Up_Down,

You know i 've been thinking maybe i should allocate a small portion of my fund, or at least my personal money to trading.

Would you mind writing about your journey, your philosophy etc

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Posted by Up_down > Jan 5, 2019 10:44 AM | Report Abuse

Yeah. It’s easy to trade once you get used to it through acceptance of our mistakes and learning experiences in the process. It may take years to endure such setbacks. Life becomes easy once we accept our mistakes gracefully in trading.

True.

Do note seth klarman also said that, buffet is probably a better judge of business than he is. Although to be honest, both their levels are so high, i cannot even tell if there is a difference.

I think good investors, all have their own philosophy, that must flow from value investing, because all intelligent investing is really value investing.

Its just that your perspective on the intrinsic value and how you value it is
different. Everyone wants to pay significant less than their derived intrinsic value.

Not to mention, we all have our quirks.

Having said that, the trend does point towards people who held for an extremely long time.

Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was that they were the accounts of people who forgot they had an account at Fidelity.

Of course one must then ask who did these participants consist of? Were they all intelligent investors or traders? I doubt it. However, most people also consider themselves intelligent investors/traders despite the statistic clearly showing that isn't the case.

Having said that, if you are a normal individual, without any particular brilliance when it comes to investing or trading, i think warren buffets "invest as if you can only do it 20 times in your life" really helps.

If you pay that much care into your investments, as if you can only buy 20 companies in your life time and hold them.

The probability of a few of them being incredibly wonderful companies like Public Bank, Top Glove etc, should be decent, and for the rest to turn out to be pretty ok, with no major losses.

Even so, you really only need one of them to be the Public Bank.

From what sifu's like charlie munger said, "I did not get rich investing in middling opportunities."

Or Seth Klarman: “It is easy to find middling opportunities but rare to find exceptional ones.”

This is my biggest lesson this year, i have to confess i bought quite a few middling opportunities, probably like 10% of portfolio. And this consist of a large proportion of my losses last year, despite being so small.

Since our name is not WB, and our cash not so much, as investors, we should only invest in wonderful opportunities. Not middling ones.

That's for me anyway.

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Posted by Icon8888 > Jan 5, 2019 09:17 AM | Report Abuse

Long term hold of companies with moat not the only way to make it in bursa

I have busy reading lately. John Neff , Joel Greenblatt, Seth Klarman (margin of safety) , David dreman etc all churn their portfolio every few years (some even happy to let go after few months when profitable)

So it is not true that moat based Buffett style super Long term investing is the only way to do it

Don't believe me ? Read their books

Mr Teo,

There is Class B shares, USD 195 per share, or RM800.

Its basically class A split 1/1500. The downside is it has less voting rights, prorated.

https://www.investopedia.com/ask/answers/021615/what-difference-between-berkshire-hathaways-class-and-class-b-shares.asp

No arguments there.

Mr phillip,

Regardless of our differences, i hope you stick around and continue to comment.

Your perspective is a breath of fresh air, and i believe your presence to be a net positive to those around.

If a newbie read your postings, he would have saved a lot of money. I think i would have made a few mistakes less if i read this article in 2016. The "any price" portion of your philosphy, i would have naturally removed.

I hope you reconsider. Very few here have a brain for investing as sharp as yours, and even fewer with the length of experience that you have.

Good luck. Im sure your smarter than than the reply above. There are so many holes, i don't even know where to start.

I hope you find your next ql, preferably something where, profit went up 300%, share price up 500%.

Not profit up 7.2%, share price up 77%.

The initial one will be much more resilient, can potentially go to 100 bagger.

The second well. you know my perspective. Good uck.

I agree. You thinking is similar to mine. I read the annual reports since IPO of the company.

Very very good management. They understand ROIC very very well. Dont waste money on stupid investments.

i really like this co.

but i have better things to buy. If not for that, i would buy this.

I think Mr long Number, will have a good performance in investment to the end of his days.

He is right, MOAT first, but valuation is a very close second. There are so many extremely overvalued wonderful business.

Our name is not WB, our capital is small, can only invest in wonderful companies selling at fair value, a little above, or below fair value. This was the most important lesson i learnt in 2018, its now engraved to my DNA d.

I doubt he is as egoistic in his investment as he is when he writes here (some of his writing, mostly his replies when people give criticism).

Good luck long number guy!

Haha probability.

You are right.

Having said that, looking at his replies, and how he speaks.

He is a very intelligent man, that is for sure. There is no way mine or ricky, or your points don't make sense.

But he cannot admit, because he said QL is wonderful company at this or any price publicly d, to admit fault now, would be humiliating if you have a large ego.

qqq3,

OTB is a trader, not an investor.

When he sells, you would expect most to drop after running for a bit longer.

The mark of a good investor on the other hand, is that the stock he sells, keep going up, because he trades one wonderful company, for an even better one.

i3lurker,

I saw so much CP in singapore frozen storage.

And this co, only 13 times earning in thai stock exchange.

QL must be going to do magic trick d. Not just trick, but real magic now.

I bet next year, QL will triple revenue, and quintuple margin! That's why our genius investor long number guy willing to buy!

He so genius until can see this magic trick pls!

Raider bro,

When people get stupid, they start using stupid valuations.

At the end of the day, the value of the ivnestment is all the cash generated over the lifetime discounted to present value.

Uber lose 1bil a quarter. They need to pay for electricity etc, you think they can lose 1 bil per quarter to eternity?

No mah.

I am willing to bet with you, whatever value UBER IPO at, within 2 years, it will be 60% or less of that.

Haha QL will turn into magic, and turn 1.88% earning growth rate to 20% per annum clearly!

I can see myself paying 50PE for a super moat and wonderful company whose earning growing at 20% per annum.

This company on a valution basis is worth more than Tencent, Alibaba, Berkshire Hathaway, Google, Apple, Facebook, TSMC, Nividia etc.

Ecommerce, disruption, AI, automation, movement to cloud.

SO WHAT, QL WILL WIN ALL THROUGH SURIMI. Our margin will fly from 6% to 30%! We make surimi 1 sen per KG, our competitors make at RM1 per kg!

Why? Because our founder wake up at 5 o clock. No other founder in the world does that. Therefore, regardless of the economics of the business. QL will win, and be a great investment, AT ANY PRICE!

Mr teo,

Well, to answer your dilemma, do you think you cannot find a better investment?

Berkshire is selling at 16 times operating earnings now. Which is 3 times cheaper (just a rough estimate i think its probably 4-5 times cheaper).

Do you think QL is better than berkshire hathaway? When QL cannot even grow earnings and revenue faster than berkshire hathaway?

Don't take this to be me being argumentative. Just asking a question. If you say yes, hold. If you say no, go buy Berkshire Hathaway better.

Good luck with your journey. I wish you all the best.

Good. I like it. Continue extrapolating the now to the future, infinity and beyond.

Because there is no such thing as natural feedbacks.

And to top it off, valuations for berkshire, is 3 times cheaper than QL.

This is Mr long number logic.

Please.

Mr Long Number,

You talk alot about QL moat. Let me show your something.

Just a brief overview, since i dont have that much time.

From 2015 to 2018, Ql Revenue grew from RM2,706.91m to RM3,263.14m, that is RM556.23m or 4.68% per annum. Not even beating Malaysian or ASEAN GDP growth. They beat only SG growth rate.

Where is this massive growth your're talking about, don't make me laugh please.

You said QL is better than Berkshire, because QL can grow faster than Berkshire which has a higher base. Well, Berkshire revenue from 2015 to 2017 grew from USD210,943m to USD242,137m, that is 4.7% compounding.

And this is from a USD500 billion business base, with GDP growth rate in the US barely 2 percent pa, which is more like double the performance of the economy, in terms of revenue anyway.

So that growth point, you can go throw rubbish bin.

From 2015 to 2018, QL earning grew from RM191.40m to RM206.24m. That is RM14.84m, that is 1.88% growth in earning compounding.

I can't compare with BH here, because they have alot of revaluation gain etc, which swing a lot, If want to analyse properly, need to 10 yeas minimum.

Well, that strong growth in revenue, and weak growth in net earnings, this points to margin compression of 15.5%.

Since when company with strong moat, drop margin like that ah? And every single year the margin drops.

And as the company does not have a 90-100% dividend policy, more like 30%, this means the earnings retained is being invested at increasingly lower returns.

Now earnings grew 7.7% from March 2015 to March 2018, while the share price increased from RM2.9 to RM5, or about, 72%. Far above earnings.

Well, you must expect QL to be a perpetual machine for the next 3 years, where earning will grow another 7.7% while share price go up 72%, to 110PE!

I would be alot more impressed if earnings went up 72%, and the share price went up 100% or something.

This is not really a case of you analyzing it correctly, but more of the stupidity of others, speculating on the greater fool and pushing the price up to stupid levels.

Now since you like this company performance so much, lets do a quick analysis using last 3 year results. If QL continue to increase earnings at this pace, how much cash/earnings will QL generate over its life time?

Lets assume inflation of just 4.5% (do note bank FD rate is usually lower or equal to inflation, and its now, 4.5%, gives you an idea of how optimistic this assumption is), and the earning growth of 1.88% per annum for perpetuity, all of which were great years were nothing bad happened.

Well, is RM5.83 per share, and this is discounted using FD rate. If this is an investment, right now at RM6.7, you are saying, i will take on the risk of investing in stocks, instead of risk free FD, for a negative difference in return of roughly 0.65% per annum.

Wah seh. Your logic is flawless.

Well, call me when its RM2, i might think about it then.

Now, since you know the company so well. This company is in a cost based business. Its brand is not worth much overseas. If it was, margin wouldn't be compressed.

In a cost based business, its the lowest cost producer who wins. What is the cost of production for each KG or surimi, and how does it compare with that of global competitors, assuming the same quality?

And how does it net off if we are to taking into account shipping cost?

Cannot answer? Fine. Lets just compare to ASEAN. Do you think QL can do it cheaper than any competitor in Vietnam, Indonesia or Cambodia? Where they are working off a much lower natural cost base?

Good luck. Better don't go on margin anymore.

Mr Long Number,

Layhong is not a value play. Not even close.

Its a punt on the NHFOOD JV being worth something, and the rest of the company being worth the share price then.

Yes the logic is tenuous, but i was feeling adventurous and in a gambling mood (this was an error of its own) not too adventurous however, as i only bought 1.9% worth. So the error had limited effect.

Cest la vie, i am human. My error resulted in 1% loss. Yours resulted in you losing your shirt.

Haha im at a point, where the pleasure of eating an egg is more than RM1 now, but not by much! I'm still very kiam when i think its not worth it, even if its 50 sen. Hahaha. To a fault probably.

I am still very careful with money. But i'd like to think its a calculated care, and when i should put alot of money down, i will.

Its one thing to be cautious, and another to be cautious to a fault.

Good luck with your currymee.


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Icon8888 hi Jon, if you need a decision tree to eat an egg, that means your character is naturally cautious. Then better stick to what you are comfortable with, ignore what I said.
04/01/2019 19:30

Correct, WB made alot mistakes. I can both hand also not enough to count. Even the purchase of the initial berkshire hathaway was a mistake.

Having said that, this was the man who turned USD17 to USD290,000, And have a 17% for 50 year track record. His initial 20 years was almost 30% per annum.

His success, far far exceed his failures.

So we have that. Having said that, at his price, apple is pretty good. And given the markets now, everyone would wish they are WB with USD100b to put to work.

I wont be surprised if he bought USD50b worth of apple in the last 3 months.


===
lching Warren Buffet could be dead wrong. you go figure out how much he lost by buying APPLE at the highest price last year. i don't think he can recover the sum in the coming years.
04/01/2019 18:35

Yes, Aeoncr is a better business i think. But given the price, i prefer rce. Still, i have some aeoncr in my port.

Mr Lee,

I disagree with QL as an investment, but i'm not sure i understand your points and arguments against it. It strikes me similar to one throwing darts and hoping for one to stick.

Go read ricky yeo's comments on QL.

Respectfully,

How on earth did you read

"the word of the sage of omaha. Reading about benjamin graham, walter schloss, philip fisher, george soros, charlie munger etc"

And then proceed to invest in,

Aokam Perdana, Ekran bhd, and most obviously "undervalued" Renong bhd

All of which had massive debts, Ekran had non stop cash calls.

And Renong, How was it undervalued? Did you rely on UEM word that it was undervalued via the Put contract? Did you do your expected value calculations?

Well if someone followed his philosophy, it should work. I agree on many points.

I'll just say this, you can go and pay 30PE, that is fine, but you better be damn sure its below the discounted net present value of all future cashflows.

If you buy wonderful companies at fair prices. you will do well.

If you buy wonderful companies at ANY price, you will die, unless you hold and just buy rain or shine.

If you used margin buying wonderful companies at any price, you will die.

Icon,

I have more than 100% of my networth in stocks. I'm not going to count my private stakes, even thought i think one of them should be quite valuable.

I don't diversify as i think equities is the best asset class. Property? Let someone buy it, i don't want.

Even if it was my own money only, i'm very conservative. I used to do a decision tree, economic utility analysis, on whether i should buy an extra egg during lunch or not when i was younger.

Will the extra egg for RM1, provide enough pleasure to warrant the RM1, compared to the other ways i can spend the money.

Again, i don't avoid paper loss, as i've shown many times, i avoid permanent loss of capital.

I would buy PetronM today, and be happy if it falls to RM3 next month.

You are right, i focus alot more on not losing money than making money.

The focus of most investors differs from that of value investors. Most investors are primarily oriented toward return, how much they can make and pay little attention to risk, how much they can lose.

Respectfully, i think your sheer focus on following the smell of money only, also restrains your intellectual development when it comes to investing.

When i read your articles today, and those 2 years ago, i can't see a greater depth in how you think etc.

To be fair, its a decently high bar.

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Posted by Icon8888 > Jan 4, 2019 05:47 PM | Report Abuse

you make a mistake by setting this fund management toy for your relatives and friends

because of the need to preserve capital and avoid paper loss, you box yourself into a corner by avoiding all the sexy girls and only stick with the lady book worms

it restrains (at first I was thinking of saying retard, but better not) your intellectual development

Lol, if i teach, ill only do one on one.

RM5k, for 1 and a half hour a month for a year. And me replying your whatsapp now and then. Hahaha

But i'll only do so, once i finish writing my free "Learn investing the hard way" articles, Which knowing me and my lohsoh-ness, will probably end up 300,000 words or more.

Hahahaha

hahaha icon making me paisehhhh.

Now my face on 15,000 post across i3, hahahaha

Icon,

That is inaccurate.

75% of my portfolio is in companies with market caps of 2bil or less. Currently, the largest of that 25% is airasia and timecom. The rest are very small.

I dont fear paper loss or volatility . I fear permanent loss of capital.

Lets say UZMA, from OTB , this one i cannot agree at all. The moment i buy, even if it goes or up, or does not move. In my head, i've already made a loss d, i just haven't paid for it yet.

Because i do not think its worth that at all. If i make money, i consider it to be because i was saved by a greater fool than me.

And when it drops even 1 sen, i damn scared, because i know its not worth that to me at all, even if some fool might consider it so. However, i am not in the business of relying on fools.

On the other hand, the stocks in this portfolio, when i buy, i'm very relaxed, because i know the profit is made the moment the bargain is purchased.

Lets say, My initial cost for petronm is RM7.8

When it drop, i feel so happy, just average down non stop. Give me even more paper loss!!

KSL i bought a small position at RM1, drop to RM0.7. Just top up, no fear at all. Ill be perfectly relaxed if it fell to RM0.5

For a short time in 2017, i heard rumours that OTB was buying AYS, i thought it was rubbish, but i was greedy, i bought abit. The more it go up, the more my heart jump, because i have no idea how to balance my greed and fear, i know its rubbish i hold.

When it drop 1 sen, i almost die. Whole day cannot look away from the screen.

I sold it in 2 days, and moved away. Its not for me.

I made a small amount of money on JAKS with the koon bee system, but i doubt i can ever make much, as i dont dare to put alot, since im gambling.

My investments on the other hand, when im confident, will be alot more than 5% of my entire netowrth, much less portfolio ;)

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Posted by Icon8888 > Jan 4, 2019 05:24 PM | Report Abuse

Like a doctor, I think I finally figure out Jon's style

It is called "fear of paper loss syndrome "

All stocks he picks must be so safe until very little chance of paper loss

Most of us are different. We tolerate our portfolio goes on a wild swing as long as it doesn't kill us, and hopefully pot of Golf at end of rainbow


Posted by Icon8888 > Jan 4, 2019 05:25 PM | Report Abuse

To cut it short, whatever jon call himself, it is Blue chip investing

We are small and mid cap investing

Probability,

Its proven to work anywhere, through many research. KLSE and SGX? well you have yeoman bearing the flag proudly. Pangolin Investments etc

Japan? The market with 30 year stagflation, value investing still works there. Haruhiro Nakano, founder and president of Saison Asset Management Co

HK? ValueAsia, David Webb, 20% per annum using value investing in HK small caps.

France? Jean Marie Evillard. Fantastic record.

India? Monish Pabrai, Vishal Navishak etc etc

If i fair to get better than index returns over the next 10 years, the fault lies in my incompetence, not the failure of the philosophy.

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Posted by probability > Jan 4, 2019 05:17 PM | Report Abuse

a lot investment books seemingly have evolved from U.S...

why have we not seen these from U.K, Germany, France?

it would have been nice if two unconnected person from different countries...derive the same thesis independently...

like say when Newton discovered apple fell because of gravity...another man china discovered the same independently..

but that not the case isn't it?

i think what happened in U.S stock market..is simply because the competitive advantage U.S had over the rest of the world for all its business to thrive...

any theory produced there is not universally applicable

Kb is Koon Bee system.

The system consist of Mr Ooi recommending, and Mr Koon, through sheer force of his buying frying it up.

And if the next 2-3 q results are as per Mr Ooi, the frying goes absolutely crazy.

OTB record is his record.

If i try to do like OTB, ill probably have all the loss and little of the gains.

Why become a poor version of OTB, when i can be a rich version of choivo capital. Hahahaha

He is a trader, i'm an investor, too different d.

I tried his style, but i just cant stand buying rubbish. Tbf, this year, his competition picks, not that many give me heart attack, because prices are so low now. And we did agree on a few companies, although for very different reasons.

But his miss universe list at late 2017, give me heart attack.

Dear Probability,

You probably have not read Warren Buffet's FA report.

Though, he does not talk in time periods of 2 years, but a decade minimum.

Scion Capital, Peter lynch, the few value investors who made their research known, after reading it, you can see the next 10 years pretty clearly.

And the uncertainty? Well, thats why we have margin of safety.

CharlesT,

If after a few years, and i cant get good returns, well, i need to find a new source of investment.

I'll probably throw most into index funds of various countries, and speculate a little with the rest via options.

haha trading around the market forces of mr koon and mr ooi is probably smart.

If you know you're gambling and not investing.

Maybe i should, but i still cannot finish studying investing, and am a long way away from reading all the annual reports in SGX, HKEX, Shanghai, Shenzen, Nikkei, KOSPI, Vietnam.

Or basically every exchange in the world.

I think that will keep me busy till im forty at least.

Thanks for the advise uncle.

But if does not make sense, i cannot use it, and my home does not just consist of BURSA, but the rest of the world.

If value investing does not work in BURSA, Neoh Soon kean would be a bankrupt today, But he is not.

The philosophy is as follows.

1) Identify the intrinsic value of the investment,
2) Purchase when prices are far below the intrinsic value and sell when its close or above it.

If this does not make sense logically, theres nothing to more to say haha.

Good luck with currymee. I wish i bought 1-2% when calvin promoted it, but i didnt. At this price, i dont know how to buy.

Mat Salleh book theories, proven track record since 1930.

And if we consider John Keynes to be a value investor, it goes back to 1920.

having said that, that means but little to me.

The most important thing, is that Value investing make sense to me. The rest dont.

Haha charlest,

I've never felt inclined to make money quickly, but if it does happen, i wont protest. Haha

I do some speculation via options when i feel that the odds are very very firmly in my favor, but this does not happen often.

Alex.

You are correct. Please continue thinking that way.

It does not, all who do value investment go to holland.

Its my greatest wish, that everyone but me in the KLSE market, thinks that.

Dear john,

Thank you for the questions. They are fair ones, and i've asked the same questions when researching this company.

Some is already answered in the article, you may study further by reading the research reports from kenanga and maybank.

The rest, well, i'm not one to take from your the pleasure of finding out on your own.

Its not in my interest to fry up the price, if my research is right, it should increase on its own volition.

I've enclosed them here, and an article i wrote december 2017 on the valuation of financial institutions.

http://www.rce.com.my/docs/news/Maybank%20Research%20Report%20-%20RCE%20Capital%20Berhad%2020.09.2016.pdf

http://www.rce.com.my/docs/news/Kenanga%20Report.pdf

https://choivocapital.com/2018/11/28/the-valuation-of-financial-institutions-and-why-coldeye-is-wrong-on-mbsb/

I have. Its really good.

Go read it.

I dont think Nassim Nicholas Taleb have written a bad book so far.

His latest is Skin IN Game, also fantastic.

As always your brain is muddled.

one can very well know a company very well and buy only if it was at a discount to fair value.

Id rather no one buys to be honest.

Here's to a large stock-holding loss next Q!

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Posted by probability > Jan 4, 2019 01:06 PM | Report Abuse

wei...u all take the opportunity to promote own stocks kah?

Jon on his petronm and raider on his insas..

ok ok

He does not need my approval, and can keep doing so. I'm just calling him out.

But he is being unethical. By going to every single forum and do weak and biased analysis on that company for the sole purpose of diminishing it in comparison to MBM, which he intends to fry, and sell to the retailers, which consist of retired people with weak investment/speculation decision making abilities, who follow after him

If you see fraud and don't call fraud, you are a fraud. That's just me.

If so great, diam and buy.

Every q result out show on malaysiastockbiz, every q season, people go click, and if see such wonderful results, will naturally buy and push price up.

Although, tbh, its probably better than people do stupid things in market and get burned, thus leaving the market, but i have too much indignation for that for some reason.

=====

Why so angry ? What makes you think that common sense needs your approval to talk about his favourite stock ?

I think they probably got too much reports to have noticed your complaint.

I may be wrong though, if they have replied and rejected your pleas in this regard before.

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Icon8888 If you asked a friend to lend you a pencil (not a million dollar, just a pencil, and he has 20 of them on his table) and he said "No Way". And then the next day he approached you for advice on what shares to buy, how would you feel ?
04/01/2019 13:04

I have a feeling,

If QL goes to 10. He will call it his greatest investment.

If it goes to 3, he will admit mistake.

Which is foolish, as the outcome bears but little bearing on the thought process.

Like i said, Mr Long Number philosophy is, know the business extremely well, and buy a great business, at ANY price.

As long as don't use margin, won't die lah. And if he buys consistently at the peaks and troughs of a wonderful company for 20 years, probably will have a decent outcome. If the company turns out to actually be wonderful and with a humongous moat that is constantly expanded and maintained through innovation or network effects.

For me, in QL, beyond a good management, economies of scale, and a very slight branding edge, i don't see too much moat.

I'd rather eat TSMC, Apple or Berkshire, all of which are at least 3 times cheaper valuations wise, and are far superior businesses.

Or even PetronM, that is 10 times cheaper valuation wise, and in my opinion, an equally superior if not more superior business.

To be a good investor you need 3 things,

1) The ability to estimate intrinsic value
2) The ability to hold and buy more as prices fall
3) To be right.

Buffet is probably doing 1 and 2 now. The 3rd, we have to see loh, i think he's probably right.

=====
stockmanmylike that wallen the bufalo.....now is Apple may turn out to be a mistake...then how?
04/01/2019 10:03

Hmm, id suggest you study for yourself. Its the fun part!

Insas is a net asset play imho. 1-3% portfolio size.. The sit and wait.