I am often very perplexed by this statement and always want to make a fair comment,

"Our famous chartist and fund manager also sold all his and his clients’ shares at about Rm 1.50 so that he can buy back at cheaper prices. In fact, he has circulated his sell recommendation to all his clients because he believes the right issues will dampen the price. Obviously, he is also wrong. Unfortunately, many shareholders have been misled and they sold their holdings too early."

Why you have to do that in all your articles on Dayang? Why you always hit on this "famous chartist and fund manager" every time you write Dayang?

You know "Our famous chartist and fund manager" sold all his Dayang 3 months ago at RM1.50 and circulated the same sell recommendation, bought and replaced a buy recommendation on Jaks which was at about 75 sen then.

Dayang's share price has been lingering at about RM1.90 and only the last few minutes today rose by 7 sen, of for a gain of 40 sen, or about 26%, whereas Jaks has risen to RM1.11 today, for a gain of 36 sen during the same period, or about 52%, double the gain of Dayang.

What is wrong with selling Dayang and bought Jaks?

Who made better gain?

Why do you have to keep on repeating your criticisms?

Posted by ChoCho > Nov 7, 2019 10:16 PM | Report Abuse
RE: kcchongnz
Think about the 10 or more persons who are giving positive feedback on your article and forget that 1 person who is criticizing you. :)


You are one of the 10. Thank you.

It is ok for me to receive negative feedback, or opposing views, or criticisms. There are indeed more opposing views than those agreeing with me in this issue of SNF. I have no problem that, as everybody is different.

But some comments involving personal attack, and it is always involve the same people is way overboard.

I guess can't expect there is no weird people around. That is ok with me too.

Posted by Connie555 > Nov 7, 2019 5:03 PM | Report Abuse
so as this kc....the more he use jaks as scenario the more i feel like puking....jaks already come bck frm 0.40 last time keep talk bull shit cashflow this that....nw that it bck to 1.1 he come out advice ppl this that...once i see...ah diu jaks again....yau hai this kcchong....wahlan.....instant turn off my cpu...u knw why? i duwan sit my electric bill on this bull shit

After reading other article boasting and propagating margin finance, I wrote this article to provide an opposite view, in fact on both advantages and disadvantages of SMF for readers who are interested to read and perhaps learn something.

Seriously I did not expect anyone to become vulgar and started to personally attack others. I wish the society here is more civilized than that. Most of us were educated to be as such. Anyway, can't expect everyone to be the same.

But serious, if you start to puke seeing my name in the article, just get away from it and don't read. Don't have to get upset. Life is short.

What it is:

From Investopedia

Backtesting is the process of applying a trading strategy or analytical method to historical data to see how accurately the strategy or method would have predicted actual results.
How it works/Example:

For example, let's assume you devise a model that you think consistently predicts the future value of the S&P 500. By using historical data, you can backtest the model to see whether it would have worked in the past. By comparing the predicted results of the model against the actual historical results, backtesting can determine whether the model has predictive value.

Posted by cheoky > Nov 5, 2019 10:14 PM | Report Abuse
Jesse bought out the max of human greed. kc bought the potential candidate to the border of fear of failure. Both got its pros and cons. Jesse can get the reader jump off the building in a instant. Kc can hypnotize macam ttb asking ignorance buy and hold regardless.

but kc intention is definitely noble.


First thanks for your complement. You are the few who understand my intention of writing this article.

This is the puzzle. If you think Jaks power plant will provide huge amount of cash flows in the future, and Jaks share price should worth more than RM3.00, it is likely that the share price will continue to rise in the next few years. Why would you want to sell at say RM1.00 now, and hope to buy back cheaper later?

Does it make good business sense?

Is it so easy to time the market?

Posted by paperplane > Nov 6, 2019 1:36 PM | Report Abuse
i did not use margin, because i got few billions to invest. Moral of story is not that using margin is no good. But using bias example and views on margin is bad(though i did not use) to jump into conclusions.
I doubt doing investment in such manner is good for long run.

You see you never margin finance already a few billionaire, whereas the one using heavy finance only has a few tens of millions, so why does one need to use in the first place?

I would like to see your "ünbisas" example of how to make billions using margin finance too. Please elaborate and compare with my "bias" example.

Posted by ChoCho > Nov 5, 2019 11:24 PM | Report Abuse
Both also not good ways to invest. Ben must learn TA to avoid the 'caught up' holding period. Jesse must learn not to over invest. lolz

Good point. but perhaps it will be more useful if you look at the chart of jaks and try to do a back-testing; when you should buy and sell Jaks and based on what signals, Head and shoulder, cup and handle, shooting star, Eliot Wave, or whatever, and then see if you could have doe better than Ben.

Posted by paperplane > Nov 5, 2019 11:27 PM | Report Abuse
Your example is bias. What if margin used in dutch lady, nestle last 10yrs?

Well, I do not know who and how anyone used margin on Dutch Lady and Nestle. I use real example which I can find in Jaks and Sendai which margin finance were highly publicized and touted in i3investor in the last three years. It is more effective to use real examples to provide an opposite view and to educate the masses, rather than made-up examples.

as I have said, I have nothing against anyone using margin fiance including you. I hope you did not do it in 2018.

https://klse.i3investor.com/servlets/pfs/99613.jsp

The above could be used as a real life example on the peril of margin finance too.

This is the best real life case study.

When Jesse and Ben first invested in Jaks three years ago with $1m, they were both attracted by the fantastic future 25-year cash flows from the operation of the power plant a few years down the road.

Jesse, besides using his own $1m, he used another $1m from margin finance, and continued to borrow more and more when the share price rose up from $1 to $1.80.

Ben, on the other hand, invested in Jaks for the long haul, as power plant investment has a long gestation period and time is needed for the extra-ordinary return. He endured the up and down of the share price of Jaks.

Three years later, the result is,

Jesse lost all his $1.0m initial investment, plus has to fork out another 328k to pay the bank due to the margin calls.

Ben, as at to-date, his $1m initial, plus 125k used to subscribe for the warrants, has grown to $1.49k.

Which is a better way of investing?

This is the best lesson in margin finance.

Posted by paperplane > Nov 2, 2019 1:58 PM | Report Abuse
Ya. Everyone is different. Then why u preaching not using margin, and what wrong when other preaching using margin. Right. Be fair loh.

Is this article about "preaching on not using margin"? Or it is abut the unimaginable Magic of Margin Finance, praising the great thing about margin finance? Can you read it again and see if you understand it?

Is there anything wrong for me to "preach not using margin" if I intend to do so?

To be fair mah if I present an opposite view.

So please may I write an article on the opposite view on the margin finance, please?

Posted by paperplane > Nov 2, 2019 12:26 AM | Report Abuse
By the way, kc, whats your result compared to him? Results is what all ppl see end of the day. Dont care abt process one ppl nowadays. Only look at yearly return.

"Him"? Who is this "Him"? Why "Him"? Is this article about "Him"?

This article is about the "Unimaginable Magic from Margin Finance". It is purely a subject matter. Does it involve any personality?

Anyway, it is your prerogative to worship money, and rich people. Money to me is at the bottom of my list. I value more on personal traits such as honesty, incredibility, humility, truthfulness etc.

Well, everyone is different. Let us agree to disagree.

Posted by paperplane > Nov 1, 2019 1:45 PM | Report Abuse
aiyo. kc. in real life, apa macam ppl pun ada. to certain ppl result more important than process, vice versa for other as well mah

This article illustrates that if one uses $1m of his own capital and hare margin finance to the maximum buying Jaks from RM1.00 all the way up to $1.80, he would have made a profit $1.92m, or 192%, within a short period of just over a year.

What if he uses $50m of his initial capital? The profit would be close to $100m.

Wasn't me talking about "results", the unimaginable Magic of margin finance?

Posted by paperplane > Nov 1, 2019 1:15 PM | Report Abuse
margin is like smoking, smoking not good for health still ppl smoke. But if smoke lightly it gives you boost. so use margin wisely.
U cannot tell ppl smoke no good hence cannot smoke. Must give ppl freedom mah

Who here is restricted from, or cursed for smoking?

Smoking is one of the few things proven for not good for the well being of a person, and can shorten the life of a person. But if you enjoy smoking, please go ahead. In life, quality is better than quantity.

However, if you know smoking is not good for health, do you still keep on telling how good smoking has done to you and pestering others to smoke, and feel damn proud about it?

Posted by speakup > Nov 1, 2019 9:37 AM | Report Abuse
Jaks CEO Ang knew Koon was on margin, so Koon was easy target to fark

Who in i3investor does not know?

Posted by Sslee > Oct 19, 2019 7:48 AM | Report Abuse
Hahahaha
3iii, I think he is safer listening to advice of OTB and never fall for PLP of qqq3 again then he should be able to build back his wealth.


Gambling is an addiction just like drug addiction. Can you convince a drug addict to give up taking drugs?

Some gamblers do win, but what is the chance of winning for most of them, 10%, 20%?

I have personal seen what gamblers do and how they behave. They do win once and a while but none that I know can keep his winning at the end.

One of them strike lottery for RM3m, but within a couple of years, all given back.

The fact is, most if not almost all gamblers lose because they never give themselves an opportunity to win; even when they have won a significant amount they will continue to bet until they lose it all again

Posted by CharlesT > Oct 19, 2019 8:51 AM | Report Abuse
I m sceptical on his 20m dayang as he claimed dayang is his biggest investment...he should hv few hundred millions bullet (including margin)..even he may lose rm100m last year but his fund size couldnt shrink by so much..
Maybe typo..200m (his average cost should be below rm1.00)io...held thru few names to avoid troublesome in repoting to sc


Most of the very rich people I know won't tell you they have a lot of money. They always keep quiet of what they own. But there are exceptions.

You should be able to make a good judgment from what they say, and what they write, and boast about.

Anyway, even a few tens of million is still very wealthy.

Posted by Sslee > Oct 17, 2019 8:49 AM | Report Abuse
Thank you very much. I appreciated it. By the way I am very surprise Mr. Koon latest Dayang article reveal he only hold 20 million of Dayang. He used to hold over hundred millions in JAKS. JAKS really hurt him a lot.

In April 2018, he and his wife owned 220m shares in Jaks, and 78m shares in Sendai. When Jaks and Sendai were at their peak price of RM1.80 and Sendai at RM1.40 respectively, the value of their share holding in these two stocks were RM400m and RM109m respectively. That is equivalent to RM509m. Assuming RM200m was margin loan, that still equivalent too a personal wealth of about RM300m.

Even at that time, numerous articles were written on “How to use margin finance effectively”, and “How I managed to make more than 100% in 6 months?, etc.

Fast forward today, the same articles using Dayang were repeated, again and again.

20 million shares in Dayang is worth about RM40m. Some capital was obtained from selling land, and of course, as usual some from “using margin to the maximum”. So may be personal wealth in the stock market is about RM30m?

Of course this is still a lot of money for most investors here, but what a far cry from a couple of years ago.

Is “using margin finance in stock investment to the maximum” really that great?

Should it be constantly encouraged in the public forum?

You make your own judgment.

Posted by DK66 > Oct 13, 2019 2:33 PM | Report Abuse
ELLIPSE08,
We are all strangers in i3, not obligated. In my opinion, i3 is a dangerous place for unarmed people. People must be armed with the basic ability to analyse information presented by strangers. Otherwise, you are easily hunted by predators and your life savings taken away. It is a hundred times easier to lose money than making money in stock market. Always ask yourself, what have you got to make you a better player than others in stock market.
Less than 5% of investors are able to profit from stock market. These are insiders, professionals, fund managers and highly intelligent investors. Where is your place ?
Trust no one but yourself. What you get from i3 can only be used as references at best.


I always think DK66 is a very honest contributor in i3investor. The above confirm what I think. When DK66 writes something, he is basing on information, detail analysis, and true sharing. Though sometimes I do not agree with him.

There are very few in i3investor are like that. Most of them are touting their stocks, ask you to buy the stocks they have, sailang and margin, while they are profiting from it. They brag about how rich they are, how good they are, and if you don't follow them, you are stupid.

There are few things you can learn from i3investor, but this is the best,

"Trust no one but yourself. What you get from i3 can only be used as references at best."

Posted by Sslee > Oct 13, 2019 9:19 AM | Report Abuse
Dear KCChong,
Good morning, still angry with Mr. Koon for his uncalled/unfound accusation on you many year back?

SSLee, no lah, please do not project me as someone with 小气 “small air”. After all a public apology was made. That would be bad for me to still put that in my heart.

For some senior citizens with time on their side, they also wish to share their wisdom on things like stock investment. Being human, I sometimes cannot tahan also reading flip-flop statements like,

1. You must follow the Golden Rule
2. You must examine your track record why you lose money not following the “Golden Rule”
3. Only use three examples all the time which happened 4-5 years ago to demonstrate the success of the rule, but totally ignore the tens of stocks which failed miserably subsequently, using the same rule.
4. Regret of losing a lot of money using too much margin on certain stock a year ago, and now boasting about “How to maximise your profit using margin” and “I am going to buy more and more of another stock next week with more margin
5. Scold others as “braggarts” and “stupid” selling certain stock too early.
6. Next day ridicule those who didn’t sell when the stock price had gone up, and now gone down.
7. Etc.

It is just a sharing of wisdom. When I feel things are not right, just express my personal opinion, nothing personal.

Posted by DK66 > Oct 13, 2019 10:53 AM | Report Abuse
Kcchongnz,
Thank you for clarifying your view on Jaks. At best punting only.

DK, I did say I punted on Jaks, but not "Ät best punting only".

Posted by DK66 > Oct 13, 2019 10:17 AM | Report Abuse
Kcchongnz, Thank you.
You have clarified that the later part of your statement is more important. Most, including myself, are now confused.
Are you able to weigh the prospect of the power plant against the risk of other businesses and provide an overall simple conclusion ? Thanks.

In my opinion, the prospect of the power plant far outweigh the risks in other businesses as it appears that it is a lucrative business. But that is not the point for me.

Bear in mind, someone had invested about RM300m in Jaks and became the major shareholders in Jaks, also based on the assumption that the power plant is a very lucrative business. He even said the Chinese banks "guarantee" Jaks will make a lot of money. Haven't you read that?

But why did he sold off all his shares in such a promising stock, some more with a loss of more than RM100m, in a single stock? Do you think he is so stupid? May be yes, may be not.

I did make about 20k punting on Jaks, closing my position last week, within a week. Yes, punting is the right word, and not "investing".

Why do I use the term "punting"? By the way, this is just my opinion. You have to make your own judgment, and your judgment may be better than mine. I am just speculating. But do pay attention to some comments which are not the same as yours. One of the credible ones is here,

Posted by sense maker > Oct 10, 2019 11:20 AM | Report Abuse
Doubting Koon is worried he will get eaten by this stock the second time. Once bitten twice shy. He boasted about jaks at rm1.40 but then he badmouthed jaks after he exited at a price as low as 40sen plus.
Even if the power plant proves more than accounting profits, it is almost certain the controlling shareholders would not share any cash profits through dividends to shareholders.
Exercise caution, everyone.

And also, please do not use "sifu"to my name and more important, do not associate me with your "sifu" qqq3. Goose bumps appear on my body seeing it.

Posted by DK66 > Oct 13, 2019 9:33 AM | Report Abuse
I m glad to have sifus Icon8888 and qqq3 with me from the start. I received vote of confidence from Sifu Kcchongnz. His recent encouraging remark on Jaks;
"Jaks' worth in this power plant per share basis, in my opinion, is definitely worth a lot more than its 75 sen per share, no matter how we slice it. If you are investing in Jaks based on this assumption, I don't think you should worry about it. There is a big margin of safety."

DK66, I need to correct you on my statement as what you have copied and pasted here is not complete, and it could have painted a totally different picture on what I said about investing in the share Jaks.

The following part of the statement which I made, in my opinion is more important, and must be included too,

"However, when we invest in Jaks, bear in mind we are not investing in the power plant, but the whole of Jaks; its other businesses, its management especially."

"I have to advise them to examine their track record to see why they have not been able to make money"

Many people have made satisfactory returns investing in the stock market following their own methods over a long period of time which they are happy about. Some of them in fact become very rich too investing in the stock market doing it in their own ways, in their own circles of competence.

Every road leads to Rome, and though there are many roads, but of course you have to make sure that road you take is not treacherous and full of dynamites as there are many dangerous roads too and before you are any way near your destination.

These successful people have great humility, remain in very low profile and very few brag about it.

Don't advise them to examine their track return. They will tell you to look at the mirror.

Posted by factorrumour > Oct 12, 2019 6:19 PM | Report Abuse
after bonus issue and/or share split, does the company total equity increase, ROE decrease?

Company can increase the number of shares by share split and bonus but can't produce more equity by doing so, unless shareholders, existing or holders put in more money for rights issues or placement. It is like cutting a cake into different number of pieces but the amount of cake remains the same.

R in ROE is the net income of the company. Splitting the shares or bonus issues don't increase the earnings of the company, does it?

Posted by qqq3 > May 25, 2019 5:27 PM | Report Abuse
aiyah kc............Look at Dayang and PIE.....your kind of favorites FA.....so how?
u say you teach people to fish not give fish to them....so u teach them to fish dayang and PIE , then how?


When I did a FA on Dayang on May 25 here,

https://klse.i3investor.com/servlets/forum/600207121.jsp?ftp=2

Dayang share price was about 90 sen. It is now RM1.97, more than double in just 4 months.

So what is wrong with my kind of FA?

Posted by qqq3 > May 13, 2019 11:37 AM | Report Abuse
kc...your Dayang $ 1.70 to $ 1.24...still the same FA....then how?
Is Dayang a quality share?

Hey Thomas, here is a post specially for you.

https://klse.i3investor.com/blogs/koonyewyinblog/228366.jsp

Posted by qqq3 > Oct 12, 2019 1:49 AM | Report Abuse
Sendai a bit delayed.... maybe in a few months a different story

What delay? When the following statements were made, Sendai was trading at RM1.20, it went down to 70 sen in 8 months for a loss of 42% while the market was booming.

[Posted by stockmanmy > Jul 7, 2017 11:25 AM | Report Abuse
Jaks and Sendai are for super investors...These super investors intend to make multiple baggers from Jaks and Sendai and already half way there.]

Again, when the following statement was made, Sendai dropped from 95 sen to close at 38.5 sen, for a loss of whopping 60% in two years.

[stockmanmy has left a new comment on your post "Margin Finance, Ever-Sendai: A real time case study kcchongnz": Sept 27 2017
sendai from 80 sen to 95 sen now...................
KC lousy timing, lousy business sense and lousy analysis.]

So where got delayed? Very fast indeed. What will happen to Sendai share price in a few months’ time, Stockmanny, qqq3, Brightsmart, Desa6769, Loneranger, etc.?

Thanks corrected

Posted by speakup > Oct 10, 2019 9:18 AM | Report Abuse
James cut loss Sendai at 50 sen?
Now 90sen, he must be crying!

No, James was a little lucky to cut loss on Sendai at 50 sen, because the share price of Sendai continues to fall. It closed at 38.5 sen today.

On the other hand, the other construction stock, Jaks, fell to 40 sen at the mid December last year. Those people who encountered margin calls and forced selling have missed the recovery of the share price of Jaks. It has more than double its share price since its trough and closed at 91.5 sen today, in less than a year.

That is the peril of leverage in investing. In Jaks case, lost big and missed the chance of recovery.

Posted by qqq3 > Oct 9, 2019 12:53 AM | Report Abuse
kc chong................look at u....pick all the low quality companies and have the gumption to talk about investing.....if that is not speculations , what is?

Pick “low quality companies”? Please elaborate,
1) Which “low quality” companies you are talking about?
2) Why are they “low quality” companies?
3) What are your criteria to judge they are “low quality” companies?
4) Why can’t pick “low quality” companies?
5) Are you invest in the stocks and hope to make money? Or are you
6) Looking for a wife to get married?
7) How are the performance of the business of my “low quality” companies?
8) How have been the share price performance of my “low quality” companies?

It is best if you have something to compare with for points (7) and (8) above. It is best to use the stocks mentioned by the character below,


Posted by stockmanmy > Jul 6, 2017 9:20 PM | Report Abuse
"and picking Jaks and Sendai is very illustrative of the thinking behind the man."
winning strategies place great value on earnings certainties. and Jaks and Sendai have great earnings certainties and transparencies and that is worth a lot. They will be reporting ever increasing earnings in coming quarters with great certainties.
I think it a great strategy to follow.
as recovery stocks coming from a low base, not many other stocks have the same level of earnings certainties.
will out perform most other portfolios.

Posted by 3iii > Oct 8, 2019 6:36 AM | Report Abuse
# Coca-Cola: Even though the stock price has been overvalued at times, an investor would have been filled with regret later after selling off their stake. #


Investors who bought Coca Cola in the eighties when it was selling at low valuation and sold in 1998 when PE was 50+, and then buy back in its lows in 2007 2008 when its PE was below 20 wold be overjoyed and have become multi-millionaire.

Yes, for value investors, they would have bought low and sold high, not necessary at the exact lowest or highest, but even 20% around them. That is their principle.

Posted by Jason Toshi Ho > Oct 8, 2019 5:51 AM | Report Abuse
Notice how I start with the business valuation first, instead of jumping into pe, charts, cash flow and other quantitative metrics? If we can just look into the business itself, understand the model and the ecosystem and the "moat", then it will shape the worldview on the PE of the stocks and if it is warranted.

Why did Jeff bezos not take your advice and sell his shares when it went up to PE 200? Obviously because he is not stupid and he looks at the business first and foremost.


I fully agree that an investor should start with the quality analysis, start with a story first. I do that all the time. Every good investor should do that.

However, a good story is not good enough. It must come with valuation and has to have some good numbers. All super investors, Warren Buffett, Seth Klarmen, Howard Marks, Mohnish Pabarai, Joel Greenblatt, they are multi-billionaire, purely from investing and for sure I know they all do it. They all compae price with value.I have read Common stock and uncommon profit a couple of times, but can't remember if Philip Fisher did that. But vaguely I think he did in some way.

As I have said, few companies grow like Goggle and Amazon at their early stage, and they are tech companies selling their products and services all over the world and demand all over the world. I don't think you can compare PE of a normal company growing 10% a year with the valuation of a top tech company at its early stage, with a PE of 200. A PE of 50, or an intrinsic value way below its present price, or whatever measure, but expect to grow at 10% a year for the next 5 or 10 years is simply too expensive.And yes, I may buy it and continue to buy it when it is, a good company, trading below PE say 20 or whatever valuation measure, but not when it is 40, or whatever measure, and will definitely sell it if PE is 50.

You can put it in a simple valuation model to see that. It is simple maths.

However, each and everyone has his way of investing, and each and everyone can make money in his own way.

Note when I use PE of 40 is for a great business with a moat, with a growth potential of more than 20% over an extended period. For a normal company, pe of 20 is too much and if you continue buy it at a pe above this value for most of the time, it is unlikely to be able to get extra-ordinary return.

Posted by Jason Toshi Ho > Oct 7, 2019 2:59 PM | Report Abuse
As always, it is very easy to make pointed decisions based on past year predictions and to just buy once. but luckily we are about the future and the intrinsic valuation of the long term prospects of the business.

It is pure common sense that your return depends on the price you pay, be it in a business or in a stock. You may not like to use the E in PE, and you can use other measures, be it enterprise value, cash flows, intrinsic value, or whatever. There must be a value to relate to price.

It doesn't matter if you buy once at the time when the price is high, say at a PE of 100,50 or whatever, or continue to buy when Pe continue to go up, going down, or stay the same. As long as you continue to buy at a pe of say more than 40 most of the time, it is likely you will under-perform. Because in the long term, unless they are like Goggle or Amazon in the early stage of growth, pe will contract and reverse to the mean. It is pure economics and maths, practically, and not theory.

Posted by qqq3 > Oct 7, 2019 5:54 PM | Report Abuse
.. but people very funny one, scared this scared that still thinking of making money............night time scared see ghost, day time scared see devil.


Posted by Beary > Sep 27, 2017 8:39 PM | Report Abuse
Hahahaaha
Dogmanmy,
KC sifu is having the last laugh on u.

Got feel hot or not?

Got feel pain or not?

Sailang UMWOG from 1.00 to 0.30

Sailang JAKS from 1.80 to 1.30

Sailang Sendai from 1.40 to 0.80

U think u r a cat meh, got 9 lives?

U r a dog la......hahahaha

Now hiding kennel with tail between legs kah?

Looks like u will remain there for a long long time.

Hahahahaha

It is plain simple logic.

The return of your investment depends on the price you pay.

If you pay a lofty price, even for a great company, your return over the long term won't be good. You may even lose money, even over a number of years.

I have just shown the example of Coca Cola if you have bought it at a PE of over 50 in 1998, you wold have lost a great sum of money if you have to sell it 10 years later.

Even if you hold it until now, which the price is closed to all time high, your CAGR is only about 2%-3%, way under-perform the broad market.

By the way, not everyone is Warren Buffett who holds his shares forever.

Posted by 3iii > Oct 6, 2019 10:00 PM | Report Abuse
Many valuable lessons can be learned from KYY's investment into Jaks and Sendai.

Indeed. Ideally they should be disseminated from the horse mouth but I don't see any sign of it as it is just human nature. We have a Chinese saying,

"It is easy to move the mountain than changing the behavior of a person."

Anyway, I am going to present the lessons one by one.

"A business that increases its revenue and earnings throughout the years while keeping shareholder value will always see its share price go up in the long run - Philip Fisher"

But does the "Golden Rule" we are talking about here has any similarity with what Philip Fisher said?

Did Fisher named his statement as "Golden Rule"?

I would also like to add that the above statement is generally true, but not all the time.

If you buy those stocks at a lofty price, your return won't be encouraging, even for a long period.

Warren Buffet through Berkshire Hathaway invested in Coca Cola from year 1987. He invested in it because in his analysis, Coca Cola was an excellent quality company, and it still is. On 1st July 1990, share price of Coke was $5.69. At earnings of 30 cents per share, PE was only 19, a fair price to pay for a company which grew its earnings at a CAGR of 13.4% over the next 8 years to 82 cents a share in 1998. The share price grew at a much faster rate at a CAGR of 29% over the next 8 years to $42.59, six and a half baggers. PE ratio of Coca Cola in 1998 expanded to 52.

Over the next 21 years from July 1998 to July 30th, 2019, EPS of Coca Cola still grew by 83%, but just at CAGR of 2.9%. Its share price barely grew by 22.6% to $52.2 per share, or a CAGR of just 1%, while the Dow Industrial Index has doubled during the same period. The PE ratio of Coke has contracted to about 35. Those investors who bought Coke, a great company, at its peak price 21 years ago way under-performed the broad market during the same period.

It is the same story for Microsoft. If you have bought it in year 2000, your return won't be good. There are many others.

Posted by speakup > Oct 6, 2019 9:56 PM | Report Abuse
since we discussing margin financing, tell u secret, speakup bought 150k redtone on margin. now dah paper profit


This appears in the article above,

"Frankly, I have nothing against anyone who uses margin finance and makes tons of money in the stock market. Congratulation for those who have done it. It is a democratic and capitalist country here and everyone is entitled to be rich."

Posted by popo92 > Oct 6, 2019 9:35 PM | Report Abuse
KC, since you said there's pros and cons on leverage i do suggest you to write an article on how to use leverage wisely next time. Include some strategies, awareness of traps. Using case study on the darkness alone doesn't actually help them understand SMF as whole.

In this article, I did mention the below,

"Referring to Table 1 and Figure 1, if one had bought Sendai at 65 sen sometime at end of year 2016 before the various articles appeared in public forums would have madeRM100000, or 100% when the share price went up near its peak at RM1.3 half year later in June 2017. With 50% margin, he would have made an amplified return of 192% as shown in Column 1. Even if he had taken profit at 97.5 sen, or 50% above his cost of 65 sen, he would have made 93% return with the margin as shown in Column 2. How wonderful, the beauty of margin finance."

That is the "Bright" side of using margin finance. But knowing the dark side of it, which I always emphasize, and it is devastating to the financial welfare of anybody using it and caught, I will never say more than what I have said about its bright side.

To propagate margin finance in the public forum, in my strong opinion, is highly irresponsible for a senior citizen like me.

Posted by qqq3 > Oct 5, 2019 6:53 PM | Report Abuse
kc...want to make money?
follow the trend, take some risk...........
margin, sailang and all in at appropriate times....maybe, one can be the next multi billionaire...............................

Unfortunately, this is the very statement from the same character which caused someone to lose a total of RM150 million in the last two years.

Why are you so proud of that?

A golden rule of investing; invest in companies with strong and predictable cash generation; sustainably high returns on capital; and high growth opportunities.

Each of these financial traits is attractive at its own right, and when they are combined, they are extremely powerful, enabling a virtuous circle of cash generation, which can be reinvested at high rates of return, begetting more cash, which can be reinvested again.

Also provided that you don't pay a hefty price for it, as your return is determined by the price you pay.

Growing revenue and profit without cash generation, and with return on capitals lower than its cost is a value destroying act.

Posted by Sslee > Oct 5, 2019 4:03 PM | Report Abuse
Dear all,
There is only one universal Golden Rule of Investing: Companies that grow revenues and earnings will see share prices grow over time. Compliment from 3iii
Thank you

I like to add a caveat; provided that earnings is translated to cash flows, free cash flows in particular.

"The profit will be reducing after 5th year."

Thanks Ooi. any idea what the above?

Posted by Ooi Teik Bee > Oct 4, 2019 8:50 PM | Report Abuse
My tips to DK66.
If I am not mistaken, I was told during the meeting, the projected profit for Jaks is around 200 million to 250 million for first 5 years.
The profit will be reducing after 5th year.
This figure is from horse mouth.
Thank you.
Ooi

Ooi,the profit for the first 5 years is that the profit from construction, or the profit is for the later years when power is generated?

Thanks.

Posted by qqq3 > Sep 29, 2019 11:12 PM | Report Abuse
forget kc...he got no common sense one


Common sense?

Lets see who has common sense and who doesn't.

In the last two to three years, the idiot qqq3, aka Desa6767, Brightsmart, Loneranger, Stockmanny, etc. has been shouting sailang and margin on the stock mentioned here, Jaks, when it was trading at RM1.80+, and Sendai when it was trading at RM1.40+ in i3investor.

KC has written tens of articles here to to give detail analysis why investors must be caution about these two stocks at those prices.

Today, Jaks and Sendai are trading at 75 sen and 40 sen respectively, for a whopping loss of 58% and 71% respectively.

So who has common sense and who doesn't?

More recently, KC has written a few articles about London Biscuit and its the various irregularities about it when it was trading at 20+sen, and the same idiot qqq3, aka Desa6767, Brightsmart, Loneranger, Stockmanny, etc. wrote numerous comments and bought loads of it, and also shouting buy buy buy in this forum. London Biscuit is trading at 10 sen now, a loss of more than 50% in just a few weeks.

Who has common sense, and who doesn't?

isn't that pretty clear?

Posted by DK66 > Sep 29, 2019 8:09 PM | Report Abuse
Let me try to explain why I have to add the interest cost to get the net operating cash flow. It is mathematical.
Project investment = US$1870m
Payback Period = 8 years
Calculation to determine the payback period;
Project Investment (PI)/(Net operating cash flow (OCF) - Interest costs(I)) = Payback period (P)
Hence,
PI/(OCF - I) = P
OCF = PI/P + I
OCF = 1870/8 + I
Operating Cash Flow = US$233.7m + Interest costs


I think I can see where you have gone wrong now, doubly wrong.

Payback period = PI/Operation Cash inflows of the firm

Note PI is the total cost of the project
Hence to be consistent, the operation cash flows must be the total cash inflows for the shareholders + debt holders

Total operation cash inflows, OCF = inflows for equity shareholders (E) + Inflows for debt holders (D+I)

Hence OCF = E+D+I

Whereas you call your OCF as E+D

Where D is the principle repayment = 77.8m, I is interest repayment

Inflow for debt holders = principle payment + Interest payment
= $77.8 + I

Hence payback period is 1870/(E+D+I)

Instead, you use payback period as 1870/(E+D-I), a double whammy.

You have the wrong interpretation of the article by Kavous Ardalan, where he was talking about when computing the present value of a project, one must use not deduct the interest expense, or should not use(OCF - I), or {(E+D+I)-I}, because you use WACC, which is the discount rate for the firm, not just for the equity shareholder, to be consistent.

In any case, please continue to share your knowledge. Your sharing has been sincere. Good to get feedback, especially those different from yours to give you another side of view. This will curb some of the cognitive bias one may have.