Whatever is it, no one can say FA alone won't work. Maybe we can say FA alone won't able to provide a very high return - I am interest to know what will be the number?

I think we need to have a longer record to check out the return of both approach.

The value investing (FA) player - Warren Buffett, Peter Lynch, Philip Fisher, and Joel Greenbaltt have a return of 20% - 30% p.a. (CAGR) in their portfolio.

Can I have the name and the portfolio return for FA + TA + Margin player? So, we can use this as a proxy to see what is the return p.a. (CAGR).

We can use above return as a guide and make decision which path to follow.

I think we have to know what is our target return and then based on this to determine the stock selection and fund allocation.

We need to remember why we need to invest? What is our goal?

http://klse.i3investor.com/blogs/intelligent_investor_notes/53832.jsp

Buy and hold a good fundamental stock when price is cheap should able to provide investor a CAGR of 15% - 20%. Or, it maybe a more. Do check out the records for Warren Buffett and Peter Lynch.

If someone aim to earn more return (to beat Warren Buffett). A combination of TA, FA, trend and machine gun (the margin) would need to come into picture. Maybe, Mr Ooi can advise what's his return (in CAGR) for the pass 20 years. So, we can use this as a guideline.

I believe both approach have different risk profile. And, we have to remember High-Risk Investments Not For Amateurs. Do you think it is so easy to beat Warren?

If we can earn a good living with a CAGR of 15% - 20% (W.B. CAGR is only a 26%, and he is the world third wealthiest person), do we need to take extra risk?

Intelligent Investor Hi Mr. Tan,

Please help Mr. Chong to add in following dividends:-

CBIP - http://www.klse.my/entitlement/116299.jsp
ECS - http://www.klse.my/entitlement/115849.jsp
MFCB - http://www.klse.my/entitlement/116083.jsp
PADINI - http://www.klse.my/entitlement/116194.jsp
PRESBHD - http://www.klse.my/entitlement/116255.jsp
PRKCORP - http://www.klse.my/entitlement/116222.jsp
PTARAS - http://www.klse.my/entitlement/116181.jsp
TONGHER - http://www.klse.my/entitlement/116138.jsp
UCHITEC - http://www.klse.my/entitlement/116088.jsp
WILLOW - http://www.klse.my/entitlement/115922.jsp

Hi Mr. Tan,

Please help me to add in following dividends:-
CSCENIC - http://www.klse.my/entitlement/115873.jsp
PRKCORP - http://www.klse.my/entitlement/116222.jsp
PTARAS - http://www.klse.my/entitlement/116181.jsp
UCHITEC - http://www.klse.my/entitlement/116088.jsp
VITROX - http://www.klse.my/entitlement/116243.jsp and http://www.klse.my/entitlement/116244.jsp

Accounting is the language of business.

You need to understand basic accounting to identify good companies from the bad ones based on their past financial performance.

You have no right to invest in the stock markets if you not able to read the financial statement.


http://klse.i3investor.com/blogs/intelligent_investor_notes/53834.jsp

There is different stlye in stock investment.

Some peoples like to invest in asset based company (e.g. Graham), some people like to invest in company with consistent earnings and good moat when the price is cheap (e.g. Buffett), some people like the turnaround and cyclical play (e.g. Mr. Koon).

All roads lead to Rome. I think there is no right or wrong. And, it is not necessary everyone choose the same path.

Like Deng Xiaoping said "It doesn't matter whether a cat is white or black, as long as it catches mice."

Do we need to attack if some peoples not agree with the approach where we are using?

I think we should be appreciate if someone spend time to research and provide their view on the company which is our core holdings. Be it a positive or negative feedback.

The more we understand the company, the better.

Don't you agree?

Glad to learn that a lot of I3investors were making money. Well done.

Hi AdCool,

Congratulations for your financial sound mindset.

But, I would suggest that you should look for a house first before put your money in the equity investment.

Just like what Peter Lynch suggest on his book "One Up on Wall Street" - Do I own a house? Lynch suggests that you buy a house before you invest your money in the stock market because, "in 99 cases out of 100, a house will be a money-maker."

Hi MF88,

Let's compare VS with 2 other technology based companies in my portfolio.

VS - http://www.klse.my/stock/result/financial/6963.jsp#stockDetailDiv


vs

VITROX - http://www.klse.my/stock/result/financial/0097.jsp#stockDetailDiv

ELSOFT - http://www.klse.my/stock/result/financial/0090.jsp#stockDetailDiv

There is 1 company if I remove the market cap condition.

http://www.klse.my/stock/screener.jsp?Type=S&T4QNPM-1=20&LFYDY-1=3&L5FYAvailableYears-1=2&L5FYPositiveProfitScore-1=100&L5FYContinuosYearProfitGrowthScore-1=100&T4Q_V_LFY_REV-1=10&T4Q_V_LFY_NP-1=10

The only selected stock is PTARAS

I am trying to filter out the company in KLSE based on the criteria in this article - http://www.klse.my/stock/screener.jsp?Type=S&MarketCap-1=50&MarketCap-2=400&T4QNPM-1=20&LFYDY-1=3&L5FYAvailableYears-1=2&L5FYPositiveProfitScore-1=100&L5FYContinuosYearProfitGrowthScore-1=100&T4Q_V_LFY_REV-1=10&T4Q_V_LFY_NP-1=10

近5年不能有赔钱记录--- 不买亏钱公司
- Last 5 FY Positive Profit Score % = 100%
营业额或利润每年稳定成长10%~15%
- Last 5 FY Continuous Year of Profit Growth Score % = 100%
- Growth - T4Q vs Last FY Revenue >= 10%
- Growth - T4Q vs Last FY Net Profit >= 10%
资本额在5千万至4亿的企业
- Market Cap 50M - 400M
派息率60%或以上
- Not available - replace with DY at least 3%
老板遵守承诺—讲一套做另一套的老板其诚信不足, 不值得投资.


此外,他也有分享十种他本身不会投资的公司特质:
1) 毛利率(Gross profit margin)低于20%的公司
- T4Q NP% >= 20%2) 负债比同业高
3) 上市不到两年 (Matrix?!)
- Available years >= 2

But there is no any company can met the requirement.

I would suggest to use following criteria for the "Companies trading under the net asset value"

http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=12&T4QNPM-1=3&T4QPNAPS-2=1&;;

I think we should look for a company where ROE higher than the IRR or WACC when we risk our money in equity market.

And, the historical quarter result can be retrieved from klse.my

E.g. http://www.klse.my/stock/result/qr/quarter/0097.jsp#stockDetailDiv

I suggest fundametal investor to get the AR and AAA from www.klse.my website.

E.g. http://www.klse.my/stock/result/annual/0097.jsp#stockDetailDiv

Happy value investing.

“Isn’t that a $10 bill laying on the ground?” asks the student. “No, it can’t be a $10 bill,” answers the professor. “If it were, someone would have picked it up by now.” The teacher walks away and the student picked it up and walked off to the pub for a cold beer.

Howard says that being too early is indistinguishable from being wrong and that averaging down is how value investors make their biggest returns when a firm sense of intrinsic value and confidence in ones thesis is present. The final matter that is quite obvious, is that you also have to be right.

“An accurate opinion on valuation, loosely held, will be of limited help. An incorrect opinion on valuation, strongly held, is far worse.”

Hi Mr. Chong,

That was well said. In my opinion, we can't predict but we can prepare.

So, how should we manage the investment if the market is unpredictable?

Seth Klarman did provide us a good guideline - "A margin of safety is necessary because valuation is an imprecise art, the future is unpredictable, and investors are human and do make mistakes. It is adherence to the concept of a margin of safety that best distinguishes value investors from all others, who are not as concerned about loss."

And, "A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world."

And, what if the bear market really happen?

I suggest we can learn from Howard Marks - "There are two essential ingredients for profit in a declining market: you have to have a view on intrinsic value, and you have to hold that view strongly enough to be able to hang in and buy even as price declines suggest that you're wrong. Oh yes, there's a third; you have to be right."

At one extreme of the pendulum - the darkest of times - it takes analytical ability, objectivity, resolve, even imagination, to think things will ever get better. The few people who possess those qualities can make unusual profits with low risk...

And, we have to bear in mind that markets can remain irrational longer than you can remain solvent. We should invest only with the spare cash.

Hi Mr. Tan,

Please help Mr. Chong to add in following dividends:-
CBIP - http://www.klse.my/entitlement/115763.jsp
HAIO - http://www.klse.my/entitlement/115814.jsp
HOMERIZ - http://www.klse.my/entitlement/115759.jsp
PADINI - http://www.klse.my/entitlement/115870.jsp
PANTECH - http://www.klse.my/entitlement/115804.jsp
PRESBHD - http://www.klse.my/entitlement/115924.jsp
SCIENTX - http://www.klse.my/entitlement/115454.jsp
TASCO - http://www.klse.my/entitlement/115850.jsp

Hi Mr. Tan,

Please help me to add in following dividends:-
CHINWELL - http://www.klse.my/entitlement/115944.jsp
TGUAN-LA - http://www.klse.my/entitlement/115986.jsp

Gong hey fatt choy. I wish I3investors mate all the joy, peace, lοve, and luck.

May the Year of the Sheep attract all the good wishes this year.

Mr. Chong, 不招人嫉是庸才...

What is the point if growthinvestor or kcchongnz win?

We shall learn the knowledge from the sharing, focus on long term wealth building and let's the compounding effect work for our portfolio.

I don't think Mr. Chong have to accept this challenge. No point.

Why not the challenger read the post carefuly http://klse.i3investor.com/blogs/kcchongnz/blidx.jsp and debate with the fact and finding?

What is the point if growthinvestor or kcchongnz win?

We shall learn the knowledge from the sharing, focus on long term wealth building and let's the compounding effect work for our portfolio.

I don't think Mr. Chong have to accept this challenge. No point.

Why not the challenger read the post carefuly http://klse.i3investor.com/blogs/kcchongnz/blidx.jsp and debate with the fact and finding?

Let's review the fact.

Padini - http://www.klse.my/stock/result/financial/last10fy/7052.jsp#stockDetailDiv

Padini able to maintain the revenue and profit in current economics context, and it able to generate 20% return from owner capital. Apart from that, Padini able to generate FCF and share the cash with its owner with dividend in every quarter.

http://www.klse.my/stock/result/financial/last10fy/7052.jsp#stockDetailDiv

What do you think on this figure?

What is a cynic? A man who knows the price of everything and the value of nothing. - Oscar Wilde

Below is comment from Mr. Chong on Kimlum from its recent post:-

the latest financial statement of Kimlun, its EY at 11.2%, passes my minimum requirement of 10%, but just. However, its ROIC fails as at 9.2%, it is below my minimum of 10%. Something is seriously wrong with Kimlun as its ROIC has been falling unabated from 30%+ five years ago to less than 10% now. This shows that whatever money retained has been earning lower and lower marginal return year after year which is below its costs of capital.

I disliked Kimlun more of its deteriorating margins, increasing debts and most of all, and extremely poor cash flows. It never has any free cash flow for the last three years. Its cash flows from operations were even negative for the last three years. However, this seems to be improving in the recent quarters, but I have long discarded this stock from My First Portfolio

http://klse.i3investor.com/blogs/kcchongnz/67653.jsp

Hi Calvin,

High Growth might not equal to High Return. See http://intelligentinvestor8.blogspot.com/2014/10/high-growth-high-return.html

Return of Equity (ROE) reveal how much the company is making compared with how much it has invested to make that. The company is creating value for its owners if the ROE is higher than the cost of capital.

The ROE is equal to Net Income/Equity.
- ROE = Net Income/Equity
= Net Income/Sales * Sales/Total Assets * Total Assets / Equity
= Net Income Margin * Asset Turn Over * Financial Leverage

So, the question is does Kimlum able to growth is NP% from a merely 4% to increase the it's ROE, and create value to its shareholder?

Hi Calvin,

I am just a small retailer. I do not have access to the company's mangement and I have limitation on forecasting the future.

I only able to play an armchair investor role and judge a company by checkout it's historical financial result.

I believe history doesn't repeat but it does rhyme.

Hi Calvin,

We have different risk profile.

Henry Blodget said "Sometimes it's helpful not to look at valuations too closely. Just blur your eye and say 'I see a big future for these stocks'."

But, this is definitely not suite my taste.

By the way, PTARAS did maintain at least 8% of it's margin on the pass 10 yrs. It is low but it is 2x kimlum margin of 4%.

http://www.klse.my/stock/result/financial/last10fy/9598.jsp#stockDetailDiv


http://www.klse.my/stock/result/financial/last10fy/5171.jsp#stockDetailDiv

Hi Mr. Tan,

Please help me to add in following dividend:-
HOMERIZ - http://www.klse.my/entitlement/115759.jsp

Hi Vaentec,

I use klse.my - http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=12&L10FYAvailableYears-1=10&T4Q_V_LFY_EPS-1=30&T4Q_V_AL10FY_EPS-1=50&;

You can modify the criteria to suite your own taste

Hi Yeo,

Good observation.

I think it is because the bonus issue on oct-2014 dilute the share while the financial result on sep-2014 didn't take in the bonus issue effect.

http://www.klse.my/stock/entitlement/capitalChange/7076.jsp#stockDetailDiv

http://www.klse.my/stock/result/qr/quarter/7076.jsp#stockDetailDiv

In my opinion, kimlum and pintaras jaya is not same.

Let's look at their profit margin and ROE for the pass 10 yrs.
http://www.klse.my/stock/result/financial/last10fy/9598.jsp#stockDetailDiv
http://www.klse.my/stock/result/financial/last10fy/5171.jsp#stockDetailDiv

PTARAS's profit margin is very high quality while KIMLUM is the other way round. And, PTARAS able to achieve high ROE with low asset turn over, low financial leverage and high excess cash. It is way above the cost of equity and owing to this it able to create value for its owner.

We need more time to see how's kimlum perform. But a merely 4% margin is very dangerous. It will be wipe out if there is any issue on the project.

I was filtering out company with positive net profit which earn at least 3% margin.

You can check out the criteria I use in the link
http://www.klse.my/stock/screener.jsp?Type=S&T4QNPM-1=3&T4QPNAPS-2=1&

Please do your own analysis. This is just a list of potential stocks but not a buy recommendation.

If you are interested in buying them, you can use this checklist to assits you

http://intelligentinvestor8.blogspot.com/2014/06/checklist-against-ncav-stocks.html

Please do your own analysis. This is just a list of potential stocks but not a buy recommendation.

When should you buy?
http://intelligentinvestor8.blogspot.com/2014/08/when-should-we-click-buy-button.html

And the checklist before purchase a net net

http://intelligentinvestor8.blogspot.com/2014/06/checklist-against-ncav-stocks.html

Please do your own analysis. This is just a list of potential stocks but not a buy recommendation.

Please remember High Growth is not always equal to High Return?

http://intelligentinvestor8.blogspot.com/2014/10/high-growth-high-return.html

A list of growth stocks....

http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=12&L10FYAvailableYears-1=10&T4Q_V_LFY_EPS-1=30&T4Q_V_AL10FY_EPS-1=50&

Hi Calvin,

I agree with you.

Asset play is safe and a well diversified net net portfolio can provide a CAGR around 15% - 20% ; Earning power candidate is definitely can provide more return if pick the right company.

So, it is depends on the individual earning target and risk appetite. Risk and return are inseparable.

Hi Calvin,

Below stock is trading under the net asset value and able to earn more than 15% net profit margin and 15% ROE

http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=15&T4QNPM-1=15&T4QPNAPS-2=1

Some candidate for High Asset Value Plus Strong Earning Power

If you like to value the company based on the asset value instead of earning power. This is a list of companies trading under the net asset value.

http://www.klse.my/stock/screener.jsp?Type=S&T4QNPM-1=3&T4QPNAPS-2=1

You can perform study on the asset and make your own descision.

Yes. I am happy with my return. I wish I am able to maintain 15% CAGR for next 30 years.

Hi NOBY,

I found that it is difficult to monitor too much stocks. I try to limit it to 10. But, most of the time I hold more than 10, but less than 15.

Hi NOBY,

What is the max number of the companies in your portfolio \ watchlist?

Hi Mr. Tan,

Thanks for compiling my comments.

Please take note that the stock listed in http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=15&T4QNPM-1=15&T4QPEPS-2=8&T4QPNAPS-2=1.5&LFYDY-1=3 is not a buy recommendation.

It is just a list of stock that deserve me to put in some efforts to understand more.

And, I am not yet perform analysis in most of the companies.

Hi NOBY,

I came across TURBO when it was recommended by you last year. I didn't know the Oil and Gas industry well and it is definitely not in my circle of competence. And, I choose not to invest when I am not understand.

However, you seem did a very thorough analysis on TURBO. May I ask why you not include TURBO in your pick? http://klse.i3investor.com/servlets/pfs/41665.jsp

Buying Good Companies when the price is cheap.....

Below companies might be a good candidates..
- Good Companies - ROE >= 15, Net Profit Margin >= 15
- Cheap? P/E <=8, P/NAPS <= 1.5, DY >= 3%

http://www.klse.my/stock/screener.jsp?Type=S&T4QROE-1=15&T4QNPM-1=15&T4QPEPS-2=8&T4QPNAPS-2=1.5&LFYDY-1=3

Walter Schloss pratices this and able to achieve a very good return. Over the 45 years from 1956 to 2000, his fund earned an astounding compound return of 15.7%.

But, it is not a sure win strategy. We have to take note that the original ‘bargain’ price probably will not turn out to be such a steal after all
- “in a difficult business, no sooner is one problem solved than another surfaces – never is there just one cockroach in the kitchen.
- Second, any initial advantage you secure will be quickly eroded by the low return that the business earns.”

There are some Quantitative Criteria and Qualitative Criteria recommended by Evan Bleker to help to minimize the risk. I have summarize the key point in http://intelligentinvestor8.blogspot.com/2014/06/checklist-against-ncav-stocks.html

I agree with NOBY. I am very happy if I am able to get 15% for 30 years. My task is relatively easier in view of my small capital.