THE INVESTMENT APPROACH OF CALVIN TAN
Why 90% Active Traders & Contra Players are GUARANTEED to Lose money while only 10% Savvy Investors are making money, Calvin Tan
calvintaneng
Publish date: Mon, 28 Mar 2022, 08:53 PM
calvintaneng
0 1,788
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.
Dear Friends of i3 Forum,
To-night we want to share Why 90% of Contra Players & Active Traders will Lose Money while only a small 10% will make money in the stock market.
And these are True Life Examples honed after several decades
Here you go
1) Frequent & active trading; especially playing Contra will cause 80% to lose money & 10% to break even
In years 1993 to 1997 during the GoGo years before the Crash of the Asian Financial Crisis I met Mr. Ng, my Stock Broker in KL
Market was hot then & everyday he was surrounded by 8 or 9 Very Active Traders
One day when I visited Mr Ng he suggested buying SH Chan at Rm20.00. That is Rm20,000 a lot. I told him I prefer buying less expensive share so I did not take up his Tip. But about 8 or 9 persons did. They all bought into SH Chan around Rm20 a share
Since i was very busy then (hardly got time to eat) I left them. But on the TV to my surprise I saw SH Chan moved up from Rm20 to Rm30. Then from Rm30 to Rm40. And from Rm40 to Rm50, then Rm60 & finally Rm70 as I watched with awe & curiosity
How much these guys would have made buying at Rm20 and now price has Rm70 for a Rm50 gain?
That is for every lot the profit is Rm50,000. 2 lots mean Rm100,000 profit & if they had bought 10 lots that would be a nice Rm500,000 profit
One fine day I paid them a visit to congratulate them.
So i said,"Hey! Mr. Ng, your Tips are very Chun Chun on SH Chan as price has surged up from Rm20 to Rm70 a share. All your clients must have made lots of monies"
I got a shock from Mr. Ng's reply, "No. None of these ones make any money!" Greatly surprised I asked further, "Why? What's wrong?"
He said, "Most of them don't buy and pick up shares. So after T plus 7 or more days they just sold contra"
They do make some profit along the way. But eventually all gains were eaten up by high transaction fees
You see, in those days each time there is a purchase the fee is 1.123%. If buy & sell contra = 1.123 x 2
= 2.246%
YES! every one playing contra will get to pay a fee of 2.246%
Today's one year Bank FD rate is only 1.75%
SO HOW NOT TO LOSE MONEY.
We have IB Banks everyday giving out Tips like
Buy X share at Rm1.00
Take profit at Rm1.10
If cannot and if price weakens to 90 sen then CUTLOSS!
What kind of stupid advise is the above?
Gain only set to gain 10%
If lost? Then expect to lose 10% as well
Think like this
If you follow these "Tips" to buy and take profit or cutloss
Then if you do twenty trades
Suppose by the law of 50/50 chance
In 10 trades you gained 10% each
And in other 10 trades you lose 10% each
By the law of average you neither win nor lose
BUT YOU HAVE DONE 20 TRADES, AND EACH TRADE INVOLVES BOTH BUYING & SELLING
THAT MEANS 20 TIMES BUYING AND 20 TIMES SELLING
SO EVEN IF YOU BREAK EVEN TRADING YOU STILL GOT TO BEAR THE LOSS OF 40 TRANSACTION FEES
IN THE END THIS IS HOW 80% OF ACTIVE TRADERS AND CONTRA PLAYERS ARE GUARANTEED TO LOSE MONEY
Most traders being short term look out for any Tips or any good news daily
And by reading the Media they will be harmed greatly
Especially those buying Palm Oil shares
The media will report
"CPO PRICES EXPECTED TO GO UP NEXT WEEK!"
So good news out. They get excited and will buy and chase Palm oil shares
Then another day another News
"CPO PRICES EXPECTED TO GO DOWN"
Aha! Panic Stricken they will sell
By so doing they will lose their shirts eventually
Of course out of them all there are 10% who will break even trading less frequently & a very very few (maybe 1% or 2% who can do well trading professionally)
THE MAJORITY 80% WILL LOSE MONEY DAY IN DAY OUT, YEAR AFTER YEAR
2) THEY ARE THOSE WHO TAKE SMALL PROFITS TOO EARLY. LATER CHASE HIGH AGAIN
Ever hear of this, "Got profit take profit first lah!" Later then buy back on retracement"
This was what happened to a Lady Bank Manager
Early in the Glove Superbull she bought Comfort glove at 70 sen & Topglove below Rm6.00
Then in April 2020 due to Covid 19 there was a fierce bull run in Gloves
Delighted with the gains she sold off Comfort glove before Rm1.00 & also Sold off Top Glove at Rm7.00 only to see both rise and rise until TOPGLOVE EVENTUALLY REACHED RM27.00
And at Peak Top Glove announced "Two Free Bonus for One share held".
She being a Bank Manager scored A+ in her Maths & many As in other subjects as well being Straight As Student
But Alas! Investing is another matter altogether. She just could not resist buying back Top Glove at the lofty price of Rm27.00 (Sold at Rm7.00) only to see Topglove After Ex-bonus crashed below Rm2.00
THIS IS HOW NOT TO SELL TOO EARLY AND HOPE TO BUY BACK ON WEAKNESS LATER WHICH NEVER COME UNTIL TOO LATE.
3) BUY AND HOLD TIGHT TIGHT OR SIT TIGHTLY & DOING NOTHING IN BULL RUN TIME IS BEST
Now also in year 2020 I bought Supermax at Rm1.73. Supermax moved to Rm2.00 then lingered at Rm2.50 for quite a while
Finally Supermax reached Rm3.00 with some effort. And then Supermax reached Rm4.00
A kind friend called me to sell Supermax at Rm4.00 to buy back again on retracement as he was so "sure"
But i held on. Then Supermax reached Rm5.00
Guess what? I received an urgent phone call telling me I "MUST TAKE PROFIT" in Supermax at Rm5.00 as price expected to fall back
He has kind intention but i told him, "It is ok as I don't have too many Supermax shares so it is ok to hold"
Supermax turned supersonic and powered from Rm5.00 to the peak of Rm24.44 (of course not in a sraight line as there were ups and down interspersed with times of euphoria & bouts of fear). I sold off all Supermax as it retraced before dropping below Rm18 for a 1,000% gain
SO WHAT IS THE MORALE OF THIS LESSON?
THE LESSON IS THIS
WE ARE NOW IN PALM OIL SUPERBULL TIME
Cost of Cpo Production for most is Rm1600 a ton
So if Cpo at Rm3,200
Profit is 100%
If Cpo is Rm4,800
Profit is 200%
If Cpo is Rm6,400
Profit is 300%
Note: April 2022 Cpo future is still above Rm6,500 today
Many are convinced that we are now in Palm Oil Superbull run time as Cpo prices will hold up far into end of 2022 & also into year 2023 as all the signs are there
But KNOWING & HOLDING FIRMLY OR SITTING STILL AND SITTING TIGHTLY LOOKS LIKE "IMPOSSIBLE" TO TRADERS WITH ITCHY HANDS
That is why only the very small 10% who can wait patiently will eventually earn all the money the rest are losing
AS THE STOCK MARKET IS AN EFFICIENT DEVICE TRANSFERRING WEALTH FROM THE IMPATIENT TO THE PATIENT
See
WARMEST REGARDS
Calvin Tan
Please buy or sell after doing your own due diligence or consult a good remisier who cares for your welfare
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Discussions
Be the first to like this. Showing 42 of 42 comments
soon the Russia/Ukraine war will be over as Russia cannot keep on spending huge amount of money for the war to prolong. Ukraine will be split into two countries either east ukraine and west ukraine or North/South Ukraine. Superbull run of plantation counters will end in 2 weeks
2022-03-29 09:24
no leh
Sunflower oil only one of 4 major vege oil
Right now Ukraine short window of planting will be over soon and lacking fertilizer plus many farmers still stranded in Poland will cause shortfall in planting sunflower
This shortfall once window of planting season over cannot be replaced
2022-03-29 09:30
Canola oil crop failed in Canada last summer and this year Too much rain in NSW, Australia impacted quality of canola oil
as a result Canola oil spiked up from Usd600 to Usd1,145 and up by over 85% above world record
There won't be any canola until end 2022 harvest which will also be impacted by la Nina drought
As such if we Benchmark Cpo price by another 85% rise from Rm4000 world record it should be above Rm7000
2022-03-29 09:34
Does palm oil companies sell on spot price? or sell Call contracts to lock in profit at certain price?
2022-03-29 09:57
I guess this is why my uncle wasn't doing well in share market. One of the reason I was staying away from share market was also partly because of him not earning much, possibly losing money.
2022-03-30 11:42
generally people want to earn fast money in share market
so they only like hot popular liquid stocks and avoid cold value stocks
Most remisiers are also not too happy if their clients buy illiquid stocks and little trading. Since they earn from frequent tradings they will point their clients to hot liquid stocks
The more people trade the more remisiers will earn
This works against the long term welfare of their customers
Many who failed later blame the stock market and think it a no no
And remisiers after losing clients will constantly have to look out for new ones
Now good remisiers will care for their customers long term
though earn little in beginning their profits will grow if their customers prosper life long
2022-03-30 11:56
this is a real example
I have two remisiers
one in Kl whose clients are punters and traders
after 30 years he had hundreds if not thousands of customers
very sad
98% of his customers are losing money playing with hot inferior stocks
today he has less than 3 or 4 active customers
earn just enough to survive and some time not even enough
2022-03-30 12:00
I got one remisier in Johor
this remisier is more careful
so retention of customers much better
2022-03-30 12:01
bursa is a low volume sometimes non volatile market sadddd wan contra this is not the market...only bull time can once in very blue moon then have to cut already stop game if continue wait DIE
2022-03-30 16:47
Why 90% lose ? because they follow a Sifu from the 90% category la xD
2022-03-30 18:53
Value investor 88
How high and how long palm oil prices can be sustained ?
This is a very important question
By studying the world weather condition, the ongoing war in Ukraine and the shortfall of other vege oil plus the price of crude oil combined we might get some clarity
1. last summer canola crop failed in Canada and in NSW Australia canola crop quality was impacted by too much rainfall
as such canola oil is now at new world record at Usd1120 above it's previous record of Usd600
Up by over 80%
if we Benchmark Cpo by another 80% increase from Rm4000 then it should be above Rm7000
to be continued
2022-03-30 18:54
with ongoing war in Ukraine there are two implications
1. War has damaged sunflower seed crushing factory and it's ports are blocked so sunflower oil export is very limited
plus now is Spring time planting season and the difficulty of securing needed fertilizer plus many farmers are refugees in Poland planting might be very limited and concentrated in food crop for survival and less on cash crop like sunflower
That means year end harvest of sunflower will be reduced(if any) and next year will see shortfall of Sunflower oil
as such the palm oil bull run can stretch into mid or end 2023
2022-03-30 19:00
the embargo of export on Russia has pushed up crude oil
this will spur biofuel use from soyoil, sunflower oil, canola oil as well as palm oil in Indonesia
Plus this year in USA more fossil fuel refineries are being converted to biofuel
so more soybean will be taken up for biofuel
this will help elevate palm oil prices
2022-03-30 19:04
This year soybean harvest from south america is impacted by too much rain in Mato Grosso and too dry in parana Brazil south
Paraguay is suffering worst and Argentina also did poorly
these will cause shortfall
and palm oil will stay strong in prices
2022-03-30 19:07
in Malaysia we see the lack of fruit harvesters have seen shortfall in Ffb collection and that reduced palm oil production as well
2022-03-30 19:08
All these are compounding factors that will sustain palm oil prices above Rm5000 to Rm7000 range till June 2023 and possibly till end 2023 and beyond
Since Cpo cost of production is between Rm1600 to Rm1800
even at Rm5000 the profit is very high since a long long time in coming
So we stay invested and hold tightly for as long as Cpo is elevated
who said what?
Thplant Mr Megat Rizal said even Cpo at Rm2,500 Thplant is making money as cost per ton was Rm1,465 (higher a little due to fertilizer increase)
2022-03-30 19:14
Kmloong people said Cpo at Rm3000 is already very good as profits will be good
2022-03-30 19:16
Simedarby plant people are bullish last year saying at least Cpo price will be sustained at Rm4200 by first quarter of 2022 which is fulfilled but much better at above Rm5,000
2022-03-30 19:18
To Mr Megat if Cpo price can last at Rm5000 till end 2022 will be Very good indeed
2022-03-30 19:20
Netflix price collapsed
later all Tech stocks will drop by 60% to 80%
Run to safety of palm oil now
2022-04-21 15:13
90% of the mkt players lose moni bcos they no got come here n follow the advice of the experts here in i3 investor.
2022-04-21 20:27
most cpo counters trading in range of 10-16 pe ratio.... with likes of cepat and sarawak in the low ranges and ioi and klk in the high ranges..... which will prove the better?
2022-04-22 01:07
many small and mid cap plantations counters are trading at well BELOW 10X PE of 2021's earning, eg SOP (7.2x) , Taann (8.6x) , MHC (6.2 x), Cepat (6.9x) , Swkplant (6.4x) etc.
In the likely event of CPO averaging $6,000 pmt for FY2022, the forward PE of the many small and mid cap plantation may just be 4 - 7 X only !
Huge room for plantation share price to surge.
2022-04-22 07:01
yea the 10% need to keep write article tipu ppl buy. or create telegram group tipu more ppl to buy.
2022-04-22 08:18
If u follow General raider the possibility of success is more than 70% but your investment horizon must be longer term above 3 yrs loh!
2022-04-22 08:24
in bad times buy big cap palm oil stocks and avoid small caps
but in bull run like now go for small cap palm oil better
2022-04-22 09:15
in bad times buy big cap palm oil stocks and avoid small caps
but in bull run like now go for small cap palm oil better as they will outperform all by more upside overall
2022-04-22 09:17
ok what is the logic
in bad times buy well capitalised big cap
in good times buy small cap?
Answer:
Like this
During bad monsoon season off Trengganu the weather is bad only Big Cruise ships are safe while smaller boats will topple over
So in bad weather stay safe in BIG SHIP
IN GOOD TIMES SMALLER BOATS CAN NOW GO FISHING
IN BAD TIMES THEY CANNOT DO ANYTHING BUT STAY ON LAND TO DO ODD JOBS OR REPAIR NETS
UNDERSTAND?
2022-04-22 12:19
Actually in good time or bad time , always buy good profitable quality companies which is managed by people with integrity, no matter whether small & big cap for sustainable long term outperformance loh!
Do not be swayed from this important objective no matter whatever circumstances loh!
2022-04-23 11:52
Haha why so late on plantations ... After the War , price is Peak .. Before the War , price is expected Good until May...
2022-04-23 18:40
Stray mouse
Palm oil SUPERBULL will last for all of 2022 and well into year 2023
By then there will be new palm oil millionaires , Multi Millionaires and even Palm oil Billionaires like Robert Kuok and Remisier King Peter Lim of Singapore
So better come back now quai quai from your wandering days
2022-04-23 18:46
Kind hearted Calvin always kind to his enemies and want them to do well
So better listen to Calvin for once for your own good
2022-04-23 18:48
Remember stick to good stocks which has only malaysian plantation exposure which are not affected by export ban which are;
1. Cepat
2. Hapseng
3. Kmloong
4. MHC
5. Taann
6. swkplant
7. Wtk
8. Bplant
2022-04-24 08:19
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calvintaneng
hokkien says
puak kiau
puak kiau
su liaw liaw
translated it means
play contra
play contra
lose everything
2022-03-28 21:32