A key component to growth stock is sometimes counter intuitive.
Fisher argued that numerous studies over the previous 35 years had shown growth stocks—those that reinvested in growth rather than paying dividends—had outperformed stocks that did pay high dividends. Specifically, over a five- or 10-year span, growth stocks had done “spectacularly” better in increasing their capital value. In addition, after a reasonable time, the growth stocks were paying superior dividend returns as well.
But I do have a point to make. Cigar butt investing has inherent risk in that when you buy such a stock, you are buying knowing that something is wrong with the company for it to deserve a low valuation.
By that fact alone you will never have the confidence to put more than 15% of your networth in such a stock, because the inherent risk can pull the carpet underneath you.
And if you want to discuss topglove, I put 50% of my networth in it on margin loan in 2010, and went all in.
My question is, how would you have the confidence to do something crazy like that unless you were convinced you were buying a wonderful company at a fair price?
My only opinion is if I don't like owning a cigar butt company like talam for ten minutes, why would I even want to touch the stock in the first place?
And if I like the stock enough, why put in small measly amounts that do nothing in the long run?
As for takaful, have you ever thought deeply on what it does as a business? What does roe of 25% yearly tell you about the business?
Do you use the service? I doubt not. Do you use their general and motor services? Definitely not. If GEICO had such insane roe every year how fast would you think it would have grown? And yet ql grows is revenues faster.
And I personally believe at those roe levels, takaful is simply a scam to take money from uneducated Muslims with sweet sounding words of religion.
You have to understand the quality of the business and the growth opportunities(bigger piece of the pie) to know why ql, topglove and nestle is afforded higher pe,
Takaful will never interest non Muslims, and those who know how insurance works realize that insurers make their money from float and investment funds return.
How will you perform in bursa stock if I tie your hands and say you can only invest in shariah compliant companies? ( Ql is one. Hint.)
Instead of just thinking takaful is undervalued, try going a bit further and try to understand why the investing market is giving takaful a lower pe.
Dear all, Although I am a newbie in investment and had no excellent past record to speak of but by just reading Mr. KCChong articles I had learnt to think critically. 1. How to identify pump and dump stock and never chase high. 2. How to evaluate company by doing the quantitative part of valuation. 3. How to look into Price Multiplier to indentify is the company overprice or at acceptable price multiplier.
I had to admit NESTLE and QL are great companies but do you know this PE50+ phenomenal only happen in 2018 compare to their price multiplier of past 10 years so my question is why?
If you read into Icapital.biz Mr.TTB yearly articles, he is reserving cash in preparation of market crash and asks your-self this question can a big fund collecting money by selling their units fund to you keep cash and not investing in market? The answer is no they have to put the investor’s money into market whether bear or bull market. Thus in anticipating a market crash or uncertainty crisis (Trade war) they normally park their investment in defensive or save heaven stocks hence the phenomenal of PE50+ (Great demand and short supply). Once the uncertainty is over or perceived over they will sell the PE50+ stock and start to look into value for money stock to growth their fund at a faster rate.
Thank you P/S: In my personal opinion no bread and butter/Brick and Mortar business deserve PE 50+ only those fast growing WWW business where the business is word wide deserve such PE
Good morning, Philip. Your graphs and comparison of a few PE50 stock made very interesting reading. Hopeful you will be kind enough to draw up a graph on Aeon Credit and Supermax for i3 investors and my benefit. Thanks for yr painstaking and clear explanation. Have a great day ahead.
Warren Buffet says Short term stock is a voting machine and long term is a weighing machine mah...!!
When a stock look cheap, its warrant objectively further investigation whether Market right or wrong for giving such a low valuation loh...!!
Only upon careful investigation & confirming that Mr market is wrong & unfairly in pricing the secuirity, the value investor will then buy mah...!!
Value investment people still got confidence buy big too loh, take for example sslee put substantial money in insas to buy big bcos he has confidence loh...!!
As for Raider, use to be substantial holders few yrs back but dispose all for a tidy profit, now slowly buying back....bcos of the attractiveness of this insas as a value stock now loh...!!
Posted by 10154899906070843 > Jan 24, 2019 07:09 AM | Report Abuse
But I do have a point to make. Cigar butt investing has inherent risk in that when you buy such a stock, you are buying knowing that something is wrong with the company for it to deserve a low valuation.
By that fact alone you will never have the confidence to put more than 15% of your networth in such a stock, because the inherent risk can pull the carpet underneath you.
And if you want to discuss topglove, I put 50% of my networth in it on margin loan in 2010, and went all in.
My question is, how would you have the confidence to do something crazy like that unless you were convinced you were buying a wonderful company at a fair price?
My only opinion is if I don't like owning a cigar butt company like talam for ten minutes, why would I even want to touch the stock in the first place?
And if I like the stock enough, why put in small measly amounts that do nothing in the long run?
>>>As for Raider, use to be substantial holders few yrs back but dispose all for a tidy profit, now slowly buying back....bcos of the attractiveness of this insas as a value stock now loh...!! <<<
For the above reason, you are unlikely to have any good discussion with raider.
Again SSLee no one is grabbing your hand here asking you to invest in QL or nestle. The entire purpose here is for you to please finalize understand that numbers only will not a good business make.
It is what you do with the understanding of numbers into the business that gives you insight into how the business will perform over time.
Obviously when I bought QL in 2009 it was not pe50. But if you ask me to sell it now I will think you are crazy. It's like asking Warren to sell coca cola.
Anyway, learn to use a bit of business sense.
Just because pe is high does not mean it is a bad business. Just because pe is low and they have a lot of cash also does not mean it is a good business. I'm looking at you xingquan, xidelang etc.
But if you shut your mind just because pe is high, you will automatically lose out on investing in public Bank, nestle, ql, topglove, hartalega, yinson and all the other premium companies just because you think price is what you pay. Value is what you get.
Raider Just want to be kind to share here, eventhough raider is accumulating insas now, but the opportunity is big enough for us all, like kind sslee did, raider don mind sharing here loh....!!
Bcos if sslee did not mentioned & reminded raider of insas....there is a chance raider may missed this gem....bcos raider already move on...once sold out mah....!!
Ahfah says to raider 'after fully sold your choysam at a profit, that does not mean u not going to buy choysum again ??"
Posted by 3iii > Jan 24, 2019 12:25 PM | Report Abuse
>>>As for Raider, use to be substantial holders few yrs back but dispose all for a tidy profit, now slowly buying back....bcos of the attractiveness of this insas as a value stock now loh...!! <<<
For the above reason, you are unlikely to have any good discussion with raider.
Dear Mr. Philip, I quote: “Just because pe is low and they have a lot of cash also does not mean it is a good business. I'm looking at you xingquan, xidelang etc.”
To save you from looking at my Xingquan below are what actually happen. My investment experience: Newbie and most costly mistake, not knowing the existing of i3investor website till 31-8-2016 and committed my biggest investment mistake of become No. 13 (Thirty Largest Shareholders) of Xingquan Financial Report 2016. 08 Mar 2016 02:42PM 2Q/FY16 results - within expectations. Maintain Hold Call. Mercury Securities Sdn Bhd Results Report √ Hold
I was mislead by this Mercury Securities Sdn Bhd Research report and in May 2016 when the share price drop to 20cent+ below the recent right issue price of 30cents I sold my Arreit and bought in big position thinking I had make a good investment decision. To my horror the Q4 financial report is so horrible/unbelievable and can only be explained as fraud. The rest is history where I attended the AGM, make many complaints on (Xingquan (Big holding), CSL and Maxwell (Very small holding)) to SC and Bursa, join meeting with them and handing all the evident of fraud/email corresponds to them. I even meet up with Mr. Koon Yew Yin to call for Xingquan EGM.
I am now waiting for SC to complete their investigation on Xingquan before I will discuss with substantial shareholder to take a class action on CIMB Investment Bank Berhad (“CIMB”) IPO promoter and external auditor for gross negligence and misrepresentation in misleading investing public and minority shareholders of Xingquan.
Thank you P/S: Blessing in disguise, my bad experience in Xingquan had allow me to meet many very interesting people, found this i3investor website and read many investment blogs by many i3 Sifu especially Mr. KCChong blogs. I have move on from all those red chip companies and I am very confident that I can make back all the losses from my previous investment on red chip companies very soon.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
10154899906070843
4,842 posts
Posted by 10154899906070843 > 2019-01-24 02:06 | Report Abuse
This is in no way any shape or form asking the i3 community to suddenly go around hunting for pe50 companies and going hog.
What I am merely trying to imply is that pe is just what the public is paying to get a ride on the boat.
The trick is to identify the boat early and getting on at the right time before it leaves.
How to identify that is more than just numbers on a financial report.
You really need to apply some business sense in understand how a business runs and works.
If you see numbers for numbers you will just end up buying a low(or high) pe company for the wrong reason and feeling stupid about yourself.