Posted by kcchongnz > 2014-01-25 11:49 | Report Abuse

"Hopefully you won't have to find out the hard way that buying a good company for too high a price is still better than buying a poor company - even at what you may think is a bargain price."

"No matter how low it may be, a company that doesn't meet the quality requirements will always be too expensive - at any price!"

A new tiny 800cc Myvi cost 10,000. A new 2500cc Honda Accord costs Rm300,000. Which would you buy?

A house with untidy garden, some broken windows, tiles is selling 500k. A nice looking house in the neighborhood, everything in good conditions selling at 1m. Which house would you buy?

Posted by Qiii > 2014-01-25 14:05 | Report Abuse

@Kcchongnz: Thanks for generating a discussion mate. I know it is an analogy to the content of the article but I cant resist to respond :). Based on the conditions you described in the comment, a property investor may choose to get the undervalued property instead because broken windows, tiles and garden can be rectified for less than the potential profit of RM500k but the location of the neighbourhood cant be changed.

Posted by kcchongnz > 2014-01-25 17:33 | Report Abuse

Investment success doesn’t come from “buying good things,” but rather from “buying things well.”

If you buy something for its fair value, you can expect a return that is fair given the risk. So buying something at its intrinsic value is no great shakes. And paying more than something’s worth is clearly a mistake; it takes a lot of hard work or a lot of luck to turn something bought at a too-high price into successful investment.

Buying something for less than its value. The most dependable way to make money. Buying discount from IV and having asset price move towards its value doesn’t require serendipity; it just requires that market participants wake up to reality.

Howard Marks: The most important thing illuminated

Posted by andyhard > 2014-01-25 19:33 | Report Abuse

Just some 2 cents...Warrent buffett said in a recent interview that when Bershire is relatively small...He used Benjamin Graham philosophy...When Bershire is so big...he needs to use Fisher philosophy...the difference between these 2 investment gurus...Benjamin believe buying something cheap...Fisher believes in value in the company....For a small retailer with capital less than Rm1 mil...i think Bejamin philosphy is suitable to us...

" Cheap" means that the current price to its intrinsic value..But, Fisher is looking at growth to overcome the current pricing..Warren Buffet bought American Express at 20X PE....But, Amex has proven the company is valuable because of its growth and world wide exposure...

Posted by Elwin Kai Kai > 2014-01-25 19:48 | Report Abuse

kcchongnz in your opinion how would you determine a shares intrinsic value？ i think every investors problem is dunno which is a good buy and when is a great price to sell

Posted by kcchongnz > 2014-01-26 07:54 | Report Abuse

Posted by Elwin Kai Kai > Jan 25, 2014 07:48 PM | Report Abuse

kcchongnz in your opinion how would you determine a shares intrinsic value？ i think every investors problem is dunno which is a good buy and when is a great price to sell


Intrinsic value of a company and its stock is the sum of all discounted future cash flows, or in finance we call it the present value. That is the very basis of valuation.

So whether you buy a good quality stock, or a poor quality stock, what is important is the present value. Is the present value higher than the price now? if so it is a good buy, if not, it isn't.

If you pay a high price for a quality company with estimated intrinsic value lower than the price you pay, is it a good buy?

How to estimate intrinsic value? Please refer to my latest comment on 25th January 2014 in the appended link below:

http://klse.i3investor.com/blogs/kcchongnz/45032.jsp

Posted by AyamTua > 2014-01-26 10:43 | Report Abuse

i miss u kcchongnz :-)

Posted by kcchongnz > 2014-01-26 17:15 | Report Abuse

Ayam Tua
A lot of people miss you. I have written a number of posts recently. Hope you can read them and provide some feedback.

Posted by AyamTua > 2014-01-26 18:28 | Report Abuse

hi kcchongnz yes i do read all your posts from my bed when i have gum operation .. i will provide my opinions when i know what to say. you know lah i am old .. brain not use to be sharp like before .. anyway want to wish you

Happy Chinese New Year and Gong Xi Fa Chai
Good wealth and health!

God bless you and all of your counters!

Sincerely,
AT

Posted by Elwin Kai Kai > 2014-01-27 01:29 | Report Abuse

thx mr.kcchongnz

Posted by Elwin Kai Kai > 2014-01-27 01:33 | Report Abuse

mr.kcchongnZ if want to learn how to calculate intrinsic value what kind of method or book would you recommend....new here would like to learn from pros like you....

Posted by kcchongnz > 2014-01-27 11:51 | Report Abuse

Posted by Elwin Kai Kai > Jan 27, 2014 01:33 AM | Report Abuse

mr.kcchongnZ if want to learn how to calculate intrinsic value what kind of method or book would you recommend....new here would like to learn from pros like you....

There are plenty of e-resources in the net. Book wise try this one "the 5 rules for successful stock investing" by Pat Dorsey.

Posted by Elwin Kai Kai > 2014-01-30 23:48 | Report Abuse

thx for all the advice and guide mr.kcchongnz wish you have a prosperus and healthy year....god bless