Your definition is not wrong.

Difference between investment and trading?

An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.

https://choivocapital.com/2018/11/28/differentiating-between-the-investor-and-the-trader/

I wrote something on this a long time back. Do note i was a lot more arrogant and brash back then.

Hard to believe i know.
====

Icon8888

As you correctly point out, if things turn sour and you need to cut loss, you are a trader. Because you are not giving the stock time to rectify the problem (or their fundamentals simply do not allow that to happen, even after 100 years).

The first sentence incorrect. Investors (my definition) expect the price to go up within short term of let’s say, one to two years (due to stock pick based on Uncle Koon golden rule), but in the event things turn sour, the stock must be good enough to be held so that can ultimately recover. The holding period should not be more than 5 years (or you might as well crystalise the loss. Don’t kid yourself that “it is just a paper loss”, when you need to wait for twenty years）

The thought process i illustrated in that post/research, got me a few hundred thousand investment from 2 new investors.

And these 2 investors, are sophisticated value investors, they just happen to prefer spending their free time doing things other than reading thousands of annual reports.

I think it was a good trade.

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Connie555 He cannot lar, he flip roti canai better...a while say he won't share out his 5k analysis on RCE then after that also post....know how to condemn people's analysis saying people collected only post their article, but while he is comdemning other people he is also owning Rce yet posting his 5k RCE analysis....what kind of people is this?

I think it is better for him to be a politician than become an investor because politician also always flip roti canai...period.
20/01/2019 22:52

Those who know QL and am rational, will sell QL and buy CPFoods then.

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10154899906070843

But I will sell when the story changes, which is why buy and forget is stupid. Those who don't know ql compare it to pos Malaysia. Those who know ql are looking to the growth patterns of a cp foods.

Not buffet buy. Ted Combs buy.

Why did he buy? He considered the price to be lower than all the future cash flows discounted to present values.

Thats it.

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10154899906070843 But again this is not a promotion or a push to ask someone to invest in a pe50 stock. That would again be insanity for new investors.

My question is merely: if stoneco were to do an IPO today in Malaysia, how many of you would invest in it? It's got huge borrowing, negative income, high growth, low earnings, low margins, what's metrics would you use to invest in it?

Ta doesnt with for IPOs, fa doesn't work for start ups. What then would be Warren buffet reasoning behind a high pe buy?
21/01/2019 18:54

Now im curious.


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Icon8888 Icon has always been very good at doing one particular thing. Now icon has found the second missing parts. Only the two put together can generate sustainable return indefinitely

In 2016, icon is a good car, in 2019 he gets his petrol. So the car can finally move

Yeap

I wonder why all these companies like to diversify into CPO. Diversify into Musang King can ah.

Don't forget to double the valuation. Because they hold half their equity in directly convertible preference shares.

Go on Connie.

I'll wait eagerly for the request for appearance by SC. Hahaha. Please.

Buy, Sell or Hold. Do whatever you like, i have no preference. Price go down, i buy, price go up, i sell. Price stay the same i hold.

http://www.bnm.gov.my/files/publication/fsreview/en/2018/1h/ba_01.pdf

This is a fun read.

I would suggest the people here to go and read the aeoncr forums from 2013 to 2018, and look at the price movements.

The similarity is uncanny. Haha.

Having said that, i do think AEONCR is a better business. Just much more expensive.

Despite my position being large and thus unable to top up significant amounts, i generally find moments when prices drop for RCECAP to be quite useful. Because it its during these moments, that everyone let loose with all their pent up critique. Whether real or imaginary, logical or spurious.

And every time i read the critiques, i can't help but feel inclined to buy a bit more.

I kind of wish i saw this drop coming and made money on the difference, i did in fact have a feeling, but i've all but removed most action triggers related to technical or sentiment from within my system.

Well, whatever you're going to do, good luck. I know what i'll be doing.

Yeap.

764950395,

At the current valuation, its not a bad idea. The company is a pretty great business.

Flintstones,

If you're going to look at book value, look at book value per share basis.

Do you even understand why on earth warren buffet uses Book Value at the front page? Did you not read his statements over the years, telling you its not even close to a good measurement, but its the best he can give.

Because as long as you reinvest money at a good return, the company should be worth at minimum the book value. Berkshire value now is far far above the current book.

If Warren looked at Book Value as the only measure of intrinsic value for Berkshire, the book value will be far higher by now, and the intrinsic value far lower.

If you're going to be lashing out every time someone finds flaws in your thinking, to protect your own ego, i think you should stick to being an observer.

The moment you speak, the flaws in all your understanding comes out.

This was really good. I wish i wrote this.

If you ever wrote seriously on it, id really like to read.

Im personally very curious why you and icon8888 etc like it so much.

I personally just figured it had a pretty decent management, in a growing ish industry, with capacity expansion down the line.

But i just cant properly estimate the real economic power or its position, versus say precision castparts.

id like to see what special insight you have into that.


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Posted by Fabien Extraordinaire > Jan 16, 2019 08:36 PM | Report Abuse

Posted by 10154899906070843 > Jan 16, 2019 06:24 PM | Report Abuse

Fabien, for me I look at it this way, of course I may be wrong, because I dont follow SAM engineering very closely or the airline industry either.


Thanks for the insight, Phillip.

I'll study more over this weekend.

What i have gathered from various reports, some pertinent points:

1) currently there is a backlog in orders worth RM3.1billion. most of the models are in early stage of lifecycles. Airbus and Boeing have combined order backlog of 13k+ aircrafts which will take min 9 years to fulfill all the orders and this does not include new orders over the 9 year period
2) significant contribution will come from their 2 FMS lines to produce nacelle beams
3) Starting from FY2020, will see contribution from additional facility for LEAP-X engine casing manufacturing

Anyway, SAM is in my core holdings. And i dont want the share price to go up because i am still accumulating.

Having said that, it's good to have opposing views. I'll take some time to study more.

You really are very very sharp and perceptive.

I wish i am wrong in QL and you are right. I have no rider on that horse after all.

However, despite reading your reasoning on QL carefully, i just cant see it. Especially when compared to other investments.

Maybe i'm blind. Good luck.

Spot on!

This is why i dont consider RCECAP or AEONCR is a wonderful business.

A wonderful business is one with an economic moat, and also the complete public backing. Where by the company succeeds by contributing to the net happiness of society and improves it.

People want these companies to make more money, because if they make more money, society is better off.

I can only think of 2 companies in bursa with this. Both of which i own. One of which you picked in your 2019 stock pick.


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Posted by 10154899906070843 > Jan 15, 2019 11:38 PM | Report Abuse

On an off side, as this also happened to me before. I believe lending money to financially uneducated people at very high interest rates is a sin and a horrible action.

This is a tax on the ignorant. Bullying and robbing ignorant people and turning them into slaves is detestable to me.

I don't invest in gaming, vice counters. And I feel that investing in companies that I realized is basically a government ah long in name is a horrible thing to do, turning people into slaves that work just to pay their debts.

I believe in karma.

I can do better with my investing skills.

Mr Long Number,

You are correct. Just because its make very little sense quantitatively now, the future earnings could be so enormous that it would make paying up now make sense.

I'm just saying you reasoning on how enormous the future earning for QL will be in the next 10 years, is likely to be erroneous.

On RCECAP. Thanks for the question. I asked the same one. Here's where your facts are wrong.

Aeoncr lenders consist of more than 70% B40. Aeoncr rates is higher than RCECAP.

Having said that, i do consider Aeoncr is a great(not wonderful) business. However, rcecap is a pretty good business. Is the difference between a "pretty good" and "great but not wonderful business) worth paying roughly 70% more valuations wise?

Not for me, but i still like Aeoncr enough to buy some. I bought some presplit in 2016, held and topped up just a little in 2017 and 2018. Mainly because i was buying so much rcecap.

I consider the management of RCECAP and Aeoncr to be of similar abilities. However, unlike rcecap, aeoncr was not in the industry that got a collective slap in the face by BNM.

Aeoncr used to be cheap for the very same reason you stated above,

"But if you applied business sense in identifying the fallacy of lending money to the 40 bottom wage earners at very high rates of interest where if your lending pool becomes big enough you will definitely be doing subprime lending ( assuming government officers will always be able to pay off their high interest rate loans) with disastrous long term results.

Compare that with credit card lending to disposable income public who buy goods at aeon and top up with rm100 for a 2 year extended warranty. Free money. Very low risk. "

And now it isnt.

Good luck. I look forward to your future posts.

Not some. Its basically all.

Don't lie so much until you start to believe it your own lies and can't tell the difference.

Your track record very clear.

qqq3, i dont think you should talk so much.

You talk like you're so experienced, but you actually made nothing from market despite being in your sixties, with all your profits coming from front running kyy in 2017 with insider knowledge.

All your picks go into rubbish bin.

Just because Ricky, kc and i don't share our research publicly (especially the recent ones), does not mean we don't know to identify businesses with economic moats or have special insight into them.

We are just not so keen on having our prices increase. After all, our companies aint exactly 50pe.

Ricky top 2 position is by large Scientex And Aeoncr. Held for more than 5 years. One hell of a trap.


My top 4 are almost 80% of my portfolio. You seem to be under the impression that all good companies are of bad value. That its impossible to buy good companies at a cheap price. If you could see the topglove of today with high level of confidence 10 years ago, that price would have been damn cheap.

However, being a hater of value, you would argue that its not expensive enough and turn it down.


Kc top positions are not exactly pretty quantitatively only. If it was just numbers i can show him a full list of investments that are quantitatively better. Not so much qualitatively.

KC knows how to look at businesses.


Lets stop with the foolish comments about things you know little about.

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Posted by Flintstones > Jan 15, 2019 10:05 PM | Report Abuse

Just look at long numbers guy business sense and compared it to somebody like kcchong. It is only when the tide goes out, you discover who is swimming naked. Over the years, our extrapolation master has only shared his extrapolation maths and nothing on business sense. I have reminded time and time again about kcchong's flawed method of looking at investments. And time and time again, he will quote his yesteryear's track record while ignoring the fact that he could only be lucky.

Give kcchong RM 1 million, he would take out his calculator and show you the maths why his RM 1 million will compound indefinitely.

Give long numbers guy RM 1 million, he would invest in a company with moat and tells you the competitive advantage of the underlying business.

Give Jon Choivo RM 1 million, he would invest in multiple value stocks while continue to write beautiful letter to shareholders every quarter.

Give Ricky RM 1 million, he would invest in value traps while sharing his financial theory.

Now, you tell me. Who is the sifu?

Emotion have a weird way of complicating things, most people, including those who will be long term net buyers in the future, take comfort in seeing stock prices advance.

These people resemble a car driver who rejoices after the price of petrol increases, simply because his tank contains a week's supply.

Bro. This is called chance. No political (among other kinds) uncertainty, where got chance to buy cheap.

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Posted by sheldon > Jan 15, 2019 07:40 PM | Report Abuse

A main factor holding down our market (including Petron) is political uncertainties on especially succession - useless bums!

They are other opportunities, my capital is small. great industries turn cold and then hot.

I have no idea what you're talking about. Its really a waste of time replying to you.

A conservative and intelligent investor, during bull markets, will be increasingly conservative with his purchases and cash allocation.

As he knows the high the price is, the higher the risk of permanent loss of capital.

While during bear markets, he will become increasingly aggressive (to a point) as prices fall, as he knows the lower the price, the lower the risk.

What he buys in bear, goes up in normal and bull markets.

I bought a lot in 2018, at bottom or close to bottom prices. My error was not being conservative enough in 2017.

Make less in bull, make more in normal, make the most in bear.



===
qqq3 don't make money from bull market, make money from what?
12/01/2019 16:08

Pretty great article.

I just consider the valuations of some of your companies too rich. That is all.

But when it comes to understanding a business, you're really good.

Yes.

I can't answer your question properly, as i like this company at this price very much for myself and my investors.

Its not in my interest to potentially increase my purchase cost by explaining to others on a public forum. Its already up 5% this year, and it had just cost me an additional few thousand this year when i buy more.

However, i wrote something on the economics of refinery business.

https://choivocapital.com/2018/11/28/an-estimate-on-the-real-refinery-earnings-of-hengyuan/
https://choivocapital.com/2018/11/28/lessons-from-hengyuan-petronm-and-other-oil-gas-related-companies/

I believe the above two articles, as well as a brief study on husky energy and other petrol retailing or refinery companies around the world, will provide you an answer.

Email me once you've finished your research. We can talk further then.

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johnbrooks Choivo, why do you say the refinery margin is not important? Shouldn't it be the most important thing for the company's profit? I mean the refinery margin is what determine the gross profit margin right?

The way u say it, u think that the profit won't be affected even if the refinery margins go down. I'm not saying the retail business is not important but the biggest weight to the company profit should still be the refinery profit.
13/01/2019 15:11

Hmm interesting. Not sure if its real but, its interesting.

Famous Amos,

I've met calvin tan before. He is well off. Retired. With friends everywhere in JB and Sg. When i go with him, all the restaurant owners come and introduce themselves to him and eat with us. He is married with family, his children are all working.

If i was like calvin tan when im 60 plus, i think i have probably lived a good life.

This has close to zero impact on the long term economics of the business.

There is however, one very key risk. Which applies to the petrol retail industry of malaysia, including petdag etc. And this is my main worry. If not for the very cheap valuation, i would not be as keen.

Try studying the economics of the petroleum retailing business globally, and then go and read up on the recent disposal of the petroleum retail arm by Husky Energy in the US.

Then you'll know what i mean.

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johnbrooks Vincent, refinery margin in asia weakest since 7 years. Oversupply and demand slowdown from china mainly. Not sure if malaysia refinery same thing or not.

https://mobile.reuters.com/article/amp/idUSL4N1YA2PV
10/01/2019 11:13

Haha thanks CharlesT.

This year i decided to ignore all low value add individuals and i'm quite happy to find myself perfectly ease doing so.

When the phone don't ring, you know its me. Hahaha

probability,

I wont be preparing a speech. i expect to just wing it. Just go there and start talking, more fun this way.

in any event, i dont think i am in a position to be giving advice at my age, when the audience are all much older than me. I may have studied it abit deeper than most on this topic, but, a person in their fifties or sixties have lived alot more.

Like they say, they've eaten more salt than i have eaten rice.

I'll probably just share my experience, talk a little on how i think, and take questions.

Icon,

I expect to under-perform the index in bull years, and beat it in normal or bear years.

Though tbh, malaysia index is kind of rubbish, so i expect to beat it during bull year.

Over a 20 year period, i expect to beat the index very comfortably. And value investing is the only one that can provide that consistently.

Having said that, if OTB make 100% in bull, you make 50% and i make 20%, with the index say 15%.

I'll be extremely happy. They are worse things in life than to make a little less profit than the other person. 20% or 15% is still huge.

You say my conservatism is the bad part. Globally, in order to be the top 1%, you need USD32,400 in income. Im pretty close for this one.

And a net worth of USD770k, or about RM3.2m. I expect to hit this figure in 15 years if i compound at 10%, with savings per annum rising at 3% (this is very conservative as i'm very good at what i do, and i work damn bloody hard).

Personally, i expect to be hit the top 1% in the world by my mid thirties or less than 10 years.

And i intend to keep that whealth. Instead of the many retail participants here who have their horror story of how they become very rich and lost in all in their thirties.

At my own age cohort, i'm fairly certain my networth is top 1-5% in malaysia.

in any event, when you have enough money, its just a number on a screen and high score. Im not one to risk what i need for what i want haha.

My method suits me, because of my temperament and how i think. I buy more when prices go down, if i'm a trader, i will die. And i sell when it goes above fair value.

Some money, not for me to earn.

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Posted by Icon8888 > Jan 5, 2019 06:11 AM | Report Abuse

Yes. Jon will very likely underperform in bull and in normal market

That is the weak link of his investing model

Which is why I until now is still not convinced that it is suitable for him

Icon,

If you want a clearer and newer picture. Let me know!

i'll wear a lion hat for you. Hahaha

Probability,

Busy these days. Lets not make conjectures where none exist.

I'm fine with icon using my picture, if it brings him luck, All the better. Talk about free marketing!

Probably posting a new article on sunday, and i'm working on my "Learn Investing the Hard Way" posts, which will likely take up alot of time.

To be honest, i dont see much value in replying to people here. As most comments are rubbish and zero value add. My latest investors all came to me via direct email. They don't have i3 accounts, and merely happened to have read them.

My time is probably better spent on my dayjob, the fund, side business, and my various other hobbies (picked up poker recently)

Good luck with this year, i think this year is going to be great for everyone, but not for me, since rising prices are the enemy of a long term buyer of equities.

having said that, ill be giving a speech at the i3 blogger forum. See you there.

i think people are expecting a less than stellar quarter. Considering the valuation, TG cannot afford that.

This analysis is very close to being worthless.

I'm fine. Haha

I hope it brings you more luck!

Icon8888,

Ever since you use my picture, your comments make a lot more sense!
Hahaha. I kid.

I agree.

got, but much smaller position.

probability,

That is a very dangerous thing to say.

Hmm, i should probably study further on semiconductor companies. Just for fun.

Its very hard for me to get a feel of the economics, or why the economics of one is better than the other.

I wonder if its similar to the refinery business, in that, due to the constant growth of the industry, as well higher entry cost, as long as you have good and intelligent management, should do ok.

But this is a touch tenuous for me.

spinninglotus,

You should probably note, sharil is not known as a good ceo, even internally. This in info from a former director in saprng.

No one knows where he is most of the time, and he skips meetings often.

Now all this is just from incidental observations, but take what you may.

Haha true.

Having said that, i have not heard of a fantastic company coming out from government ownership, since the start of malaysia.

I would love to be proven wrong.

I must admit, i was looking at yinson, management looks great, but i didnt find it that wonderful. Its probably because i dont really understand the business gua.

There is also right issue as well.

Yahoo takes into account split, but not rights.

The multiple expansion is larger than what yahoo shows i think.

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Posted by Icon8888 > Jan 5, 2019 09:01 AM | Report Abuse

QL earnings grew from 125 mil in 2009 to 250 mil in 2018

A growth of 100% over 9 years

But market cap expanded by 400% (according to yahoo chart, it went up from 1.6 to current 6.7)

Value creation for shareholders not so much by earnings improvement but more on PE multiple expansion

Same thing happen to TOP glove , vitrox, prestariang (before collapse) JobStreet

Raider bro,

Its a trade, not an investment.

PNB subscribe because they have no choice. PNB does not exactly have a track record in turning things around.

Yes, the company will likely be profitable post right issue, and sale of 50% of EP to OMV.

But EPS will basically be nothing, 40-60PE if you're lucky. Because its so diluted d.