My Golden Rule for Share Selection - Koon Yew Yin

Koon Yew Yin

Publish date: Mon, 30 Nov 2015, 09:45 AM

Many friends and acquaintances frequently ask me how I made so much money from the stock market. I have been using this golden rule for share selection:

The company must be able to make more money this year than last year by looking at its profit for the last few quarters and provided it is still selling at a reasonable P/E ratio. For most cases I consider P/E 10 is cheap enough or acceptable. But for leaders of the industries, I am willing to buy at a higher P/E ratio.

I need only to wait for the next quarter profit announcement to see the share price go up because an increased profit announcement is the most powerful catalyst to move share price. When the company announces its annual result of an increased profit, the share price will surely go up because most clever investors who are watching for quarterly announcement, will rush to buy the share.

The following shares comply with my share selection golden rule.

Can One 1st Q. 10 sen, 2nd Q. 14.77 and 3 rd Q. 14.28 EPS selling at Rm 4.35

Focus Lumber 1^st Q. 3.22 sen, 2^nd Q. 7.80, 3^rd Q. 9.35 EPS selling at Rm 2.90,

Thong Guan 1^st Q 4.4 sen 2^nd Q 6.75 , 3^rd Q 10.70 sen EPS, selling Rm 2.65

Mieco Chipboard 1^st Q 1.53, 2ndQ 3.21, 3^rd Q 2.94 sen EPS, selling Rm 1.10

Many readers frequently complain that I only recommend shares when they have already gone up in price and I wanted to sell so that they can buy. As you know I have been recommending Latitude, Lii Hen and VS for a long time when their prices were much lower but all my critics did not buy. Those who have bought are laughing to the bank.

Now the prices of Latitude, Lii Hen and VS have all gone up a few 100% within 1 or 2 years, nevertheless, they still comply with my golden rule. I believe their prices will continue to climb. You can verify what I said above by looking at their EPS for the last few quarters in Bursa Malaysia.

On the last trading day 28^th Nov. 2015, both Latitude and MPI reported about 29 sen per share and both their share prices went up about 30 sen each.

If you are not a novice, you should use margin finance to leverage your profit. As long as you are confident to make more than the 4.8% pa interest rate, you can make more money with margin finance.

I hope some readers will find some new shares which comply with my golden rule and post their findings here for the benefit of all readers.

My intention of posting this article is to teach people how to make more money from the stock market. Unfortunately, there are a few habitual critics who want readers to think that they are clever in making stupid comments. They must realise that most readers can see how stupid they really are and appreciate my writings.

As I have a lot of the shares I mentioned above, I am not asking you to buy any of them but if you decide to buy, you are doing it at your own risk.

Discussions

15 people like this. Showing 23 of 23 comments

DarKLoRD888999

Hi mr koon can share about Pohuat? Thanks you a lot... Cause in my mind you got bought it

2015-11-30 23:33

Angie1996

Thank you Mr. Koon for posting the above article. I'm sure many have benefitted from your vast experience in share investment.

2015-11-30 23:39

xyxy8

thanks for sharing.

2015-11-30 23:42

chrisyap

oh oh flbhd ada ummph already !

2015-12-01 00:05

rosetan

Thanks, Mr Koon. Your sharing is much appreciated.

2015-12-01 08:55

skyz

so this are his SELL queue. still not yet wake up from Jayatiasa and Mudajaya incident by this old fox?

2015-12-01 09:22

LATO' SELI

Thanks Mr Koon ; i read most of your posting - as a beginner i enjoy reading it & will try my luck .
Keep posting your view for investor like me to learn

2015-12-01 09:25

tftey

Agreed with your rules. Simple but works. Out of your four shares, I prefer Canone and FL. Thank you for your good article.

2015-12-01 11:17

bglim

Hi Mr Koon, Thank you for sharing your experiences. :-)

2015-12-01 12:48

dnn78

Promoting margin finance again....good good.

2015-12-01 13:10

Pusher_Punisher

thank you for sharing

2015-12-01 13:15

cheeseburger

you dun need to be very rich only you can start trading. The wonder of share market is that everyone can participate for small sum to large fund. Is the profit percentage count, not the amount.

2015-12-01 14:26

Kevin Wong

Interesting sharing, thanks Mr K, and congratulations to those who managed to make $$$ from their investments, well done!

All the best, and good luck everybody!

2015-12-01 14:55

dianaooi

Dear Mr Koon, please keep on educating us and keep the blogs coming. Do not let a few skeptical critics with their rude remarks stopped you from believing that you are helping the public to learn how to invest from you. You can just brush them aside and don't waste your time getting frustrated over them. There are many people out there like me who wants to learn from you. A lot of average Malaysians do not have enough disposable income to help the poor, as we just earn enough to cover our own expenses. Hopefully through investing in shares, we can be like you one day, to contribute and help the poor and less fortunate. You are an amazing role model.

2015-12-01 15:04

Yeow Gary

Thanks Koon, That the fundamental of Value Investing , I been praising it for 2 years now and my return is 38% over 2 years , i am happy to invest and let my fund grow

2015-12-01 17:28

pputeh

Thank you Mr. Koon for taking time to share yr experience and knowledge in share investing. Do not be discouraged by the few who have differing views. Please keep yr articles coming esp to us novice who find it a joy to read

2015-12-01 21:58

zx08

Mr.koon, recently u just bought in EG. Any comment on EG. I love to hear from u regarding EG. Can it be next VS?

2015-12-02 07:17

yangkwang

Thank you Mr.Koon, your thoughts n sharing r full of wisdom and sincerity.
Always interesting and informative to read! Keep it up SIR!
A BIG THANK YOU!!!

2015-12-02 11:55

BUCKBUNNY

/mr koon,,is Inari 0166 meet your requirement?do you hold any,,if not?why?

2015-12-02 12:40

skywalker72

Dear Mr. Koon, i consider myself a new comer due to for the past 10 - 15 years i only rely on tips rather than doing my own homework! Only after a few painful lessons i started to change and learnt it in a very hard way! I appreciate most of the investment guru here and in any other blogs that really shed me some light and i totally salute your unselfishness sharing!

Recall there is another guru commented in other article (2013 article) EV/EBITDA will be a better indicator as compared with PE. For a cash rich company and with high retain profit, usually EV/EBITDA is lower than PE, and vice-versa.

On P/S ratio, usually if it is below <1.0 it is consider undervalue, right? However, i found some debt rider or companies with an unstable financial some has P/S <1, will that still consider a good counter for long term (since its indicate undervalue)? However, for DIGI, it has 5.67, does it mean it is very much overvalue?

Your guidance and comments is appreciated.

2015-12-02 20:36

DreamEmperor

A load of bollocksy rules ... They all don't work ...

2015-12-02 23:48

richard88

KYY selling mieco? Drop non stop?

2016-01-03 10:56

AnkKmpg

I'm a late comer to your blog. Should have read your articles much earlier.. Thank you very much for your pearls of wisdom...

2016-01-14 05:52

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