Make sure you have the cash and courage to add more when your predicted correction comes true.
Do you not notice that stock prices do fluctuate a lot even in a 52 week period - up 50% and down its equivalent 1/3? Hopefully, you have a good strategy in place to benefit from this market price fluctuation (Mr. Market).
MARKET FLUCTUATIONS OF INVESTOR'S PORTFOLIO Note carefully what Graham is saying here.
It is not just possible, but probable, that most of the stocks you own will gain at least 50% from their lowest price and lose at least 33% ("equivalent one-third") from their highest price -regardless of which stocks you own or whether the market as a whole goes up or down.
If you can't live with that - or you think your portfolio is somehow magically exempt from it - then you are not yet entitled to call yourself an investor.
BENJAMIN GRAHAM'S 113 WISE WORDS The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."
This Ben Graham wise comment below is applicable to margin of safety stock like insas share price rm 0.70 with Nta rm 2.54 and nett cash Rm 0.70 per share with PE less than 10x and with decent div yield of about 3% pa loh..!!
Not applicable to overvalue stock like QL and Nestle, if u encounter big selloff on this type of counter u better cut n lari kuat kuat loh...bcos no margin of safety mah with Pe 50x, dividend yield of o.5% to 2.0% pa loh.....!!
Posted by 3iii > Jan 18, 2019 06:38 PM | Report Abuse
Finally:
MARKET FLUCTUATIONS OF INVESTOR'S PORTFOLIO Note carefully what Graham is saying here.
It is not just possible, but probable, that most of the stocks you own will gain at least 50% from their lowest price and lose at least 33% ("equivalent one-third") from their highest price -regardless of which stocks you own or whether the market as a whole goes up or down.
If you can't live with that - or you think your portfolio is somehow magically exempt from it - then you are not yet entitled to call yourself an investor.
BENJAMIN GRAHAM'S 113 WISE WORDS The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."
truth be told, I never see shares like LCTITAN as investment shares like QL and Nestle...shares like LC is and always a trading share...a good trading share because it follows logics....
U ask yourself what type of earning power ?? When Nestle earnings yield is less than 2% pa based on PE above 50%...even u put monies in fixed deposits u get an earning power of 4% pa mah....!!
If u buy insas got earning power as Pe less than 10x...earning yield already exceed 10% pa mah...!!
Margin of Safety for those who are invested in Nestle, DLady, PBB, Petdag and HEIM, as explained and taught by Benjamin Graham, the father of value investing. :thumbsup: :thumbsup:
In the ordinary common stock, bought for investment under normal conditions, the margin of safety lies in an expected earning power considerably above the going rate for bonds.
Over a ten-year period the typical excess of stock earning power over bond interest may aggregate 50% of the price paid.
This figure is sufficient to provide a very real margin of safety— which, under favorable conditions, will prevent or minimize a loss.
Nestle ROE very terror 120% pa with NTA of Rm 3.00 it generate earnings of Rm 3.60....but u need to buy nestle for Rm 140.00...so ur earnings yield is less than 2.6 % pa loh...!!
Now u compare nestle 2.6% pa v insas 14% pa, u ask who got more earnings power leh ?? Of course Insas mah...14& pa warnings yield even kindy student understand 14% pa is more than 2.6% pa mah..!
But growth proponent may argue, nestle have growth woh ??
Raider ask very logical question loh...how much growth & for how long nestle need to grow from 2.6% pa to catch up with insas yield of 14% pa even, if u assume insas has no growth at all loh...!!
The answer is very long and very uncertain when nestle can catch up mah...!!
An english old saying a bird in hand is better than 2 in the bush mah...!! Insas yield is already there with 14%pa...now u want to speculate nestle yield 2.6% pa can catch up, but when leh ??
Thus insas has definitely has higher margin of safety than nestle loh..!!
That is a separate issue under psychological investment aspect of share loh...!! If u read sslee comment carefully, he has already dealt and risk manage this aspect u have highlighted mah...!!
Posted by lazycat > Jan 18, 2019 09:04 PM | Report Abuse
mr loh..!!
the fact that insas is thong kok khee personal piggy bank meant margin of safety is completely meaningless loh..!!
risk and return is inherent in the share, any share...high risk high return....low risk low return...u wouldn't know it flips left or right until the future has come ....risk and return is what one makes of it....
just because a share goes up after purchase, it does not mean it is a high return low risk share......
I can talk about it...but I am not naturally a buy and hold guy......I just don't have the temperament for it....but I respect and I like people who do....
This is not unexpected. It is well known that 1% of the population owns 50% of the wealth, the next 9% of the population owns the next 40%. The majority (90%) owns less than 10% of the wealth.
At price of 6.87 per share, QL has a market cap of 11.146 billion.
Net earnings in 2018 was 215.7 m Net CFO was 298.6 m Capex was 339 m Increase in debt was 169 m Dividend 90.5 m
It is a good company, not a great company (by my definition). It is also trading at a high valuation.
For these reasons, I shall not be buying this stock today. It will be in my radar screen though. I will spend a bit more time to understand its new business, Family Mart.
Dear all, My response to Mr. Philip: THE PERCEPTION OF P/E Definition of High PE or growth trap: Growth, again, has little meaning without any reference to the future return of the business. Growth is only good if it is above the cost of capital. https://klse.i3investor.com/blogs/Sslee_blog/190733.jsp
Thank you
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Posted by 3iii > 2019-01-18 18:29 | Report Abuse
Make sure you have the cash and courage to add more when your predicted correction comes true.
Do you not notice that stock prices do fluctuate a lot even in a 52 week period - up 50% and down its equivalent 1/3? Hopefully, you have a good strategy in place to benefit from this market price fluctuation (Mr. Market).