Topglove and Hartalega are both trading at P/NTA of 0.99 and 1.02 respectively.

Kossan and Supermax are both trading at P/NTA of 0.74 and 0.43 respectively.

Market cap of Topglove is 5.5b and that of Harta is 5.1b.
Kossan's market cap is 2.9b and Supermax is 2.1b.

Monitoring the businesses of these big 4 glove companies meantime.

Company Price (RM) ... P/NTA... P/E... Mkt Cap (m)
CAREPLS [s] 0.245... 0.38... -1.15... 140.39
SUPERMX [s] 0.76... 0.43... -36.73... 2067.67
HEXCARE [s] 0.27... 0.45... -5.26... 295.16
KOSSAN [s] 1.12... 0.74... 18.26... 2864.82
TOPGLOV [s] 0.675... 0.99... -46.95... 5539.8
HARTA [s] 1.48... 1.02... -44.82... 5072.86
ADVENTA [s] 0.53... 1.29... -16.25... 80.98

Topglove and Hartalega are both trading at P/NTA of 0.99 and 1.02 respectively.

Kossan and Supermax are both trading at P/NTA of 0.74 and 0.43 respectively.

Market cap of Topglove is 5.5b and that of Harta is 5.1b.
Kossan's market cap is 2.9b and Supermax is 2.1b.

Monitoring the businesses of these big 4 glove companies meantime.

Once again, calvintaneng should go back to his basics and analyse why he continues to find himself stuck in mud repeatedly. Only a fool fails to learn from his mistakes.

It is obvious to me, at least, the majority of players in TSH lost money.

Only calvintaneng huffs and puffs, hoping hot air can lift his balloon.

Would be lovely if calvintaneng of Netx fame will share his valuation of any of his stock?

Meantime, when calvintaneng goes low, we shall not follow him, as we wish to remain high in our dignity.

Company Price (RM) ... P/NTA... P/E... Mkt Cap (m)
CAREPLS [s] 0.245... 0.38... -1.15... 140.39
SUPERMX [s] 0.76... 0.43... -36.73... 2067.67
HEXCARE [s] 0.27... 0.45... -5.26... 295.16
KOSSAN [s] 1.12... 0.74... 18.26... 2864.82
TOPGLOV [s] 0.675... 0.99... -46.95... 5539.8
HARTA [s] 1.48... 1.02... -44.82... 5072.86
ADVENTA [s] 0.53... 1.29... -16.25... 80.98

>>>>
Posted by calvintaneng > 10 minutes ago | Report Abuse

Yesterday pi corp turned pi corpse and gone limit down

today Cfm computer form turn to limit down

better be very careful

two foolish ones are 3iii and SEE Research telling people to leave the great safety of palm oil

great harm done to ignorant people

i3 better ban them

>>>>

Why? For preventing so many going to HOLLAND in Netx!!! ???

CPO price moved upwards in March 2022 and reached a peak in March 2022. It remained high till June 2022 and then dropped to its lowest in October 2022. It has risen slightly from its lowest since.

The share price of TSH followed very closely the rise and fall of CPO prices.
It rose in March 2022 to its peak of 1.77 to 1.81.

From April 2022 to July 2022, we saw a steep decline in its share price from 1.81 to 0.96. It has climbed a bit since to 1.08. Yes, it has also declared a dividend.

>>>>
>>>>
Blog: TSH RESOURCES & ITS GOLD MINE LANDS IN NUSANTARA: THE NEW CAPITAL OF INDONESIA, Calvin Tan

2022-03-30 21:40 | Report Abuse

FANTASTIC CONFIDENCE

DIRECTOR TAN AIK YONG (IN TOP 16 & TOP 24 POSITIONS OF TSH: SEE TSH ANNNUAL REPORT TOP 30 SHAREHOLDERS)

HAS JUST GOBBLED 16 MILLION SHARES OF TSH AT RM1.64

THAT IS OVER A WHOPPING RM26 MILLIONS IN A SINGLE PURCHASE)

TOMORROW JUST SELL OTHERS AND GO "ALL IN" TO TSH

Final decision is yours

See

https://klse.i3investor.com/web/insider/detail/D_164991_3044377266
>>>>


When was calvintaneng enthusiastic or hot on this TSH stock? March 2022!

my dear calvintaneng continues to not learn from his many earlier adventures into his promotions of previous stocks.

CPO price moved upwards in March 2022 and reached a peak in March 2022. It remained high till June 2022 and then dropped to its lowest in October 2022. It has risen slightly from its lowest since.

The share price of TSH followed very closely the rise and fall of CPO prices.
It rose in March 2022 to its peak of 1.77 to 1.81.

From April 2022 to July 2022, we saw a steep decline in its share price from 1.81 to 0.96. It has climbed a bit since to 1.08. Yes, it has also declared a dividend.

>>>>
>>>>
Blog: TSH RESOURCES & ITS GOLD MINE LANDS IN NUSANTARA: THE NEW CAPITAL OF INDONESIA, Calvin Tan

2022-03-30 21:40 | Report Abuse

FANTASTIC CONFIDENCE

DIRECTOR TAN AIK YONG (IN TOP 16 & TOP 24 POSITIONS OF TSH: SEE TSH ANNNUAL REPORT TOP 30 SHAREHOLDERS)

HAS JUST GOBBLED 16 MILLION SHARES OF TSH AT RM1.64

THAT IS OVER A WHOPPING RM26 MILLIONS IN A SINGLE PURCHASE)

TOMORROW JUST SELL OTHERS AND GO "ALL IN" TO TSH

Final decision is yours

See

https://klse.i3investor.com/web/insider/detail/D_164991_3044377266
>>>>


When was calvintaneng enthusiastic or hot on this TSH stock? March 2022!

my dear calvintaneng continues to not learn from his many earlier adventures into his promotions of previous stocks.

>>>>
Blog: TSH RESOURCES & ITS GOLD MINE LANDS IN NUSANTARA: THE NEW CAPITAL OF INDONESIA, Calvin Tan

2022-03-30 21:40 | Report Abuse

FANTASTIC CONFIDENCE

DIRECTOR TAN AIK YONG (IN TOP 16 & TOP 24 POSITIONS OF TSH: SEE TSH ANNNUAL REPORT TOP 30 SHAREHOLDERS)

HAS JUST GOBBLED 16 MILLION SHARES OF TSH AT RM1.64

THAT IS OVER A WHOPPING RM26 MILLIONS IN A SINGLE PURCHASE)

TOMORROW JUST SELL OTHERS AND GO "ALL IN" TO TSH

Final decision is yours

See

https://klse.i3investor.com/web/insider/detail/D_164991_3044377266
>>>>

>>>>
Blog: TOP 10 POWERFUL REASONS WHY PALM OIL BULL RUN WILL RESUME THIS AUGUST 2022, Calvin Tan

2022-08-01 11:22 | Report Abuse

Buying Tsh now to earn easy money now is effortless

Tsh boss bought from Rm1.09 to Rm1.79(he no selling )

he again bought all the way down to 99 sen

so now we see Tsh boss buying up 500,000 shares (was 150,000 shares last round )

why he buy more ?

answer:

because he knows Tsh very cheap now

he will buy at Rm1.05

he will buy at

Rm1.10
Rm1.20
Rm1.30
Rm1.40
Rm1.50

and he will buy even higher

SO HOLD TIGHT EVERY PRECIOUS TSH SHARES

SEE ALL AT THE TOP!
>>>>>

I invest for a very long term. However, not many invest for this long term time horizon. Many investors in icap may have planned to cash out at 10 years, or 15 years or the unplanned 20 years of their investment in this stock. They may wish to cash out for various reasons (downpayment for a house, children or grandchildren higher education, retirement income expenses, etc.)

As icap closed end fund is trading at such a huge discount, those who need to cash out at this time are most unfortunate indeed.

As an example, I encouraged my young niece to invest in iCap. She bought at 1.60 per share. After more than a decade, the arket price of iCap is 1.97. Her investent objective was not realised. She needs to cash out now as she is a young mother and wish to put a downpayment for her first house. To solve her problem, I bought over her shares at NAV, playing the kind uncle role.

How can existing investors realise the fair value of iCap today? Perhaps, it will be a long, long while yet.

my dear calvintaneng,
can you please share with us how low DLady will drop to, so that we can be like you, so clear in your vision?

>>>>
DickyMe

Even after consolidation, it sinks!
This is what Calvin recommended a couple of years ago.
So many brought to Holland by Calvin.

23 hours ago
>>>>

This was from the Netx forum.
my dear calvintaneng was supposed to make everyone rich in Netx BECAUSE he knew the true value of Netx. I think he was probably of the opinion that he was the only person who knew the true value of Netx.

Sadly, if the above poster is correct, and I believe DickyMe is, many were led to HOLLAND believing the great stories of calvintaneng of Netx fame.

Always do your own due diligence. Start by looking at the fundamentals. Make your own assessment and decision. I always do and I have shared these repeatedly in i3 too.

my dear calvintaneng, stay focus.

Many issues face the investors in the stock market. Interest rates, inflation, recession, geopolitical events, energy prices, commodity prices, trade competitions, etc, etc.

As an investor, I buy a business. Just stay focus on the business. Bottom up approach is my way to go.

>>>
In August 2017, these 10 companies were trading at the following prices (in sen):
WTK 82
BJ Corp 32
MRCB 119
Bonia 55.5
Media Prima 75
CBIP 198
MUI 16.5
PBA 126
OPCOM 57.5
EIG 90


By calvintaneng's intrinsic value for these stocks in August 2017, the upside potentials for price appreciation of these stocks were as listed.

Potential Upside
WTK 252%
BJ Corp 1463%
MRCB 320%
Bonia 170%
Media Prima 167%
CBIP 203%
MUI 809%
PBA 138%
OPCOM 161%
EIG 233%


The potential upsides for these 10 stocks according to calvintaneng were a low of 138% (PBA) to a high of 1463% (BJCorp).

But alas, after 5.5 years of calvintaneng's listing of his 10 severe bargains, these are their returns today, should you have bought these stocks like calvintaneng in August 2017.

From 21.8.2017 to 4.1.2023
(slightly more than 5.5 years)

Gain/Loss
WTK -41%
BJ Corp -6%
MRCB -76%
Bonia 311%
Media Prima -43%
CBIP -44%
MUI -55%
PBA -40%
OPCOM 27%
EIG -66%

or

Over the last 5.5 years, here are the returns of the 10 stocks of calvintaneng

The obvious 1 big winner is BONIA (+311%).

There are 7 big losers. They lost from -40% to -76%.

OPCOM gains 27% while BJCorp lost -6%.
>>>>


... and my dear calvintaneng the hero of Netx fame,

Not surprisingly, we hear of your Bonia and Opcom from your reposts and not on the other stocks.

calvintaneng, hope you can understand why some of us may not be enthusiastic in following your path.
3iii

>>>>
Posted by calvintaneng > 18 hours ago | Report Abuse

hahaha

Not every Calvin's stock ends up like Next

these ones up 400% to 500%

Bonia
Texchem
complete logistic
Ancomny

got check them out
>>>>>


Dear calvintaneng, my good friend from Netx.

Here is another of your post which must have ranked high in your promotions.
THE INVESTMENT APPROACH OF CALVIN TAN
TOP 10 OVERSOLD STOCKS TO BUY NOW WHILE STILL VERY CHEAP! (Calvin Tan Research)
https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/130378

Just look at the charts of your calls for these 10 stocks since 2017.
The prices have just gone progressively from the day you called these stocks till today.
The prices did not just go down because of the bear market.
The prices were following more the deteriorating fundamentals of these companies.

Share with us here your opinions if you think otherwise, my dear calvintaneng.

3iii

Feds is targeting inflation rate of 2%.
Anticipated to keep hiking rates.

Actions available: accelerate, decelerate, pause or flip and flop rate hikes

>>>>
Posted by calvintaneng > 18 hours ago | Report Abuse

hahaha

Not every Calvin's stock ends up like Next

these ones up 400% to 500%

Bonia
Texchem
complete logistic
Ancomny

got check them out
>>>>>


Everyone knows you sold 8 houses to invest into NETX. No one or few know about the other stocks which you mentioned after the prices had risen. Did you also sell 8 houses to invest into these too? :-)

Hawkish Fed Chairman’s Jerome Powell’s testimony

Bigger rate hike
Faster rate hike
Higher terminal interest rate

Warren Buffett owns businesses

Sound investing should be about buying and owning a business and making money from its profits. The problem I see is that many value investors aren’t business owners. Even if they really do dig deep in a company's fundamentals and business operations, many investors see fundamental analysis as a means to calculate fair value and sell the stock later on.

Even if you did thorough research into determining what the fair value of a stock should be, buying a stock with the intention of profiting by selling it if and when it goes up is not how Warren Buffett invests and *can prevent you from truly compounding your money. *

Emulating the mindset of a business owner as a value investor

One of the biggest misconceptions of value investing and investing as a whole I see is the idea that investing is about buying a stock, waiting or hoping for the stock price to go up, and selling the stock for a profit. This misses the point of value investing, specifically Warren Buffett’s way of value investing (at least after he met Charlie Munger, and shifted his mindset from buying cigar butts to wonderful companies at fair prices. Even if you did thorough research into determining what the fair value of a stock should be, buying a stock with the intention of profiting by selling it if and when it goes up is not how Warren Buffett invests and *can prevent you from truly compounding your money. *

Warren Buffett owns businesses.

Warren Buffett owns businesses and pockets the money it generates from selling goods and services. He does not invest in stocks to sell them later when their share price increases. This mindset has allowed Warren Buffett to compound and multiply his money at incredible rates:

Emulating the same mindset as Warren Buffett

One way I have been able to move away from this and emulate the mindset of Warren Buffett is by visualizing that owning a single stock is just like owning (but not necessarily managing) a coffee shop.

As a cafe owner, I want to sell excellent coffee that people are willing to pay a premium for to as many people as possible. I also want to use that money to open new stores instead of spending it on everyday costs to keep the business running and ultimately pocket as much profit as possible.

Bottom line, I want to make more and more money by selling coffee and not by selling the coffee shop to someone else. This way, I will have a *stable stream of money* which I can use to either grow the business or invest/start other ones.

This same principle applies to investing in stocks.

Growth capEx: Money spent to open new stores
Maintenance capEx: Money I have to spend to keep the business running
Free Cash Flow: Money I get to keep for myself
Owner’s earnings: Money that I would keep if I decided to stop opening new stores

This does not mean I will never sell my coffee shop if someone offered way more money than what it is currently making or will realistically make in the *next decade*. It means that I don't invest with the expectation and hope that someone will come along and offer way more money for it.

The toxic obsession with fair value

Value investors and aspiring value investors are familiar with or will come across the idea of fair value. Fair value is a price (or range of prices) a company is worth. The most common method to derive this number is calculating how much money a company will make for the rest of its life and then adjusting that money for inflation. And investors — retail and professionals alike — are constantly trying to figure out this number.

While the concept of fair value is undoubtedly useful, not just in investing but in life as a whole, I find that it ironically can blind investors and prevent them from compounding their money.

By focusing on fair value, we overly obsess with a "buy" price and a "sell" price. In doing so, we miss the point of what investing is: owning a business so you can sit back while the company makes money for you. Selling a stock, even if it has doubled or tripled in price, also prevents you from compounding your money.

If the business is still making money or, better yet, even more money than when you initially bought it, why would you sell it and forego all the profits the business can generate for you just because its stock price went up?

Of course, selling it might be a good idea if the business is unable to generate significant profits in the future because of steeper competition or changing consumer preferences. But if this isn’t the case, you should not only not sell the business but continue to own more of it. This is why Warren Buffett has repeatedly said it is “far better to buy a wonderful company at a fair price than a fair company at a wonderful price” and that his favorite holding period is forever.

The toxic obsession with fair value

Value investors and aspiring value investors are familiar with or will come across the idea of fair value. Fair value is a price (or range of prices) a company is worth. The most common method to derive this number is calculating how much money a company will make for the rest of its life and then adjusting that money for inflation. And investors — retail and professionals alike — are constantly trying to figure out this number.

While the concept of fair value is undoubtedly useful, not just in investing but in life as a whole, I find that it ironically can blind investors and prevent them from compounding their money.

By focusing on fair value, we overly obsess with a "buy" price and a "sell" price. In doing so, we miss the point of what investing is: owning a business so you can sit back while the company makes money for you. Selling a stock, even if it has doubled or tripled in price, also prevents you from compounding your money.

If the business is still making money or, better yet, even more money than when you initially bought it, why would you sell it and forego all the profits the business can generate for you just because its stock price went up?

Of course, selling it might be a good idea if the business is unable to generate significant profits in the future because of steeper competition or changing consumer preferences. But if this isn’t the case, you should not only not sell the business but continue to own more of it. This is why Warren Buffett has repeatedly said it is “far better to buy a wonderful company at a fair price than a fair company at a wonderful price” and that his favorite holding period is forever.

Source: Warren Buffet's Annual Letter 2023.
Warren Buffett gave away gems that may serve as guiding light to many who believe in investing for wealth creation.

Find a smart partner

"Find a very smart high-grade partner - preferably slightly older than you - and then listen very carefully to what he says."

Leverage is dangerous

"There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerious. A string of wonderful numbers times zero will always equal zero. Don't count on getting rich twice."

Make meaningful investments

"Make meaningful investments in businesses with both long-lasting favorable economic characteristics and trustworthy managers."

Be 'business-pickers'

"We own publicly-traded stocks based on our expectations about their long-term business performance, not becasue we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers."

It just takes few winners to make wonders

"The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And yes, it helps to start early and live into your 90s as well."

Don't fall for every stock advice

Today, social media platforms are filled with influencers, of finfluencers, who share stock tips to investment strategies.

Pump and dump - DUMPING

Once the stock soars, those involved in the operation (insiders and brokers) engage in DUMPING the shares at a highercprice, causing a dip in stock prices.

Communication channels used by pump and dump schemes:
emails
SMSes
webinars
youtube channels
twitter
whatsapp
telegram
newsletters, among others.

How to stay safe?
ALWAYS do your own research and be wary of unsolicited investment offers.Go through the company financials before buying its stock.

On hindsight (20/20 vision), it was obvious calvintaneng had fed this forum with false or misleading information.

The information conveyed by calvintaneng to this forum was at best very exaggerated and at worst, false or completely fabricated.

Be wary.

>>>>
DickyMe

Even after consolidation, it sinks!
This is what Calvin recommended a couple of years ago.
So many brought to Holland by Calvin.

23 hours ago


bbc99

see AZRB, many also brought to Holland by Calvin. After promoted kaw kaw, he disappear

5 hours ago

>>>>>

Very true indeed.

Allow me to smile quietly at this post of stockraider. Of course, he will never be able to invest like me. I have quite a number of multi-baggers in my portfolio. I believe my investing philosophy and strategy are safe and very rewarding indeed. :-)

One of the biggest misconceptions of value investing and investing as a whole I see is the idea that investing is about buying a stock, waiting or hoping for the stock price to go up, and selling the stock for a profit. This misses the point of value investing, specifically Warren Buffett’s way of value investing (at least after he met Charlie Munger, and shifted his mindset from buying cigar butts to wonderful companies at fair prices. Even if you did thorough research into determining what the fair value of a stock should be, buying a stock with the intention of profiting by selling it if and when it goes up is not how Warren Buffett invests and can prevent you from truly compounding your money.

Interestingly, in my books:

DLady is a 20 multi-bagger
Petdag is a 11 multi-bagger
Nestle is a 16 multi-bagger
Padini is a 7 multi-bagger

These returns have yet to include the dividends received.


Few people understand the power of long term investing in high quality businesses and the power of compounding. I know as I do speak to many people on share investing. The latest newsletter of Buffett explains very well my portfolio too.

2019 to2020. Everyone in i3 witnessed calvintaneng lost his 8 houses in NETX.

https://www.facebook.com/groups/53286054621/permalink/10162544535029622/?mibextid=Nif5oz

Emulating the mindset of a business owner as a value investor
One of the biggest misconceptions of value investing and investing as a whole I see is the idea that investing is about buying a stock, waiting or hoping for the stock price to go up, and selling the stock for a profit. This misses the point of value investing, specifically Warren Buffett’s way of value investing (at least after he met Charlie Munger, and shifted his mindset from buying cigar butts to wonderful companies at fair prices. Even if you did thorough research into determining what the fair value of a stock should be, buying a stock with the intention of profiting by selling it if and when it goes up is not how Warren Buffett invests and can prevent you from truly compounding your money.
Warren Buffett owns businesses.
Warren Buffett owns businesses and pockets the money it generates from selling goods and services. He does not invest in stocks to sell them later when their share price increases. This mindset has allowed Warren Buffett to compound and multiply his money at incredible rates:
A thousand dollars invested with Warren Buffett since 1965 would be worth more than $27 million today, while the comparable amount for the S&P 500 is roughly $200,000. That’s over 100x more.
The toxic obsession with fair value
Value investors and aspiring value investors are familiar with or will come across the idea of fair value. Fair value is a price (or range of prices) a company is worth. The most common method to derive this number is calculating how much money a company will make for the rest of its life and then adjusting that money for inflation. And investors — retail and professionals alike — are constantly trying to figure out this number.
While the concept of fair value is undoubtedly useful, not just in investing but in life as a whole, I find that it ironically can blind investors and prevent them from compounding their money.
By focusing on fair value, we overly obsess with a "buy" price and a "sell" price. In doing so, we miss the point of what investing is: owning a business so you can sit back while the company makes money for you. Selling a stock, even if it has doubled or tripled in price, also prevents you from compounding your money.
If the business is still making money or, better yet, even more money than when you initially bought it, why would you sell it and forego all the profits the business can generate for you just because its stock price went up?
Of course, selling it might be a good idea if the business is unable to generate significant profits in the future because of steeper competition or changing consumer preferences. But if this isn’t the case, you should not only not sell the business but continue to own more of it. This is why Warren Buffett has repeatedly said it is “far better to buy a wonderful company at a fair price than a fair company at a wonderful price” and that his favorite holding period is forever.
Emulating the same mindset as Warren Buffett
One way I have been able to move away from this and emulate the mindset of Warren Buffett is by visualizing that owning a single stock is just like owning (but not necessarily managing) a coffee shop.
As a cafe owner, I want to sell excellent coffee that people are willing to pay a premium for to as many people as possible. I also want to use that money to open new stores instead of spending it on everyday costs to keep the business running and ultimately pocket as much profit as possible.
Bottom line, I want to make more and more money by selling coffee and not by selling the coffee shop to someone else. This way, I will have a stable stream of money which I can use to either grow the business or invest/start other ones.
This same principle applies to investing in stocks.
Growth capEx: Money spent to open new stores
Maintenance capEx: Money I have to spend to keep the business running
Free Cash Flow: Money I get to keep for myself
Owner’s earnings: Money that I would keep if I decided to stop opening new stores
This does not mean I will never sell my coffee shop if someone offered way more money than what it is currently making or will realistically make in the next decade. It means that I don't invest with the expectation and hope that someone will come along and offer way more money for it.
Sound investing should be about buying and owning a business and making money from its profits. The problem I see is that many value investors aren’t business owners. Even if they really do dig deep in a company's fundamentals and business operations, many investors see fundamental analysis as a means to calculate fair value and sell the stock later on.
I’m interested to hear your thoughts on this? One argument that I hear is that money is just a tool and what's the point of owning a business if I don't sell it for cash that I can pocket.

Market Risk

Even if the earning power of the corporate sector and the interest rate structure remain more or less unchanged, prices of securities, equity shares in particular, tend to fluctuate.

While there can be several reasons for this fluctuation, a major cause appears to be the changing psychology of the investors.

There are periods when the investors become bullish and their investment horizons lengthen. Investor optimism, which may border on euphoria, during such periods drives share prices to great heights. The buoyancy created in the wake of this development is pervasive, affecting almost all the shares.

On the other hand, when a wave of pessimism (which often is an exaggerated response to some unfavourable political or economic development) sweeps the market, investors turn bearish and myopic. Prices of almost all equity shares register decline as fear and uncertainty pervade the market.

The market tends to move in cycles.

"You need to get deeply into your bones the sense that any market, and certainly the stock market, moves in cycles, so that you will infallibly get wonderful bargains every few years, and have a chance to sell again at ridiculously high prices a few years later."

The cycles are caused by mass psychology.

"The ebb and flow of mass emotion is quite regular: Panic is followed by relief, and relief by optimism; then comes enthusiasm, then euphoria and rapture, then the bubble bursts, and public feeling slides off again into concern, desperation, and finally a new panic."

One would expect large scale participation of institutions to dampen the price fluctuations in the market. After all institutional investors have core professional expertise to do fundamental analysis and greater financial resources to act on fundamental analysis. However, nothing of ths kind has happened.

On the contrary, price fluctuations seem to have become wider after the arrival of institutional investors in larger numbers.

Why? Perhaps the institutions and their analysts have not displayed more prudence and rationality than the general investing public and have succumbed in equal measure to the temptation to speculate.

As John Maynard Keynes had argued, factors that contribute to the volatility of the market are not likely to diminish when expert professionals supposedly possessing better judgment and knowledge compete in the market place.

Why? According to Keynes, even these peope are concerned with speculation (the activity of forecasting the psychology of the market) and not enterprise (the activity of forecasting the prospective yield of assets over their whole life).

Interest Rate Risk

The changes in interest rate have a bearing on the welfare of investors. As the interest rate goes up, the market price of existing fixed income securities falls, and vice versa.

This happens because the buyer of a fixed income security would not buy it at its par value or face value if its fixed interest rate is lower than the prevailing interest rate on a similar security.

For example, a debenture that has a face value of MR 100 and a fixed rate of 12% will sell at a discount if the interest rate moves up from, say, 1% to 14%.

While the changes in interest rate have a direct bearing on the prices of fixed income securities, they affect equity prices too, albeit somewhat indirectly.

The changes in the relative yields of debentures and equity shares influence equity prices.

Business risk

As a holder of corporate securities (equity shares or debentures), you are exposed to the risk of poor business performance.

This may be caused by a variety of factors like
heightened competition,
emergence of new technologies,
development of substitute products,
shifts in consumer preferences,
inadequate supply of essential inputs,
changes in government policies and so on.

Often, of course, the principal factor may be inept and incompetent management.

The poor business performance definitely affects the interest of equity shareholders, who have a residual claim on the income and wealth of the firm.

It can also affect the interest of debenture holders if the ability of the firm to meet its interest and principal payment obligation is impaired. In such a case, debenture holders face the prospect of default risk.

Establishing a PE Ratio
The PE ratio maybe derived from the
constant growth dividend model, or
cross-section analysis, or
historical analysis.

Constant Growth Dividend Model.

We derive the PE ratio for a constant growth firm from the constant growth dividend discount model.

PE Ratio
= Dividend payout ratio/ (Required return on equity - Expected growth rate in dividends)

Cross-Section Analysis

You can look at the PE ratios of similar firms in the industry and take a view on what is a reasonable PE ratio for the subject company.

Historical Analysis.

You can look at the historical PE ratio of the subject company and take a view on what is a reasonable PE ratio, taking into account the changes in the capital market and the evolving competition.


The Weighted PE Ratio

We arrived at two PE ratio estimates:
PE ratio based on the constant growth dividend discount model: 6.36
PE ratio based on historical analysis: 7.37
We can combine these two estimates by taking a simple arithmetic average of them - this means that both the estimates are accorded equal weight. Doing so, we get the weighted PE ratio of:
(6.36+7.37)/2 = 6.87

Determine a Value Anchor and a Value Range
1. Determine a Value Anchor

The value anchor is obtained as follows:

= Projected EPS x Appropriate PE ratio

In our illustration, the projected EPS is 5.00 and the appropriate PE multiple is 6.87. Hence the value anchor is 34.35. However, as valuation is inherently an uncertain and imprecise exercise, it would be naive to put great faith in a single point intrinsic value estimate. Practical wisdom calls for defining an intrinsic value range around the single point estimate.

2. Determine a Value Range

For example, in the above illustration, where an intrinsic value estimate of 34.35 has been arrived at, it may be more sensible to talk of an intrinsic value range of say 30 to 38. When you define a range like this, you are essentially saying that a "there may be a bias and error in my estimate. In view of this, feel that the value range is 30 to 38." Given this value range, your decision rule may be as follows:

Market Price*** (Decision)
< 30***********(Buy)
30 to 28********(Hold)
>38************(Sell)

Note that different PE ratios can be calculated for the same stock at any given point in time:

PE ratio based on last year's reported earnings
PE ratio based on trailing 12 months earnings
PE ratio based on current year's expected earnings
PE ratio based on the following year's expected earnings

*We will generally use the PE ratio based on current year's expected earnings.*

Investing: When to bet the farm

Big payoffs often require big risks. Bet wrong, and you could lose everything. Do you have what it takes? And how do you assess whether a dicey investment is worth it?


You want a big return? How big a risk do you want to take to get it? Gauging the risks associated with really promising investments, and handling those risks appropriately, can change your life.

"It's never safe to take a risk, by definition." Yet successful investors take major risks all the time. They succeed because they do their research, can afford to lose the money they invest in high-risk schemes and are able to make up any losses they incur with other investments, which frequently involve complementary or counterbalancing risks.

Whether considering an investment in a stock, a privately held startup or a hedge fund -- all high-risk propositions -- investors should start by digging through the details of the business case to figure out how the return on investment is likely to be generated. How big a payoff might the investment produce? And how likely is success?

Successful investors look hard at the downside as well. What would the price of failure be? And how likely is that?

Just jump in and take a risk
And what about all the outcomes in between?

Successful investors tend to have a broad view, taking the downside into account with the upside. They plan on an outcome somewhere in the middle of the range of possibilities. That is their "expected return."
"An expected return is an average," "It's the probability of all of the outcomes."

Risk assessment gets pretty sophisticated at risk-oriented hedge funds. These funds combine and counterbalance risks to put together exotic investment strategies that increase an investor's upside while controlling the downside -- all for a price. But the basics are just common sense.

A chief investment officer for an asset management company spends his days researching investments both risky and safe for the wealthy families in the firm's client base. He researches basic business practices as well as the big-picture business opportunity.

"The No. 1 most overlooked aspect of hedge fund due diligence is on the operational side," "The things that can be potential risks and pitfalls are not always easy to spot."

Among the not-so-obvious business risks, are high employee turnover, sloppy accounting and computers that aren't backed up. A mistake in the office can wipe out an investment's potential return even in the most promising environment.

Our own personalities add complexity to high-risk situations. Know the risks associated with overly emotional reactions.
"What you don't want to happen is for people to get emotional with the market."
The more emotional we get, the more likely it is we will make a mistake.
A company's business prospects can be measured and evaluated statistically, but there is no easy measure for mood swings. Before making any moves, people contemplating high-risk investments should come to grips with their emotional makeup and know how they are likely to react.

Three ways to analyze a company (Quantitative, Qualitative and Technical Analysis)
Where risk is high, the investor needs to analyze his or her life situation.

Is financial risk really risky?
"There are times in your life when it's appropriate to take different levels of risk."
Age is a big factor. Age changes us in a lot of ways. We gain emotional maturity. At the same time, the nature of our financial obligations changes, and the time horizon for risk gets tighter.
"Let's say you're young, in your mid-20s." "If you take a big risk and something goes wrong, you have time to recover." On the other hand, the middle-aged homeowner probably needs a bigger safety net, especially if there are kids who need braces or there are college costs to consider.
Even a high-risk investment can be a very positive part of a portfolio when it's appropriate to a person's situation and is well-managed.
"In investing and in life, you have to look at everything on a risk-and-reward basis." "Volatility is not the end of the world."

Risk lesson from the OPQ
OPQ is a good example. He left the investment firm of X in 2003 to start his own firm. He knew most new businesses fail, but he had a lot of confidence in his own investment skills. If the business went under, he reasoned, he could always get a job with another firm.
"Careers are actually the easiest place to take risks, as long as you don't burn your bridges."
Younger investors, particularly, should be ready to gamble with their careers. But be aware, as professional investors often do: Risk only as much as you can afford to lose.

What to do when the stock markets decline sharply?

According to one theory you should stay calm and do nothing. The stock market will eventually climb to new heights. And it is impossible for you to time your investments – the short term development of the stock market is unpredictable, most of the time the market is flat and stable, and positive and negative price developments occur so fast you are not able to react.

According to a second theory you should rebalance your portfolio and buy more stocks. Rebalancing is necessary because you have an investment strategy or an asset allocation, which you believe is just right for you. When the stock market decline the relative value of your stocks diminish and you need to buy more stocks to re-establish the right proportions.

According to a third theory – advanced by a.o. Warren Buffett - you should “be greedy when everybody else is fearful” – i.e. you should buy more stocks. When stock markets decline, investors tend to overreact, and stocks fall to prices well below their long term value.

According to a fourth theory you should have stop losses on all your shares and sell immediately when the price drops below the indicated level. Since this theory mainly applies to individual stocks and not stock markets in general, perhaps we may neglect it when considering declines on the stock market.

According to a fifths theory you should never buy stocks as long as they are falling in prices, but wait until the price fall has stopped. Then you should be an active investor.

According to a sixth theory you should sell your stocks when the short term moving average price falls below the long term moving average price, and only start buying again when the opposite occurs.


What do private investors actually do when the stock market decline?

Most of us stop trading. Most of us act according to the new trend of the stock market with a 6 months delay – both when the stock market collapse, and when a new bull market begins. Most of us overreact based on our short term experience – at one time we are too optimistic, and at another time we are too pessimistic. Some of us loose a terrible lot of money because we have committed a number of sins – we have too few stocks in our portfolio, have stocks in poor quality companies, have illiquid stocks, or have been investing based on borrowed money or money we need for daily consumption.

Conclusion

It is difficult to tell which of the theories is the right one, but looking at our normal behaviour it seems clear to me that we need to invest in a more rational manner – do our homework before choosing the companies in which we invest, base our investment on long term perspectives, base our investment on fundamentals such as p/e figures over a long period of time, base our investments on demographics and macroeconomics, learn about the stock market fundamentals, and last but not least base our investments on our individual investment profile and strategy, and not on whether the stock market goes up or down.

Is the Firm Cyclical?

Firms that go through boom and bust cycles - semiconductor companies and auto manufacturers are good examples - require a bit more care. Although you'd typically think of a firm with a very low trailing P/E as cheap, this is precisely the wrong time to buy a cyclical firm because it means earnings have been very high in the recent past, which in turn means they're likely to fall off soon.

For cyclical stocks, your best bet is to look at the most recent cyclical peak, make a judgment whether the next peak is likely to be lower or higher than the last one, and calculate a P/E based on the current price relative to what you think earnings per share will be at the next peak.

Understanding Stock Market Return

Stock market return
= fundamental return + speculative return
= (earnings growth + dividend yield) + (change in PE ratio)

A crisis mentality among investors

Professionals, even the most seasoned, have the same emotions as everyone else. Learning the ropes professionally does not eliminate human emotion, nor does it elimate urges to buy or sell emotionally. Faced with uncertainties, the tide of emotion surges. How can one resist the surging tide of emotion? Only if one has a framework of disciplines and knowledge within. Controlling emotions and replacing them with the elements of this framework are the secret.

PRICE: is frequently an essential element, so that a stock (and even a bond) may have investment merit at one price level but not at another.

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Having selected the company to invest based on various parameters, the next consideration will be the price we are willing to pay for owning part of its business.

Price is always an important consideration in investing. At a certain price, the company can be acquired at a bargain, at a fair price or at a high price. Each scenario will impact on our investment returns.

We should ALWAYS buy a good quality company at a BARGAIN PRICE (margin of safety). This allows us to lock in our potential gains at the time of buying at a favourable reward/risk ratio. This maybe when the upside gain: downside loss is at least 3:1.

There maybe FEW exceptional occasions when we may be willing to pay a FAIR PRICE for a good quality company. This is often the case when a good quality company is fancied by many investors and is often quoted in normal time at a high price.

However, we should NEVER (NEVER, NEVER) buy a good quality company at HIGH PRICE, whatever its earnings and growth prospects maybe. To do so will not only diminishes our potential investment returns, but may even results in a loss of our capital due to the unfavourable reward/risk ratio.

Don't time the market, it is difficult. However, there will be time when the market is on sale and the prices of stocks are at a bargain and there will be time when the market is exuberant and the prices of stocks are high or very high.

The market will always be there and we should choose when to buy and when to sell. We should only buy a stock when the PRICE IS RIGHT FOR US and sell a stock when the PRICE IS RIGHT FOR US.


(What is market timing? Timing is a term that refers to investing by buying everything or selling everything on the basis of the (faulty) assumption that one can predict the market's next move. Attempts to time are common, but academicians and practitioners have concluded that success happens through luck only on occasions that are quickly reversed and very costly.)