Posted by Sslee > 2019-10-05 16:03 | Report Abuse

Dear all,
There is only one universal Golden Rule of Investing: Companies that grow revenues and earnings will see share prices grow over time. Compliment from 3iii

Thank you

Posted by stockraider > 2019-10-05 16:07 |

Post removed.Why?

Posted by 3iii > 2019-10-05 18:30 | Report Abuse

>>
Posted by stockraider > Oct 5, 2019 4:07 PM |

Post removed. Why?
>>>

Why did stockraider removed his sohai 3iii post?

Maybe dishonest raider is embarassed.

Posted by cheoky > 2019-10-05 18:38 | Report Abuse

independent thinking, daring to question authoritative guru, experience losing fast and small can turn a lemonade guan chong into a gold.

Posted by qqq3 > 2019-10-05 18:53 | Report Abuse

kc...want to make money?

follow the trend, take some risk...........

margin, sailang and all in at appropriate times....maybe, one can be the next multi billionaire...............................

Posted by probability > 2019-10-05 18:57 | Report Abuse

sslee sifu, i have one very dumb question....

if all business collectively (economy-wide in a closed economy) makes profit, i.e total revenue is more than all the wages & cost of production...

from where is the money for profit coming from? Mass balance of the money does not make sense if one argues...the revenue is from the wages earned by the households.

........

any sifu can help to answer this disturbing fact? :(

Posted by probability > 2019-10-05 19:00 | Report Abuse

i hope profit is just not a 'zero sum' game...where another company necessarily makes a loss for another to make profit

Posted by qqq3 > 2019-10-05 19:07 | Report Abuse

kc...look at the riots in HK....It informs us a lot about human nature, crowd psychology, social science, the power of social media, of religion ( in this case its the Christians who become the taliban and Isis combined) , Hk people individually I still believe are smart people, but collectively has become ISIS.

Every international media only paints a one sided picture being pro West and anti China, only interviewing the black shirts but never interviewing the police, the long suffering mothers and fathers .............


yes, that is what mass media can do to people. From smart people as individuals to ISIS terrorists collectively.

What has this to do with stock market?

Every thing......stock market in the final analysis is about people...............



I always find it fascinating and useful to analyse mass psychology.....and the roles internet sifus do in destroying other people lives........


There is only one protection and its called critical thinking.

Posted by probability > 2019-10-05 19:14 | Report Abuse

sifu raider, cheoky, 3ii, icon, qqq3...any of you can answer this?

businesses exist to make profit and all production from upstream to downstream has to derive the revenue eventually...from goods and services finally consumed by end consumer...

if the end consumer's source of income (source of money) is from the wages.....how can the revenue generated to businesses from their consumption ever be higher than the wages given to produce the consumables?

Posted by probability > 2019-10-05 19:19 | Report Abuse

and yet we all talk about investment to make profit...

Posted by qqq3 > 2019-10-05 19:30 | Report Abuse

probability...there is this thing called credit.....everybody spends more than they earn, from citizens in capitalist countries to governments....every government in the world is in a big rush to print money, spends their children's money, grand children money, several generations into the future............

they call it capitalism and good for GDP.............

Posted by qqq3 > 2019-10-05 19:31 | Report Abuse

bull market is also another form of printing money............

Posted by probability > 2019-10-05 19:34 | Report Abuse

ahemm.....was guessing in that direction too..thanks for the little enlightening qqq3...sincerely.

feel free to enlighten more how the economy works....very interesting and essential to know indeed.

Posted by 3iii > 2019-10-05 19:53 | Report Abuse

GDP = C + I + G + (X-M)

https://m.youtube.com/watch?v=w7Y89zTISrE

Posted by probability > 2019-10-05 20:13 | Report Abuse

thanks 3iii, i have done some self studying too from web info...

in a closed economy, there is no export or import or net export is zero, (X-M) = 0

that leaves GDP = Consumption + Investment from Savings + Government spending....(1)

and on Gross National Income, GNP = Income + Profit...(2)

Using equation (1) and (2), and at max possible Consumption rate , C = Income without any savings, the only source of Profit becomes Investment and Government expenditure then...

..................

GDP = C + I + G ...(1)
GNI = Inc + Profit...(2)

when C = Inc, at max consumption rate possible without any Savings. S = O...Investment from savings also becomes zero...

G = Profit

only source of Profit becomes Government expenditure or Investment from Savings or borrowings then...

that is why Investment by the Government or Central Bank injection is so crucial to sustain the capitalism game i guess

Posted by probability > 2019-10-05 20:21 | Report Abuse

If all government spending source is from taxation...then the only source of profit comes from pure Borrowings then... very much like what qqq3 said

Posted by 3iii > 2019-10-05 21:01 |

Post removed.Why?

Posted by probability > 2019-10-05 21:27 | Report Abuse

economy appears like a growing child....and every time central bank injects money to the economy to avoid deflation, its like feeding food to his tummy for his hunger...

just that the child has to work later for paying back for the food given ahead...in the form of return from investment made from these borrowings.....

all sounds well as long he keeps growing...

Posted by kcchongnz > 2019-10-05 21:28 | Report Abuse

Posted by Sslee > Oct 5, 2019 4:03 PM | Report Abuse
Dear all,
There is only one universal Golden Rule of Investing: Companies that grow revenues and earnings will see share prices grow over time. Compliment from 3iii
Thank you

I like to add a caveat; provided that earnings is translated to cash flows, free cash flows in particular.

Posted by kcchongnz > 2019-10-05 21:37 | Report Abuse

A golden rule of investing; invest in companies with strong and predictable cash generation; sustainably high returns on capital; and high growth opportunities.

Each of these financial traits is attractive at its own right, and when they are combined, they are extremely powerful, enabling a virtuous circle of cash generation, which can be reinvested at high rates of return, begetting more cash, which can be reinvested again.

Also provided that you don't pay a hefty price for it, as your return is determined by the price you pay.

Growing revenue and profit without cash generation, and with return on capitals lower than its cost is a value destroying act.

Posted by kcchongnz > 2019-10-05 22:02 | Report Abuse

Posted by qqq3 > Oct 5, 2019 6:53 PM | Report Abuse
kc...want to make money?
follow the trend, take some risk...........
margin, sailang and all in at appropriate times....maybe, one can be the next multi billionaire...............................

Unfortunately, this is the very statement from the same character which caused someone to lose a total of RM150 million in the last two years.

Why are you so proud of that?

Posted by Sslee > 2019-10-05 22:26 | Report Abuse

Dear probability,
In a close economic or socialist economic where production is carried out directly for use then there is not profit or loss.

But in a capitalist market economy where production is carried out or value added to be sold for Market consumption where the market demand and supply shall determine the willing buying/selling price. Profit or loss is generated base on you selling price minus your total input cost. The profit and loss will be shared by the capital return, salary to the employees and government tax.

To capture the value of good produce/sold and services provided every nation government are allowed to print money which are given a value to represent the nation GDP. Government is allowed to collect tax for services and development provide by the government.

Since this world are make- up of many countries with different countries currency and countries production capabilities and capacity. Hence Market exchanges were set up to determine the currency, commodities, metal, mineral and etc on willing buying/selling market price.

Market is a voting/weighing machine hence US is allowed to print money because world oil trade is done in US currency, other countries holding USD as reserve currency or invested in US government Bond. But if any other countries will to print money in excess of their nation GDP their currency will be devalue.

With current capitalist market economy and US able to freely printing US currency hence this allow industries that have the lowest cost to make profit and those with highest cost make loss and closed shop.

The Globalize market economy had made the rich richer and the poor poorer.
The richest 1% are on track to control two-thirds of the world’s wealth by 2030
https://www.marketwatch.com/story/the-richest-1-people-in-the-world-are-on-track-to-control-two-thirds-of-wealth-by-2030-2018-04-10

Thank you

Posted by qqq3 > 2019-10-05 23:22 | Report Abuse

kcchongnz > Oct 5, 2019 10:02 PM | Report Abuse

Why are you so proud of that?
============

I am not his father nor his keeper....

I am just saying that is how he made his fortune...........and those interested can learn from it.

Posted by Ooi Teik Bee > 2019-10-05 23:52 |

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Posted by qqq3 > 2019-10-06 00:01 |

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Posted by Ooi Teik Bee > 2019-10-06 00:05 |

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Posted by qqq3 > 2019-10-06 00:06 |

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Posted by qqq3 > 2019-10-06 00:11 |

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Posted by Ooi Teik Bee > 2019-10-06 00:19 | Report Abuse

CPA, accountants, doctors, lecturers, lawyers and directors of public listed company also attended my TA and FA training course.
They paid money to attend my training course every year.
I feel very shy to teach them in my opening speech.
They said no, they still want to learn from me.

They said they do not care whether it is black cat or white cat, can catch a rat is a good cat.

A faked accountant was sacked 20 years ago for misconduct, cannot find a job in last 20 years.
Can conduct a training course to teach FA to earn some money if he is good rather than living under a skirt for last 20 years.

Enough is enough, I stop here.

Posted by qqq3 > 2019-10-06 00:56 |

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Posted by qqq3 > 2019-10-06 00:59 | Report Abuse

I don't want to conduct coaching course........ cannot meh? I prefer the way I am

Posted by qqq3 > 2019-10-06 01:02 |

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Posted by qqq3 > 2019-10-06 01:13 |

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Posted by Sslee > 2019-10-06 08:20 | Report Abuse

Hahahaha
qqq3 please go cycling. Leno is black cat. Dragonslayer is white cat, Calvintaneng is stock market Jesus Christ and you qqq3 is sacked accountant 20 years ago.

Posted by qqq3 > 2019-10-06 12:38 |

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Posted by stockraider > 2019-10-06 13:04 | Report Abuse

Probability,

The answer given by 3iii is too textbook macro not practical for our understanding as an investors....!!
We need to approach the case on supply side and understand positive economy is generated in the form of supply side and in the form of value added loh...!!

What value added ?? Wages,management expenses, plant & machinery and profit are all value added mah....!! So if u look at cost of production your purchase of external inputs such as raw materials, semi finished goods, royalty etc are not value added bcos this value added already earn by the other counter party u buy from, so u should not double count loh..!!

Finally profit come from your overall revenue after deduction of all your cost comprises of external input that u purchase and your own internal input such as wages etc loh...!!

Remember high economic growth does not means high profit bcos the profit element are created after u exploit all your inputs against your revenue, it could be your cost is too high or your selling price are too low.

from where is the money for profit coming from? Mass balance of the money does not make sense if one argues...the revenue is from the wages earned by the households.
THE RIGHT ANSWER PROFIT COME FROM INGENUITY OF ENTREPRENEURSHIP OF EXPLOITING ALL THE INPUTS, IN ORDER WORDS IT IS CREATED FROM THE TIN AIR LOH....!!

THUS FOR A HEALTHY ECONOMY IT NEED TO GROW & GROW AND ALSO THE ENTREPRENEUR NEED TO MAKE A SUSTAIN GROW PROFIT LOH...!!

IF THIS CYCLE IS REVERSE, WE CAN SEE A RECESSION AND EVEN A GREAT DEPRESSION LOH...!!

In the down cycle the govt may need to pick up the tap & spend to cover the gap, this could be thru borrowing loh...!!

As investor we need to understand Since profit is indirectly created from thin air..it is imperative that we have confidence of growth for a healthy economic environment. The increase of human birth and increasing expansion of human needs & want lend support the continous economic expansion loh...!!

On wealth issue, it is a separate topic of economic growth & gdp of a nation.

Posted by probability > Oct 5, 2019 6:57 PM | Report Abuse

sslee sifu, i have one very dumb question....

if all business collectively (economy-wide in a closed economy) makes profit, i.e total revenue is more than all the wages & cost of production...

from where is the money for profit coming from? Mass balance of the money does not make sense if one argues...the revenue is from the wages earned by the households.
........

any sifu can help to answer this disturbing fact? :(

Posted by Ooi Teik Bee > 2019-10-06 15:49 | Report Abuse

I did not attack any person in I3 so far.
I had never been a terrorist in I3.

qqq3 is the worst terrorist in I3 keep on attacking kcchongnz and me.
I could not care about this all the time.

I have my pride and I am a gentleman all the time in my life. I never use a single cent from my wife. I pay for all household expenses and also allowance for my wife even she is a career woman.

I am not like qqq3 lived under the skirt for 20 years and never see sunshine for the last 20 years. Hence qqq3 can never be rich and he is worse than any man in the street.

I have enough cursing for qqq3, I stop here.

Posted by qqq3 > 2019-10-06 15:56 |

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Posted by qqq3 > 2019-10-06 15:59 |

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Posted by Ooi Teik Bee > 2019-10-06 16:04 |

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Posted by qqq3 > 2019-10-06 16:05 |

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Posted by Ooi Teik Bee > 2019-10-06 16:11 |

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Posted by Ooi Teik Bee > 2019-10-06 16:19 |

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Posted by Ooi Teik Bee > 2019-10-06 16:25 | Report Abuse

Posted by qqq3 > Oct 5, 2019 6:53 PM | Report Abuse
kc...want to make money?
follow the trend, take some risk...........
margin, sailang and all in at appropriate times....maybe, one can be the next multi billionaire...............................

Unfortunately, this is the same statement from the same character which caused someone to lose a total of RM150 million in the last two years.

Why are you so proud of that?

Posted by Ooi Teik Bee > 2019-10-06 16:32 |

Post removed.Why?

Posted by Ooi Teik Bee > 2019-10-06 16:33 |

Post removed.Why?

Posted by Jason Toshi Ho > 2019-10-06 18:33 | Report Abuse

Hi probability, i think you may have slightly interchanged the meaning of the word money and value.

money is a part of value, but value is far more than just money.

For example, in a closed economy, all valuable business (services, production, manufacturing, plantation) has a quota in value, but some are so valuable that more money has to be created to meet that quota in value.

We call this capital. As services, production and plantations are met and exceeded, the government then creates a influx of money to meet this value in the market.

To explain in simpler terms, revenue of an economy is never a zero sum game, as time goes on, more people are created and born, creating more demand, opportunities, and services, meaning as time goes by, if the population does not go down, more and more profit and revenue will be generated in total. That is why we have GDP (gross domestic product) as a more apt explanation of your "distrubing fact". Malaysia= 314b gdp, brunei 12b gdp, etc. interestingly, countries which are connected worldwide have better gdp, for example singapore 323b and hong kong 341b.

even simpler, revenue does not only come from wages earned by households, there are also location location location (hk and sg), durian fall from the sky (brunei and dubai and middle east), taxation banking ( ireland and switzerland) and innovation (silicon valley).

that is why people today(despite popular opinion) are far far richer than at any previous time in our history, the net value of a human being has exponentially increased since the time of jesus until today.

a simple final example: a man armed with a rocket launcher in the dark ages would be worth far more than all the money in the world... agree? so to hire such a man, we would have to print a lot of money to meet this value.


>>>>>>>>>>>>>>
probability sslee sifu, i have one very dumb question....

if all business collectively (economy-wide in a closed economy) makes profit, i.e total revenue is more than all the wages & cost of production...

from where is the money for profit coming from? Mass balance of the money does not make sense if one argues...the revenue is from the wages earned by the households.

........

any sifu can help to answer this disturbing fact? :(
05/10/2019 6:57 PM

Posted by Jason Toshi Ho > 2019-10-06 18:41 | Report Abuse

To be honest, I think the golden rule still applies.

Problem is, it has been simplified into a single metric with a single minded result.

Instead, one should always tell it like the original:

A business that increases its revenue and earnings throughout the years while keeping shareholder value will always see its share price go up in the long run - Philip Fisher



The problem is when you tell it like the original, many people begin to misinterpret the entire meaning and start buying the wrong stocks.

1. Increasing revenue and earnings must be forward, not based on past results. (which then becomes risky by default, something not even warren buffett can avoid) One must know where the company is going in the future, not where it is right now.
2. keeping shareholder value means making sure dividends, stock buybacks, rights issue, warrants issue, private placement or simply just any stock dilution has to be with the mind of increasing company value, not reducing it.

Posted by probability > 2019-10-06 19:38 | Report Abuse

Hi Jason Toshi Ho, thanks for the attempt to explain...i totally agree with you on value creation - that is why we have GDP growth.

And money has to be in System as per the size of economy, else we will have deflation or inflation (if in excess). Its like addition of salt in growing stream of river (value) to maintain salinity level.

What i was actually trying to grasp was the mechanism the money is injected to the Circular flow of Money in a closed economy.

I am aware of the Interest Rate effects too.

As far i understand, either via reduction of interest rates or via quantitative easing by active purchasing of government bonds to inject money to the economy is still a BORROWING.

It is still a liability on a balance sheet of commercial bank (if it came from central bank via encouragement of borrowing, by interest rate reduction or even reduction of reserve ratio) or the bond issuer, where the borrowed money eventually has to be paid back from business profits.

If there no other way to inject it (i am not sure if there is), Revenue cannot indefinitely be higher than wages. It should balance to give net zero profit when the economy stops expanding.

This to me has a very deep ethical implication if one is truly concern for future generations.

Posted by probability > 2019-10-06 20:12 | Report Abuse

Just realized your reply Stockraider. Thanks