THE INVESTMENT APPROACH OF CALVIN TAN

'THE GREATER FOOL THEORY By Dr Neoh Soon Kean (Excerpts from STOCK MARKET INVESTMENT), Calvin Tan comments

calvintaneng
Publish date: Thu, 24 Sep 2020, 09:43 AM
calvintaneng
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Hi Guys,

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)

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 & others

IFCA was pumped up from 7 sen to the lofty peak of Rm1.87 due to the GST Hype

It later went 3 times limit down from Rm1.87 to below 50 sen wiping out sorchai, sotong, water fish, ikan bilis, sardines & what not.

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. 

 

Right now there are many new fangled perils of New Glove wannabees theme

Vaccines theme, PPE theme - MANY MANY GREATER FOOL STOCKS THAT WILL BANKRUPT ALL ITS PARTICIPANTS

 

More articles on THE INVESTMENT APPROACH OF CALVIN TAN
Discussions
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cheahsk

Calvin Tan, what happen to Maybulk??

2020-09-24 10:24

AlIGATO

NETX?

2020-09-24 10:34

scenery

Come on lah the greatest conman sifu in i3,

until now you still dare to come out and lie,

you really shameless...

2020-09-24 11:33

SureWin1Woh

Hi bro, where have u been lately? Long time no see your articles.....

2020-09-24 11:42

amateurJR

Haha What an article.Not bad

2020-09-24 16:31

Aimhigh

Keep writing Calvin. You surely help us understand the market and ourselves better!

2020-09-24 17:02

apolloang

no lah sell one show us buy one never show us.must be someone bought then must pump so only can dispose all to the ikan bilis.they know ikan bilis only green will chase

2020-09-24 17:19

apolloang

netx no pump and dump so is butaland…..hehe

2020-09-24 17:20

amateurJR

Haha how about texchem?

2020-09-24 17:38

Kukuman

How cheap is cheap
Is glove theme is belong to greater fool theory? No. Zil. Not yet. You are the greater fool if you believe that. Will EPF is the greater fool suddenly became substantial shareholder to glove company? God helps you if you believe

2020-09-24 19:57

Solidrock

What about Nylex?

2020-09-25 01:12

Zuliana

Sifu Calvin, you are my rock that I depend on.
Keep it up... my sifu.

2020-09-25 05:53

lextcs

what happened to the fiberization story n netX? like what u said...many many greater fools will bankrupt all its participants....im afraid netx already done that.

2020-09-25 08:31

lextcs

no good writer writes a dull story and expect the book to be on the NYT best seller. No one likes to read ;- "today I woke up, brush my teeth, wash my face, put on my makeup, go to jamban, bla bla bla…" Alas! people wants to hear exciting stories like how much billions are going to be rolled out for the NFCP deals. who gets who who gets what knot. good writers gets paid hamdsomely I must say...they are like frogs actually...writes as their masters command them to write. But of course CTE is different lor...he is writes for himself...or is he?

2020-09-25 08:38

lextcs

there's another genuine glove manufacture. But its listed in ASX. located or rather hiding far away in a district called Beranang in Sgor. 4 lines producing millions of nitrile gloves. CTE, why don't u make a com research n write up a jolly good story of this gem in the making.

2020-09-25 13:09

lextcs

then there is this Mercator Medical listed in Poland....factory in Thailand...price now is a mind blowing 411++ polish dollar. Up from 6.00 only 6 months ago.

2020-09-25 13:12

lextcs

So guys if you want a good play in the gloves sector again...u may n I repeat U MAY want to look @ Voltage Ip Ltd 0.085 oz cents. In a super strong wind even kangaroos can FLY!!!

2020-09-25 13:16

stockraider

Don over look Netx mah...it is trading at net cash value now mah...!!

Opportunity buy loh...!

2020-09-25 19:50

apolloang

komark got pump and dump?

2020-09-25 19:56

Michael Kwok

Ivory got Ong.Only 14 cents .NTA 79 cents.Call buy lah.Calvin is tht ok.....

2020-09-25 20:42

Michael Kwok

Tq.I use some of ur approach.By the way,I'm former Anzo at 3 cents.I think u know I promote Anzo like hell last year.No regret.Im learning a lot from here.

2020-09-25 21:18

Foker

Dr Neoh? Who cares. You can't be Benjamin graham in Malaysia. Here, the stock market is lousy.

2020-09-25 22:09

apolloang

ivory no PN17 yet ar? the main office got 3 lifts but only 1 operating.boss no money to pay for maintainence since MCO

2020-09-25 22:38

stockraider

IF U CAREFULLY LOOK AT SOHAI 3iii LOGIC LOH ??
THEN U UNDERSTAND HOW STUPID LOH...!!

"If the company is raising cash to develop NEW projects and NEW businesses (high uncertainties and high risks).
In general AVOID ALL COMPANIES INVOLVED IN RIGHT ISSUES".

IF U LISTEN TO THIS SOHAI 3iii, U WOULD HAVE TOTALLY MISSED WORLD BEATING RETURN STOCK LIKE AMAZON, FACEBOOK & GOGGLE LOH...!!

IT IS SIMPLE MAH....DURING INFANCY STAGE...HOW COULD U EXPECT PROFIT INTIALLY LEH ??

U NEED TIME TO GIVE BABBY TO GROW LOH...!!

U ASK YOURSELF A LOGIC QUESTION WHY PEOPLE PAY A PREMIUM & SUPPORT GRAB FUND RAISING DESPITE STILL LOSING MONIES LEH ??
ANSWER GROWTH PROSPECT MAH...!!

COMING BACK TO NETX U R PAYING 21 SEN FOR THE BUSINESS WITH 25 NET CASH..WITH GROWTH PROSPECT....DO U NOT SEE OPPORTUNITY LIKE GRAB LEH ??

U MUST PUT SOME INVESTMENT IN TECHNOLOGY COMPANY LIKE NETX LOH..!!

ON TOP OF IT, U PARTICIPATE IN A VERY ATTRACTIVE RIGHT ISSUE MAH...!!

2020-09-26 12:15

Michael Kwok

Please,made a time horizon ex 6-12 month.If not people will confused.Maybe also percentage of return.

2020-09-27 20:51

Mikecyc

Post removed.Why?

2020-09-28 11:55

Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

>>>>>>


calvintaneng I say before and I say again

Last time Calvin promoted Kbunai at 5.5 sen
Then Kbunai fell to 5 sen and many cry father cry mother
Then Kbunai was taken private for 100% gain

So wait

Netx still an inspiring work in progress

Even Facebook and alibaba needed lots of funding in early days

Netx will yet spring a surprise in the future
26/09/2020 3:09 PM



>>>>>>>{




It is stories like the above that make conman calvin same as dishonest raider. Not credible.

2020-09-28 12:07

Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

>>>>>>>

Posted by calvintaneng > Sep 28, 2020 5:09 PM | Report Abuse

See the two most incorrigible spammers called 3iii and Mikecyc

Never warn people in utusan, london biscuit which gone bankrupt

Netx still an inspiring work in progress

Calvin happy to take up Netx Rights issue

As for Netx it is still a new start up like Alibaba and Facebook in early days needing funding

Now see how Calvin warned people in mmag, Bintai, myscm, parlo, inix, anzo, pdz which none of them these two low life lapsap 3iii or Mikecyc dare go warn

>>>>>>



conman calvin is not credible. Conman shared stories of his friends who lost their fortunes in the 90s. Did conman calvin save his friends? Obviouly no. Today, conman calvin shared their stories depicting his friends as fools. In other words, among them, conman calvin was smarter.


Spare us the delusion, please.

2020-09-28 18:06

Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥

>>>>>>>


Posted by calvintaneng > Sep 28, 2020 6:25 PM | Report Abuse

Stupid 3iii totally missed the Ogse bull run

Also missed Glove bull run especially Supermax

Now Nfcp still ongoing

Netx shall rebound

>>>>>>>>





Selective highlighting his gains.

Who sold 10 houses end of 2019?

Which counter (hint: N...) he invested into?

Ah yes, conman will be selling more houses to take up the RI.


Incredible indeed. :-)

2020-09-28 19:17

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