most of the historian now ... just cari makan nia ... and go think y
2014-10-25 23:42
call me tj la ... now a day many see market5 got reversal signal then forget wat they talk liau ... i3 is not kopitiam la ... why act like those oldman in koipitiam ? talk for song ka ? ...si kaw si thunn la ..
if any phd holder can beat mr market ... tomorrow i go get 8 or 10 beside me liau la ...still so susa in in out out for wat
2014-10-25 23:47
uum uum pika ... Plan your trade, trade your plan. .... LIKE ...
hahahahaa
good luck and happy trading ... wish u huat huat
2014-10-26 00:25
if we get to know our company a little bit better and understand its business a little bit better, probably we can plan certain trade.
Probably we can take advantage of certain price action as we understand it. Making decision won't be so ambiguous.
2014-10-26 00:42
Greedy person cant take advantage of panic selling. A Panic person can't take advantage of break out price.
Well an acute businessman can understand price action much better.
2014-10-26 00:50
Generally investing is most business like. What does it mean?
It is important to get to know the Business that you are Buying into and equivalently important to know the value of the company that you should pay.
I think all stakeholders who are negotiating a business deal, propose a take over, considering a private placement, mulling a management buy out, privatization will share my above thoughts.
If the prevailing market condition is favorable, we also try Not to take advantage of the Buyer so as not to distort the true value of a business.
if the prevailing market condition is Not so favorable, we also try not to take advantage of the Seller for the same reasons.
TQ
2014-10-26 11:04
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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....
stockoperator
KC the problem is lots of analyst just take the current year of earning or prospective earning of next two years as the Basis of Valuation. It is a very shallow valuation.
We all know current earning or speculative earning will manipulate the PE ratio in wide range. That is how they justify the valuation and they even skip the Balance sheet and cash flow and Business operation or debt ratio.
2014-10-23 12:38