That is a very interesting way of looking at risk management.

One thing i've always found interesting is how veterans here often say they are going in big, and it turns out to be 15% and now 4% of portfolio, which is probably not what the average retailer considers big, but speaks a lot about the experience of these veterans ability to manage risk.

Anyway, lets delve a little deeper into this method.

Based on what i've read, its almost as if your risk management strategy, consist of first determining the return you expect in absolute value (Lets say RM100,000), and then using the highest leveraged (non recourse) instrument to help you get what you want in order to minimize the size of the investment relative to the fund.

This strikes me as a little inefficient, because mathematically, the most efficient method is to use the Kelly's Criterion in order to determine the most efficient bet size.

https://blogs.cfainstitute.org/investor/2018/06/14/the-kelly-criterion...

And because of this, it appears to ignore the line of thinking, where one puts the most money on what they consider to be their best investment.

But by doing so, it effectively caps the profit and the loss in absolute figures. And reduces the risk of ruin to close to zero.

From an investment perspective its a little odd.

But from a speculative perspective, if one looks at stocks etc as just numbers on a screen, does so adventurously (ie not really knowing what it is they are holding or the probabilities/expected value with a high level of confidence, but rely instead of trusting gut feeling and "feels good"), and want to maintain the ability to think straight by limiting exposure.

This works very well then.

I'm not sure if its for me, because i'm effectively 105% in equities and i like to put the most money in my best ideas.

But the allocation size definitely speaks volumes about how much confidence you actually have in your investment in jaks or others (if this is considered big).


=======
Why did I sell my shares ? Because that was the right thing to do from risk vs. reward point of view ! Let's look at the mathematics.

By holding Jaks at 80 sen, my maximum downside risk is 80 sen. But by holding warrants, my maximum downside risk over the next five years is only 25 sen (my rights subscription price).

My target price for Jaks is at least RM1.50. If that is achieved, the warrants will register gain of RM0.61, being RM1.50 less RM0.64 exercise price and then less RM0.25 cost of investment (based on conservative assumption of zero conversion premium).

If I hold mother shares at RM0.80, my upside is RM0.70 (being RM1.50 less RM0.80).

A 25 sen Warrant can give me potential gain of RM0.61 while an 80 sen mother share will give me potential gain of RM0.70. Do you really need to be a genius to figure out that it makes sense to replace mother shares with Warrants ?

Subsequently, I averaged down by buying several more batches. But for sake of simplicity, you can assume my cost is RM1.17. By selling at 80 sen, I incurred a loss of 32%. But Jaks makes up about 15% of my portfolio. So the effective impact is negative 4.8%. Not an insignificant amount, but if I didn't buy Jaks and instead bought some other shares, I might have registered some losses also (in this bearish market). So, as far as I am concerned, my exposure in Jaks is still quite manageable.

Now that I have switched to warrants, my exposure to Jaks has been further scaled down to 4% of my portfolio (being RM0.31 / RM1.17 multiplied by the original 15% exposure). Do I really need to lose sleep over that amount ? The best thing is that if Jaks price goes up, I have the exposure to enjoy the upside.

For me, as long as you manage your risk properly, it is ok to be a bit adventurous. No pain no gain.

If he had everything under control. He won't be crying father mother when the bankers are force selling his shares.



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Posted by Icon8888 > Dec 2, 2018 07:53 AM | Report Abuse

I am the only one in this forum that did not believe for a second that Uncle Koon is in trouble. I have never met Uncle Koon before, but I can feel how seasoned and smart he is. This is because I dealt with successful entrepreneurs all the time. I know how much thoughts they put into things they do and how far they are always ahead of the crowd. Uncle Koon is one of those people. He has everything under control.

Haha I'm guessing plp means kissing ass. In which case I'm too lazy to do that.

The reason I invest is to be able to just say what I consider to be true and let the chips fall where they may.

If I liked kissing ass so much, I'd just do it at work.

As a fund manager, the only thing I can control is my investment philosophy, investment process and client base.

The way he is now, I will not accept kyy as a client. But I'm open to meeting him, and see if I can get it him to reach an understanding similar to mine.

But considering kcchongnz failed, I don't think my chances are good. Haha.

I'll just consider the time spent teaching him, if he takes me up on the offer, charity work for future scholarship students, and what will likely be a very interesting conversation.



====
CharlesT If elderly bizman could listen to an plp idiot what makes u to think he wouldnt do that to jon boy?

Jon boy is yr plp skill as good as yr england?

Is so, yr seat is 90% secured
02/12/2018 08:37

Thats low, im guessing alot of cut loss?

Whats your policy on that.

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soojinhou 54 Stock Pick 2018 - soojinhou -40,262.50 -40.26%

Probability, since you asked, as of today, real life portfolio -13.4%.
30/11/2018 21:44

QQQ3 talk so much.

In the end, his profit comes wholly from front running KYY with maximum margin.

And in the end, 1 mil also dont have.

Haih, really is Jho Low and Ah Jib. Except this jholow earn peanut money.

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Posted by qqq3 > Sep 21, 2018 09:24 AM | Report Abuse

halite

KYY started buying jaks several weeks before I blog about it......my blog is mainly a summary of Public Bank research in a more readable manner.

of course, with my own interpretations and value added comments...since then, I and KYY met up with Jaks people and can confirm every thing in that Public bank report....and their source of data.

INstead of winning all these stupid awards, how about make some money?

Wouldnt that be better?

There are 3 things needed to be a good investor.

1) The ability to estimate intrinsic value
2) The ability to buy more or hold as prices fall
3) To be right.

I hope you pass the last. That sweetness of being right, is ultimately of little value to me.

Whether you make or lose money is of zero consequence to me, but of large consequence to you.

Good luck.

I remember this value investor sifu, he was a big buyer of valeant. As prices fell from 300 usd to 12 dollar. He made a video reiterating his research and saying he will go all in.

He was wrong. No more videos.

Really good luck, i hope you are right and make alot of money.

Uncle Koon, well i wasn't expecting this. He definitely learnt something.

Having said that, from that article, i have to say, i think for the amount of tuition money paid, he did not get his money's worth.

he still fails to identify if he is an investor or trader. What kind of investor sells as prices go lower, and risk goes lower?

He only admits his mistake in using margin loan, but only on a surface level, nor does he concede that he was likely one of the people who could not control emotions.

He only said "most people cannot control emotions". Not he cannot control emotion.

Oh well, uncle koon, i wish you good luck. I think if you lose this amount again, can go bankrupt. Im fairly certain he has lost about 70-100m easily.

Having said that.

BSO is a very foolish model to use if one is valuing long dated options or warrants etc.

BSO only works(mostly) for short term ones less than 6 months.

I'm in a mood to listen. Because i want buy.But i can't see much beyond risk and reward probably not that stupid. And power plant, may make profit. And at this price, not a stupid bet to make.

Its in the airasia cimb report.


https://www.thestar.com.my/business/business-news/2018/11/30/cimb-research-downgrades-airasia-from-hold-to-reduce/

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Posted by sheldon > Nov 30, 2018 02:48 PM | Report Abuse

"Jon Choivo Just so you guys know. Crack spread for jetfuel is at US20. Almost all time high. If one is punting."

Jon - where did you get this info?

Thank you. This was useful.

I stand with ricky abit. But its very admirable how you take things into your own hands. the market needs people like you.

on a unit basis, down about 12%.

But i bought alot of units at low prices this year. So no idea on the IRR.

Said this before, but about 65% of the fund is in like 4 companies. The remaining is over 20 companies or so.

Not really well diversified tbh. The remaining 35% is in companies that are too cheap for me ignore. Alot are dividend paying, extremely low valuation property companies, or companies like orient.

Im a mix of schloss and buffet haha. Very highly concentrated and also diversified to an extent haha.

=====
1%...i would believe for cute Jon Choivo...

bull or bear market his return will be the same...he diversify like all stocks are beautiful women....and can lay his eggs.

You clearly know nothing about foreign markets.

Do you see able flying up and nose diving 20% in 2 months?

Do you see volatility close to zero in 2017, and off the charts in 2018.

As long as it humans there, markets will be emotional. And as long as people will be emotional and illogical.

Value investing will continue to work.



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Posted by rajachulan > Nov 30, 2018 11:19 AM | Report Abuse

true this... US market is more mature and stable than the Asian...

Not that value investing is not good... but it simply not suitable in Asian market which are more volatile and emotional...

I learnt my lesson...

hope others may soon to realise this too...

Just so you guys know.

Crack spread for jetfuel is at US20. Almost all time high. If one is punting.

If you think jaks may at some point go to say 0.9 or more down the line.

The risk reward for the warrants is very very good at 0.1 say.

If you can't explain your thesis down in a way that makes sense and is backed by numbers.

Maybe it's because you actually know nothing.

It may be because it's such a wonderful investment and trade, that you don't want anyone to know and buy, therefore pushing up your cost price.

But you're nothing buying, and you're not one to refuse having someone fry up your shares and let you lock in profit, without needing to see if you're right or wrong.

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Posted by Icon8888 > Nov 30, 2018 10:43 AM | Report Abuse

I am not even talking about the power plant. That is too far ahead in time

if you cannot understand what I have said so far, you better stick to Maybank and Tenaga, because this game is not for you

I think your backside burn until brain now muddled.

You can forsee this drop, and yet you decide to buy the forms and buy at rm1?

The seer who predicts his death, and runs at top speed into it.

Not about power plant? Then construction and prop dev? I can think of 15 companies better and cheaper in that business.

Jaks is rubbish at Prop dev and construction.

Show your figures. I read all your post on it, and your only analysis is "power plant should be profitable"

The only thing that can save yours and kyys ass, is if they win the star rm50m, which I have no idea.

But at this price. Its like buying a mediocre construction and property company cheap, with a potentially profitable power plant.

Not the stupidest decision in the world.

But very stupid at rm1 or more.

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Posted by Icon8888 > Nov 30, 2018 10:38 AM | Report Abuse

I have foreseen this price collapse coming

anybody can boast like that, but I can prove what I said

I will prove it at a later stage, when the dust has settled

none of you will be able to doubt me then

experience with "china" people in business.


Posted by Icon8888 > Nov 30, 2018 10:41 AM | Report Abuse

you guys need to put all the figures and details down on a piece of paper

look at the economics, the risk-reward ratio, etc

then you will have a better feel

Posted by Icon8888 > Nov 30, 2018 10:43 AM | Report Abuse

I am not even talking about the power plant. That is too far ahead in time

if you cannot understand what I have said so far, you better stick to Maybank and Tenaga, because this game is not for you


=====

My guess is that you expect the power plant to be profitable

Whats your basis for that perspective?

Do provide your analysis if you can. This is not going to be a mudajaya as Vietnam and China won't have so much regulatory problems.

But it's far from certain at rm1 or so.

But at 40sen. I can teman you I guess. Haha


====

Posted by Icon8888 > Nov 30, 2018 10:32 AM | Report Abuse

999,999 out of 1,000,000 people believe what they saw

but 1 of the 1,000,000 has an alternative view

sometime in stock market, not everything you see is real

this stock offers huge opportunity

think harder and try to see the hidden things

this could be your chance to make a killing

Wow.

Thank god I'm not an adventurous investor or speculator.

icon8888, turn from trader to long term investor d.

Man i hope it works out. Feel like buying some also.

I'm still thinking of buying more. But im not sure if im that keen if shoots up too much.

You guys are aware that,

Depreciation was "Lowered" due to it not being charged on the sold planes, despite them being used?

And that leasing cost will go up 600m right?

I wish he punt alot and will punt even more, because he clearly feels he is right. And if he's right, he'll make alot of money.

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Posted by abang_misai > Nov 29, 2018 10:51 PM | Report Abuse

I pray our brother Icon8888 does not punt too much into Jaks. My godness, he was still awake at 3.30am.

You are clearly still stupid.

Do you know how many have said the same thing all the way down from RM4?

I am not saying is definitely a stupid investment. But if you do stupid things such as predicting prices. You're likely to be in for a very big surprise.

Take out all your money put in fd and china index. You're too stupid to buy individual equities.

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Posted by Uncle Sam > Nov 29, 2018 02:14 PM | Report Abuse

If sap has good image n investors come back to buy the shares, hard to even get share price at 30c + anymore. This is the floor. Even after RI, share price will adjust but I doubt will drop below 30c dy. Unless omv cancel deal or bad things happen. below 40c is cheap dy
U really think can go to 20c? Dun be stupid

You must be stupid.


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Posted by UnicornP > Nov 29, 2018 06:12 PM | Report Abuse

Worth RM2.50

ok gua.

Q result is not that good.

You dont say anything about his promotion from 7-19

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Posted by Fam Jenny > Nov 29, 2018 04:16 PM | Report Abuse

Probability was correct about its downtrend when he turned very negative about it.Credit must be given to him for the right forecast as he might have helped some of you to turn cautious instead of being conned by the promoters here.
Acquire a thinking cap is much better than unpractical theories n save your investment from fire.

haha congrats. i sold my flbhd at 1.51 for some parkson at 0.41, which i sold at 0.62.

Then i dunno the money go buy what d. Wish i had a little of flbhd haha.

All the stupid chartist still around ah?

In bear market, your chart can throw in tong sampah pls.

Then drop 20 sen one shot, when foreign fund pull back money to buy us stocks. Chop your margin.

Then jump from klcc d loh.

use brain pls.


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Posted by Oracle of Omni > Nov 29, 2018 03:30 PM | Report Abuse

Now rebounding, go for the strong momentum, buy big, and sell after few cents profit to cover ur loss guys.

God. I am so tempted. But i want below 2.7. Because my money ooprtunity cost is high with so many cheap shares.

Yeap.

Because he speculates in shares, and invest in properties.

I think having been a remisier for so many years. The nature of the stock market being a gambling den is ingrained in his mind.

Eitherway, no problem, he has a happy outcome. And despite all his flaws, he's a good man, and he deserves his current wealth.



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Posted by 3iii > Nov 29, 2018 03:18 PM | Report Abuse

otb is smarter.

He put his gains into properties.

Why?

If he is so good and certain of his investing in shares, he should be putting money into stocks.

But no, he invested in properties and his off-springs are not to sell them.

This speaks volume of his confidence in share investing for the long term to build long term wealth.

Rm200 is today haha.

I'm too lazy to explain to you the history of that position. Zero value add activity. Id rather go study my companies.

====
dragonslayer Aiyo ah jon...700shares also loss more than rm200 leh..you really hiding lah... your loss...wakakaka
..kikiki
29/11/2018 13:53

In 2017, i very stress despite portfolio up. Nothing to buy but property companies and rcecap, everything so expensive.

Now, so many cheap things.

I went from planning to increase property companies in 2018, to buy everything else. refinery lah, some prop co lah, some steel, airline lah, some construction co, palm oil co lah, insurance co lah, chicken co lah

And when i buy, dont even need to think much now, last time at those prices, must study 10 year annual report and read everything.

Now waseh, my only risk, is for my net cash companies to go bankrupt in the next 6 months.

So relaxing man. I'm 100% in. With about an additional 6% in from margin. The margin must spend very very slowly. The moment i feel excited to spend money, i dont, close app straight.

Must only use the money when i feel very very calm to minimize mistakes.

====
TakeProfits All you scardy cats. You fellas jumping all over, talk 3 and talk 4. Dont buy if scared and when price go down 10 cents. Jon is calm. Haha. But who knows cold sweat with his investments. But all.In all if wanna buy, take some risks. This is a good company anyway
29/11/2018 14:49

Wow.

I hope you guys are really really damn sure about the profitability of the power plant.

Because this is the part where you need to hold and buy more.

If you're right.

Icon8888, if you got more research for JAKS, i suggest you share. I will attack and try to poke holes in it.

If i fail, the probability of it being a right decision should be higher.

i wont mind buying some saprng after right i think. But the USD loans, aiyoyo, gonna get whack properly again.

if it goes below 2.5. It would be fine. A casino with global presence, selling for 10 PE or 10% EY. Where to find. Not likely to be a stupid decision.

Mr Sslee,

Im sure you're a very competent individual in many areas of your life. And this is but a small part of it.

However, i strongly suggest you don't look into shares until you have finished your education in investing by reading the works of our betters.

https://klse.i3investor.com/blogs/PilosopoCapital/172219.jsp

Here is a list. Contrary to honing a "killer instinct", i think you will likely find investing (not trading) a very enjoyable, intellectually stimulating and to an extent, relaxing activity.

in the mean time, putting your money in the chinese index is not a bad idea. Chinease stocks valuations is very very low now, anhui expressway is selling for 6PE. A highway. And this country went from nowehere in the top 10 in gdp 30 years ago, to number 2.

There are a few reasons for this undervaluation, such as a weak sc, closed markets etc. But none of them matter if you have a long term perspective.

In 20 years, i see china being much bigger and stronger, unless they go to war, in which case, everything die anyway.

Only start buying additional individual stocks after you've finished you education.

Only hold 700 shares haha. Because i wasnt so sure about the operation earnings, buy to make friend only.. Less than 1% of fund.

But now, im open to making it maybe 5%.

===
dragonslayer Aiyo ah jon..you lost rm200 only...wei..you fund so small meh 1% of your fund...cannot be bah...one big lot alos lost few hundred oredy..how can be you fun bought 300shares only kah...dun hide your lost leh...aiyoyo...kikiki
29/11/2018 10:27

Panji,

I lazy teach you. or explain to you for everyone benefit. Its not in my interest to have timecom price go up. Cause im always looking for chance to top up.

In 5 weeks. Chicken reach to adult size.

You have millions of eggs, go hatch a few.

=====
Posted by Flintstones > Nov 28, 2018 05:02 PM | Report Abuse

My friends who think next quarter Lay Hong result will recover should think with their heads. Sabah chickens culled. Where to find fat hens who can lay grade AAA omega 3 eggs? So easy to raise a fat hen? Who want to sell you AAA hen? QL? Teoseng? They will tell you to go fly kite la

Lost RM200 or so. Heart so pain T_T

haha position size was very small at like 1% or less. Was waiting for chance to top up. Which seems to be appearing.

your jaks bakar how much d?


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Posted by SarifahSelinder > Nov 29, 2018 10:08 AM | Report Abuse

Congratulations besar to u kepala butoh ah jon syabas

Could you a write up on that analysis?

Im curious.


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Posted by Icon8888 > Nov 29, 2018 03:00 AM | Report Abuse

燕雀安知鸿鹄之志

Uncle Koon is going to become so rich... so bloody rich...

Posted by Icon8888 > Nov 29, 2018 03:25 AM | Report Abuse

Jaks WA is potentially worth RM1.86

Posted by Icon8888 > Nov 29, 2018 03:30 AM | Report Abuse

Maximum bullish scenario for Jaks WA is RM3.11

My eye opening now.


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Posted by shawn88 > Nov 29, 2018 09:43 AM | Report Abuse

no eye see.. 52 weeks low

Sslee,

Brother. That is just market analysis.

On the long chain cracker, the only question that you should ask is not about the value of the end product. But the spread. Is it wider? Whats the IRR if we take into account the higher cost etc.

And that is a far too complex question, if you need to know the answer to invest, its probably the wrong investment.

How about you go normalize the earning for hy and see.

=====
Refer to Petronm q3 report Page 13: Dated Brent Crude average USD 75 per barrel during the quarter.

Hengyuan have Long chain cracker that can crack the long chain to more valuable finish products.

Anyway I'm done.

I was probably just in a bad mood from working late, coupled with a dose of self destructive tendency, and soft heartedness, that may raise my purchase price slightly now.

Kindly assume I'm an idiot. Hy is going to bankrupt. The refinery going to turn to storage unit for oil. Not even worth 10m.

All go sell tmr. Push it down to rm1 to punish management and bankrupt the Co.

Just in case no one is aware, the last sentence is sarcasm. Or at least the particularly zesty one.

Can you even read English ah?

You don't see the capex needed for euro4m and imo2020?

Do you even know why shell sold it to hy?

And why would you want a dividend when right now, they can clearly get way higher roe for it.

Unless your stupid lah. Or your name is James Simmons and can do 40% per annum for 20 years.

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Posted by SapNrg > Nov 29, 2018 02:17 AM | Report Abuse

4.91 stock why dividend cannot afford to pay?

Yes, whether a stock is high or low beta, or gambling or investing.

Depends on whether an ib analyst covers it.

Saprng at rm4 is investing stock in that case.

Also whether it is an investing or gambling has no relation to who is holding it.

A knife is a tool for killing only. Even if a housewife use to cut vegetable.

You also need to take money out and put in fd or China index.

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Posted by qqq3 > Nov 29, 2018 01:58 AM | Report Abuse

probability

anyway, this HY is a gambling stock, never been a low beta stock,

Posted by qqq3 > Nov 29, 2018 02:11 AM | Report Abuse

to my knowledge, no IB analysts dares to cover this stock

In your case, you're definitely the kind to put the cart before the horse.

I don't usually recommend losing one's house as a cure for being foolish in the market. But in your case that may be a good thing because very little else will teach you that you know nothing.


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Posted by probability > Nov 29, 2018 01:22 AM | Report Abuse

walao eh....this sounds like you are claiming the effects happen before cause...kikiki