Strategy In A Falling Market - Koon Yew Yin

Koon Yew Yin

Publish date: Thu, 27 Aug 2015, 10:47 AM

The above 5 year KLCI chart shows that our KLCI is more than 3 year low and in the last few months the KLCI drop most rapidly below the 1,600 level.

How did you react?

All ordinary investors are losing money because all the listed shares with the exception of a few really good shares are still falling. They are looking for an opportunity to exit.

Smart traders have cut loss early, holding cash and waiting for an opportunity to buy back some really good shares.

Clueless investors like Murali who are still holding hopeless type of shares, not willing to cut loss, are grumbling, groaning and mourning as if some has cut of his most precious part.

Super investors are still holding shares of companies which export their products in US$, for examples MPI, VS, Latitude, Lii Hen etc. These companies are enjoying additional profit for no extra effort because our Ringgit is 17 year low. The current exchange rate is Rm 4.20 to one USD. Just imagine our Ringgit has fallen more than 20% in the last one year. All their goods sold on credit in USD are worth a lot more which will benefit all their shareholders.

As I know, no market or share can continue to fall or rise for whatever reason. At the moment it is difficult to tell when the bleeding will end. The future looks bleak. But when the market rebounds, we must be prepared to take advantage of the opportunity to make back some money.

When the market starts to recover, we must first look for those really good stocks that had held steady or dropped the least during the index sell off. Investors do not simply sell good stocks unless it is urgent to meet margin call. Currently even serious investors would not buy them because they are not sure when the market will rebound.

Similarly, if people are selling a hopeless stock even when conditions are good, they are likely to continue selling regardless of if the index recovers or not.

What are really good stocks?

After a few decades of experience in the stock market and having read many books of gurus, like Warren Buffet, Peter Lynch, Benjamin Graham and others, I have simplified my formula for selecting good shares.

As you know, there are many stock selection criteria such NTA, cash flow, intrinsic value, healthy balance sheet etc. I consider the most important and powerful catalyst for moving share price is profit or EPS growth prospect. It must be able to make more profit this year than last year because if it announces a reduced profit at the end of the financial year, the share price will fall. But if announces an increasing profit the share price will go up.

The share I want to buy or own must have announced increasing profit in the last few quarters on Bursa Malaysia and it is selling below P/E 10.

I must tell you that I am a substantial shareholder of Latitude, Lii Hen and VS Industry and I am not asking you to buy to push up the prices. If you do, you are doing it at your own risk.

Discussions

9 people like this. Showing 39 of 39 comments

calvintaneng

Haha!

Interesting highlight on Murali! That's a really good joke. I can't help laughing!

2015-08-27 10:58

murali

Clueless investors like Murali who are still holding hopeless type of shares, not willing to cut loss, are grumbling, groaning and mourning as if some has cut of his most precious part.

Hmmm....Koon Koon is really good...how does he know I am holding hopeless types of shares.....Is it any co besides VS, Latitude, Liihen n Xinquan are hopeless?

2015-08-27 11:00

murali

So have u cut loss on yr Xinquan?

2015-08-27 11:04

股海無涯

murali u going to be more famous...

2015-08-27 11:05

murali

LOL....a big TQ to Koon Koon

2015-08-27 11:06

bsngpg

Mr. Koon: thanks for your another great write up. Only humble people can learn from great experienced people like you. Please keep on contributing write ups to i3 so that many rationale people here can learn from you. Thanks again.

2015-08-27 12:51

Icon8888

Don't butter him too much

He tends to get very egoistic when many people praise him

Hentam him more, then he will become more sensible

All for his benefit (tough love for Uncle Koon)

2015-08-27 12:58

pputeh

Thanks Mr. Koon for a good & informative article. Sure appreciate u taking time off to write to keep us in the loop. As for bsngpg don't have to repeat yr comments twice. Am sure Mr. Koon would have read the first one. No hard feelings only an observation.

2015-08-27 13:12

MG9231

Murali, you are getting famous as you like to knock the head of famous investors or legend in Malaysia. By right Legendary Investors such as Koon and Boo, you must remember not to hit but to kowtow.

2015-08-27 16:34

murali

Yes, must keep a photo of them at home n pray 5 times a day

2015-08-27 16:40

MG9231

Legendary Koon advocates buy good companies in last 5 years can make tons of money and this is the true investor while Boo says holding cash "tight" in last 5 years just "sapuh" management and advisory fees is another kind of great investors. I am confused ,probably I need to seek munks help from temple.

2015-08-27 16:48

murali

Legendary Koon advocates buy good companies in last year (only when he is under the advice of OTB) can make tons of money...prior to that dont have to mention....or else old man may think u make sarcastic remarks on him

2015-08-27 16:54

MG9231

Haha, from i3 investors, at least I know legendary investors have personal characters of sarcastic, open mouth with stupid , etc

2015-08-27 17:04

Lewis Lee

Murali, your koon koon likes you and KCChong the most !
I always read about you two in his blogs ! Hahaha

2015-08-27 21:55

paperplane3

Down MKT? It rebound today

2015-08-27 22:03

skyz

im all behind you Murali. as long as you are not contributing to part of his "noble intentions" then you will be labelled as "clueless". those who keep chasing after his "recommendation" will be labelled as "value investors" while somebody happily disposing them at high price and exit without a trace. in the end, few months later, just a simple APOLOGY note and truckload of bulls*** just like Jayatiasa and Mudajaya

2015-08-28 08:46

murali

Bro Skyz, no worries, we are not alone though we could be the minorities here...

2015-08-28 08:48

pisanggoreng

This old man really hopeless, never learnt from kcchong, how come 80+ years still do not know higher earning fro bigger borrowing and lower profit margin is actually burning cash. What improvement you are talking about.
I think your wealth is built on good karma of previous life not your excellent strategy

2015-08-28 09:03

yfchong

no worry different set of kung-fu, G Arnold kung-fu , different for A Damodaran, Greenblatt, Pat Dorsey, Seth Klarman..., Greenwald...., so no need compare...OK

2015-08-28 09:06

yfchong

BTW, Jae Jun fr old school value...,

2015-08-28 09:08

dawlim

Why so many people like to attack Mr. Koon and my sifu OTB. Honestly, I learn a lot from them in term of managing emotion and look at thing at macro and micro level. I think what they said is quite an advice to young investor like us.

I still make silly mistake and keep learning.

2015-08-28 12:11

cn21

We should at least acknowledge and appreciate Mr. Koon good intention and his willingness to teach and guide younger generation....

Mr. Koon,....Malaysia needs to have more people like you....salute to you!!

2015-08-28 12:19

timetokoon

So how much JTiasa now? 1.49. So how to become super investor? All who follow koon can spend another 135.00 and listen to him again.

The price has been depressed for more than a year, since the bonus issue of 2 for every one share held. A few long term investors bought 15% of the total issued shares at Rm 7.90 per share before the bonus issue which is equivalent to Rm 2.63 per share. The closing price on 31st Oct was Rm 2,13.

I am obliged to tell you that Jaya Tiasa is my major investment and I am not asking you to buy it.

Koon Yew Yin
http://klse.i3investor.com/blogs/koonyewyinblog/40359.jsp

2015-08-28 12:21

paperplane2

this oldman failed.......in every single investment if hold longterm like 20 years!

2015-08-28 12:37

before i read the article...I know Mr Koon will talk what...EPS, Grow prospect...but some good stocks if not play by syndicate, it won't go up & it won't able well support. Latitude, Lii Hen and VS Industry is play by Mr Koon & of course Mr Koon partnes players, & I assume Mr Koon also well connected to the bosses, Mr Koon can get first hand information before it reach to the public.
We all know stock if not play by a group of syndicate, it will stagnant even it below fair value.
The point here is...even we know EPS...but we only have 50% chance to forecast correctly the GROW prospect. This data, u need well connected to the bosses...they know where their company leading...

2015-08-28 13:26

Mr Koon, if I'm not correct, pls advise me, if not I take it as correct gueesing. :)

2015-08-28 13:28

timetokoon

Posted by Koon Yew Yin > Mar 2, 2014 06:41 PM | Report Abuse

Johnny, I have just sent another piece for posting. It is a lesson based on my experience which should be useful to all investors. I do not pick stocks based on P/E and NTA. http://klse.i3investor.com/servlets/forum/600047525.jsp

2015-08-28 13:36

timetokoon

Posted by Koon Yew Yin > Mar 5, 2014 11:44 AM | Report Abuse

alphabeta, As I said I am a businessman, I do know how to calculate all those figures which worry you as a professional accountant or fund manager. All I know is that the consortium of banks must make sure that the whole business of selling electricity to the Indian Government for 25 years must be profitable to Mudajaya and his partners. Otherwise every body including the banks will go bankrupt and all the Indian people will suffer without electricity. I will also lose my pants by owning so much of Mudajaya and all the poor students who expects to receive my scholarships will also suffer.

I did not bother to ask why Ng Ying Loong sold some Mudajaya shares because the amount he sold is so small. He owns 24.49% of the total issued shares of 543.2 million. He probably needs money to buy a new Mercedes or a holiday home in Switzerland

2015-08-28 13:37

Tom

That's exactly what I thought too......

Posted by cm > Aug 28, 2015 01:26 PM | Report Abuse

before i read the article...I know Mr Koon will talk what...EPS, Grow prospect...but some good stocks if not play by syndicate, it won't go up & it won't able well support. Latitude, Lii Hen and VS Industry is play by Mr Koon & of course Mr Koon partnes players, & I assume Mr Koon also well connected to the bosses, Mr Koon can get first hand information before it reach to the public.
We all know stock if not play by a group of syndicate, it will stagnant even it below fair value.
The point here is...even we know EPS...but we only have 50% chance to forecast correctly the GROW prospect. This data, u need well connected to the bosses...they know where their company leading...

2015-08-28 13:42

Forever

Be patient and wait until 1300-1400.

2015-08-28 20:16

cherry88

Tom, I give you a "LIKe"

2015-08-29 10:11

cherry88

I think we should "SELL" after those corporate exercise (like the bonus issue, share split, warrants) which no value creation but increase liquidity for them to sell without affecting the prices.....late comers will be caugth

2015-08-29 10:13

Forever

cherry88 you got the point. I give you many "LIKe"

2015-08-29 18:02

murali

calvintaneng Haha!

Interesting highlight on Murali! That's a really good joke. I can't help laughing!
27/08/2015 10:58

LOL. Specially dedicated to Big Gas Bag Calvintaneng

Koon Koon wrote on Jun 22, 2014 08:28 AM | Report Abuse

calvintaneng has written 5 comments out of the last 10. Please look at skyland's remark quote "skyland Calvintaneng seems like malaysia warrant buffet...all his share bought earlier all 100-300%...but dunno how true is it? 21/06/2014 21:14"

He sounds like a big gas bag, an empty drum makes the most noise. If he writes down all his current share holdings including Mulpha, I can easily tell you how successful he is.

Since he has given us the impression that he is a big shareholder of Mulpha. If that is true, I think he has to examine his track record to find out why he has failed in making money.

Four years out of the last 10 years, Mulpha lost money. The total net earning for the last 10 years is less than one sen per share. I will not buy Mulpha now until it shows a much better result.

There is a saying "In the stock market you can still buy the winning horse after the race". It means that you can still buy Mulpha after it has shown its fantastic profit.

2015-08-31 18:45

Jibaikoon

Post removed.Why?

2015-08-31 18:47

Jibaikoon

Jtiasa, mudajaya, xingquan...please go study back when he recommended and what is prices now! He failed in every single way

2015-08-31 18:48

uzi440

Post removed.Why?

2015-08-31 18:56

murali

Posted by murali > Sep 2, 2015 08:35 AM | Report Abuse X

Koon Koon, still waiting for your reply.....

Hope u dont turn into Super Ostrich now.....

Posted by murali > Aug 31, 2015 05:21 PM | Report Abuse X

Koon Koon, when did u realise that u were being kencing by the Indian Partner in Mudajaya's case?

When did u start disposing yr shares? I believe it may took a while since it was your second major investment at that moment

Have u ever thought of alerting your loyal supporters such as Johnny Cash etc when u found out the Indian Partner Scam? The price was around RM1.80 in Dec 2014. If u could highlight these to your loyal supporters in Dec 2014 (say after u disposed all yr shares n u are oredi safe), u still can save their ass...Now (RM0.90) is only 50% of the price in Dec (Rm1.80).

2015-09-10 06:57

murali

Where is your RM4 million donation to help young people to buy house? Another con program just like your so call RM20 million donation to TAR?

2015-09-10 07:01

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