Posted by qqq3 > 2018-08-16 00:26 | Report Abuse

3iii

correct strategy of one era, one location is wrong strategy in another era, another location.

buy and hold? every 10 years a crisis comes and wipe off all the gains of the buy and holders.


the mini crash of last 12 months already wiped off the gains of many buy and holders of last few years.

(when discussing generalities, we should use the Indices to represent the average and the medians......not stock pickings because like I said, for next 2 years, not more than 2% of stocks is expected to give you 100% returns)

Posted by ProfitSonar > 2018-08-16 11:16 | Report Abuse

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
qqq3

correct strategy of one era, one location is wrong strategy in another era, another location.
-----------------------------------------------------------------------------------
Me : Why is the strategy wrong in another era? Is it proven wrong?
-----------------------------------------------------------------------------------
buy and hold? every 10 years a crisis comes and wipe off all the gains of the buy and holders.


the mini crash of last 12 months already wiped off the gains of many buy and holders of last few years.
-----------------------------------------------------------------------------------Me : For long term value investor , they really looking forward to Bear market as this give them the opportunity to buy at a discount. As for their holdings , they will keep holding if the fundamentals of the business is remain intact. The loss is just a paper loss (unrealized loss) -----------------------------------------------------------------------------------
(when discussing generalities, we should use the Indices to represent the average and the medians......not stock pickings
-----------------------------------------------------------------------------------Me : What do you actually mean by this? -----------------------------------------------------------------------------------

because like I said, for next 2 years, not more than 2% of stocks is expected to give you 100% returns)
-----------------------------------------------------------------------------------Me : Really? 2% of stocks of? FBMKLCI? Why only next 2 year? What about the next decade? If it really is , so what ? ----------------------------------------------------------------------------------- <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Posted by 3iii > 2018-08-16 11:39 | Report Abuse

>>>Posted by qqq3 > Aug 16, 2018 12:26 AM | Report Abuse

3iii

correct strategy of one era, one location is wrong strategy in another era, another location.

buy and hold? every 10 years a crisis comes and wipe off all the gains of the buy and holders.


the mini crash of last 12 months already wiped off the gains of many buy and holders of last few years.

(when discussing generalities, we should use the Indices to represent the average and the medians......not stock pickings because like I said, for next 2 years, not more than 2% of stocks is expected to give you 100% returns)<<<



Are you into index linked funds? Probably not.

You are short term in your approach, sounds like.

Even if you were to use indices as the representation, here are a few things you need to know of the stock market.

1. The stock market fluctuates. Stock market fluctuations can be very big in the short term, e.g. 1 or 2 years. However, those holding a portfolio of selected stocks or index linked funds, should generally be having gains over a 5 year or more rolling period.

2. Market fluctuations to the short term player are risks, yet for the long term value investors are opportunities.

3. During the bull market, be prepared for the appearance of the bear market. The best time to be in is the bear market, especially for those who will be net investors into the market over the long term. This is the period when he can buy his stocks cheap. Generally, for every 5 years in the stock market, you can expect 4 bull and 1 bear market.

4. "The mini crash of last year" which you mentioned with a lot of fear was actually an expected event in the market. A fluctuation of that level is actually a very common event. If you are one who will be frightened out of the market by a sudden downturn of the market, you will initiate a train of actions which maybe detrimental to your long term investing.

Posted by 3iii > 2018-08-22 12:42 | Report Abuse

https://myinvestingnotes.blogspot.com/2018/08/risk-management-in-long-term-investing.html


Always look at risks before looking at the rewards.

Posted by 3iii > 2018-08-22 12:43 | Report Abuse

1. By avoiding losses or minimizing losses, the modest returns from the winning stocks in your portfolio translate into good reasonable returns.

2. For the investor with a long term successful portfolio of stocks, his portfolio will have captured significant gains over the years. The gains (from capital appreciation and reinvested dividends) exceed the capital invested by many folds.

3. In the event of a severe bear market, his portfolio too will goes down in value but his capital is unlikely to be threatened. Moreover, his substantial yearly dividends attenuate the "quotational losses" during the severe bear market (>20% down from the peak).

4. The investor with a long term successful portfolio of stocks received yearly dividends of the quantum which exceeds many folds (100x) that of the single gain of a trader's best trade. [Why? Think this through yourself.] For this reason, it is common for the investor with a long term successful portfolio of stocks to be less enthusiastic in trading, which he seriously indulges occasionally. He knows the path to great wealth with certainty and does not need to deviate from this.

Posted by 3iii > 2018-08-22 12:53 | Report Abuse

Keep Investing Simple and Safe


When is the best time to buy share?

Anytime really.
You should track a list of high quality stocks.
Buy when the stock is selling at a bargain price,
that is, when the risk of losing your capital is low or negligible and the return substantially higher.
The good investors aim for high returns with minimal risk taking.


Is there a time when you should not be buying any stocks?

1. Generally, when the market is trading at a high valuation.
There is always another time to buy the stock. Be patient.

2. However, if you are not knowledgeable in stock selection (QVM) and money management,
you should not be investing directly in the stock market.
You are better buying a mutual fund when the market is trading at low valuation
or to park your fund with a personal fund manager.
The stock market is a dangerous place for the uninitiated.

3. Avoid investing money in the stock if the money you invested may be needed urgently anytime or in a short time.
Investing in the market should be for the longer term.
There is too much uncertainties in the returns over a short time frame.

Is now a good time to buy stocks?

Anytime is a good time to buy stock.

Rather than timing the market, one should buy or sell base on the price of the stock offered by the market.
Even in the peak of the bull market, one can pick up some bargains.
Of course, in the depth of a bear market, there are many good stocks selling at very low prices.

Is buy and hold, a safe strategy?

The recent severe downturn in the market brought this strategy into question once again.
It is very safe for those who employs this strategy using certain criterias. It is safe for selected stocks.
These stocks should be of the highest quality (QVM). These stocks should be bought at a bargain price with a margin of safety.
The only time you may have to sell the stock urgently is when there is a fundamental deterioration in the business of the company. Other than this, you have the leisure of selling.

The market is cyclical. The bull-bear-bull-bear cycles ensure that the bull will always follows a bear and vice-versa.
Here are a selection of Malaysian stocks that have stood the test of time over at least 3 severe bear markets:
Nestle, DLady, Petdag, Guinness, Petgas, PBB, PPB, Resorts. There are also others too.
At certain short period of time, each of these stocks may underperform
but if assessed over a longer period of time, the returns have ALL been positive.
By minimising the downside and aiming only for modest returns,
investing can be surprisingly rewarding for a large number of investors and with little effort.

How to maximise returns?

1. First, ensure that there is safety of your capital. Remember not to lose your capital.
By ensuring that you do not lose money and aiming for moderate returns, you can maximise total returns too with low risk.
Don't be greedy for high returns by taking unnecessarily high risks.

2. Stick to the few high quality stocks you are familiar with. This is the circle of competence mentioned by Buffett.
Stay within your circle of competence and never, never, never, never, get out of this circle.
If your circle of competence is only 6 stocks, stick to these 6 stocks.

3. Only buy high quality stocks at bargain price.
At a certain price, the stock is a bargain and at another price, it is trading at a fair price.
Never, never, never buy these high quality stocks when it is trading at high price.
By buying these good quality stocks at a bargain price,
one is buying with a margin of safety to minimise loss to your capital in the event you got it wrong.
At the same time, if the event turned out to be as you expected, your return will be greater.

4. Also do not over-diversify.
According to Buffett, adding the 7th stock into your portfolio reduces the overall return of your portfolio.
Bet big if you are very certain of your selection.

5. Allow the wonder of compounding to grow your return over a long period of time.

Investing can be very safe. Keep it simple and safe. (K.I.S.S.)

Posted by enigmatic > 2018-08-22 15:29 | Report Abuse

3iii sifu, do you mean that investors should only stick to established companies?

Posted by Alex™ > 2018-08-22 15:48 | Report Abuse

investing yes only if you have large capital.

young upstarts will like to punt and do it trading style. Of course huat 50% and 100% per stock per few months are exhilarating.

Over the long term, your thesis that 'the stock market goes up forever' is only correct until the point that it is proven wrong. Unfortunately we only have reliable data since 1920s, and the market is sold by munger/buffett low-cost index method.


When recession comes, don't think Nestle can stand. And worse if it is near your retirement years where you had hoped to cash out a little bit earlier (timing issue again).


Nevertheless, funds will only chase after companies that provide values, i.e., growth expansion (earning), and is then translated to lofty valuation (price-to-again...earning).

It's the earning, stupid. So they say.


but so boring la, huat ar~

Posted by Alex™ > 2018-08-22 15:48 | Report Abuse

my interpretation is that i3 din touch hrc from RM5 to RM19. Missed opportunity, but not those traders who know how to enter and exit with proper gameplan and risk management. You've got to respect that skill.

Posted by 3iii > 2018-08-22 16:02 | Report Abuse

>>> Posted by enigmatic > Aug 22, 2018 03:29 PM | Report Abuse

3iii sifu, do you mean that investors should only stick to established companies?<<<


You should invest in yourself first.

You should develop your own philosophy and method which you are comfortable with.

Your philosophy and method will generally determine how successful you are going to be in the long term in the stock market.

"There are many roads to Rome."

75% to 90% of traders lose money, as a group.

The most successful investors are those who have a great company and they are holding this for a long time. [The long term owners or major shareholders of the most successful companies attest to this easy formula.]

Posted by 3iii > 2018-08-22 16:04 | Report Abuse

>>>> Posted by Alex™ > Aug 22, 2018 03:48 PM | Report Abuse

my interpretation is that i3 din touch hrc from RM5 to RM19. Missed opportunity, but not those traders who know how to enter and exit with proper gameplan and risk management. You've got to respect that skill.<<<<



I believe the majority of those players in Hengyuan lost money over the last 12 months.

Knowing how to avoid the risks is as important as trying to chase for outsize returns.

The greatest risk in your investing is after-all, YOURSELF, the person staring back at you in the mirror.

Posted by 3iii > 2018-08-22 16:17 |

Post removed.Why?

Posted by 天龙八部≈ 扫地僧 > 2018-08-22 16:33 | Report Abuse

rchi..

tell real real... are U normally hold more than 12 seconds??? or at least 1.2 minutes if not usually

Posted by 天龙八部≈ 扫地僧 > 2018-08-22 16:33 | Report Abuse

rchi..

tell real real... are U normally hold more than 12 seconds??? or at least 1.2 minutes if not usually 12 minutes

Posted by 4444 > 2018-08-22 17:00 | Report Abuse

If buy Nestle RM 150-160, D Lady RM 70 can still make money?

Posted by 3iii > 2018-08-22 19:36 | Report Abuse

Warren Buffett is worth 86 billion US. Assuming he grew his investments through doubling every 4 years.

Here is the illustration of his networth at various ages:

Age. Net worth


86 .....86b
82 .....43b
78 .....21.5b
74 .....10.8b
70 ......5.4b
66 ......2.7b
62 ......1.35b
58 ......675m
54 ......338m
50 ......119m
46 .......59.5m
42 .......30m
38 .......15m
34 ........7.5m
30 ........3.75m
26 ........1.9m
22 ........950k
18 ........475k

Posted by qqq3 > 2018-08-22 19:40 | Report Abuse

Warren Buffalo?

an outlier , it happens

Posted by 3iii > 2018-08-22 19:52 | Report Abuse

Warren Buffett

He made his 1st billion around age of 60.
His next 85 billions were made after the age of 60.

That is the power of compounding at the later periods of long term compounding.

Posted by 3iii > 2018-08-22 20:29 | Report Abuse

An old post.



>>>>Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Dec 31, 2017 12:33 PM | Report Abuse

Yesterday, was the last trading day.

The KLCI has risen 10% this year.

Hope the market has been kind to you this last 12 months.

Though KLCI has underperformed the regional peers, it has been a rewarding year so far.

4 stocks in my portfolio have > 100% gains this year, the biggest being 381%.

8% of the stocks in my portfolio show losses this year.

For 2017, the portfolio has gains:loss ratio = 70:1<<<<

Posted by 3iii > 2018-08-23 06:17 | Report Abuse

>>>Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Dec 28, 2017 10:07 PM | Report Abuse

Just recalculated the intrinsic value for Nestle.

It generated FCF of over the last 5 years, averaging $570.45 million per year.

Using this, its intrinsic value is $ 94.35 per share.

[Note: Its 2016 FCF was $767 million. Using this figure, its intrinsic value is $ 126.86 per share.]


Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Dec 28, 2017 09:54 PM | Report Abuse

Over the last 5 years, DLady has generated FCF of 775.171 million, averaging $155 million per year.

Its intrinsic value is $55.67 per share.

Today, its price is $60.00 >>>


>>>>
Posted by 4444 > Aug 22, 2018 05:00 PM | Report Abuse

If buy Nestle RM 150-160, D Lady RM 70 can still make money?<<<<


What will be the intrinsic values of Nestle and Dlady in 2023?

Will their intrinsic values be higher or lower in 2013 than their market prices today?

Posted by 3iii > 2018-08-23 06:28 | Report Abuse

<<<Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Dec 28, 2017 09:35 PM | Report Abuse

Petdag


FCF from 2012 to 2016 totaled RM 6628 million, that is, averaging 1325.6 million per year.

Its intrinsic value by my calculation should be $30.67 per share.

It is presently trading at $24.30 per share.


[For the benefit of Raider]<<<

Posted by 3iii > 2018-08-23 06:31 |

Post removed.Why?

Posted by 3iii > 2018-08-23 06:37 | Report Abuse

>>>>Blog: The Most Important Thing: 2017 Christmas Reflection in FVI kcchongnz

Dec 26, 2017 06:09 PM | Report Abuse

>>
Henly I invested 4k of HSBC share since 1986 (3200 shares) with advised from my badminton kaki at that time. Already 31 years. Already appreciated 600 times. Can I be the winner?

I personally i think, this is a stupid question. This is pure luck, ok
26/12/2017 14:11<<<


HSBC has gone through very volatile periods over the last 41 years (since 1986).

Your statement just illustrates many points:

1. Select a good company
2. Invest early
3. Hold for the long term.
4. Stock market and returns can be very volatile over the short term (in fact, may lose 50% in 1 year)
5. In the long term, a good company grows intrinsic value and delivers great return.
6. The returns in the early years may seem not great, but at the end of a long investing period, the gains are just huge (from compounding).
7. Was it luck that you are holding a 600x multibagger today? Maybe but most of it is attributed to your ability to recognize a good company and holding them for a long time to capture its earnings power and the power of compounding. Yes, a little luck but a lot of right knowledge and temperament.

Imagine the next doubling of HSBC will deliver you a 600x2 = 1200x multibagger.<<<<

Posted by 3iii > 2018-08-23 06:56 |

Post removed.Why?

Posted by 3iii > 2018-08-23 06:57 | Report Abuse

>>>Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Nov 27, 2017 01:41 PM | Report Abuse

Mr. otb,

Just my unfair comments on your valuation methods:

Method 1: Using Benjamin Graham's formula.

This method is probably the least useful of the 3.
Very difficult to comprehend this valuation.
Benjamin Graham used this formula to illustrate some points.
Warren Buffett commented that when Benjamin Graham used these formula, he was not at his best (politely saying so).


Method 2:

EV/EBIT

You will realise that the Professor of Finance in NY University, Dr. Damodaran, will frown and talked down on his students and ex-students for using this multiple.

He thinks this is a very wrong multiple to use as you have a numerator which is compared to a like-to-like denominator.

He think it is better to use EV/EBITDA.

Anyway, can you elaborate why you use the multiple of 12.


Method 3:

Method 3
EPS = 3.20
PER= 5


The criticism here (if you allow me to voice this) is the EPS.
We can discuss and argue on this till the cows come home (and of course, we have.)


Regards<<<

Posted by 3iii > 2018-08-23 06:59 | Report Abuse

<<<<Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD

Nov 27, 2017 12:27 PM | Report Abuse

>>>
Ooi Teik Bee I prefer simple calculation so that all readers can understand the target price easily.

Q3 2017 EPS of Petronm is 0.393, 4 rolling quarters = 1.55.
The target price given by PBB is around 14.46.

If Q3 2017 EPS of Hengyuan is 1.30, 4 rolling quarters = 3.20
The target price given by PBB should be ??

What is the target price of Hengyuan ??

I am using Benjamin Graham's formula to count the intrinsic value of Hengyuan as follows :-
Method 1
(22.5*EPS*Book value per share)^0.5
EPS = 3.20
Total equity = 1323953
Number of shares = 300000
(22.5*EPS*Total Equity/share)^0.5 = 17.83
Current price = 10.72
Margin of Safety = 39.86%
Potential gain = 66.28%

The target price of Hengyuan is 17.83.

Method 2
Target price (EV/EBIT=12) = 19.96
Current Price = 10.72
Margin of Safety = 46.31%
Potential gain = 86.24%

The target price of Hengyuan is 19.96.

Method 3
EPS = 3.20
PER= 5
Target price is 16.00
PER = 6
Target price is 19.20

I prefer to take target price of 17.83

Thank you.
Ooi
27/11/2017 12:20<<<


Thanks for finally sharing your valuation.

Will have a look to understand your valuation methods.<<<<

Posted by 3iii > 2018-08-23 20:00 | Report Abuse

The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy.

It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!

Posted by Alex™ > 2018-08-24 13:09 | Report Abuse

It HSBC is a bad example. This is outcome bias. Ask anyone who invested 4k in 1986 and keep it until today. Confirm huat?

Posted by 3iii > 2018-08-24 16:35 |

Post removed.Why?

Posted by 3iii > 2018-08-25 07:52 |

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Posted by 3iii > 2018-08-25 08:12 |

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Posted by 3iii > 2018-08-25 12:59 |

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Posted by 3iii > 2018-08-25 13:00 |

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Posted by Apabagus > 2018-08-25 13:06 | Report Abuse

Lecturer kaki kong kaki song.
Not even one student here.Total failure!

Posted by 3iii > 2018-08-25 13:21 |

Post removed.Why?

Posted by Alex™ > 2018-08-25 13:23 | Report Abuse

I3 uncle... U also say investing is a probablistic decision. So, can I safely deduce that not all who bought stock in 1986 sees gain in 2018?

Posted by 3iii > 2018-08-25 13:45 |

Post removed.Why?

Posted by 3iii > 2018-08-25 17:54 |

Post removed.Why?

Posted by 3iii > 2018-08-25 18:10 | Report Abuse

What are you doing with your money?


Fear Index


I'm buying stocks while they are cheap.
I'm staying put in the market for the long-term.
I'm taking some money out of stocks. I don't want to risk everything.
I'm selling all stocks and moving to CDs.
I'm in a panic. Where's the nearest mattress?

Posted by Apabagus > 2018-08-25 20:16 | Report Abuse

Lecturer still talking to himself.Hahaha.

Posted by 3iii > 2018-08-26 07:47 | Report Abuse

>>>
Great quote "investing is a probabilistic decision based on imperfect information on an uncertain future".
<<<


How can you master the uncertainties of the stock market? This is one way.



Smart diversification is the key. The smart investors are focus Investors.

True investors are not random stock pickers.

They take out risk by understanding the investments and their intrinsic value, rather than by spreading the risk across more companies.

Smart investors are focus investors who drive toward deep understanding of their investments without diluting possible returns through diversification.

They see danger in owning too many investments, which may be beyond the scope of what they can manage or keep track of.

Here's the paradox: Instead of reducing risk through diversification, risk may actually increase as it becomes harder to follow the fortunes of so many businesses.

That is why Buffett and others reject diversification per se as an investment strategy.

They prefer to reduce risk by watching a few companies and investments more closely.


"Diversification is for people who don't know what they're doing." Warren Buffett.

Posted by 3iii > 2018-08-26 07:53 |

Post removed.Why?

Posted by 3iii > 2018-08-26 08:10 | Report Abuse

The true measure of a successful investor is not a comparison of performance against a stated index, but rather how well a portfolio performs during down markets.

Posted by 3iii > 2018-08-26 08:16 |

Post removed.Why?

Posted by 3iii > 2018-08-26 08:22 |

Post removed.Why?

Posted by 3iii > 2018-08-26 08:45 | Report Abuse

Very Important Point


Buffett cautions against selling off one’s “superstars” for the rather perverse reason that they have become too successful.

The decision to sell or hold a security should be based solely on an assessment of the stock’s expected future yield relative to its current quoted price, rather than any measure of past performance

Posted by Apabagus > 2018-08-26 13:20 | Report Abuse

Still no business.

Posted by 3iii > 2018-08-26 14:55 | Report Abuse

>>>> Posted by Apabagus > Aug 26, 2018 01:20 PM | Report Abuse

Still no business.<<<<




Apabagus

I feel sad for you.

Posted by somchik > 2018-08-26 15:49 | Report Abuse

Thank you very much 3iii i really enjoy reading your blog.

Posted by Apabagus > 2018-08-26 19:01 | Report Abuse

3iii,i feel extremely sad for you.