THE INVESTMENT APPROACH OF CALVIN TAN
'THE GREATER FOOL THEORY By Dr Neoh Soon Kean (Excerpts from STOCK MARKET INVESTMENT)
calvintaneng
Publish date: Tue, 07 Feb 2017, 11:18 AM
calvintaneng
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Hi Guys,
I have An Investment Approach I which I would like to all.
I have An Investment Approach I which I would like to all.
This is an excerpt from STOCK MARKET INVESTMENT In Malaysia And Singapore by Dr Neoh Soon Kean, the Benjamin Graham of Malaysia. Year of printing 1985
THE GREATER FOOL THEORY (Page 67 Last paragraph)
"URGENT WARNING FOR ALL i3 FORUM MEMBERS WHO HOLD HIBISCUS ABOVE 50 CTS!!
LAST QUARTER HBISCUS RESULTS WAS ARTIFICIALLY SUPPORTED. SO NEXT QUARTER RESULT WON'T BE SO KIND.
BETTER SELL OFF ALL HIBISCUS BEFORE INSIDERS START DUMPING!! THEY HAVE HUNDREDS OF MILLIONS OF CHEAP HIBISCUS SHARES THROUGH PRIVATE PLACEMENT.
ONCE THEY START DUMPING IT WILL BE TOO LATE TO ESCAPE!!!
SO SELL WHILE THE SELLING IS GOOD (Calvin comments)
This is a theory that is usually very popular during the immature phase of a stock market's development. More of the followers of this theory are not aware that the trading system which they believe in goes by this peculiar name. From the stock market's behaviour during the past three booms, we can say that many Malaysians/Singaporeans appear to be strong supporters of this theory. This theory was very popular in the US during the 1920s but since then, it has fallen out of favour even though pockets of true believers still appear from time to time.
In essence, believers of this theory hold that stock prices are not dependent on anything tangible but rather dependent on the continual appearance of more people who are willing to purchase the stocks at an even higher price {these people are the so-called 'greater fools'). Thus, it neither matters what price one buys a stock nor that the stock's price is ridiculously high by any normal standard of measurement. Thus the believers of this school of thought hold the view that whatever stock one buys can always be sold at a higher price because there will always be greater fools than themselves. Thus, it is fine to buy MUIB at $24.00 because there will be another person foolish (or brave) enough to pay $26.00 for it. Believers of the greater fool theory never for a minute think that the supply of fools will be exhausted and that they may be the final purchaser before the crash.
During every stock market boom, there are usually a large number of believers of the greater fool theory and some of them actually make a lot of money on the way up. Some of them get out in time by finding some greater fools to take over their hot potatoes in the nick of time but many find that they themselves end up as the greatest fools because there is no one else willing to bid up the price anymore. Needless to say, the Greater Fool Theory is a much discredited one among academics and most professionals. But it still finds many adherents. Why is this so? Everyone is having too much fun, (that is, making so much money) on the way up that they do not want to leave the market. George Goodman, writing under the pen name of 'Adam Smith' has this wonderful parable to explain how people are caught up in the web of the Greater Fool Theory and do not know when to get out.
We are all at a wonderful ball where champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment, terrorists will burst in through the terrace doors, killing many and scattering the survivors. Those who leave early will be saved, but the ball is so splendid that no one wants to leave while there is still time. Everyone wants to enjoy one more dance and sip one more glass of champagne. So everyone kept asking: "What time is it? What time is it?" We look around and find that all the clocks have no hands.
This may be a surrealist's way of describing the stock market but Goodman's parable has a great deal of truth in it. Of course, we know that in every speculative boom of the past, the 'terrorists' did come when most of the guests were still enjoying themselves at the ball. As 'Adam Smith' implies, nobody knows when a speculative boom will end but end it must for that is the rule. At every speculative boom, not many of the small speculators escaped with their gains made on the way up. Most of the smaller speculators known to me eventually lost all their gains and much more than what has been gained.
Some even lost a large part of their original capital. Thus on the next occassion when you happen to find yourselves at this type of a ball, try to leave early. The problem is that once one is caught up in the fun and games of the party, one is apt to lose touch with reality. Chances are that believers of the Greater Fool Theory will hang on to the bitter end, only to be slaughtered. It is better to miss a few dances or a few glasses of champagne than lose one's life.
In concluding this section, an anecdote about Bernarde Baruch, generally acknowledged to be the greatest stock traders of the 1920s is related. He was once asked how it was that he remained so rich while many of his contemporaries had declared bankrupt. This was his splendid answer: 'I always sold too early.'
Calvin comments:
This greater fool theory could be applied to stocks like IFCA, Sumatech, VSolar, XOX & others
I have people telling me I missed IFCA on the way up. Calvin does not go gambling in casino Greater Fool Type of Stocks. And how they missed a fortune on the way up due to my warnings. And how they finally lost all their 'profits and all their capitals' for overstaying. Now I am not here to tell you how to punt or gamble. I am here to warn of a Greater Fool Stock.
All will have to be responsible for your own actions in investment.
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Discussions
2 people like this. Showing 28 of 28 comments
Hi guys,
I have done my best to warn and warn.
See you all later
Going to Booming Iskandar now!
btw
My conscience is clear now. Anyone going bankrupt later chasing hibiscus don't blame Calvin, ok?
Bye bye for now!
2017-02-07 11:27
Calvin Tan mind your own business, no need go around rescue people
People are fine without your advice
2017-02-07 12:10
Yes 3iii,
You are welcome. Actually you are a fundamental investor. I am happy to note that. Please contribute your best ideas. And also be at peace with StockRaider our friend. We might differ in approach but out end is investment with margin of safety. So stay and help. So many newbies are gamblers.
2017-02-07 13:15
u know why the hibiscus can run until today? is because the eps is support by the new company which acquired by hibiscus, thats why the company start to generate the profit with the cost of one barrel usd17 cost and sell as usd 53. U said insider throw, if the eps can be maintain why does the people need to throw, u just using the common sense of low get high throw to hit the long term investor without any fact, like the inari also fly from 0.3 until bonus split today
2017-02-07 14:49
Calvin,
The young master / 2 time championships said Sendai a darling stock with tp 1-3 are 0.65 to 0.90. Support at 0.65. He dares to give all the figures for ppl to see the actual result. Where as you just give a general statement Sendai is over exposed and a sell now....
Maybe is a young n daring vs older n wiser (or out of touch) but 2 opposite calls cannot be both also correct (both wrong or one of you is wrong)
http://klse.i3investor.com/blogs/stanleysim/115307.jsp
2017-02-07 16:25
Calvin, congrats. Australia is a nice place to practise medicine. 20 of my classmates of 124 migrated there without regrets. Cheers.
2017-02-07 16:59
Aiya, both also cari makan, but with different approach. So give face a bit, cannot straight away call them crooks or conman. Give them a chance to prove and explain.
But Sendai up 0.025 today to close at 0.740. Going for young master tp2 target. Those sold following Calvin call today will be heartache or not ?
TP1 = 0.65
TP1 = 0.75
TP3 = 0.90
young vs older
1:0
2017-02-07 17:10
Calvin,how can I contact you?I would like to talk to you about properties
in JB.Thks.I can be contacted at yjrcllt@yahoo.com.Thks
2017-02-08 05:29
this one i agree with calvin, calvin have been making bad calls for years, this one you guys better sell hibiscus, not gonna make much money
2017-02-08 10:33
Calvin, happy Chinese new year!
You are not mad after so many people attack you, so kind of you.
You cannot alter one's destiny with advice. 銅油酲始終裝銅油。The greater fool is the greater fool because they are reluctant to learn....those who are eager to learn can evolve after they paid the school fee....
Also, you cannot just talk like that shooting empty, you must provide solid information on why the stock is a bad choice.
2017-02-08 11:27
U ask sell rgb at 31.5c now rgb 33.5
U ask sell sendai at 72c now sendai 75c
Calvin here are u? Why u so holland sifu?? Why WHY WHY
2017-02-08 16:10
There are 3 types of fools in the market, so you speak. The first one is the new fools, the second the old fools and the last, the regular fools! Which type of fool do you belong?
Sorry, it is a joke.... please do not be offended!
Have a happy Thaipusam holiday! :)
2017-02-09 10:22
The False Hope in hibiscus
1) Crude oil production is still in early days. Will it generate enough income to justify share price rise.
This was the same trick used by syndicate in Ifca. Ifca hype was GST from housing developers. Totally overblown to trap sorchai!
2) The Private placement has bloated hibiscus total shares over 1 billion. Lots of dilution for little miniscule profit. Divided among all paid up shares the EPS is insignificant.
3) Be careful of insiders who got hibiscus shares at dirt cheap prices DUMPING ALL TO Sorchai unawares!
4) Hibiscus price has run far ahead of fundamental. Time to sell.
2017-02-09 19:12
The fact that Aramco is set for listing by S.A. government tells something. It owns the largest oilfield in the world. Why the S.A. government wants to sell a portion of its shares to the public?
Oil might not fetch those fantastic historical prices as before. i) shale oil formations are plenty in US, Canada, China & Argentina. 2) the introduction of cars running on electricity.
"The stone age ended not for the want of stones & the oil age will end before the world runs out of oil." These prophetic words spoken by Yamani in the 1970s is becoming a reality.
2017-02-10 11:39
calvin, if i only want to add one plantation stock into my portfolio, which one would u recommend?
2017-02-11 15:28
Posted by lizi > Feb 11, 2017 03:28 PM | Report Abuse
calvin, if i only want to add one plantation stock into my portfolio, which one would u recommend?
I think I got 2 for longer term
CBIP & DUTALAND
Both got VERY BRIGHT FUTURE.
Really cannot tell which will come out first.
Dutaland is selling a Very Deep Discount to Valuable Real Assets
CBIP has the world class Modipalm which is unrivalled.
So I will put it 50/50 for half of both.
So you can choose Dutaland as Asset Play
Or choose CBIP for future strong growth
2017-02-11 15:35
great, let me study on both of them and see if i could take position next week. tq.
2017-02-11 15:49
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Post removed.Why?
2017-02-07 11:23