There seems to be lots of investment experts in i3investor forum.  I believe it is a good place to pick up some tricks.  Among the portfolio styles are cigar butt investing method, high ROE and growth, low debt method etc.  Some will have their fomulas, and even proven portfolio.  Until the experts has at least a track record of say MIN 5 - 10 years of getting a return of 10-20% p.a. CAGR, I believe, they are more appropriately called "expert in the making".

An anology is like going to Genting, this person, with some kind of formula, makes tonnes of money.  Of course, in the long run, based on probability, he will lose his pants.  He may be a hero for the last 18 months, but, not one in the last 60 months.  A lot of expert will show you their investment portfolios, and makings great return, but when eventually the market dropped, they will never, never, update their portfolio.  Most don't let you know when to SELL.  It's like, teaching you how to fly, but not teaching you how or when to land.

Jokes aside, on a more serious note, based on an experience financial planner, her view was, even great fund manager dare not guarantee a 10% return on a long run (10 years).  We have to accept the reality that the people who is in the 10-20% category for 10 years and above is about 10%?  If they are so many of them, when you ask around, not many will be working. 

Let just say, you gave your kid RM50k, he is 20 years old, and he invest with a CAGR of 20% for 30 years, guess how much does he gets when he reach 50 years old, RM11.9 million.  Hey, son, you technically don't need to work one day in your life.

Guess what is the return he will get if his CAGR is 10%, the RM50k will turn into RM872k. 

Even if you can do 15%, the return is about RM3.3 million. That is a fantastic return, but do you often hear someone have done it? First of all, I believe not many keep a 30 years portfolio and can prove they have done a CAGR of > 15%.  The closest I have seen is a fund manager with 6 years track record, with a CAGR of about 11% (of course, his last 18 months return is close to 100%).  This said fund manager suffer the same fate when the market was down (say 40%), his "formula", no matter how great, also down about 20%.

CONCLUSION

There are not many who can achieve 15% p.a. for a long run 10, 20 or 30 years.  Of course, there are many who did 100% for a period of 2 years (since 2013), just ask the Datasonic investors and most of the penny stock investors who started to invest for the last 18 months.

It is a very sad fact to admit, but how often you have someone that can do it, who can persistently outperformed the market?  Even the track record of KLSE only shows a CAGR of about 11%.  So, let us be more realistic and rationale, full time investment cannot replace your day to day job.  If it can, not many would be working out there.  

PART 2 (2 Aug 2014)

Frankly selling itself is as important as buying.  While we wait for the stocks we bought to reach or exceed the intrinsic value before we sell, we are also facing a risk of major market correction.  Like what is the market in Bursa facing presently.  Should we sell and come back later?  What if the major correction never come?  You may argue, no worry, the stocks you buy is undervalue, much lower than your intrinsic value, but we also have to look at the big picture and liquidity.  So, be cautious.  A 80% gain can easily we wipe out to 20% in two weeks.  Remember, small cap stocks went up due to liquidity and syndicates, when they leave the game, who will end up holding the undervalue stocks?  Of course, the price may recover, it may take a few years.

Dow Jones dropped almost 400 points in two days, 1 Aug and 31 July 2014.  Currently the liquidity is still there as we can see the top active companies are mainly penny stocks and small cap stocks.  Mr Tong did caution investors that small cap index valuation is higher than big cap, which is the first time.