Posted by ks55 > 2014-11-20 23:45 | Report Abuse

Buy good company cheap, I like it.
Good share doesn't come cheap. But when market crash, bad share drop, good share also drop. It is always when market crash that you can get good value for your money.
The problems are:-
1. How do you define good share? What are the criteria to qualify your good share?
2. How do you evaluate value of good share to form basis of buy cheap
3. How do you accumulate good share (buying strategy)
4. When is the best time to start buying (always remember lesson learnt during 97/98 crash)
5. Exit plan

Right now the most important thing to consider is the risk factor in investment cycle clock. I am of the opinion the peak is over. The market can only move south. It is safe and prudent to keep more cash or park your money in REITs to wait for opportunity.

Posted by kcchongnz > 2014-11-21 04:42 | Report Abuse

ks55,
"It is always when market crash that you can get good value for your money."

Very good points. Value investors always buy good stocks in loads during market crash. Late 2008 and early 2009 was one of the best times to buy stocks of good company.

However, nobody can really predict when the market will crash. And historically the stock market is always in a long term uptrend, 10% a year probably. So to build long term wealth, especially for young professionals, they have to save, and invest. Saving money in bank deposit is not a good option as the real value of the saving doesn't grow because of inflation. Here are my response to your points.

1) Good shares are defined in the strategies mentioned in the post. For example in the Magic Formula investing, good shares are defined as having high return on capitals. If they are not defined, the particular post will remind what to look for. For example for low P/E strategy, adjust for one time off ordinary gain as part of the E, etc. Appreciate your comments on them.

2) The basis of buying I always look at the price Vs Value relationship. Only buy good stocks at reasonable prices, for example, basing on Earnings yield.

3) Value investors buy stocks if they are selling at a comfortable margin of safety. Hence value investor generally make an estimation of what is the value of the company, may be using discount cash flow analysis. If the margin of safety is very high, just buy, but remember the use of diversification, and never swing at the fences.

4) Of course the best time of buying is when the stocks are selling cheap, especially during market crash like what was mentioned by you. But bear in mind that what Woody Allen said,

"Ninety percent of success is just showing up."

5) Exit plan. Here is my thought:
http://klse.i3investor.com/blogs/kcchongnz/56937.jsp

I do generally agree the investment clock is not favorable for the market now, but history has also shown that the market is generally unknowable and unpredictable. Another thing is REITs are subjected to the same systematic risks as other stocks. I still remember I invested in Axis Reit for about RM1 in 2009.

Posted by ks55 > 2014-11-21 10:18 | Report Abuse

Thank you for reply.I really appreciate.

We cannot be certain exactly when market is going to crash, but we are certain the peak is over. When investment clock is at 1155hr, it will not be much different from 1200hr, the changes is small. Likewise, from 1200hr to 1205hr, many still remain unaware. It is always when it reach 1215hr when drifting market accelerates its fall, people will start to realise. By then half of their capital might have been wiped out.

What I have been doing now is keeping 40% cash (FD), 50% REITs (of course not office REITs), 10% good DY stock (may change from A to B) to help me keep update market movement regularly. Like shares,REITs may drop, but minimal. So call low risk medium return investment.

I would also like to share my view that 97/98 crash in Malaysia/Asia is only comparable by 08/09 US market in modern history. 08/09 Malaysian market is no where compare to 97/98 if you were already in during that time. For me, I will never forget lesson learnt during that crisis.

Posted by ks55 > 2014-11-21 10:30 | Report Abuse

I would like to add further

1. Beware of creative accounting. PE can cheat, PL can cheat, BV can cheat, growth rate can also cheat. You know what I mean.

2. Must be comfortable with Director of company you intend to invest. Too many examples happened in Malaysia. Cheat once, he may cheat second, then third time and so on.

Posted by kcchongnz > 2014-11-21 11:28 | Report Abuse

Posted by ks55 > Nov 21, 2014 10:30 AM | Report Abuse
I would like to add further
1. Beware of creative accounting. PE can cheat, PL can cheat, BV can cheat, growth rate can also cheat. You know what I mean.
2. Must be comfortable with Director of company you intend to invest. Too many examples happened in Malaysia. Cheat once, he may cheat second, then third time and so on.

Yes, you certainly have eaten a lot more salt than many people eating rice, having gone through the 97/98 saga and also the second board euphoria in the 90s. Thanks for your timely reminder which is good for many newbies who think they can make a lot of money in this market betting against insiders, manipulators, institutional investor, investment bankers etc. One who plays golf know what is the outcome is like if you play scratch against single handicapper like if your handicap is above 20.

More so these single handicappers intimidate you with all kind of psychological tricks, improving his lines, set his own golf rules without you knowing, etc.

That is also why my first lesson in "How to lead a comfortable retirement life through investing in the stock market?" is never telling newbies how they can make thousands and millions in the stock market, but to be aware of and how to identify lemons and avoid them. That is the first rule.

http://klse.i3investor.com/blogs/kcchongnz/62293.jsp

I still maintain the market is unknowable and unpredictable though. A seemingly high price market can go up much higher, and similarly a seemingly low market can go much lower. That is not what my theory is, but a reality and have shown again and again in history.

Posted by stockoperator > 2014-11-21 11:33 | Report Abuse

lets say all stocks in Bursa are mispriced to certain extents for good or bad reasons. That is why there is price adjustment everyday as every valuation Model tried their Best to get it right. We respect the way it is.

They can be either mispriced at the top or mispriced at the Bottom. Sometimes it is Buying Opportunity. Sometimes you may want to do rebalancing in your portfolio.

Once you are in the market, just be Ready for 20-30% correction at any point of time. If you have already 50% upside, it is Rightful to give back 20-30% gain. We will only be anxious and worried if we dont want to give it back.

It is like doing Business. Gain from Society. Donate some as charity.

Posted by kcchongnz > 2014-11-21 11:51 | Report Abuse

And I want to repeat and repeat and repeat, the riskiest thing to do is to borrow and use margins to play the stock market now.

http://klse.i3investor.com/blogs/kcchongnz/61822.jsp

Hey, I even talk about the 97/98 stock market in Malaysia here.

I am no sifu, but I seriously think newbies, or rather anybody who thinks that it is easy to make money from the stock market, must read my article above.

Posted by stockoperator > 2014-11-21 11:53 | Report Abuse

i would also like to add: Crisis will Only be allowed to develop if it is a Shock to the economy as we are unprepared for Sudden shock. At this juncture, i perceive market is preparing for some eventuality of slow down and if there is Only a slow down and there is No default and Credit downgrade or Currency Devaluation or other black swan, we are safe for slow down.

Posted by ks55 > 2014-11-21 12:13 | Report Abuse

You think we are not in that crisis at the moment?

My comment in SKPetro
## In case you don't follow what has happened at the macro level, oil just got totally destroyed in 5 months. Go figure the impact to the national deficit and govt budget for the next one year, and how everything would be funded.
Light Crude Oil fall from USD109 in Jul to USD74 as per today.
14/11/2014 12:36 ##

How will be our budget 2015 fare? No money coming in, no operating budget, no development budget. Everything come standstill.

Again you look at KL city line, KL is already City of Crane just like Bangkok in 1997.
Please also refer http://www.patchay.com/p/kuala-lumpur-urban-developments.html

USD fast approaching 3.5, will it stop at 3.8?

Will Malaysian banks facing US banks subprime problem?

Posted by stockoperator > 2014-11-21 12:20 | Report Abuse

Uncle ks55, i know it is tough.

If our economy is big enough, we can absorb all the shocks.

Posted by stockoperator > 2014-11-21 12:28 | Report Abuse

anyway, uncle, we would never investing in our national economy. We are Only investing in a few selected company at fair price if not discounted price.

Posted by ks55 > 2014-11-21 12:36 | Report Abuse

破巢之下 安有完卵

Posted by stockoperator > 2014-11-21 12:42 | Report Abuse

anyway crisis seldom strikes twice at the same spot. It got to be better than last times. That is why it comes as a Shock and Black Swan as we are unprepared.

Posted by stockoperator > 2014-11-21 12:48 | Report Abuse

if it comes it is a fact and i cant argue with the facts.

When the facts come in, i believe market will ask me to decide.

Posted by stockoperator > 2014-11-21 14:16 | Report Abuse

Ha, looks like KC is prepared to go down with me as well, ya? just testing.

Posted by stockoperator > 2014-11-21 21:31 | Report Abuse

Dear All, We are given the same investment environment. We are given the same company to invest. We are given the same chance to acquire investment knowledge.

But investment results are different. Somebody can be the Richest man because of Investment. Somebody can be Bankrupt because of investment.

it is because Investment is Mentality.

Posted by raoyam > 2014-11-22 02:54 | Report Abuse

How to retire through "value investing" has morphed to something else; the future is always que sera sera; but value investing strategies is still the same; aax for glorious future, anyone?

Posted by kcchongnz > 2014-11-22 17:01 | Report Abuse

stockoperator Ha, looks like KC is prepared to go down with me as well, ya? just testing.

Stockoperator, I am not prepared to go down with you but I do hold some similar principles as you:

The future is unknowable and unpredictable, at least it is to me.

1. We should spend our time trying to find value among the knowable, rather than based our decisions on what we expect from the less-knowable macro world of economies and broad market performance.
“Eighty percent of success in life is just showing up” Woody Allen

2. Given that we don’t know exactly which future will obtain, we have to get value on our side by having a strongly held, analytically derived opinion of it and buying for less when opportunities to do so present themselves.
“The secret to successful investing is to figure out the value of something and then-pay a lot less”
Joel Greenblatt

3. We have to practice defensive investing, since many of the outcomes are likely to go against us. It’s more important to ensure survival under negative outcomes then it is to guarantee maximum returns under favourable ones.
“Take care of the downside; the upside will take care of itself”

4. And most of all, stay high at the capital structure, and shun leverage as a plague.

Posted by ks55 > 2014-11-22 20:14 | Report Abuse

Shortlist those fundamentally good counters, make technical analysis before you decide to buy. There is always an alternative, buy share A or share B. Opportunity cost exists. Best buy today is not always best buy tomorrow.

Posted by stockoperator > 2014-11-22 20:51 | Report Abuse

good la this is called friend. Let me drag somebody else going down with me. Ha, Uncle, you don't come too close ya.

Posted by murali > 2014-11-22 21:00 | Report Abuse

Good sharings

Posted by stockoperator > 2014-11-22 21:30 | Report Abuse

Anyway we always need KC and his forum to stay up for Public education and i wish him success on his online course as well.

Posted by kcchongnz > 2014-11-23 03:43 | Report Abuse

Posted by ks55 > Nov 22, 2014 08:14 PM | Report Abuse
Shortlist those fundamentally good counters, make technical analysis before you decide to buy. There is always an alternative, buy share A or share B. Opportunity cost exists. Best buy today is not always best buy tomorrow.


Great advice ks55.

Investment Strategy: Buying bargains on the move

Posted by kcchongnz > 2014-11-23 11:02 | Report Abuse

Posted by ks55 > Nov 21, 2014 10:30 AM | Report Abuse
I would like to add further
1. Beware of creative accounting. PE can cheat, PL can cheat, BV can cheat, growth rate can also cheat. You know what I mean.
2. Must be comfortable with Director of company you intend to invest. Too many examples happened in Malaysia. Cheat once, he may cheat second, then third time and so on.


True and true. Need I say more? Please read:

http://klse.i3investor.com/blogs/kcchongnz/45373.jsp

But how can you be protected?

"No one protects the retail investor-not corporate officers, not brokers, not analysts, not the media, not even government agencies and elected officials whose job is to do so. An investor must use his own best judgement, all the information available (bearing in mind that publicly available information is never equivalent to insider information), and be very conservative."

So how? Get out completely from the market? But then hear him say:

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” - Robert G. Allen

But can you do that if you insist to invest to build long-term wealth? Do most retail investors know how to protect themselves?

The only way I see you can protect yourself is you. Yes, you are the one! But how? Benjamin Franklin will tell you this below.

"Tis goeth down to a fundamental aspect that “An investment in knowledge pays the best interest”"

Posted by stockoperator > 2014-11-23 15:49 | Report Abuse

i remember during the childhood time we used to build a very tall pyramid tower from a small block of cubicle. It takes considerable amount of time as most often than Not the tower was crumbled down before half way mark. But our childlike attitude does not stop us there. We happily regain our composure for another rebuild attempt and before long another tower was in sight again.

Same as investment, we are building long term wealth. And same as building a pyramid tower, before long our investment was crumbled down. But as adult, we lose our childlike innocence, we start to blame others and all circumstances instead of inspecting the failure. And most often than not, we lose our courage for another attempts.

Before long, we lose faith and courage. What do we do next? WE resort to trading and speculation. We resort to all kinds of vice to harm our bodies and families. Drinking, smoking, gambling, drugs, bodily abuse and broken marriage and so on. WE are totally crumbled under the rumbles. And before long, we resort to all other kinds of Money game and pyramid schemes.

Be very conscious.There is a Light within. It is there very deep down where no human eyes can see and Nothing can destroy. The eternity can defeat the time factor.

Wish you all the peace and joy in life.

Posted by andychucky28 > 2014-11-23 21:45 | Report Abuse

Nothing can protect you. Buy at your own risk!

Posted by stockoperator > 2014-11-24 00:34 | Report Abuse

the risk is Market does not care who we are and there is Sub par return Over a period of time and market has lost its money making machine which is unlikely to happen.

Posted by RonnieKimLondon > 2014-11-27 23:46 | Report Abuse

Are shareholders allowed to vote for a change in fund manager?

Posted by stockoperator > 2014-12-21 20:40 | Report Abuse

Dear Ronnie, i really dont think so as Capital Dynamics is the Principal.

But Capital Dynamics can replaced TTB though which is unlikely as TTB owns Capital Dynamics. So nothing is going to change for quite some time.

Posted by ks55 > 2015-01-20 20:23 | Report Abuse

Plan for your retirement : Financial Mistakes To Avoid For Every Decade
www.imoney.my/articles/financial-mistakes-to-avoid-for-every-decade

In your 20’s

In your 20’s, you are most probably new in the workforce, trying to work your way up. Unfortunately this also translates to a low income but being young, socialising usually takes priority causing you to overspend and under-save.

Overestimating purchasing ability

You could be wanting to travel the world or buy a luxury car, but you do not earn enough to afford these things. If you cannot pay for these wants from your own pocket, you may end up incurring huge debts that hold you back for years. Get used to saving for the things you want instead of solely depending on credit.

Delaying retirement savings

When you are in your 20′s, retirement can seem far away. The earlier you start stashing away savings for this purpose, the more you will earn with compounding interest and the more comfortable your retirement will be. The money you save in your 20′s is potentially worth way more than anything you will set aside in your 40′s.

Abusing credit cards

While credit cards serve a valuable service by providing convenience, they can also tempt you into living beyond your means. At this stage, your credit card bills can seem burdensome if you are not careful. Failing to settle the full amount, you may resort to paying the minimum balance only, incurring a big sack of accumulated interest (Find out how you can pay-off your debts). Create a spending plan based on your income and stick to it. Use credit cards only if you can pay the balance off in full at the end of the month.


In your 30’s

In your 30’s, you are most probably married, and started to plan for your family which may involve having kids. More and more financial responsibilities are pouring in, and it will take some finesse and strategy to balance your finances and provide the best for your family.

Not planning for your children’s future education needs

Holding your bundle of joy in your arms, the thought of him or her going to the university may seem light years away. But, time flies faster than you could ever imagine. As the cost of a university education is set to rise as years roll by, you should start planning for your child’s university fund right from the birth of your child. If you have more than one child to fund through university, these figures can rack up quite high (Find out how you can save for your children’s future education needs). By procrastinating or not having an education fund at all, you may be forced to dip into your retirement fund before your golden years.

Taking insurance lightly

Individuals in their 30′s often neglect to protect themselves with adequate insurance. They often lose out on the chance to buy life insurance at a lower premium and delay the purchase of disability, personal accident or health insurance. Going without sufficient coverage is financially risky. With having dependents such as spouse, children and aging parents, it guarantees a financial safety net for your entire family if something were to happen to you.


In your 40’s

In the 40’s, one would most probably have reached the peak of their career and be earning substantially more than you were in your 20′s (or even your 30′s). However, many are still busy spending money on the things they want right now, such as vacations, bigger cars, or new houses, and delaying their retirement savings.

Not reviewing your investment portfolio

Yes, it is a good thing that you have an active investment portfolio, but as you go through different stages in life, your risk tolerance changes. You may have been willing to take more risks when you were in your 30′s as you still had the ability and time to earn an income. However, as you are nearing retirement, you may want to review your portfolio to allocate more of your assets in more conservative investments. However, moving your investments to a safer avenue too early could also cause you to run short on your nest egg. You need to ensure that your savings can support you well through retirement. Balance is the key!

Ignoring will

Obviously it is hard to imagine being in your death bed when you are still young and active. However, writing a will should be on your must-do list when you are in your 40′s, if not earlier. A will protects your family and your assets if something happens to you. It also ensures that you have an attorney that will make financial and legal decisions on your behalf if you become incapacitated............

Posted by ks55 > 2015-01-20 20:25 | Report Abuse

........ In your 50’s

In the 50’s, your children are in university and only a decade more to go before retirement.

Using retirement savings to pay for child’s education

If you have children, it is not wrong to help pay for their tertiary education related expenses, but not at the expense of your retirement savings. Too many parents sacrifice their retirement savings and withdraw from their EPF in favour of their children’s education. Put your retirement needs first and do what you can to save for both, which is why its important to start planning for both as early as possible.

Investing like you are in your 30′s

As you are nearing your retirement you become even more protective of your savings in your 50′s. Considering the fact that you could be living well into your 80′s or 90′s, you require a substantial amount in retirement. Simply preserving capital is not a sustainable financial strategy, the money must be put to work. While investing money in an investment is risky, it is equally risky for if the money is kept under the mattress. So make sure you keep growing your nest egg well into your 50′s and beyond, to combat against inflation and support you financially.


In your 60′s

In the 60′s, you have finally retired, wrinkles set in, and your children have settled and have started their own families. Money becomes extremely important to you now that you no longer have an income stream. The best case scenario would be to enjoy your golden years in relaxation and do things that you were too busy or didn’t get to choose before, when you were still climbing the corporate ladder.

Completely abandoning investments

You tend to build your funds until you retire, and then stop proactively building and start living off those funds. However, retirees can continue to maximise on their investments to stretch their retirement income through investments that offer monthly or quarterly distributions. Ensuring your investments deliver a steady income stream can help you better manage your budget and stretch your money further (Find out what are the low-risk investments that retirees can invest in).

Not maintaining a medical insurance

As you grow older, your medical insurance becomes more and more expensive. Most people would cancel it, and focus their finances in other areas of their lives. However, there is a reason why the cost of medical insurance increase in tandem with your age — people are prone to sickness as they get older and medical bills would start pouring in. That is when it will hit that you should have kept your medical insurance.

Making full use of financial opportunity at every decade of your life is important. More money handled appropriately means more opportunities and more financial security for you and your family.

Posted by ks55 > 2015-01-20 20:31 | Report Abuse

Save Up For Your Child’s Education Fund Now
www.imoney.my/articles/save-up-for-your-childs-education-fund-now

How much will a university education cost when your child is ready to go?

First, do your research and find out how much money you will need to support your child’s tertiary education. This figure will depend on whether you want your child to further their studies locally or abroad, and also the course pursued. Then you will have an idea of how much money you will need to save.

Below is the present fee structure for some common tertiary education courses at preferred locations:

https://www.imoney.my/articles/wp-content/uploads/educost-table-1.png

*All fees listed are estimates. These estimates do not include accommodation, food, travelling and books costs.

If a medical degree cost RM255,400 in a local private university today, in 18 years, it will come up to RM645,893 (assuming an education cost inflation rate of 5% per annum). If you have more than one child to fund through university, these figures will be even more startling.