Koon Yew Yin's Blog
Why most of us cannot become super investors? - Koon Yew Yin
Koon Yew Yin
Publish date: Thu, 06 Feb 2014, 01:17 PM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
The last time I published ‘How to become a super investor?’ I received more than 200 commentaries. Of course, most of the commentaries are good, but a few are really bad and insulting. In fact, one doubted my sincerity and accused me of trying to promote Jaya Tiasa. Fortunately or unfortunately, Jaya Tiasa did go up by about 20%, soon after the publication of my article. It went up too fast and not sustainable. As expected, it is making a healthy correction.
In view of this situation, I am obliged to write this article and also I genuinely wish to share my knowledge with people who are interested in share investment.
For a long time, I have been trying to teach my wife, close relatives and friends to follow what I did but all of them could not emulate my performance or achievement. I think the reason is that to be a super investor your brain has to be wired differently when you are young. It is a nature built into your brain which cannot be nurtured. By the time you are an adult, either you have it or you don’t have it.
For a start, let me define what is a super investor? To qualify as a super investor, you must have a long term track record of making more than 20% per year. Warren Buffet has been able to achieve about 22% per year over the last 20 or more years. Using the empirical formula of 72; when 72 is divided by the rate of return the answer is the number of years for you to double your capital. In Warren’s case, he can double his capital in 72 divided by 22 = 3.3 years. That means $1 will become $2 in 3.3 years and $2 will become $4 in 6.6 years and $4 will become $8 in 9.9 years. At 22% return pa, Warren can turn $1 to $8 in about 10 years.
How many of us can achieve more than 20% return per year in the last 10 or more years?
To test the putting is in the eating. In retrospective, did you make a huge amount during the Y2K computer crisis when MPI and Unisem went above Rm 40 per share? Globtronics went up from about Rm 2.00 to above Rm 20.00 in about 18 months.
Did you make much money when CPO went above Rm 4,000 per ton a few years ago?
Did you make a killing when all the rubber glove shares shot through the roof due to the HINI fear about 3 or 4 years ago? Supermax went up from Rm 1.00 to Rm 6.50 in 18 months.
Did you buy SOP when it was selling about Rm 2.50 about 3 years ago? SOP went above Rm 6.50 per share recently.
If you did not make much money when the above mentioned opportunities came, you can only be a mediocre investor and you have no hope to be a super investor.
Looking forward, do you dare to buy Jaya Tiasa when it is not showing much profit currently and the share price has been depressed for quite a long time? Most fund managers are not interested to own Jaya Tiasa. Can you see that it is really undervalued and it has tremendous profit growth prospect?
About 3 years ago, Sarawak Oil Palm (SOP) was selling about Rm 2.50 per share because most of their oil palms were young. As a result, the company was not showing much profit. For the same reason, Jaya Tiasa is now showing poor profit. Most of the Fund Managers do not want to own it. But, do you have the patience to own it and wait for a few years to maximize your profit? I am obliged to tell you that Jaya Tiasa is my major investment holdings.
I can tell you that very few of you can achieve above 20% return per year over a long period of time and if you spend enough time studying investors like Charlie Munger, Warren Buffett and other famous investors, you will understand what I mean.
I know that everyone reading this article is exceedingly intelligent and you have all worked hard to get where you are. You are smart and experienced. And yet, there is little likelihood of anyone here becoming a great investor. You all have a lot of advantages over normal ordinary investors, and yet you have almost no chance of standing out from the crowd over a long period of time.
The reason is that it does not much matter what your IQ is, or how many books or magazines or newspapers you have read, or how much experience you have, or will have later in your career. These are things that many people have and yet very few can end up compounding at 20% or more over their careers.
I know this is a controversial thing to say and I do not want to offend anyone. On the bright side, although most of you will not be able to compound money at 20% for your entire career, a lot of you will turn out to be good, above average investors because you can learn to be an above-average investor. You can learn to do well enough, if you are smart and hard working. You can make millions without being a great investor. You can learn to outperform the averages by a couple points a year through hard work and an above- average IQ and a lot of study. So there is no reason to be discouraged by what I am saying today. You can have a really successful, lucrative career even if you are not the next Warren Buffett.
Going to the best business schools and reading every book or article ever written on investing would not make you a super investor. Neither will years of experience. If book knowledge and long experience will make you a multi- millionaire, then all the Professors in finance, all the old fund managers and old people who have been investing for decades, would be multi-millionaires.
So what are the sources of competitive advantage for an investor? They have to do with psychology, and psychology is hard wired into your brain. It is a part of you. You cannot do much to change it even if you read a lot of books on the subject.
After having said all these discouraging words, I think some of you who can master the following traits or qualities will have a better chance to become a successful investor.
Trait 1. The ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China wanted to take back Hong Kong, the stock market crashed. Did you dare to buy Hong Kong shares knowing the risk when the communists took over the control Hong Kong?
Everyone thinks they can do this, but then when the market crashed on October 19, 1987, almost no one had the stomach to buy. When the year 1999 came around and the market was going up almost every day, you could not bring yourself to sell because if you did, you might fall behind your peers.
Trait 2. A great investor is one who is obsessive about playing the game and wanting to win. These people do not just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.
Trait 3. A good investor is the willingness to learn from past mistakes or to admit that he or she has bought the wrong share. It is so hard for people to recognize their own mistakes and sell the bad share which they bought at a higher price. Most people would much rather just move on and ignore the dumb things they have done in the past. But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career. In fact, even if you do analyze them it is not easy to avoid repeating the same mistakes.
Trait 4. A fourth trait is an inherent sense of risk based on common sense. You must have the common sense to realize the risk of buying any share which has gone up a lot and when all the analysts are recommending buy. No share can go up indefinitely for whatever reason. Quite often you might be tempted to fall in love with your purchase because it has been going up and up. You are so proud of your pick and refuse to sell it. Remember your ego can skew your judgment.
Trait 5: Great investors have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania and he was being criticized publicly for ignoring technology stocks. Eventually he was proven right. Unlike Buffet, we small investors can get in and out quickly and make some profit.
Besides confidence, you must have patience to wait to buy when it is has established a base and not buy when it has shot up due to some exciting hot news.
Trait 6. It is the ability to think clearly. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads. I have met a lot of smart people in my life time but very few of them can come up with an inventive way of looking at a problem.
As you know, there are so many criteria to consider in share selection and invariably all the professionals will consider the current profit is most important. They do not look at the future profit growth prospect of the share. They do not look at the company and the industry like a business man or an entrepreneur.
Again I have to use Jaya Tiasa as an example to explain this important point of making super return. You only have to have the elementary knowledge of arithmetic to calculate that JT will almost double its fresh fruits bunches (FFB) production in 3 years. Even if the CPO price remains unchanged, its profit from its oil palm plantation will surely double.
Moreover, JT has about 2,500 sq km of forest to supply all the raw material for its plywood and timber business. Surely any one with eyes should be able to see the huge forest ( 50 km X 50 km approximately) which is the competitive advantage it has over all the manufacturers in China, Taiwan, Japan, India and in any other countries. Yet all the professional fund managers cannot see the forest as the competitive advantage JT has over other competitors.
As Warren Buffet often say that in the competitive world of doing business, all your competitors are constantly trying to attack you and you must build a moat around you to protect yourself. Unfortunately, in the Malaysian stock market, we do not have stocks like Coco Cola, Gillett Razors or Mac Donald which have the market competitive advantage.
Trait 7. Finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do; when the chips are down they have a terrible time not getting themselves to average down or to put any money into stocks at all when the market is going down. People do not like short- term pain even if it would result in better long-term results. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just cannot see it that way; their brains would not let them. Their panic instinct steps in and shuts down the normal brain function.
Conclusion: I must realize the risk I am taking in writing this article. People will judge me and they will laugh at me if I am wrong in betting Jaya Tiasa so heavily. I still have some SOP which I have bought when it was cheaper and I sold a large portion to buy JT. I also have Mudajaya, Kulim, and smaller amount of Symphony Life, Success Transformer.
Only time will tell whether I am right or wrong. Nevertheless, my intention is honorable and altruistic. I also believe I have some special knowledge which will help you make more money from the stock market.
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Discussions
21 people like this. Showing 50 of 143 comments
to be fair. this article by Mr KYY is the best articles on stock market written by a malaysian. that i have ever seen.
2014-02-08 15:51
>>>best
Trait 7. Finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do; when the chips are down they have a terrible time not getting themselves to average down or to put any money into stocks at all when the market is going down. People do not like short- term pain even if it would result in better long-term results. Very few investors can handle the volatility required for high portfolio returns. They equate short-term volatility with risk. This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just cannot see it that way; their brains would not let them. Their panic instinct steps in and shuts down the normal brain function.
2014-02-08 15:54
>>> very best! 100% agreed!
For a long time, I have been trying to teach my wife, close relatives and friends to follow what I did but all of them could not emulate my performance or achievement. I think the reason is that to be a super investor your brain has to be wired differently when you are young. It is a nature built into your brain which cannot be nurtured. By the time you are an adult, either you have it or you don’t have it.
2014-02-08 15:57
Tahun lepas Dsonic saham paling menguntungkan. So tahun ni ada ke saham boleh beri 200 peratus macam Dsonic? Jtiasa tahun lepas tak hebat, tahun ni pun ala kadar jerr. So tak perlu iklan beribu kali. Abang tau ada satu saham ni boleh beri 200 peratus, bila dah pas baru abang hebohkan...hehehehehe. korang dapat bila gua buang air besar punya, gua belajar dari KYY. Kikikikikki
2014-02-08 16:15
One thing I can say with almost 99% certainty is that jtiasa won't shine this year. Their trees not fully matured. Even if CPO reaches 3000, they can't be there to pick up the durian
2014-02-08 17:01
Alphabeta I have similar experience with ytl power. I thought the stock can hold forever to enjoy dividend income. But their venture into Jordan completely changed the calculus. Stock investment is a very unpredictable thing (sigh)
2014-02-08 17:10
Icon, Nothing is forever. That's why the investment game can be so adrenalin charged, almost like gambling in certain ways but with better odds. Just when you think it's a no brainer to put your money in to enjoy an assured rate of return, something changes the equation. As for JT, I view it as a 3 year bet supported by a super investor's hunch. That's good enough for a small wager at this juncture. As for additional future bets, we'll wait and see.
2014-02-08 18:45
Icon, Lohman, well said. Situations keep on changing. It can be boardroom decisions, the weather, economic climate, politics. The super investor, digests them all and often than not makes the right decision. As for JT the jury is supposed to be out three years from now. But I'm sure Mr Koon will react to safeguard his sizeable investments before the three years are up if they are at risk. Shouldn't we too?
2014-02-09 00:04
M vince,a value investors who has been coincidentally advocating palm oil & picked kulim, TSH, SoP as a good buy since last 1decade.
Mr KOON has invited me to meet him on feb12 with other few ppl. I m coming frm KL after i return from hometown on feb11. U may reach me at
vinext@gmail.com, another guy plan2 drive frm KL, we r seeking car pool,stil hv 3more seats.Pls send ur hp,email, fb add/link, wat time,date, u plan to take off,wat time to return to kl
2014-02-09 02:47
GARK, Haki which co u work for? Those co r not cheap. JTIASA is an unconventional bet. JT doesnt hv all the pretty ratio,but the prospective profit growth is great.
2014-02-09 02:52
M vince,a value investors who has been coincidentally advocating palm oil & picked kulim, TSH, SoP as a good buy since last 1decade.
Mr KOON has invited me to meet him on feb12 with other few ppl. I m coming frm KL after i return from hometown on feb11. U may reach me at
vinext@gmail.com, another guy plan2 drive frm KL, we r seeking car pool,stil hv 3more seats.Pls send ur hp,email, fb add/link, wat time,date, u plan to take off,wat time to return to kl
2014-02-09 02:52
Thanks Lohman. What about 1993/4 big bull n big crash? Did you go tru that too? Big bucks n huge losses. How to spot or avoid such market crashes?
2014-02-09 12:20
@Seek, The 1993 mother-of-all bull runs in Malaysia was when I got involved in stock investments. It was a highly speculative environment where the initial frontrunners and the brave made serious money, and kept a large part of it if they exercised prudent money management. But those were heady days, the easy money making gets to you; and greed keeps fear at bay until the crash. I still recall Daim's headline statement in Jan '94 that he was out of the market which many pinpoint for precipitating the crash. As for avoiding such crashes, you really can't if you are always invested in the market but if you adopt value investing strategies and prudent money management, you will be spared the worst effects. A value stock will rebound in time, not so the speculative. Just where is Aokam, Idris, Repco and such speculative darlings now?
2014-02-10 10:06
I hope so much I have the pleasure to meet Mr. Koon this coming gathering! But I was late to get the news. Missing a chance to hear Mr. Koon's talk is like chosen A worst counter! Nasib!
2014-02-12 02:52
Dear, Koon Yew Yin
I will share my view hope it won't offend anybody , hope you can accept my sincere view on what normal investor experience.
Trait1.
This particular trait means to buy in when there are intense difficulties, unstable conditions either political, social and abrupt change in economic conditions. In order to do this either they are extremely Rich, Hedge funds, Institution Investors, and Fortune teller (dispose all their holdings because they can predict the timing ) When this happens it is considered a CRISiS reaches the highest point and the average investors will be in deep trouble with interest rates hikes, Loan recalled, OD recalled, Margin call , property value diving down , emotional breakdown and all sort of traumatic changes to all average investors. It may take a while for average investors to wheather the storm and when the opportunities flashes just in front of the average investors eye, do you think the have the gut and capability to buy stocks again ? Even it is rock bottom dirtcheap, they will save their houses, businesses and family as their main priority.
At this juncture, only those people I mentioned above will have the upperhand and financial capacities to stomach the stock market crash and rob the average investors hard earn money, because the extremely rich are the one directly or indirectly manipulate the stock market. They are the biggest speculators.
There are not right or wrong when it comes to this situation, but not the average investors wants to fall behind their peers but they have no other alternatives to fight againts the said Extremely Rich people .
2014-02-16 01:32
Trait2.
This trait is specifically refer to the Great Investors. To me there are no Great Investor, there are only Wise Investor, the Great investor will be replace to " Super Rich Entrepreneur " and belongs to trait.7. This I will post later or maybe not . Yes ,Trader. We are a Trader. A Trader is to buy and sell stocks, , currency and goods to be traded for a profit. Now this trait we emphasise on stocks. Then again it mentioned that with obsession, passion and knowledge of Technical Tools and FA knowledge traders can neutralise risk? Stock market risk? It Means we can able to avoid risks rather than take calculated risk ? Belief it can? Confident we ca do it? Then it's really confusing according to the above trait no 2.
To my observations, basic trader (punters and speculative traders) and tecnical traders (wiser investor) and financial analysis traders (longer term holders) majorities (90%) of them not able to accurately predict the stock markets and their portfolio of stocks. " Only 10% make it." Note:I DID NOT MAKE IT!
For those who make it congratulations.
I believe there are not more than 10% traders who can accurately read and predict the stocks movements The only thing traders can do is to do their own research and from there they understand the surfaces of each company, their future potential and planning, news that public knows. other than that it's all considered as insider news, too bad.
But then why so many people failed their trading plan and their hopes to make a living, and some traders keep on changing the target prices from time to time and finally their target prices are mostly out off sight. And some vanish forever and stuck forever. The reason maybe, yes maybe :
Excessive speculation, punting and overly invested , expert tips, excessive greed etc.
Sudden reversal of unforeseen external crisis.
Downgrading of company's sectors instabilities.
Sudden change in company planing and financial loses incurred.
Management integrity is breached, internal conflicts and accounting fraud.
Sudden trend changes in certain industry.
Abrupt change in local economic climate and polical instability.
And a million of unforeseen circumstances.
In this case no matter how wise you are, how knowledgeable we are, how passionate we are, how confident we are ,how positive we are, we will loose, a few will loose lesser and a lot will totally wipe out.
The only way to escape from this as traders:
1.Patience and calm. there are plenty of time and stocks to choose, give them a chance, dont underestimate them.nothing is impossible.
2.Commonsense, we are not using our neighbours money. Family first.
3.Do not predict and gamble excessively. Most of the time it doesnt work instantly. Speculative stock kills
4.Do not wake up and first thing you think is stocks, only balace life and healthy mind and body can work out the best results. Because we are not super investor. We have to grow step by step positively. 5.Know the value of your money more rather than stocks value. Use it to exchange for a lesser value thing
6.Must fall in LOVE with your stock, if you dont , WHY buy it.?
7.Dont over confidence on ourselves ,be humble but brave, we are not invincible.We maybe wrong many times and yet some still do not even notice it. and worst some didnt want to admit it.
8.Must know when your stock is lying and not honest to you, but they won't tell you, so intuition is important. By the time the chart knows it its too late to respond already.
9. Intuition, Gut Analysis and Spot Analysis, that is very important to add as extra tools to trade more efficiently.
10.Lastly, as a trader we are all the same status, no one is greater than anyone, with the same kind of opportunities to buy and sell, the same goal to make a living, the market is always kind to those who are kind to themself. Everyone have weaknesses, its very normal. If we have more , we help those who have less and so on.
Never have ill feeling toward ourselves, those who have this attitude will self destruct themself eventually.
Conclusion.: Do not overly expose or promote the stocks we like . We can hint and share for the benefits of everyone. Up to individual to decide.
Too overly promote a stock will eventually create a lot of other unwanted issues and arguments.
For those are new like me I am lucky I have a chace to know some friends here,, I always like to share and listen to advises because its free.
THE ABOVE POSTING IS THE LESSON I LEARN FROM MY KAKIS THAT WILLING TO SHARE WITH ME
2014-02-16 01:34
Trait3.
I have already read this trait numerous time but it still doesn't make sense to me.All trader and small investor, trade base on their own meris. It can be Tecnicals analysis, Financial analysis,general information and etc. Those traders buy shares and sell to another investor/trader for a profits when the shares reached their target price. The following trader buy base on their own reason to buys and resell to another. By this way it created liquidity and the chain continues. Every investor/trader have their own reason and intention. There are no DUMB here, all base on each individual trader's knowledge and experience. It is healthy and nothing wrong here. Some win and someone lose. Bottom line is the figures, timing, knowledge will dictate the difference. Then again I see the word MISTAKES too. Is there any mistakes you can see there? Of course no. Because nobody has the Ball. No matter how good you are, there will be never a perfect trade ,the best price and the best timing. So who are the DUMB and where are the MISTAKES?
Indeed this trait is interconnected with trait4.and 5
Trait4.
Yes Commonsense, but then, who has more and who has none? Any body dare to admit they have no brain and commonsense? Nobody because each of us have it, but being corrupted by a lots of factors and influences.
1. Trader are influence by EXPERTS. Some have interest in certain stocks and some with no interest in stock markets, but hired by those who have very large positions, " The Financial Institutions. "
Because of their involvement the Stock +Market become active and begining to flourish and here comes the exiting part. Volatility and. Manipulation. They have the upperhand manipulation.
1.Crowds manipulation. Market and data manipulation, media and psychology manipulation.
2. Volatility manipulations created a greater chance of shortfall and wider swing of stock prices.
Hence there are opportunities and also downfall created from these Big Money here. Trader become vulnerable to such circumstances and the wise will survive and majority will fall. There are no way to avoid this. Even the most wonderful trader cannot avoid these squeezing, , not to mention those who are still new to the abovementioned manipulation.
Majorities will be casualties if not being wipe out.
How to avoid this ? I afraid we have to find the answers ourselves. Because all of us have different objective, risk tolerance level and cash flow.
If we can take control of ourselves, unshaken minded, understand the importance of cash flow, follow the rules, forget our ego, knows the value of money and know what we are doing, who we are facing, know the company we are investing, then we might have a slightly higher chances or survival.
Conclusion is there are no DUMB trader here, if we willing to face them outright and passionate about our money and willing to face the challenges , We may be able to make it
To those who invest base on pure speculation, luck, lack of knowledge, and act of carelessness and reckless trading, wish them good luck.
Finally, there will free lunch available for those who knows what is " STOCK+MARKET "
And there are also expensive lunch available if we trust the wrong person and wrong company.
2014-02-16 01:35
Ability to think clearly, yes of course, I believe here you don't understand we as a investor and a Trader mindset. Each Investor and Trader has their critera beforehand to go for their Stock pick through stringent quality check such as company profile, management trustworthiness, accounting integrity, risk assessment.sector coverage, future profit, future plans, company transparencies, and most importantly WHO are running the Company. Their choice will determine whether they are well rewarded or otherwise. The Companies that lack of any of the above will be shunned by a the investor no matter how many peoples shouting how good it is. Even a good Company may not generate a good return if the Management do not have the passion and good future objectives to maximise their potential. Some Companies even betray their Investor by irresponsible Management that have false intention.
1 . Again a listed Company is mentioned here, so I choose to ignore first and go to Warren Buffet. Nobody can emulate Him and please dont copy his sayings and post. We know him well and his experiences and writing can be used as research and motivation to become wiser. And it is not suitable for everyone. Because His Status, mindset, financial strength, strategy is unmatched to all .He is a Legend don't compare anyone with Him.
2. Malaysia will never have a Company mentioned above. Never. Every one knowsthat most of our WISES and RICHES has left. Because of our Political influences and Business environment hereyou will be dreaming if you hope there will be one soon for another 30 years. It's not because we don't have Wise and Smart people, but it is very rare . A passionate and far sighted business man indeed very rare now. To find the right Company that can reward their shareholders are harder than before.
3. A good Company will focus on their business and well rewarded their Investor. It is more important to look for a good Company that do not betray their Investor,. It's nothing that the Investor can do if their chosen Company did not perform. Those Smart Investor you are mentioning is based on your own judgement. There are a lot more Smarterthan you that you have overlooked. A Smart investor who does not invest in your picking, doesn't mean they are stupid. They just didn't share the same wavelength with you, that's it.
Trait7.
The most important and rarest as you mentioned. This is the most difficult trait to answer. Because only those who has gone into a critical situation will understand the pain and suffering that you never understand. It is like a Trader with one bullet left have to find a reason either to find a shelter when Crisis struck or to keep fighting. I think you may forgotten one Financial institutions collapsed because of a single Trade bursted the Organisation? Hundreds of Big and small businesses shut down? Hundreds of Banks need their Government bailout. Who are we to compare to them. Hope the single bullet win win the battle.? Do you think we should take the risk to show thst we are a Smart investor? I have to leave this for the brave and have gone through the hardship to answer.
Only the Manipulator will win this Battle. They are the cause of a crisis. They have the upper hand. We have no chance at all. Money is not every thing. They have a lot more to concern. Those people who dare to put their money above anything is selfish. For those who cares more about their families is doing nothing wrong. Their brain and attitude is just a basic instinct, there are no right or wrong here in this situation.I think you will be able to differentiate between Smart and Stupid here. Hope in the next articles you May not include the stocks you mentioned above. Let them decide themselves. Those who make their right choice will enjoy the sweetness, and for those who did not we hope they learned their lessons. Let them have a chance to decide and their rights to pick their own stocks without any influences. I think a good Company will have their Investors Relations Manager to promote the Company. Definitely not by their shareholders.
Wish the next article you post will be "THE MOST UNSUCCESSFUL VENTURES I HAD MADE ". That may help more people to learn from you, snd from your mistakes, isn't it is better? Or you never made any.
Dear Mr.koon yew yin, sorry if my writing is offending you.But because we all majority,want to learn more.But to act like what you mentioned,I believe we will have to be a least a multimillionaire ,to be successful like you.But unfortunately majorities of us, Are still learning to be more wiser trader.
Thats my personal view,as a investor.
Thanks and kind regards. :)
2014-02-16 01:43
"2. Malaysia will never have a Company mentioned above. Never. Every one knowsthat most of our WISES and RICHES has left. Because of our Political influences and Business environment hereyou will be dreaming if you hope there will be one soon for another 30 years. It's not because we don't have Wise and Smart people, but it is very rare . A passionate and far sighted business man indeed very rare now. To find the right Company that can reward their shareholders are harder than before. " Christine Goh
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niceeee!!
2014-02-16 01:48
Christine Goh, I have read more than 500 commentaries, I must congratulate you for writing the best one. I would like to meet you and I hope you can attend my talk at 11am Sunday at Ipoh St John Ambulance Hall.
Aaron, one of the readers has collected some of my recent articles and put up a website for me free of charge. It is known as "koonyewyin.com". Readers who wish to read more of my writings can google this website or google my name, you will also see a large collection of articles and YouTube video.
I have also published a book called MALAYSIA: Road Map for Achieving Vision 2020 which was launched by Tengku Rezaleigh Hamzah who had also written the Foreword. The book was endorsed by Dato Ambiga Sreenevasan, Professor Glen Arnold, DR Azly Rahman and Profeesor James Chin.
Happy reading
2014-02-16 02:16
Mr Koon, I just read this article which is the best of all you have written before. It is insightful, scuccinct and most importantly too true. I cannot agree more with this article as it must have come from half a century of successful investing wisdom, business acumen and relentless pursuit of greater financial success.
On the other hand, I have to say that Christine Goh's grumpy reply or rebuttal reveals that she is almost certainly a mediocre investor, not really able to discern the real spirit and meaning implicit in each of the traits.
The only concern with JT is its short-term borrowings. I thinnk JT likely gets a loan rescheduling from its lenders soon, hopefully, without having to pay too much additional margin to the banks. This is better than making a cash call to its shareholders.
I do not own any JT but may consider buying in future.
Thanks again for sharing with us.
2014-02-16 12:39
Yesterday the star quotes the news that Wilmar (currently the largest buyer abt 45%) would stop buying Sarawak CPO from 2015 onwards. If this turn to be real, does that means that jaya tiasa would suffer from this campaign??
2014-02-16 12:54
fully agreed with this quote: But to act like what you (Mr. Koon) mentioned,I believe we will have to be a least a multimillionaire ,to be successful like you.But unfortunately majorities of us, Are still learning to be more wiser trader.
2014-02-16 13:19
Dear Uncle Koon, My sincere apologies for not being able to make it to your special session. But I hope you had a wonderful time addressing your friends and investors on how to become good investors. I am from penang and have to run my business even on weekends.
Thanks for your kindness in giving me an opportunity to join your talks. Anyway there is always another good time to meet. Take care and wish you all the best.
Christine Goh. :)
2014-02-16 21:21
Christine, what business are you doing? What kind of business that requires your attention even on week ends? You seem to know so much about share investment, why don't you stop doing business and invest in shares?
In share investment you are not required to work on week ends, you will not have bad debts, you will have no management and tax problem problem. Moreover, you do not need to deal with people especially the hard nuts.
What is the use of being an armchair critic?
2014-02-16 23:40
I have been investing since 1990. Managed to make some profit during 1993 super bull run. Reason for making only a little then was because I was new to investing and still young. Since then I have been buying and holding shares.
I escaped from heavy paper loss during 1998 because my holding was light. I saw opportunity when the KLCI dropped to about 260 points, increased my holding and managed to make some good money during the 1999 recovery especially the dot com era.
After that, the paper profit and loss was up and down. In between, take some profit and cut some loss. The real big profit came last year. I accumulated Puncak Niaga from 1.50 to 1.08, averaging 1.28. I bet against the pre GE cautions sentiment.
To me, investing is a little bit of everything mentioned by Mr.Koon plus some luck and bravery.
Learn a lot from all the comments. thanks.
2014-02-17 01:05
Let me be brutally honest. The fact that Christine admitted she's not the 10% who's trading or investing profitably and the fact that so many of you agreed with her comments clearly shows one thing.... You have not found your edge!
Trading profitably consistently is not about being one up in your battles against Mr Market or the syndicates, but the triumph in the war between yourselves .
When you realize that ultimately, whether you are conditioned to be a winner is a culmination of how to get your emotions in check when the stock drops or rises, your psychological fortitude to ride your profits and withstand /cut your losses, and the mental strength of of undying self belief (not stubbornness) in your convictions.
Only when you find your edge can one triumph over yourself. People like warren buffet have an edge (he buys only businesses he understands below intrinsic value), people like Mr Koon has an uncanny ability to smell out good value in his own way and stay to his convictions.
As someone who's been trading since 18 years old (now 42), I've lost my pants, been thru a few crises, traded anything that moves, I am now trading profitably for a living, I have to say that I totally agree with all the points that Mr Koon has so kind to list down.
When one has found your own edge, you will be at peace with your trades, look forward to the next opening bell, confidence of your convictions because you know your stock is acting 'correctly' and most importantly, triumph over your biggest enemy, your self
I am a momentum trader, I don't command the lines that Mr Koon does, I don't trade for the multi bagger winners, I can't buy the lowest nor sell at the highest price, yet I'm not sorry about it because that's not my edge. Find yours, for when you finally win the battle over yourself, you will win the war at the markets.
2014-02-17 01:50
Ayoyo - you're brutally honest, nice sharing and good that you've found your edge hopefully NOT with the help of TheEdge LOL
I'm still looking for mine but one of the things that might be able to help me is to sell when one is bullish and buy when all are bearish - what u think :)
2014-02-17 02:29
@frank, if one thinks the edge is the newspaper, one is then dangerously close to falling off the edge instead. You should Keep to your Focus (Malaysia) instead. :) -(loved their potshot at The Edge)
When I have urge to talk cock, I'll pen in a word or two but heres a start - don't trade any breakout nor anything that moves. William o Neil only does cup and handles, jesse Livermore only watches price and volume, etc. you could be using Joey yap's flying stars fengshui methods. As long as it works for you
2014-02-17 08:20
My personal view. Knowledge and experience alone are not the main factors to determine whether an investor can be a winner or loser in the market. More crucial is the ability to control our Fear and Greed in order to be successful in investing.
2014-02-17 11:55
Dear Up_down you have said the magic word. How to control your emotion?
If the business you are investing in is creating value to shareholders. Then you will not panic when market moved adversely against you. You can hold or buy more to average down as the company will not become PN17.
One of the most challenging tasks for management of any business is capital allocations (shareholders’ equities + interest bearing loans). If fund is channeled to productive assets which the company is confident to generate return over and above the weighted average cost of capital (WACC). Then the business is adding value to shareholders, called economic value added (EVA).
For example, if a total capital deployed in a business is RM 1,000 in which RM 600 is equity and RM 400 is loan. The debt to equity structure is 40:60, if the cost of debts is 5% and the cost of equity is 10% (expected return of capital in that industry).
WACC = 5% x 40% + 10% x 60% = 2% + 6% = 8%
If the Return of total capital [PATAMI/(Equity + Loans)] is more than 8%, then the management is adding value by generating a return over and above of the WACC, the higher the EVA the greater the safety margin.
The next question is whether the company is able and intent to pay regular dividends to reward shareholders. The answer to this is Free Cash Flow (FCF) position of the company (Net operating cash flow minus Capex). If a company has negative FCF, it will either; a> Raise more funds from shareholders, or
b> Borrow from commercial banks, or c> Divest non-core assets to plug this gap.
Dividend payment will be slim if FCF is negative year after year due to continuous stream of capex and the investments have long gestation period before profit & cash flow can roll in.
I would prefer a more balance approach in term of capital allocations. One “Should not bite more than you can chew”. If stretch too thin without reserve, then any adverse market conditions will hit the company in all directions; drop in price & volume, cost push, bad collection etc. When the time come, it will be tough to restructure to meet your obligations. Opportunists will come and press your assets prices, lender will asked for more collateral to back up the loans. Then finally, the shareholders will be required to take hair-cut or take total loss when the company went into liquidation.
Total shareholder return (TSR) involved regular dividend payment plus capital gain over the holding period which can only realize if you sell. You need to monitor the news and quarterly performance to gauge whether it is still worthwhile to hold. In view of this, it is better not hold more than 10 stocks and focus on industries you are familiar with, especially investment is not your full time job.
You need to breakdown the return on shareholders’ equity into three components.
ROE = PATAMI/Revenue x Revenue/Net Assets x Net Assets/Equity
(Net assets = Non-current assets + Current Assets – Borrowings)
For example:
Co A ROE = 10% x 1.00 x 1.2 = 12%
Co B ROE = 20% x 0.50 x 1.2 = 12%
Both company gave same ROE, the only difference is Co A assets are more productive and able generate revenue to turn around once every year whereas its profit margin is half that of B. Both companies have the same level of ratio in term of using equity funding its net assets.
If Co A is able to improve its use of trade credit instead of relying on loans without affecting its input cost adversely, then its profit margin will be better due to lesser interest charge from commercial banks.
Co B will need to evaluate whether its portfolio of assets that generating sub-par growth in term of revenue and profit. One example is holding too much cash in FD and not paying out enough dividends if there is no opportunity to invest. Another possibility is deteriorating debtors or increasing inventories or both.
If you benchmark the target against other similar top industry players, you will know its strength and weaknesses.
The computation of Intrinsic Value of stock depends on the Projected Share Price which depends on sustainable earning growth rate [ROEx(1-Div Payout)] x current EPS x perspective P/E. Adding this to dividend payout policy x EPS will yield total shareholder return. By discounting the future TSR with your expected return will give the entry price.
Quantitative analysis does matter but attention to the qualitative aspect of the business is vital as well. Continuous reading on relevant news and figuring out the potential impact of such news on the profitability and cash flow on the businesses are critical.
That's my personal experience which have served me quite well. Always remember - whether it is for trading or longer term hold, there is no free lunch, you need to work for it.
2014-02-17 14:50
Everyone has different ways to control their emotions in trading/investing. It depends on the individual investor ability or preference to defend the external pressure during the high volatility of share price.
Emotion can be easily ignored through:
- not to watch share price movement
- buying good fundamental companies on regular basis ie quarterly
Personally, I am trying to control my emotion through
- setting criteria in managing or picking a stock
- comfortable portfolio allocation
- exploiting a small margin facilities
- building a strong believe by studying fundamental of companies & making comparison
- Focus in company's bottom line and debt level
- identify my ultimate motive ( play zero sum game or investing )
- pressure reduction through profit taking or loss cutting
2014-02-17 15:54
I am running my own business which is doing fine although I need to work on week-ends. My comments do not necessarily reflect that I can be a successful trader. I am happy with the current situation, using my time to expand my business. However I do not agree with Uncle Koon remarks about being an “Armchair Critic " I believe all corporations started from scratch based on their ambitions and visions, to make their dreams become reality. They aim to reap positive results from their businesses. Some will continue to build up their empire and keep on chasing their ultimate dreams and some will give up. For those who continue to pursue their passion and committed to their goals, they will be greatly rewarded. And with their hard work and never say die attitude, their companies will eventually get listed in the stock exchange. Then my point here is : These are the real " SUPER INVESTORS " . These are the best of all investors. They have to WORK for it! Their hard work bear fruits. We can't have ignore the FACT that every stock in the world is born from these great businessman who successfully build up their empires from working out their plans for years with perfect execution and not from just trading and punting. Even Uncle Koon is investing in the stocks that are created by these people I mentioned above. Now you are a trader. You buy and sell to make profits. The stock owners are the Super Investors. They are more superior to you, a fact that you have to put up with even in your dreams. They are the one will dictate your fate. If they fail and do not work hard on their plans, even a slight wrong move will cause great losses in your trade. Probably you will never recover your money. You will be dreaming again if because you didn't believe that all of us will never be successful without choosing the right people and the company. I will stick to my words that you do not fully understand my comments. That’s why as I have mentioned, we are all traders and not Super Investors. Therefore nobody is a Super investor, unless you are the one who created the Stocks (company). If they failed, the trader will lose, no matter who you are! For me I don't dream, I don't hope, I never worry, Because I invest in the company that employs people who work hard , are passionate , honest, transparent, and with unquestionable integrity. I believe one of your Stocks that you mentioned does not have this criteria. Perhaps you would like to agree with me that when a company does not perform, aswitch to others (thousands of them) which are still undervalued. We will never be able to change the Super Investors' character and mindset, they will never tell the truth. You can only see and trust the results from time to time. Only a wise trader will smell it.
My dear all i3 forum members, this my own opinion and not meant to offend or ridicule anyone. It is from my own experience and I am still learning from all my corporate friends, I aspire to be a wiser trader soon. Thank you.
Happy investing :)
Posted by Koon Yew Yin > Feb 16, 2014 11:40 PM | Report Abuse
Christine, what business are you doing? What kind of business that requires your attention even on week ends? You seem to know so much about share investment, why don't you stop doing business and invest in shares?
In share investment you are not required to work on week ends, you will not have bad debts, you will have no management and tax problem problem. Moreover, you do not need to deal with people especially the hard nuts.
What is the use of being an armchair critic?
2014-02-17 17:03
Dear Ayoyo, thank you.
You are brutally honest person too. You saw I said that I have not perfected my trading methods yet. You read my comment and you can understand what I write. Yes , once you found the right stocks you will be in total control and will continue to enjoy their successful venture without any worries. Because the real successful company will never fail to deliver even in toughest time. They never give excuses and they always make sure they reward their Investor. They never make their investor doubt about their capabilities. They will always properly inform and share about their next expansions plan and always protect their investors interest. That's my real experience with my long term investment company , GHL Systems Bhd. They haven't fail me till today and I believe they will never.
Thank you. :)
2014-02-17 18:54
Posted by haikeyila > Feb 7, 2014 10:15 AM | Report Abuse
the promoter would know about IJM since he co-founded the company. Yet, i dont care if he's god, something is really fishy with his recommendations. Calling a counter with a PE ratio of 86x 'the most undervalued counter' is just ludicrous.
wow! talent. talent. i want to meet u. dont be an armchair critic.
2014-02-17 22:48
Haikeyila, what business are you doing? What kind of business that requires your attention even on week ends? You seem to know so much about share investment, why don't you stop doing business and invest in shares?
In share investment you are not required to work on week ends, you will not have bad debts, you will have no management and tax problem problem. Moreover, you do not need to deal with people especially the hard nuts.
What is the use of being an armchair critic?
Haikeyila, I have read more than 500 commentaries, I must congratulate you for writing the best one. I would like to meet you.
2014-02-17 22:54
We r all in the same boat, the 2nd mkt.
Would u ever consider learning from the very best, the top 10 greatest gurus of the entire world here ? :
http://purebull-bursatrader.blogspot.ca/2012/12/must-read-these-gurus-books-richard.html
Get hold of these books. Read them carefully n understand the value of price action. I promise u will turn stock mkt pro. in the simplest way.
The Hedgees r in full control of the world mkt. They r the ones who set the investment clock in motion to their advantage. Their inspiration comes from :
G SOROS - "Economic history is a never-ending series of
episodes based on falsehood and lies, not truths.
It represents the path to big money.
The object is to recognize the trend whose premise is false,
ride that trend, and step off before it is discredited"
Jim Rogers - "Figure out the money and you’ll figure out what’s going on."
I found their 1 all-important simplest secret, i.e.
BUY AT last purebear of ALL TIME HIGH or highs of growing stocks.
Time for all of us to make big money....
Be sensitive to all things RIGHT.
Aim accurately, if Right, just sit on it.
No rocket science is required.
Besides Uncle Koon, many of u like Christine Goh n more can write very well n clear.
2014-02-18 00:19
Christine Goh & i3 member , maybe some of u are not comfort with mr koon style of teaching, he is showing his way of investment especially his mindset that how he make big money in stock market. If u can master it, u must be a millionaire & financial freedom as many people dreamed. Maybe he is a little bit boastful :) , but be frankly, I will be more boastful if i have profit track record like him. Beside that, have u been found another multi millionaire that are willing spending a lot of time sharing with us ? teaching us how to win in stock market ? yes, there are many GURU(maybe not millionaire) outside there willing teach u, but that cost u few thousand per course. if u continue losing money in stock , it will be most expensive course u attend.
don't give any excuse that to comfort yourself bcos of losing money in stock market. If u continuously losing money bcos u are not smart enough & not willing find out what mistake u have been done, every success investor must done mistake before, but how they act & think after the mistake is the keypoint of success. They are winning bcos of their mindset are leading them to winning. If u haven’t make a good profit in past few year in bull market, u must review your investment style & strategy .
don’t complaint the share u choose didn’t rise or maybe u already buy at high prices becos of herd instinct. Are u buy Gtronic, MKH, Tambun , Hua yang, Hap seng , L&G , DKSH ,TDM & other good share before election last year? or u just buy after widely publicized or already priced in. I bought them early 2013 & now double of my investment .
Don’t invest if u fear about other people manipulation , currency, bond , futures, stock market, commodity goods, property , even though our mind, all this are manipulate by other powerful people. The key point is how to recognize it & become your edge . in 2012 , I told my friends don’t buy gold bcos are manipulated by big player (FED of USA). Now they are stuck in.
Finally, I wish to thanks Mr koon & other i3 member , gave me the opportunity to learn & become successful investor. Wish u all healthy , happiness & all the best .
2014-02-18 12:04
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ICON8888, very refreshing insight to your investment techniques. We wish for more contributions from you. Wish you all the best in your future endeavours. Also, kudos to Mr Koon for his passion in the stock market and for sharing. For me, I'm happy because I'm finding many other ways to pack a bag.
2014-02-08 15:37