Posted by NOBY > 2016-06-23 12:39 | Report Abuse

You are right that earnings matter. Actually most net nets that eventually go up in price due to some catalyst such as they manage to record some improvement in their earnings or maybe declaration of special dividend or privatization. However, the difference vs chasing growth stocks is that you buy them during the most pessimistic time when they are the cheapest and sell them once people get excited about them again.

There are many successful net net investors around. You can check out this blog on some examples on what to look out for when investing in net nets.

https://www.netnethunter.com/net-net-blog/

Posted by buddyinvest > 2016-06-23 12:44 | Report Abuse

Great works Icon8888!

Posted by buddyinvest > 2016-06-23 12:46 | Report Abuse

Calvin has been made a Titan because he predicted that the palm oil can hit RM6k/tonne.

Posted by Icon8888 > 2016-06-23 13:29 | Report Abuse

thank you Noby

Posted by Tom > 2016-06-23 13:38 | Report Abuse

totally rubbish, no tell what stock good to buy now ah??? what to sell??? why write long2?????? hahaha just kidding

ps: i learned it from goreng_goreng, thank you

Posted by JN88 > 2016-06-23 13:42 | Report Abuse

Icon bro you say future earning later people say you are same to bomoh.

When I doing nasi lemak business, I'm also speculating, calculating the expected customers that may be coming to my gerai gerai.

Hence, the best way investing in stock is future earning for me.

Nasi lemak selling = stock investment .

Posted by Ezra_Investor > 2016-06-23 14:03 | Report Abuse

Icon, If you haven't read "The intelligent Investor", I recommend this book to you. Understand 1 thing.

1. Graham's method of investing focuses on cigar buff investing & net net investing. Both of them are a double edge sword, as while companies may be selling cheap, they are not necessary a good investment. The quality factor is not the concern there. This is what is happening to Calvin's method of investing. It is not totally wrong, but very risky. That's why I don't discount his method of investing, but not a fan of it.

Buffett used to have this method of investing until his investment firm grew to a sizable size, but this causes him to start losing money later. Later, his partner and lifelong friend Charlie Munger, advises him to shift his method from "Buying companies selling at a cheap price" to "Buying good quality companies at a fair price". Hence Buffett come to where we know he is today.

This is also how he come to say he is "85% Fisher, 15% Graham" today, instead of 100% Graham.

Another person who does this is Fong Silling. He always advises people to own high quality companies. Does this help clarify anything?

Posted by Icon8888 > 2016-06-23 14:13 | Report Abuse

thank you for your input

Posted by soojinhou > 2016-06-23 14:20 | Report Abuse

I must say I am thoroughly entertained by your piece. I agree that no one should blame KYY for their own investment decisions. If you want to win in this game, you work hard and research hard before KYY buys. If you are merely a follower than you only have yourself to blame. If you want to win, you have to be ahead of KYY, not follow him.

Posted by Ezra_Investor > 2016-06-23 14:21 | Report Abuse

You're welcome, my friend. No need to be so formal with me since we're friends right? And oh, one more thing. The tagline "It Is The Future Earning That Matters, Stupid" is not entirely true.
I don't always agree with Ricky Yeo's statement, but what he says is correct this time. Lemme explain why.

Warren Buffett’s investing principles focus on return of equity, ROE. This is his thought.

“Customarily, most investors measure annual company performance by looking at earnings per share (EPS). Did they increase over last year? Are they high enough to brag about? For his part, Buffett considers EPS a smokescreen. Most companies retain a portion of their previous year's earnings as a way of increasing their equity base, so he sees no reason to get excited about record EPS. There is nothing spectacular about a company that increases EPS by 10%, if at the same time, it is growing its equity base by 10%. That's no different, he explains, from putting money in a savings account and letting the interest accumulate and compound. Worse still, there are many companies borrow huge amount of money to improve EPS, but the marginal return is way below its borrowing costs".

While I read this from other investing blogs, KC has wrote about this before.
http://klse.i3investor.com/blogs/kcchongnz/88007.jsp

Posted by YiStock > 2016-06-23 14:52 | Report Abuse

It is the many many parts to put together to have a giant elephant. When one touch on one part of them, please continue to explore other parts too . A missed of any part will not make the elephant a complete and powerful one.

Posted by Buns > 2016-06-23 14:58 | Report Abuse

Amazing. One of the best pieces of writing I have ever come across. Better than WSJ, fund house reports, investor books. You really have a gift.

Posted by stockraider > 2016-06-23 15:06 | Report Abuse

Posted by Ooi Teik Bee > Jun 23, 2016 08:18 AM | Report Abuse

It is the future earning drives up the stock price. It is the future growth on EPS, but not the past earning. The past earning is to determine how good is the management. A good management always able to deliver the good result.
Thank you.

RAIDER COMMENT;
OF COURSE, IT IS THE FUTURE EARNINGS LOH...!!
BUT THEN WHY LOOK INTO PAST EARNINGS ?
U LOOK INTO PAST EARNINGS TO DETERMINE THE QUALITY OF EARNINGS AND ITS STABILITY AND SUSTAINABILITY LOH....!!

IF U TALK TO SOME TEACHERS....THEY WILL TELL U THAT THE TOP 10 STUDENTS USUALLY PROGRESS WELL AND SCORE WELL IF THEY PROGRESS TO THE NEXT STAGE OF ITS FORM.

THE SAME APPLY TO STOCK MAH....!!

Posted by probability > 2016-06-23 15:08 | Report Abuse

aiyo...touching parts and exploring....hmm stocks are as tricky as women... if only the objectives are as straight forward as it is for men...he he...

Objective: Find a stock which has the potential to give you 'future value of cash pile' (a) as much as possible compared to the 'cash you have taken out to buy the stakes' (b) within a time frame years of your concern (t) - that's all. i.e the CAGR = (a/b) ^ - 1/t

all discounting using cost of capital are just a comparison of the average return you can make from the market at large...and all variables you use...name it what ever you want...has only that one objective of predicting the future cash pile with the time frame you are concerned.

variables:
- management
- roic
- salesman competence
- USD exchange rate..
- dividend payout..
- cash pile
- debt risk
- cash conversion cycle..
- whatever you want..

Posted by YiStock > 2016-06-23 15:13 | Report Abuse

Probability, women are more complicated :-)

Posted by probability > 2016-06-23 15:16 | Report Abuse

YiStock...totally agreed.

Posted by ckkhen > 2016-06-23 15:17 | Report Abuse

A very provocative article that invites much intelligent discussion. We can learn much from it. Thanks, Icon8888.

Posted by leno > 2016-06-23 15:19 | Report Abuse

Tumpang lalu ... PMCORP CANTEEEEEEEEEEKKK !!!

Posted by iamvirtualinvestor > 2016-06-23 16:43 | Report Abuse

The differ between growth investing and value investing are those growth oriented investor really depend on future earning prediction of companies. They believes what past is past, and future matters. Value oriented investors tend to look the past performance to measure sustainibility of company. If the company cannot achive sustainibily in the past, how can they perform in future. They care the downside risk most of the time. Thus, IV is and MOS is top priority of value investor.

Posted by r°Moi > 2016-06-23 16:59 | Report Abuse

Aiyo..

Dont put yourself with and compare to the others la

Others are looking for good quality earnings... you are looking at unaudited quaterly earnings...

Very different la.. stupid

Posted by r°Moi > 2016-06-23 17:04 | Report Abuse

Stockmanmy.. cannot do it...


Is there anyone who can????


Who can... to harness... to simplify... to structure... to do the necessary... on how to identify growth companies... into a step by step approach..... that is simple yet reasonably reliable to use..


Anyone??




r°Moi Stockmanmy


You could well be on to something good...


All you have to do now is... to harness... to simplify... to structure... to do the necessary... on how you identify growth companies... into a step by step approach..... that is simple yet reasonably reliable to use..

r°Moi is waiting for it

.
21/06/2016 08:33

Posted by stockmanmy > 2016-06-23 17:08 | Report Abuse

there are sifus offering TA for a fee
also sifus offering FA for a fee

too bad no sifus offering BA.

not Bachelor of Arts............Business Analysis.

too bad.

we get so many incomplete analysis

Equity Analysis stands on a tripod

But i3 produces bipod analysis.


not all

sometimes, we do get bloggers who cover all 3 legs
what I cannot stand are spreadsheets of FA without any BA.

Posted by r°Moi > 2016-06-23 17:12 | Report Abuse

.


Stockmanmy is getting better by the day...

May you be getting closer and closer to enlightenment...

And... be able....to harness... to simplify... to structure... to do the necessary... on how to identify growth companies... into a step by step approach..... that is simple yet reasonably reliable to use..



r°Moi is waiting for it

.

Posted by pingdan > 2016-06-23 17:23 | Report Abuse

Haha share price move based on future profit. I agreed with this.

A good example is Gtronic. Why Gtronic which have a excellence result in the past drop about 50% from the highest? It is because the prediction of future profit will be drop.

Another example is FLBHD. Why FLBHD will shoot up to RM3.xx in the past but now only RM1.9x? It is also because of prediction of future profit will be drop.

Posted by r°Moi > 2016-06-23 17:26 | Report Abuse

More like the prices have ran ahead of the fundamentals....

And... relying heavily on unaudited quaterly earnings...

Posted by iamvirtualinvestor > 2016-06-23 17:43 | Report Abuse

Prediction = Speculative. It is the poison that killed many people on the wall street during dot com bubbles. Nowadays, those poison start to appear again. History keep repeated itself.

Posted by murali > 2016-06-23 18:14 | Report Abuse

So keep yr money in fd?

Posted by stockmanmy > 2016-06-23 18:16 | Report Abuse

look for a trend
run with the trend

iamvirtualinvestor > Jun 23, 2016 05:43 PM | Report Abuse

Prediction = Speculative.

Posted by Ban Seng Jong > 2016-06-23 18:29 | Report Abuse

likes for the article!

Posted by iamvirtualinvestor > 2016-06-23 18:34 | Report Abuse

Speculator = Trader go with trend. Earning surge > people comes buying > price surge > trend ceeated > they buy high and think to sell higher until the trapped on top of trend. While an investor against them. Buy when no one care about the stock.

Posted by sunztzhe > 2016-06-23 19:29 | Report Abuse

THE KEY IS DOES THE BIZ MODEL EMPOWERS THE COMPANY TO EARN SUSTAINABLE INCREASING EARNINGS AND GIVES A RETURN HIGHER THAN ITS COST OF CAPITAL.

Posted by sunztzhe > 2016-06-23 19:32 | Report Abuse

INVEST AS LONG AS THE RETURNS ON CAPITAL EMPLOYED IS HIGHER THAN ITS COST OF CAPITAL.

Posted by stockmanmy > 2016-06-23 20:18 | Report Abuse

trader , speculators, investors are all advised to run with the trend...
look for a trend , follow the trend...not just price trends, there are many many other sources of trends. find the strongest trends,
find a revolutionary trend if you can
find Alvin Toffler if you can.


iamvirtualinvestor > Jun 23, 2016 06:34 PM | Report Abuse

Speculator = Trader go with trend

Posted by Superstock2016 > 2016-06-23 20:50 | Report Abuse

The trend is my friend, stupid!

Posted by iamsoonoob > 2016-06-23 22:25 | Report Abuse

this year what trend?aside from airlines,what others trend?

Posted by Lyo82 > 2016-06-23 23:32 | Report Abuse

In order to get prediction(of earning growth) correct, one has to do a lot, a lot of homework. I wonder how many of genuine investors out there are really doing this consistently and seriously? Not to mention majority of investors who still have 9-5 daily job. Besides the regular job, I believe many of us still have other things to take care of: family, friendship, love, sports and many more.

I really salute those who devote themselves fully to investment/trading. I might not be able to do that.

So, choose the investing method that best suits your life style.

Posted by stockmanmy > 2016-06-24 01:09 | Report Abuse

that is the best question of them all.

I tell you, better than the fees paid to TA sifus and the fees paid to FA sifus


iamsoonoob > Jun 23, 2016 10:25 PM | Report Abuse

this year what trend?aside from airlines,what others trend?

Posted by r°Moi > 2016-06-24 12:22 | Report Abuse

So... with Brexit.. what is the trend?

Posted by probability > 2016-06-24 12:32 | Report Abuse

The trends only comes visible to him...when everyone already jump into the boat shouting happily...thats when the trend comes obvious to him...he he...by then its too late already...

again...its all about 'being in the game of your own competence'. Being the tip of the knife which cuts...

even in economics - its all about MVA 'Market Value Addition'. This is the 'price-P' you pay above the 'Book Value-b' of a firm...i.e the discounted cash flow of the EVA's - economic value addition due to competitive advantage.

This is the price you pay for stocks too...

Posted by stockmanmy > 2016-06-24 12:36 | Report Abuse

with Brexit.....UK will be heaven on earth, a very prosperous, enlightened country

in 20 years time, UK sterling will be a very sought after reserve currency.

Goodbye, sick Europe
Welcome UK growth after unshackled from the chains of Brussels.

Posted by probability > 2016-06-24 12:38 | Report Abuse

If you see those playing on TA...like connie & Skyhawk...they will make money coz they are really good in their fields...

Business big shots like KYY will have the first insights of the BA - so called by stockman..

Similarly those who are really good in forecasting its near term earnings will have the advantage like Icon...

Its impossible to come out with a theory or strategy which can benefit almost everyone....

You really need to be different than others and you really need to be damn sure you know what you are doing better than others.

Posted by SejukSam > 2016-06-24 12:39 | Report Abuse

betui. all this carnage n uncertainty is only temporary. look at iceland....bad but now ok dy.

uk will get better n more competitive...and the pound will rise again.

now is the best time to buy uk pound, property stocks etc as all are throwing

Posted by r°Moi > 2016-06-24 12:46 | Report Abuse

Wah r°Moi is impressed

You are about the only one that knew Brexit was done deal 5 days ago..

Impressive!!



probability The trends only comes visible to him...when everyone already jump into the boat shouting happily...thats when the trend comes obvious to him...he he...by then its too late already...

Posted by probability > 2016-06-24 12:49 | Report Abuse

ha ha..that one pure gamble la...got psychological bias due to vested interest also..he he..

Posted by probability > 2016-06-24 13:13 | Report Abuse

As a summary we need to make the correction on the Title, it should be:

‘its the CAGR of the 'Current cash + Future Excess Cash accumulation' within a period t' over the 'Cash you forked out' to claim the stakes of the cash pile.....that matters – goblok!

but speculation has a way to make the price move quite unrelated to the reality of the above 'CAGR potential'....and it all depends on the mentality of the influential majorities....the players….as everyone does not have access to the same information and the same intelligence for information processing.

Posted by probability > 2016-06-24 13:33 | Report Abuse

but I if we are talking about the key influential parameters that drives the price in the short term...its the E-arnings growth...nothing beats that.

Posted by stockmanmy > 2016-06-24 15:01 | Report Abuse

trend....

trend is simple.

it is solidly red.......hahahahaha


just sell every thing including your backside....why argue?

Posted by leno > 2016-06-24 15:43 | Report Abuse

when stock manny say SELL ... leno will BUY like no tomolo ... HAHAHAHAHAH

Posted by stockmanmy > 2016-06-24 15:46 | Report Abuse

good for you

leno > Jun 24, 2016 03:43 PM | Report Abuse

when stock manny say SELL ... leno will BUY like no tomolo ... HAHAHAHAHAH

Posted by KLCI King > 2018-01-17 15:47 | Report Abuse

This article is purely written for stupid by stupid