Posted by 10154899906070843 > 2019-01-15 00:56 | Report Abuse

In summary, learn to build a story. Understand the business. Then get into the nitty gritty of the business, the valuations, the profits, the assets, the revenue growth...

because if you don't have a good story, your financial investment could end up in smoke just like that.

Posted by 10154899906070843 > 2019-01-15 08:04 | Report Abuse

https://seekingalpha.com/article/4149368-discounting-future-cash-flows-buffett-munger-approach

This also sums up how I feel about investing theses days. You could learn about margin of safety, stock valuation and the entire important philosophy of the intelligent investor in 1 chapter. Yes, that is 30 minutes of reading. Once you have the basics, the rest of simply reading up on as many financial reports you can find and understanding what the numbers tell you about the business.

When you pay 4-5k on an investing course, the sifu can actually share to you the most important tenets of investing in 30 minutes. In ta, it is basically volume analysis, momentum analysis, trends analysis and support and resistance of charts.

But if you pay 4-5 k for 30 minutes what would be the point? Therefore the sifu will start introducing to you complicated terms like Fibonacci, simple moving average 20 day, 50 day, 200 day. Exponential moving average, RSI, TSI,macd, Bollinger bands. They then proceed to sell you specialized indicators which is backdated to make a profit for the last 20 years, but never seem to work out in the future ( or Black swan event)

In the end, use too much indicators and you see the wrong thing. Value things in the wrong way.

The ones that succeed (in ta majority of the time) are those that understand the 30 minutes basics of technical analysis.

TA is about 2 things
1. Understanding market psychology. Fear and greed.
2. Ta is about using past price/volume movements to predict future events

Best application of ta( business sense of how they really earn money)
1. Small penny stocks, volatile stocks with some resemblance to fundamentals.
2. Pump and dump
3. People selling and giving stock recommendations where they can buy first before you and sell after everyone has gone in.

Hence, once you understand what the game is, you are forced to buy 100-120 counters for short periods because the psychology is all about pump and dump .

I merely wish to advise investors on a better way, a more effective way of finding and supporting a management that wishes to grow shareholder value in the long run. Instead of also playing the pump and dump game.

Posted by 10154899906070843 > 2019-01-15 08:09 | Report Abuse

I deem penny stocks to be anything below RM500 million market cap. As anything below this amount is either a business that is too young or too small for you to make an intelligent analysis (with exceptions), or it is too easy to buy a huge block, generate euphoria and greed, and run out with a 5-10% gain.

Do you really want to play this kind of zero sum game where the late game is everyone hates your guts?

Posted by 3iii > 2019-01-15 08:23 |

Post removed.Why?

Posted by 3iii > 2019-01-15 08:25 | Report Abuse

>>>
10154899906070843 I deem penny stocks to be anything below RM500 million market cap. As anything below this amount is either a business that is too young or too small for you to make an intelligent analysis (with exceptions), or it is too easy to buy a huge block, generate euphoria and greed, and run out with a 5-10% gain.

Do you really want to play this kind of zero sum game where the late game is everyone hates your guts?
>>>


Do you know the game you wish to play or are playing?

3 types of games:

Positive sum game
Zero sum game
Negative sum game.


Choose to play ONLY the positive sum games to grow your wealth over the long term.

Posted by Choivo Capital > 2019-01-15 09:29 | Report Abuse

Pretty great article.

I just consider the valuations of some of your companies too rich. That is all.

But when it comes to understanding a business, you're really good.

Posted by WongJiaHao > 2019-01-15 09:59 | Report Abuse

thanks! nice to learn more about warren buffet and how he thinks.

Posted by teoct > 2019-01-15 10:07 | Report Abuse

Philip (not Fisher), thank you for sharing.

Posted by qqq3 > 2019-01-15 10:45 | Report Abuse

stock market in the final analysis is also about character, habit and practise.......how to turn knowledge into character, habit and practise.....

any way, this Philip is an old hand and have lots of stuffs to teach....imagine the rookie SSlee cannot even recognize a jewel when he sees one. Talking to SS lee is like throwing jewels to swine.

its fresh, its refreshing and is far superior to the normal stuffs one commonly come across.

For one reason or another, the analyst community, the sifus community cannot and will not be able to give u this perspective......

Posted by pputeh > 2019-01-15 11:26 | Report Abuse

Thanks, Philip for yr articles (2) so far which I have read. Its great to see that patience and good selection according to yr laid down rules has brought you big returns.I am a small time investor. I have sat on Aeon Credit since 2010. Bought @ 3.85 per lot. (3) lots till today. Has become 5600 shares today not including the div paid. Patience & Selection pays

Posted by 10154899906070843 > 2019-01-15 13:34 | Report Abuse

Hi pputeh, aeoncredit is a good buy! My advice is if the story of aeonco bhd doesn't change, it may be a good idea to continue holding.

Just that when you do quarterly analysis, you need to understand the business of aeonco tightly, as they are correlated. Because they split the business into 2 parts ( similar to how Citibank was split into good assets and bad assets), you have to remember the story that as the assets and supermarkets of aeonco grows, so will the lending base of aeon credit.

Aeon credit is the best lending of all, they charge directly to credit cards which is under the bank provisioning so you don't have to worry about bad debt. Then they sell high interest rates and high premiums for nonevents like 2 year insurance warranty.

If I had know about aeon years ago ( they don't have any branches in Sabah and Sarawak), I might have bought. As it is, I don't see them doing aeoncredit for senq, Harvey Norman and the rest.so we need to monitor aeonco closely.

But I do still follow the performance every quarter. If the story changes, I'll be the first to join you in!

Cheers and good luck investing!

Posted by cyeec2000 > 2019-01-15 14:46 | Report Abuse

Thanks Philips..great article has ever been read.

Posted by stockraider > 2019-01-15 15:16 |

Post removed.Why?

Posted by Flintstones > 2019-01-15 15:52 | Report Abuse

I hope nobody replies stockraider. No offense to him but stockraider replies give me cancer. Too long winded.

Posted by stockraider > 2019-01-15 15:54 | Report Abuse

Take above article not winded meh ??

Posted by Flintstones > Jan 15, 2019 03:52 PM | Report Abuse

I hope nobody replies stockraider. No offense to him but stockraider replies give me cancer. Too long winded.

Posted by Rwkl > 2019-01-15 16:07 | Report Abuse

Philip, thanks for all your memorable postings.
Earlier you gave a passing mention On Scientex, care to
Share on what’s stopping you from investing?
Also what’s your take on Sam Engineering?4

Posted by qqq3 > 2019-01-15 16:26 | Report Abuse

https://www.youtube.com/watch?v=oQGpdgV_ifI&feature=youtu.be

Posted by qqq3 > 2019-01-15 19:12 | Report Abuse

Red Chips are famous...But the hustle does not end there.

conflict of interest across the whole system of auditors , investment bankers, lawyers, valuers, ...

Red chips from IPO to delisting, the whole thing has been planned.

majority of mesdaq listings are like red chips...except for the scale and audacity of it all.

Posted by qqq3 > 2019-01-15 19:13 | Report Abuse

The China hustle. As early as 2010 already got articles in WSJ.... Our Red Chips still going strong till 2017...still got people conned....

Posted by qqq3 > 2019-01-15 19:21 | Report Abuse

Sam E and Scientex belong to the group which are not rubbish...

buy or not ask philip....

me..I think Scientex late in the game, and Sam E , I think the juiciest parts will be reserved for Singapore......

Posted by stockraider > 2019-01-15 19:27 | Report Abuse

ONE THINK FOR SURE, IF WARREN BUFFET WILL TO LOOK INTO QL TODAY, WITH PE ABOVE 50X, DIV YIELD LESS THAN 1% PA AND NEGATIVE CASHFLOW WITH HIGH BORROWING...HE WILL SURELY REJECT IT IN LESS THAN 5 MINUTES LOH...!!

Posted by 10154899906070843 > 2019-01-15 19:55 | Report Abuse

For Sam engineering, it is a company based it's factories and plants in Penang, ergo usually led, semiconductors and hard disk drive. I personally don't like this business, as I don't see any long term future in manufacture of drives. As someone who started with floppy disks on my 186, then moved to hdd, then the move to solid state, I have a good friend who worked with Seagate. He was retrenched. I realized the tooling industry is not very amenable to change with new equipment expenses and long term return. Especially if your equipment and entire manufacturing methods change almost overnight.

For it's aerospace division, the only company that I have looked at before was Boeing, Airbus and Barnes aerospace. My take on this: the aerospace business is dominated by Boeing and Airbus and they have new and old engines to be maintained. It does not favor the MRO suppliers and market. By doing a comparison of the business in Barnes and Sam you see a very clear similarity. There are only a limited amount of planes that need to be replaced and maintained every year. And each new growth will be driven by new and different types of planes, meaning new upgrade in capex, lower margins and most importantly, an inability to grow organically because best competing prices are always wherever is nearest to the planes. It's a very standardised business, and cost of export hampers growth.

Then again, if it wasn't everyone would be sending engine casing from plants in China, UK and US.

Personally, it's a interesting business, but the profit margins compared to Barnes aerospace division gives me a skip.

I still think it's a fine business with ok prospects 5-10 years from now, but I'd rather look for companies with either high growth and low profits, or lower growth with high profit earnings, while protecting shareholder value. But I do like to buy companies with a clear business advantage ( like boring and Airbus), or superior tool manufacturing model. I don't see that for sam within the next 5 years.

Posted by qqq3 > 2019-01-15 20:06 | Report Abuse

1 MDB and red chips suggest the investment banking industry is just a bunch of greedy postmen....no professionalism.

Posted by 10154899906070843 > 2019-01-15 20:29 | Report Abuse

As for scientex I think it is a very very smart company, although both in industries which I don't like.

It is not a good time to be a developer, but if you have to be a developer, it is best to sell cheap landed housing which public can afford ( rumah mampu milik) or to concentrate on shoplots, which can generate higher rental yield psqft than condos, which people are now realizing are bad deals which benefit only developers. If you buy a 700k condo, which can rent out for only 3k a month, and buy a 3 story shoplots for 1.8 million, which can rent out 10k per month, which would you choose? Which has more room to increase in value?

Scientex does both of these, which is brilliant. Condos, not so much.

The stretch film manufacturing, which does 1.9 billion revenue on 1.6 billion cost of sales, is going to be a business that will grow quite well in the long run, giving a lot of leeway to company growth prospects. It is very low profit, and in a business with no moat, which I don't really like. But it has good management, which goes a long way. ( Just ask Warren buffet who took over dying Berkshire, sold is textiles business and bought an insurance business 2 years later)

However, Hong Leong owner had told his bankers not to borrow money to developers, and for good reason. I feel the same way too.

I will probably, maybe invest in a property company 10 years from now, but right now I avoid them like the plague.

Cheers!

Posted by 10154899906070843 > 2019-01-15 20:42 | Report Abuse

And malls! Avoid any developer building malls as a matter of principle! Avoid them for they are the black plague!

Posted by cyeec2000 > 2019-01-15 20:48 | Report Abuse

Philip, How do you view about hevea particle board company?.

Posted by qqq3 > 2019-01-15 20:50 | Report Abuse

buy and hold really not easy one ...that is why some people makes so much money out of it.......

a combination of so many factors to be a buy and hold guy.....and to do it right....

luck? survival bias? I don't know...but this philip seems to me to have the right temperament. tenacity, intellectual capacity and work ethics to make it work.....

Posted by qqq3 > 2019-01-15 20:52 | Report Abuse

cyeec2000 > Jan 15, 2019 08:48 PM | Report Abuse

Philip, How do you view about hevea particle board company?.
======

forget it la.....don't belong to the 5% elites. cannot be assessed.

Posted by qqq3 > 2019-01-15 20:59 | Report Abuse

https://www.youtube.com/watch?v=ILY1f4bFPoI

How does a buy and hold guy handle economic questions......bull and bear questions?

Posted by Sslee > 2019-01-15 21:04 | Report Abuse

Dear Mr. Philip,
I refer to your write up: “I was very pleasantly surprised in 2015 when he announced that he had bought the final 20% of ISCAR to completely own it. I was even more surprised when all he received in the beginning was a short letter and a financial report. Within a day, he had called back with an offer: 2 billion us dollars for a company that he had never seen, based in Israel. All from a phonecall.”
I refer to below link:
https://en.wikipedia.org/wiki/ISCAR_Metalworking
https://www.quora.com/Why-did-Warren-Buffett-purchase-Iscar
https://www.haaretz.com/israel-news/business/.premium-warren-buffett-completes-iscar-takeover-1.5240503

The story here began on October 25, 2005, when I received a 1¼-page letter from Eitan, of whom I then knew nothing.----- Overall, Eitan’s letter made the quality of the company and the character of its management leap off the page. It also made me want to learn more, and in November, Eitan, Jacob and ISCAR’s CFO, Danny Goldman, came to Omaha. A few hours with them convinced me that if we were to make a deal, we would be teaming up with extraordinarily talented managers who could be trusted to run the business after a sale with all of the energy and dedication that they had exhibited previously. However, having never bought a business based outside of the U.S. (though I had bought a number of foreign stocks), I needed to get educated on some tax and jurisdictional matters. With that task completed, Berkshire purchased 80% of ISCAR for $4 billion. The remaining 20% stays in the hands of the Wertheimer family, making it our valued partner.

Summary:
Timeline:
1. October 25, 2005, when I received a 1¼-page letter from Eitan
2. Berkshire purchased 80% of ISCAR for $4 billion in May 2006.
3. Berkshire Hathaway announced on May 2013 to acquire the Rest of IMC for $2 Billion.

Thank you

Posted by 10154899906070843 > 2019-01-15 21:22 | Report Abuse

For HEVEA, focus lumber, and evergreen I group it all within the same category. These are all penny stocks with high volatility, good cash position but no long term growth plan on view. If you ask yourself, where will HEVEA expand to in 5-10 years you know as well as I do they have no growth triggers or anything in the pipeline.

Pump and dump stock, trade at your own risk.

Posted by Rwkl > 2019-01-15 21:23 | Report Abuse

Philip, looks like its a uphill task to dislodge your fab 4.
Anyway thanks for the input as I have held both for some time
I wanted fresh perspectives and a believer in hanging on to something good.
Cut to the chase.....who is Number 5? Surely it can break the stranglehold?

Posted by 10154899906070843 > 2019-01-15 21:26 | Report Abuse

Yes, sslee,

The wertheimer family also came down to the annual meeting, and at that point Warren was gratitude enough to explain that they were one of the 5 pillars of Berkshire.

Now, do you know WHY Warren buffet bought iscar?

10 points and full marks if you can do that without referring to someone else's analysis!

Posted by Sslee > 2019-01-15 21:35 | Report Abuse

Dear all,
Investment return:
1. Purchased 80% of ISCAR for $4 billion in May 2006.
2. Purchase the rest 20% of IMC for $2 Billion in May 2013.
That mean the original Investment of $4 billion in May 2006 is value at $8 billion after holding for 7 year.
I think Mr. Philip is doing better on his investment on QL.

Thank you

Posted by 10154899906070843 > 2019-01-15 21:36 | Report Abuse

Stockraider, now you have me interested, what is this 40% in growth and quality holdings that you speak of?

Please do share here what stocks you bought and how long you have held it.

Let's see what kind of margin of safety you speak of.

https://youtu.be/63zIApwfzQI

Fast forward to number 11 for Charlie Munger and Warren buffet idea of margin of safety.

Posted by lazycat > 2019-01-15 21:41 | Report Abuse

mr long num, do you think in order to maintain profit,can glove players like harta , topglove ,kossan pass their cost to their buyers indefinitely?

cigarettes and alcoholic beverages is taxed heavily in malaysia market, so inevitably there will be people smuggled&sell non-taxed cigg and booze in malaysia markt, do you foresee/worry competitors around the world will start to challenge/eat into global glove market pie? due to it lucrative profits?

whats your view on this matter?

Posted by Flintstones > 2019-01-15 21:55 | Report Abuse

Thanks long numbers guy. I really enjoy your business analysis. Sometimes, it is harder to analyze a business than to analyze the numbers. If you are interested, create a blog for yourself analyzing businesses. I will be one of your followers.

Posted by Flintstones > 2019-01-15 22:05 | Report Abuse

Just look at long numbers guy business sense and compared it to somebody like kcchong. It is only when the tide goes out, you discover who is swimming naked. Over the years, our extrapolation master has only shared his extrapolation maths and nothing on business sense. I have reminded time and time again about kcchong's flawed method of looking at investments. And time and time again, he will quote his yesteryear's track record while ignoring the fact that he could only be lucky.

Give kcchong RM 1 million, he would take out his calculator and show you the maths why his RM 1 million will compound indefinitely.

Give long numbers guy RM 1 million, he would invest in a company with moat and tells you the competitive advantage of the underlying business.

Give Jon Choivo RM 1 million, he would invest in multiple value stocks while continue to write beautiful letter to shareholders every quarter.

Give Ricky RM 1 million, he would invest in value traps while sharing his financial theory.

Now, you tell me. Who is the sifu?

Posted by 10154899906070843 > 2019-01-15 22:09 | Report Abuse

For the answer to that question, may I refer the humble rubber tree.

https://en.m.wikipedia.org/wiki/Hevea_brasiliensis

Basically it is a plant that grows best in a tropical it subtropical environment. Any form of frost will basically kill the tree.

So, even if the market increases, the space to plant rubber trees are limited. Especially for natural rubber products.

Anybody can make booze and sell it. No so natural rubber. ( I won't go into synthetics, those are different business altogether)

Now Malaysia seems very corrupt to you and me, but the equator line which produces these rubber trees most efficiently like India, South America, South East Asia are full of turmoil and difficulty in doing efficient business.

Malaysia is actually very stable economy. TOPGLOV and HARTA just happen to be the most efficient lowest cost producer with enough rubber tree plantations supply to be able to produce and sell high quality rubber gloves efficiently with enough profits to add m&a activities, r&d activities and economies of scale that it makes it very hard for an upstart to break in.

And in the medical field, if you are a doctor handling disease and blood on a daily basis, do you really think they will mess around with what gloves they wear? Especially when the box is already very cheap? We are not selling disposable iPhones here.

Basically what I am trying to say is, when you visit the prostitute, other than the girl herself, wouldn't you want to buy a box of Durex instead of some no name brand?

HARTA has this kind of quality with their nitrile gloves. TOPGLOV, less.

Now I'm not saying that one day the market share will drop, even Nokia died to apple losing to Android.

But I'd like to think the future of the rubber gloves industry is far more predicable than say a tech company.

Who bought friendster, Snapchat and Twitter! Not me. I don't even have Facebook.

Posted by lazycat > 2019-01-15 22:19 | Report Abuse

sorry , i don't visit hooker , my life motto is :做人要做陈冠希，只干明星不干鸡, i tried durex close fit once , it broke @@

Posted by 鹅麟依旧≈ 扫地僧 > 2019-01-15 22:27 | Report Abuse

Wear two dwilayer.

If broken consider refundable

Posted by 3iii > 2019-01-15 22:39 | Report Abuse

http://www.investlah.com/forum/index.php/topic,78501.msg1531912.html#msg1531912

Topglove
A good-great company.

Posted by 10154899906070843 > 2019-01-15 22:41 | Report Abuse

Number 5 on my wish list would probably be DIALOG. Now that is a magnificent company with quality management.

However, I have never had the chance to invest in it at prices that I would consider to have my level of margin of safety.

I'm not stupid you know. I do know when something is overvalued and it's growth prospects within the 10 year period or more is unclear. Those I won't buy. No matter what. But every quarter I still follow up on it.

But here is a formula.

Any stock, no matter how small the growth is, if it grows infinitely over time, will have a 100% margin of safety if you buy it today.

Am I wrong?

No? But not knowing that you need to exercise scuttlebutt to test your analysis judgement.

Just because I won't buy INSAS today for 0.50 cents doesn't mean I won't buy INSAS tomorrow for rm15. But ONLY if multiple quarters of excellence and certain criteria fits my expected story.

Posted by qqq3 > 2019-01-15 22:41 | Report Abuse

Flintstones > Jan 15, 2019 10:05 PM | Report Abuse

Just look at long numbers guy business sense and compared it to somebody like kcchong. It is only when the tide goes out, you discover who is swimming naked. Over the years, our extrapolation master has only shared his extrapolation maths and nothing on business sense. I have reminded time and time again about kcchong's flawed method of looking at investments. And time and time again, he will quote his yesteryear's track record while ignoring the fact that he could only be lucky.
=========

why can't I put it in those terms in my 3 years debate with kc? Everyone assumes I have other motives.....

Posted by Flintstones > 2019-01-15 22:43 | Report Abuse

Long numbers guy, mind to share more about Dialog business? What do you see in it?

Posted by 3iii > 2019-01-15 22:43 | Report Abuse

http://www.investlah.com/forum/index.php/topic,78504.msg1531964.html#msg1531964

Hartalega
A great company

Posted by qqq3 > 2019-01-15 22:46 | Report Abuse

10154899906070843 > Jan 15, 2019 10:41 PM | Report Abuse

Number 5 on my wish list would probably be DIALOG.
==========

Dialog is hot favorite with analysts because of the transparency of its oil storage business....but its EPCC business will begin to produce nasty surprises ......erratic nature of the epcc business and they may not be able to able to smoothed the earnings ......

Posted by qqq3 > 2019-01-15 22:48 | Report Abuse

Dialog is hot favorite with analysts because of the transparency of its oil storage business....but its EPCC business will begin to produce nasty surprises ......erratic nature of the epcc business and they may not be able to able to smoothed the earnings ......so far so good but the risk going forward is there.

Posted by lazycat > 2019-01-15 22:54 | Report Abuse

i think if you invest nestle instead of ql in year 2009 , your return would be much higher now

Posted by 10154899906070843 > 2019-01-15 22:54 | Report Abuse

Yes exactly what I feel as well. For me if the price was low enough, the storage business is the exact reason why I think it is a long term but and hold. The EPCC is the reason why I stay away...

qqq3 for a self proposed trader is also someone looks at business sense.

But in the end why should there be competition?

Use your business sense to understand the long term prospects
Use your fundamentals to evaluate margin of safety and intrisic value
Use your technicals to find that shooting star and the best time to buy

I don't get that part. All investing in VALUE investing.

How could it not be?

The only thing that matters is I buy a stock today because I think it will appreciate in VALUE tomorrow.

If it doesn't, either you made a mistake, the management made a mistake, or God gave you a mistake.