Lesson for the failures in Share Investment - Koon Yew Yin

Koon Yew Yin

Publish date: Tue, 11 Aug 2015, 08:45 AM

First of all, you must truthfully examine your own track record to see your performance in share investment. If have not been successful, you must change your method of selecting shares. If your selected shares continually cannot go up in price, it means that you do not even know the basic fundamentals in share selection. You must read all my articles I posted in i3investors.com, bearing in mind that there are a few failures whose commentaries are abusive and senseless. They cannot even write without some grammatical errors. They must seriously examine their own track record.

Most important share selection criteria:

There are many stock selection criteria such as NTA, dividend yield, cash flow etc. The most important is profit growth prospect. Earning per share, EPS growth is the most powerful catalyst to move share price. The reason why Latitude Tree went up from Rm 1.00 to above Rm 7.00 in the last 26 months is because its quarterly profit as announced in Bursa has been increasing continuously. It went up yesterday when KLCI drop 28 points.

Now you must check all your current holdings. You must make sure that they can make more profit this year than last year, otherwise the price will drop when they announce reduced profit for the year. If you are not sure that some of your holdings will make more profit this year than last year, you must not be afraid to sell and cut loss.

Emotion overtakes logical thinking:

If you have been selecting shares with good fundamental qualities and yet you could not make money, you have to examine your behavior when the market is up or when the market is down. Do you dare to buy now when the market is plunging? Yesterday, 10^th Aug 2015, the KLCI dropped 28 points. Are you selling your shares even they are really good shares?

Did you sell to make profit when the market was euphoric, people were buying like crazy? If you did not, you have to seriously control your emotion. You must make sure that your emotion will not control your logical thinking.

With most major decisions in life, emotion overtakes logical thinking. As a result, most investors including professionals cannot perform. They are called “irrational investors”.

To be a successful investor, you must overcome your emotion and be able to think logically. You must have the guts to go against the crowd and be a contrarian investor. You must dare to buy while others are selling desperately and you must dare to sell when others are eager to buy aggressively.

Share prices move up and down like a yoyo:

Finally, the most important and rarest quality 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 find it hard to sell their stocks at a loss. They find it difficult to average down or to even put any money into stocks at all when the market is going down.

People don’t like short term pain even if it would result in better long-term gain. 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 can’t see it that way. Their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function. Their emotion controls their logical thinking process.

My advice: You should not invest in shares

if you cannot control your emotion and sell desperately now as if the market cannot rebound.
If you cannot understand the quarterly report announcement in Bursa.
If you cannot understand the company annual balance sheet.
If you cannot afford to lose some money because share investment is risky.
If you are always too busy and have no time to review your share holdings.
If you cannot understand what is P/E ratio, NTA, Cash flow, dividend yield etc.
If you could not appreciate all my articles I posted in i3investor.com.

Discussions

6 people like this. Showing 35 of 35 comments

chonghai

Mr Koon, agree with your advice except the following comment :
If you are always too busy and have no time to review your share holdings.

If an investor is too busy to take care of too many companies, he can always just shrink his portfolio to less companies of better quality. 5-10 companies is good enough.

Mr Koon, MAGNI is another interesting company.

2015-08-11 08:54

icetwink

I feel nothing when the index drop 28 points yesterday. Maybe I has numb.

2015-08-11 09:21

YiStock

Thanks Mr Koon for your advice. Happy to have you in i3 to share valuable investing experience here. May god bless you for all the good health. Regards, YiStock

2015-08-11 10:10

RapidBeginner

geeezzz..... i dun understand at 5th 6th lines...... cause i really no study on this la... how?????

2015-08-11 10:16

choop818

Good advice for newbies and seasoned investors alike.

2015-08-11 12:22

kmohan62

Keep up your good work,Mr.Koon.Only the perennial losers are the one who are abusive and inordinately criticise your opinion and advise...there are ten fold more who are quietly learning the art of investing and picking on your ideas..

2015-08-11 13:43

chyokh

Just one Rule to win.
Rule No.1 - Buy when market is plunging, sell when market is rallying. Do nothing when market is sideways. Repeat a few times a year.

2015-08-11 22:55

TengkuFaisal

Posted by MatiMansur > Aug 11, 2015 01:46 PM | Report Abuse

Mati lo

http://www.theedgemarkets.com/en/article/china-central-bank-devalues-yuan-after-poor-economic-data

China devalue the Yuan.

Malaysia furniture companies and all export companies cannot compete lo.

Mati lo

this is so misleading. china devalued by 2% 1 time event. but ringgit has drop 5% since last month

2015-08-11 23:01

charles11111

Very true indeed. You hit the nail on the head.
Mitrajaya is another quintessential example.
Great revenue and profit growth in the last 2-3 years.

2015-08-12 07:01

charles11111

Indeed grateful to Mr Koon for being so generous in sharing the salient points of his investment talk. Keep well

2015-08-12 07:11

Kian Leong Lim

Mr. Koon is a very kind person I agree and I know but I still think that he is not that kind enough. I hope he spend more time caring for more people and spend more donations for people who really need the money so that they can improve the well being of their lives.

2015-08-12 09:06

Kian Leong Lim

Latitude is a good furniture stock, this I have not doubt about it, at RM7, but the point is it is even better if the price is cheaper for you to buy and hold for long term investment.

2015-08-12 09:08

don't know why this article after read feel very demotivated...maybe too many negative wording in the article...like
if you cannot control your emotion and sell desperately now as if the market cannot rebound.
2. If you cannot understand the quarterly report announcement in Bursa.
3. If you cannot understand the company annual balance sheet.
4. If you cannot afford to lose some money because share investment is risky.
5. If you are always too busy and have no time to review your share holdings.
6. If you cannot understand what is P/E ratio, NTA, Cash flow, dividend yield etc.
7. If you could not appreciate all my articles I posted in i3investor.com.

so many cannot...my impression will straight to cannot...

2015-08-12 17:37

i guess mr Koon is writing with mixed feeling...anyone feel the same?

2015-08-12 17:39

TheRock

Sky will became clear, air will became fresh after thunder storm.
Just wondering that chicken & hippo did not strike by the thunder???

2015-08-12 17:41

Alfonso

the rock is cooking...

2015-08-12 18:02

growthinvestor

advice no7 is not valid.no article is holy grail for investor.do not overestimate i3 as though it can influence bursa.frequent web surfer do not translate to real investor/trader.

2015-08-12 20:43

annmix

the problem now crash is coz by a human, a enemy of this country plus the external factors !

if you cannot control your emotion and sell desperately now as if the market cannot rebound. Direct crash drop like 10 days, how to control the emotion ? we are jus human only

2015-08-12 20:54

iiinvestsmart

I take sides with growthinvestor that there isn't any article which is a must read for anyone to make profit in stock market.

2015-08-12 21:15

calvintaneng

Common now. Mr. Koon didn't force you to read. You have all the freedom in choosing to read or not to read.

Now don't go round posting Dutch Lady (Holland Grandma) caption every time you post in investlah,

Better stop highlighting this relic of an old grand mother story

2015-08-12 21:56

Kian Leong Lim

In life, when you keep blaming others, you are like the old grandmother, who always have unfinished business today and everyday. What about your own contributions? What have you contributed yourself to make your relationship with other people working well? What is your contribution? Failure and Success is only one foot away, both are not far apart from each other, but people don't realize it at all. The failure is giving you the improvement you need to become successful, for practising purpose, but how to be successful, how? When you confront a difficult situation, use the easiest way you can to get rid of the problem. Remember what I said, failure and success is only one foot away from each other, the easiest way you can to get rid of the problem is to drop the unpleasantness in the past and move on with life. Failure is the practise you need to be able to do something using the easiest way when you really encounter a big problem, and failure and success is one foot away. No need to be like grandmother, doing the same old stuffs day and day or recycling unpleasantness for what. Drop the unpleasantness is your contribution to others, nobody is perfect, you will be able to live a more purposeful life other than you just know how to nag only. I want to see some improvement, please don't nag and nag over and over, you don't know how to live a purposeful life is it?

2015-08-13 06:42

skyz

I agree with all your advice at the bottom, except for No.7. Please leave your ego at home

2015-08-13 10:27

skyz

This article was not as nauseating unlike your other BUY calls posts. until I read the last sentence of advice no.7. Bragging and showing ego again! KYY will still be KYY

2015-08-13 10:29

murali

My advice: You should not invest in shares

1.if you cannot control your emotion and sell desperately now as if the market cannot rebound.
2.If you cannot understand the quarterly report announcement in Bursa.
3.If you cannot understand the company annual balance sheet.
4.If you cannot afford to lose some money because share investment is risky.
5.If you are always too busy and have no time to review your share holdings.
6.If you cannot understand what is P/E ratio, NTA, Cash flow, dividend yield etc.
7.If you could not appreciate all my articles I posted in i3investor.com.

Yes, Stock God. Shall i buy Xinquan, Jtiasa, Mudajaya now? It has dropped more than 50% from the date u recommended in I3?

2015-08-13 10:49

murali

Or shall I just subscribe to OTB's service? Since all current winning stocks are 100% from him?

2015-08-13 10:50

kylohng

Post removed.Why?

2015-08-13 11:09

Kian Leong Lim

Jtiasa is not Mr. Koon's problem, to be fair to him. You ask yourself whether you yourself look carefully or not. That company issues outstanding 973 million shares to the public of par value RM1. But net profit they are able to generate from the company per year is only around 57 million plus or so. Whether the company is retarded I don't know, this is not Mr. koon's fault, you see, it uses 973 million capital to do business and produce 57 million of profit for one year (June 31 2014), whose fault is this, is this Mr. Koon's fault. It only makes 5.8 cents using RM1 invested. Even selling teh talik is a better business than the Jaya Tiasa business. Even the GST is 6% already. This company is not productive, even less productive than the government, especially it has been in the business for so long, why? Something fishy right?

13/08/2015 11:05

2015-08-13 11:09

kylohng

You cannot blame Koon as he never ask you to buy what he recommend. He only stress that you learn from him. Can you learn simple instruction?

2015-08-13 11:11

Up_down

Then blame god for share price keep dropping. wakaka

2015-08-13 11:14

joerakmo

No 7 is a tongue in cheek test of your emotions lah

should avoid emotions in trading!!

2015-08-13 11:15

GoodCompanies

Good post guru Koon, but the last point was egoistic, but it is ok for someone of your stature and wealth.
Anyway thank you for sharing with us, we appreciate it greatly and wishes you well.

2015-08-13 12:24

kmohan62

Looks like some imbeciles got burned quite badly...hence the non-stop spitting of venom directed at Mr.Koon!!

2015-08-13 15:35

one important key...do u have big capital like Mr Koon? Can u have more direct information like Mr Koon? He know a lot of bosses & he got influence cos he is famous & rich? Can buy more in the crisis time? We're not same class as Mr Koon, therefore some idea might not fix to your need...therefore, we need to find what is best suit to us due to our limitation...like some ppl like fundamental well penny stock to ride the wealth...like u invest 0.08 in IFCA...& be more capital when it reach 1.8 & lock in the profit...

2015-08-13 18:53

kakashit

无可否认，官有缘最近写的东西很有参考价值。

2015-08-14 00:00

20012015

Haha.. I think I can't invest in the share you recommend as I can't observe Rule 7.

2015-08-14 11:33

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