Just realised everyone is here.

Don't panic, someone told you it will become a bluechip soon and should worth RM40-90.

We can exclude my uncle's business if you want. But the logic is still the same, DRPs is only good if other opportunities i.e other stocks provide lower future return. IF someone has a stock that can return more than 10.3% in next 10 years, all else equal, this DRPs is not the first choice.

And if you only want to compare between bank deposit and stock, any stock that has dividend yield higher than 4% or PE below 25 (1/25=4%) can be justified as more preferable than putting that sum of money in bank deposit. But that is only true if both carry the same risk, which obviously isn't. Investor demand higher return (risk premium) in order to compensate for the risk of investing in stock, because they are riskier in nature (whether that's Scientex or Public Bank) compare to having it in bank deposits.

So going back to that 10.3% CAGR, the risk premium is 6.3% (10.3-4%). That means again, an investor has to compare to see if 6.3% is enough to compensate for the risk he is taking.

I am sure I try to be as simple as I can. No Physic level maths. Opportunity cost is really "Should I spend tonight going for movie' or 'Should I watch dvd at home'

Nice one. Labeling it as 'private info'.

Whether I am pondan of century or pondan of the millenium, you still cant provide an ounce of evidence that China funds is buying. It is nothing but plain speculative hypothesis. Vulgar don't make you win an argument bro. It does make it persuasive. Just as is all other BS. But intimidation doesn't work on me.

Well everyone is saying funds in China is buying as if it is real without any substantial evidence. That sounds really BS to me. Spinning an unproven hypothesis into real story. I won't say it is impossible, it is a possibility. But it is incredible people can create story out of nothing.

Because I am so curious so many people mentioning about China funds buying but none manage to produce a shred of evidence.

Is it that funny I want to find out if China man is buying?

There are many talks about China funds accumulating HY, can anyone offer a shred of evidence?

It is a dangerous sign when someone start calling himself a die hard fan of a stock. That literally means he will buy a stock whether it is $1 or $100.

And I am not too sure how you derive growth of 25% p.a given a $10 bil market cap in 10 years, unless you are assuming the PE will be so low than current level by then.

Now this trigger another interesting thing. I've no doubt if someone ask if he should buy Scientex now, surely all Scientex supporters will ask him to buy, saying great management, well run (I agree), etc. Lets quantify this.

Scientex current market cap is $4.35 bil, using same equation, 10 years 10 bil, you get CAGR 8.68%, which is decent if not crap. But mark my word, many people buying Scientex at this price will be imagining themselves earning 100% return in 3-5 years, thinking it is 'conservative' estimate given Scientex has average more than 100% per year for past 5 years.

Look it this way. DRPs can be a good deal for some not everyone. If in my universe where I only understand FD and Scientex but nothing else, DRP for Scientex will be a very good deal, because my opportunity cost, buying FD instead of DRP Sctx, is low. In contrast, if my uncle offer his business for only 10% of its true value, should I put my money in DRP or buy his business? of course I'll be too dumb to buy DRP because my uncle business promise way better return given he only offer me at 10%.

Business is always talking about future return on capital. How much the business can generate given its current and future investment. Which means if you DRP at that price, mean you value Scientex as 'good value', given that there are no other better opportunity out there. But if you do have a good opportunity somewhere, that is a bad decision.

To give a concrete example, Scientex at DRP price would means you 'own' a piece of the business at $3.741 market cap. IF you assume that Scientex can hit $10 bil market cap in 10 years, what is the CAGR? 10.3%. This is factual. You can calculate that. And assume PE ratio maintain the same, that means the share price will compound at 10.3% CAGR as well.

So now the thing is, what is your opportunity cost? What is the next best idea.? If someone has another stock that can give 15% long-term for next 10 years, does it make sense to get this DRP? Of course not, that is wasting opportunity. Comparatively, if someone only has the next best idea that can give say 8% long-term (all else equal i.e quality), then surely he should buy the DRPs.

Opportunity cost is relative, everyone is different. And FYI, I hold Scientex since $2.47 pre-split, just in case someone wants to accuse I have hentai intention.

IF you think DRP Scientex is good, that's great you should subscribe. The point is advising someone without taking into their opportunity cost is not a good thing to do. Just as someone would ask should i buy this, should I buy that, of course I can't answer. My opportunity cost is different from yours.

erm just admit it if you didn't read. Whether there's any number, you have 2 eyes

Yes I did write 3000 words, see the link above? In there, I have the answer to David's macro economic prediction too.

You are totally right. That's why read with a critical mind. I never say you shouldn't read. But most people read without care. Read so you can think.

That's one reason if I want to know if I should read someone's work or if it is worth my time, I go to his valuation first. I scroll all the way down to his valuation section. The way someone does valuation tells me about his thinking process. If someone start pulling PE x EPS, I know I can stop reading. Or if someone throw out a bunch of macro economics forecast, I'll be very very skeptical believing him.

@leslieroycarter I disagree: There is no such thing as definite. Comparatively, yes you will be better off doing DRPs compare to buying share. But you have to know your own opportunity cost. And again RM7.80 means your willingness to except a certain level of future return. If that future return doesn't meet the hurdle rate of an investor, the correct decision is still not to reinvest. Just because the difference is 16-17% doesn't mean reinvesting div is the right decision.

Something for you guys to read: http://klse.i3investor.com/blogs/JTYeo/143574.jsp

Hehe very funny

Thank you for telling the obvious.

Dear Koon Yew Yin,

Yes it is the profit growth prospect that moves the share price. But not what everyone likes to think. It works both way. Just as profit growth can drive the share price of a company up, it can drive it into the ground as well. Whether a company pays dividend comes down to the normalised return of the business. In Berkshire Hathaway case, that is 15-20% long-term. What is the normalised return of Hengyuan? That's for the shareholders to answer.

According to KSF, we should all stop learning and be less smart, that should increase GDP growth because everyone have good fortune.

There's is no surprise that lottery winners rarely become rich, they end up poorer than before they won the lottery. It comes to mindset. Wrong mindset determine your destiny more so than how much you are gaining now. That's why if a person can't answer a simple question, but goes to crap about crack spread and fundamental, that tells you a lot. Same as those that can't talk in logic but resort to name calling. If that makes you happy and filled your ego.

Obviously, if you didn't see my name on any competition, that means I didn't. Surprising that many that can't answer 'How does business create value' got so much to judge about another person. Extraordinary.

Recommended reading:

Fooled by Randomness - Nassim Taleb
The Black Swan - Nassim Taleb
Thinking, Fast and Slow - Daniel Kahneman
How to Argue and Win Everytime - Gerry Spence
The Book of General Ignorance - John Mitchinson
The Fallacy Detectives - How to Recognise Bad Reasoning - Nathaniel Bluedorn
Predictable Irrationality - Dan Ariely
How We Know What Isn't So - Thomas Gilovich

How do you define insincere? As in someone disagree with you? Oh wait, sorry, I forgot you can't argue thats why you resort to these rubbish talks

satan118, a classical fixed mindset. You are welcome. Of course they are real. How a business create value is a real question too.

How to win an argument when you can't win:

1. Personal abuse. Vulgar statements can come with many shapes and sizes, and since there is no logical right or wrong (only morale) to these attacks, you can win indifinitely

2. Ignore it. Changing topic to avoid the argument. Either by crediting the argument as not important, irrelevant or nonsense. Since you didn't directly argue, technically you can't lose.

3. Being impatience. This is best used with 1 & 2. Being impatience shows that you are smarter and has little patience for silly argument. Another win as well.

Sadly, what comes out from ones mouth reflect the character of that person. Enjoy your lovely morning. (What a way to start your day isn't it by spewing toxic) It is a pleasure to entertain your ignorance. Bye.

Thanks. I admire your ignorance. This shall be our last conversation since you have nothing intelligent to say but you are pretty good at coming up with low-class abusive personal statement.

Thanks satan118 for the reply. That answer is incorrect. So far only 1 replied on the question 'How business create value?', I take that the rest as 'I don't know'. I am surprised if you can analyse oil price, this question should be a walk in the park.

Now if you going to give a reply along the line 'I come here to make money bla bla, not answer silly question'. That is not so different from someone who wants to become a successful singer but dont understand how to control his/her pitch and tone of voice; someone who wants to become a successful badminton player but don't understand footwork and stamina; someone who wants to be a successful springboard diver but don't understand how body moves through the air and how moving object create resistance when entering the water.

If you want to become a successful investor and make money for the next 10-20 years, yet can't answer a simple question (ironically, you know how to predict oil price), you are not going to do well in the market, regardless of how many gain you get in HY. This is a blunt reality.

Thank you Nyama. You've already answered my question. Feel free to ignore me asking the same question to others.

@Nyama. IF you can't answer me. Or reply the question, or say a word like 'I don't know'. Then please don't bother reply. I won't bother you either. Because no answer means you already answer me. Silence/skirting the question is a big, fat answer that you don't know the answer.

To know if someone really 'know' a thing. You don't need to ask him complicated things like crack spread, macroeconomic BS, ask him the simplest, easiest question "How does a business create value'. This question is like a hot knife through butter. You can tell if a person really knows, if he is a charlatan, or he doesn't have a clue.

I am still hopeful for an answer. If you can answer it like a man. You can jump around declare victory, talk big, but can't answer a simple question. Comon.

Well get this Nyama: If you can't answer this fundamental question, then just say you are speculating. It is not a sin. But don't go around BS talking about how much you know about fundamental.

And seems like you can't differentiate between an academic and a practical question.

One hour has gone. Henyuan can't answer. deMusangking can't either, looking at the way he skirt the topic. Dear intelligent people here that makes 1000%, how can no one know the answer of such a fundamental question?

Whether I am 20s or 90s, straight or gay, male or female, rich or poor, millennial or baby-boomer, black or white skin, atheist or religious, it has nothing to do with answering the question.

How does a business generate value?

The fundamental of 好猫 is 会捉老鼠. So, the fundamental of business is to generate value. So "How does a business generate value?"

Don't change topic. Answer. It isn't academic. It is not X + Y = ? or explain 'Linear regression line'.

You understand the question "How does a business generate value?" I'm waiting.

Lets cut to the chest. You better have a reason to explain why the question is 'academic'. Cut all the BS. Answer it.

Paperplane, pang72, demusangking, Henyuan, Alex. If you can analyse crack spread, margin per barrel, obviously you can answer this question. Come.

So lets come and clear this air shall we? Settle this once and for all. Since you think you have street smart, market experience, and you are better than academics, and you feel so bad you want to beat me out of my chair, let's do this. Only one simple question:

**How does a business create value?**

Very simple question. Practical question. Non-academic. It is a fundamental question. No formula or equations. Plain english. One sentence. In fact, less than 10 words.

I suppose all the market smarty that declare victory today, if you can understand a complex business like HY, this question is like peanut to you. Come.

@Henyuan I see this coming. Just say it if you don't know the answer. Nothing to be a shame of. Everyone is not perfect. We are all learning. But if you can't answer, it is a reminder to yourself how much you know about HY.

Next. Come.

You see, professor, lecturer or academic are words used to describe someone as that only know theories but nothing of practical value in real life. (Which is strange since I have real money in market). So called nonsense stuff, as opposed to street smart or someone with market experience.

So lets come and clear this air shall we? Settle this once and for all. Since you think you have street smart, market experience, and you are better than academics, and you feel so bad you want to beat me out of my chair, let's do this. Only one simple question:

**How does a business create value?**

Very simple question. Practical question. Non-academic. It is a fundamental question. No formula or equations. Plain english. One sentence. In fact, less than 10 words.

I suppose all the market smarty that declare victory today, if you can understand a complex business like HY, this question is like peanut to you. Come.

When did I shout? Only lecture. I never say a word whether HY is under or overvalued, you are welcome to flip through all the conversation record. So why so defensive. Do you need to buy a advertisement space on thestar to declare victory? But I've benefited so much from this forum, on things that one shouldn't be doing.

Oh absolutely, that is crowd behaviour. And as if that victory has any meaning.

Interesting to see when a stock drop in a day, they shout fundamentals; when a stock goes up in a day, they shout victory. IF you don't see this as a sense of delusion, regardless of what stock you hold, then you are really beyond help.

What does hard environment has to do with investing?

There was once an experiment. The researchers shows 2 flashing lights: Red and Blue. Both with the odds of flashing at 60:40. The monkey notice this early and decided to stay at Red all the time, guarantee them a sure win, if not a big win. While human is just as aware, but choose to jumping back and forth between those colors trying to guess which one is going to come up.

It is my honour to accept the name 'the lecturer'. At least lecturer don't talk about the minute movement of the market. That is called delusion. Imagine you trying to explain every single ripple on a bucket of water:

"Big ripple, flush out the weak players",
"See the ripple hit back, consolidating, big fund coming in',
"Ripples hit the side of the bucket, next wave coming!'
"Many ripples now, I think someone is shaking the bucket, to shake out weak players, accumulate now'
"No ripple already, smooth sailing, all the way up, get onto the bucket before too late"

Seriously, does anyone wants to tally the movement of every minute so you can sum it up how many win/loss per day by the fraction of per minute. Im surprise this kind of mentality can even make money in the market long run.