TheContrarian
I sincerely think most people think Insas is a value trap. Had I not thought so I wouldn't have completely exited thrice near the peak in the past ten years or so, making a 4 fold gain from my initial investment by buying back near bottom after having sold near peak.

Congrats, in market timing, you are the best.

But I am confused here. Did you profit from a value stock or a value trap.

For value stock, investor buys it when it is selling cheap, have to buy first. When the price goes up, then you sell it and you profit from it. And repeat, just like what you have been doing for Insas.

But for a value trap, the share appears to be cheap and you buy it. Because it is a value trap, it is never cheap in the first place, and the price continues to go down. No dividends too. So how come you were so good profiting in 4 folds in trading in a value trap? It is never suppose to go up for you to profit, isn't it.

TheContrarian
When this article was written Insas was at 1.27. Today Insas closed at 1.09. So, is Insas a value trap?

If you make a decision based on your statement above to decide and demand me to say I have been wrong whether Insas a value trap or not, that is your prerogative, and I respect your opinion. My point of view is just different from you as I looked at a whole lot of different things, all in the article itself.
Do you expect everyone thinks the same?

Posted by CharlesT > 3 hours ago | Report Abuse
Personally I think it's better for KCChong to leave I3 forever io coming back to do this promotion on Insas

I do agree with you although there is no intention of promoting Insas. It is no use to be in a forum when the only thing the participants talk about is the share price.

Oscar Wilde once said that "A fool is someone who knows the price of everything and the value of nothing".

Posted by CharlesT > 26 minutes ago | Report Abuse
Personally I think it's better for KCChong to leave I3 forever io coming back to do this promotion on Insas.

Thanks for your advice. May be you are right. However, I have benefited immensely from i3investors. Good to contribute back, I think.
But why do you think I need to "promote" Insas? Have I really promoted any shares in i3investor since years ago, or was I just sharing my points of views on various stocks?

Posted by arv18 > 38 minutes ago | Report Abuse
come on now. you've answered your own question.
and not "perceived". it is one.
cherry picking a month (Jan) and year (2009) to suit your story is wee bit sad tbh.

Thanks for your comment. You are definitely not the only few who think Insas is a value trap. Many seemingly good investors also think so, and I think you are not wrong.
However, I am not responsible for your "sadness" in my "story". I have no control over it.
The date January 2009 was chosen as I was trying to look at look term return, rather on the noises in the short term, and 15 years was the longest I could get as you can see from the chart in the article.
Well, you could do some homework to choose other dates to substantiate your theory of value trap of Insas. I am sure you can do that. So which return you want to chose, 10-year, 5 year, or one year, or 9.8 years? And was Insas a value trap basing on your choice of reference? Would like to see your analysis.

Bullish
Hi KC, is KPS considered undervalued as well?

I don't follow this stock and have no positive comments about the management. It supposed to have a big pile of cash after disposing its water assets inn 2015 but if fell quickly to net debt. Wonder if the money was properly used.
It appears to be cheap with single digit PE, but that was due to large one time gain in investment and foreign exchange gain. Taking that off, which should be, it is very expensive. Just my opinion.

Thanks for your friendly gestures, my friends. I am particularly moved by the comment of connie7i3. You are welcomed to visit my FB page, kcchongnz, too.

How undervalued is Insas?

https://klse.i3investor.com/web/blog/detail/kcchongnz/2024-01-15-story-h-210469040-Isn_t_this_the_most_undervalued_stock_in_Bursa_Insas_Berhad

Posted by klee > 17 hours ago | Report Abuse

Klee
"Kcchongnz,you summed it up well.However in bursa we do not have FANNG.Bursa lacks the innovation factor behind FANNG.However we do have our own smallish kampong champions."

You are right. My "Do nothing" comment is for the broad US market in general using the S&P 500 for illustration, and the FANNG stocks as examples.

For Bursa, we do have some good stocks which can also good to invest for long term, like some of the component stocks in KLCI. But those good stocks in Bursa don't come cheap, and hence not qualified for "Do nothing" kind of stocks.

Nevertheless, we can still find many good stocks to invest in Bursa when they are selling cheap, but we should take profit when they become overvalued.

So investing in Bursa is best to use the value investing strategy.

Sslee

By the way do nothing is not an option. You have to monitor internal and external factor, the macro and micro economic factor that will impact the forward earning of the company.

Sslee, Happy new year to you too. Congrats that you are one big contributor in i3 now.

Investing is an interesting thingy. Everyone has his own opinion. It is hard to say who is right or wrong, until we got the fact, later.

My article here describe how most of the experts have predicted the market. They were mostly bearish at the advent of Covid-19, but the year 2020 and 2021 turned out to be a couple of best years in stock investment. Most experts turned bullish later for 2022 when the market was so bullish that high growth stocks in 2021, and 2022 turned out to be one of the worst years for high growth technology stocks. When Fed started the quantitative tightening in 2022, most experts predicted a recession in 2023 and stocks would be hurt. But then what was the results in 2023?

If most experts were wrong for the last 3-4 years in macro thingy, what is the chance that we can be better than them?

In my article, I have also shown that buying good stocks, for example the FANNG stocks 4 years ago and do nothing, the return were good too even encountering the Covid-10 debacle as well as the high inflation and interest rate environment in 2022, compared to if one were to follow the advice of the experts to get in and out of the market.

These are just statistics.

My finance professor's Nobel Prize winning M&M Dividend Irrelevance Theorem in its simplest terms, states that in a world with no taxes, transaction costs, or asymmetric information, the dividend policy of a company should not affect its value. According to this theory, investors can create their own synthetic dividends by selling shares if the company doesn't pay dividends or using dividends received to buy more shares if the company does pay dividends. Its value is mainly in signaling the financial health of the business, like with an increase or a cut. Let's see how TTB's research and innovation can overturn this and be worthy of another Nobel? He is already in contention with his cash being a free call option proposition as opposed to the Black & Scholes Option Pricing theory, another of my professors' Nobel winning contribution to financial research.

Your finance professor Merton Miller and Myron Scholes?

Posted by anthonytkh > 1 day ago | Report Abuse
Steel counters own considerable assets that they can monetise without actually losing any revenue by disposing them to raise much needed cash to pare down their large borrowings (which has gotten more expensive and likely even more by year’s end due to rising interest rates) but they steadfastly refused, or declined to use a more diplomatic word, after I approached a number of the companies for such a fund raising exercised based on my proposals. I wish them well. I own free shares in one of the companies mentioned by the article author

Thanks for your excellent comment. You know the industry well, better than me. I presume the fixed asset you mentioned is the property, and not plant and equipment which won't fetch much money on sales.

Take Leon Futt as an example. its business has been sucking cash. Last 5 years, there was a total outflow of RM286m. How much the company has in land and property to sell without hurting its core business, and than do what later?

Besides, many steel companies also got large amount of total debts of about RM400m.

Posted by qqq3333 > 3 hours ago | Report Abuse
negative cash flow/ positive cash flow...............neither good or bad. U have to know the company well and spoken to the directors to have the full picture. Just like increases in debtors/ stocks is not good or bad, ..... the devil is in the details , it always Depends ............................... of course, in bear markets , people want to avoid risks , that is normal.........in bull markets, people seeks risks........... that is also normal.

A few years ago with your dynamite investing and sex factor, you disputed with me the poor cash flows of Sendai. You wrote articles touting that stock and I said the cash flows were precarious. That time the share price was RM1 +.

So you must have attended the talk by the super investor, and listened to the boss of Sendai that everything okay and no problem. Do you still hold Sendai shares?

CharlesT
Learn how to catch cyclical stocks such as steels, oil n gas, plantation etc
Timing is everything.
Buy at low n buy more when prices started to climb n sell phase by phase along the uptrend.
Of course talk cock (buy low sell high or sell high buy low) is easy. In real life it's not as simple as that.
But one golden rule when u see lots of sifus or seafood started to give sky high TPs with essays long calculations then it's time to......

Wonderful comment, especially the last two sentences. Thank you.

Posted by BLee > 18 hours ago | Report Abuse
A very good write up and very easy to understand the effects of unsold stocks valuation. I hope the next write up will be on palm oil and crude oil refinery stocks.
A recent report on palm oil storage fully filled up all available storage in our neighboring country could be a big concern for future palm oil prices.
It is the same for crude oil refineries, the refineries with bigger storage capacity will have bigger profit margin when crude oil price increases. It is vice versa if the prices drop. It will not be accurate for crack spread calculation if based on another neighboring country due to its massive storage capacity.
Happy Trading and TradeAtYourOwnRisk

Palm oil is different from the steel. You can't simply open up new land and plant palm oil like open up new factories to produce steel. You can't plant palm oil in China. The industry is cyclic though.
If you look at the financials of palm oil company, ignoring company like TDM and Subur Tiasa, most of them have positive cash flows from operations much higher than their net income every year. They have free cash flows 70% of the time in all those years. Most steel company overall can't even have positive cash flows from operation most of the years, not to mention about free cash flows.

qqq3333

to cut a long story short, steel is not a popular theme at the moment, every thing else is just rationalisation and justifications because investors didn't make money. .........losing money on low PE? that is what kcchong the value investor is a specialist.

Losing money in low PE? Which stock?
Jaks at RM1.50?
Sendai at RM1.40?

I have written numerous article about your dynamite investing, margin financing on those two stocks. Anybody can google them in i3investor.

Or was it London Biscuits at RM2+? KNM at RM1+? Alcom at RM1.20+?, AYS at 90 sen+? Or Subur tiasa at RM2.50?

Or was it your English is so bloody poor that when I say North and you go the opposite direction to South?

Tiger62

HI KC, The whole intention (KYY) very simple. He want to sell his "death" that stuck for quite some time. How to sell when the chart is down trend, golden rule cannot apply ? then go back to various fundamental value of the company. Does he care his reputation. I think he think more about money. Reputation talk only for show.

Your argument sounds very logical, passing the hot potatoes to the naive and uninformed. So does it make sense that he claimed that he wanted to save the hard-earned money of small time investors?

Posted by Berlin > 2 hours ago | Report Abuse

Why does KYY still write despite being consistently wrong in his recent stock calls and being savaged by readers? I think he has nothing else meaningful to engage his remaining time. He also craves the attention writing stock articles garners. He may have lost so much money following his own calls there is little left for charity. Like many previously successful stock speculators, he went up the mountain once too often and finally met a tiger. Welcome back, kc.

Sharing his own investment thesis and getting wrong all the time I think is okay if the writer is sincere. But if the motive of the writing, and leveraging his "reputation", is to benefit himself at the expenses of the poor guys, that is a little too much. Actually, I don't know why he doesn't understand, at his age now, the reputation is worth a lot more all the money he made.
The way he flip-flop clearly can gauge his motive, so much so none in the public forum has any trust in him now.
Why want to get himself at this stage of life?
It is okay to write and share your investment thoughts. But sincerely, most people should improve themselves. That the sharing will benefit others.
If you only know about earnings, and earnings growth, without bothering and knowing how to read the balance sheet, and also the cash flows statements, you won't be able to evaluate a business well enough to be successful. That was also why hundreds of million Ringgit of value has been destroyed.

Sherlockman,
I am as puzzled as you do. Imagine such a well respectable, with high standing (previously) elderly person who has so much money that he will never able to finish using it, writing flip-flopping articles, enticing the uninformed to buy his shares, so far, none is good and I don't know how many water fish were there. After that laugh at them for losing money.
Making more money, for what?
It is definite not some kind of noble intention.
What is the results? Reputation dented beyond repair.

Posted by sherlockman > 2 hours ago | Report Abuse

Welcome back KCChong! great article as usual! calling a spade a spade. Not only KYY, same applies to Calvin Tan. Sounding noble in wanting to help you achieve your financial freedom by selling you a dream to easy money while front running orders and skimming off poor unknowing retailers

I bet to differ. Calvin Tan has his way of investing. In fact, it has been proven that his deep value investing worked. It is ok to share each individual's investing strategy. He may have bought the shares and then share his promising thesis on the stocks. But it is okay as he actually believe in it, and never flip flop like someone.

Posted by Sslee > 2 hours ago | Report Abuse
AYS too much borrowings, high inventories and receivables, it look like another subur.
qqq3 are feel to chase high on AYS for KYY to make some money

Somehow engineers seem to have much better analytical mind than accountant.
Oh, sorry, I mean certain accountant. No, in general, engineers not necessary have better analytical mind in accounting and finance matter than accountants.

Posted by qqq3333 > 2 hours ago | Report Abuse
ays is call value investing....kcchonv favourite way

You have never learnt thes few years, have you?

Posted by arv18 > 4 hours ago | Report Abuse

Hi KC. Long time no see. Some thoughts.
I wouldn't devote any time or an article to validating the Great Con.

I am also having this "Noble intention" to share my thoughts so that newbies can have an opposing view to evaluate, rather than being bombarded non-stop and flip-flopping propaganda.

Posted by qqq3333 > 43 minutes ago | Report Abuse

u talking nonsense again..................................this year I buy Xinte HK, make a lot of money...............people says negative cash flow cannot buy but negative cash flows also got negative cash flow fans.

Geng ah! King of negative cash flows investing!

There was a post dedicated to you especially.

https://klse.i3investor.com/web/blog/detail/kcchongnz/2022-05-24-story-h1623390006-Can_you_cari_makan_from_speculating_Lesson_1_on_Serba_Dinamik_kcchongnz

So, how much have you made now?

qqq3333
who are selling hundreds of millions of serba shares? these are losers............always good to buy from born losers....including kcChong

So who actually is a born loser?



qqq3333

want some pocket money, buy some serba at current price. at less than 15

1 day ago

qqq3333
2 days down , but 2weeks later make money. very easy, buy more at 7 sen.

But what did you say a day ago as below?


qqq3333

want some pocket money, buy some serba at current price. at less than 15

1 day ago

Posted by qqq3333 > 1 hour ago | Report Abuse
Want some pocket money? Buy some Serba. Yesterday just 1 day too early

In just 2 days, your recommendation to punt Serba resulted a loss of a whopping 50%! Oh my God!
You never learn.
Here is a free advice again. Treat buying a stock as investing in a business. Then your fortune may change.

Posted by qqq3333 > 1 day ago | Report Abuse

want some pocket money, buy some serba at current price. at less than 15

wondering how much money by now you have made gambling.

Also a loan is a loan. The total amount of loans taken is huge and affecting the liquidity and solvency risks. That is also why the adverse unmodified statement by the external auditor was given.

CT

I don't buy Subur, but what I know is most of the Company's borrowing are revolving credit, banker acceptance (around 90%) which can be rolled over the year. Unless the bank request to pay back the money immediately, I don' think any right issue or private placement in short term. Another way is they can restructure their short term debts to long term debts like Jaya Tiasa last year.

Thanks CT for your comments. You are right. The short-term loans for Subur is from the revolving credit which the company can keep on using as long as it is below the approved limit. With palm oil prices at elevated level, Subur should have the cash to replenish the RC.
However, a loan is still a loan and need to pay back. If palm oil price continues to be good, no problem. The problem will come if palm oil price goes down and the company does not earn enough to pay interest for the loan. Also if there is a financial crisis or economic crisis and the banks insist Subur to pay back the loans.

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 21 hours ago | Report Abuse
Welcome back KC. You have been busy putting your knowledge to share in your books. Very comprehensive, however, probably the lay person may need a much simplified version. Nevertheless, great effort and sacrifice on your part. Well done.

Thanks 3iii for your support and encouraging words. Thanks for your comments on my book too.

Yes, investing should be made simple, but not simpler.

gohkimhock
not many people understand the importance of cash flow to a company. It is like the blood stream. Only those with some accounting knowledge will able to grasp it. High receivables can also kill a company if it unable to turn it into payments.

Subur did have serious cash flows problems in and before year 2019 when it has an outflow of cash (negative free cash flows) of about RM350m from 2016 to 2019. However, cash flows have improved the last two years with positive free cash flows of a total of RM120m. If palm oil price stays around the present level, it will continue to have free cash flows.
However, the problem with Subur is it not that it won't have cash inflow, but what it owes the banks, especially in the short term of about RM400m. Short-term debts are supposed to be paid within a year. So can Subur earn RM400m in free cash flows for the next twelve months, considering the cash inflows in 2021 of RM115m was the peak in many years, and probably the highest so far?

If Subur can't make that kind of free cash flows in the next 12 months, will the banks kind enough to let Subur roll over the debts? Possibly yes if palm oil price continues to be good. Possibly no as its liquidity and solvency risks are too high.

What if the palm oil price reverse to the mean, say go down to less than RM4000/ton?

Subur requires capital injection, now, right now, whether a private placement, or rights issues. Both these exercise won't be good for existing shareholders.

s3phiroth
the current ratio of subur is 0.27 and debt to cash ratio is 135! This is a ticking time bomb waiting to explode anytime!

You are absolutely right.
A total of RM425m of short term debt, which has to be paid within a year (not to mention another RM205m of long term borrowings), where to find the cash flows to pay within a year period? The last twelve months only had RM82 m of free cash flows. You have to depend on the mercy of banks whether to let you roll over the short-term borrowings.

Posted by s3phiroth > 16 hours ago
great mind think alike. That is y i am holding sop and cepat because their r real cheap!

I agree with you.

calvintaneng
Welcome welcome back !!

Hi my good friend, hope you are well.

Posted by dxbman > Jun 5, 2020 10:11 PM | Report Abuse
John, don't be disheartened. I know a trader who make 11m contra profit oledi during the pandemic...

The great Jesse Livermore was the legend in the history of trading in the stock market. No one is even closed to his prowess. It is good to find out the beginning to the end of this great trader in the book,

Reminiscences of a Stock Operator

Many believe this book was written by Livermore himself.

Posted by paperplane > Jun 5, 2020 9:09 PM | Report Abuse
Makingg quick is fun, fei zai

A agree. There is a lot of fun making $1,000 one day, $4,000 next day, $10,000 the next etc. Those are good news.

The fun stops and pain comes when suddenly you lose $50,000 in a morning.

The pain grows when next you try to make back the losses, but instead, lose another $100,000.

Those are bad news. Unfortunately, that is closer to reality.

"I would say a valuation of a company selling eggs, surimi, palm oil, things in a convenient stores selling at a PE even at of 50 (not to say 60) is way too rich. As a matter of fact, most super investors in the world would say that. Affirmative. It would be a very bad deal for me to buy it.

S tell me, can its profit double the next year, and what about the next? And why do you think at PE 60 for the kinds of business in QL, that it is still a good buy? A good buy even at PE 100? and how you justify it with some numbers? Or your great stories is good enough?

Why say things like everyone is different, but bash me directly?"


So, the problem is above? Someone sharing that a stock is overvalued with some good reasoning and you considered it as a bashing of yourself? And you will start to even attack him personally?

OMG. What kind of character are you?

Yes, I wrote many articles on Eversendai when someone heavily promoting margin finance when it was trading up to RM1.40. It is now less than 40 sen now. So have I done a disservice to the public to tell them the perils of margin finance?

So, heavily promoting margin finance very good to the public?

Come on man!

Posted by DK66 > May 13, 2020 11:29 PM | Report Abuse
KC,
Thank for your advice. It would be irresponsible for me not to complete my journey in Jaks with i3 readers who might have followed my articles.
I will consider again after Jaks.
Thank you.

DK66, tell me, I have written a number of articles on Jaks over a 3 years period. Let me list down all of them, and all on the peril of margin finance, when the share price was pushed up by numerous articles to the peak of 1.80+.

https://klse.i3investor.com/blogs/kcchongnz/2017-05-22-story123266-Is_Jaks_a_big_fat_frog_jumping_all_around_kcchongnz.jsp

https://klse.i3investor.com/blogs/kcchongnz/2018-08-08-story168850-Jaks_and_Some_Twisted_arguments_on_Share_Margin_Finance_MF_kcchongnz.jsp

https://klse.i3investor.com/blogs/kcchongnz/2018-10-01-story176384-Jaks_Is_Santa_Claus_coming_to_town_kcchongnz.jsp

https://klse.i3investor.com/blogs/kcchongnz/2019-11-05-story233883-Jaks_the_Best_Lesson_on_Margin_Finance_The_Dark_Side_kcchongnz.jsp

https://klse.i3investor.com/blogs/kcchongnz/2019-10-31-story233107-Unimaginable_Magic_from_Margin_Finance_on_Jaks_Resources_kcchongnz.jsp

You have most of your investment in Jaks since more than 3 years ago.

Is there any of the above articles which hurts you? Any article above offended you?

I would like to ask this question to OTB too.

Posted by duitKWSPkita > May 14, 2020 7:49 AM | Report Abuse
Sifu kcchong.
Wishing you a wonderful 2020

Hi duit,

Long time no see. Wonderful to hear from you again. Your messages to me are always refreshing, although sometimes I missed them.

Hope you are well.

Posted by DK66 > May 13, 2020 8:18 AM | Report Abuse

Dear KC Chong,
I wish you all the best with your publication.
Thank you

My book sells extremely well, thanks DK. As mentioned in my article, we are selling our second print now. The purpose of me publishing this book is to propagate this value investing, a very essential investment strategy which will provide the public a higher chance of success investing in the stock market. You don't make much money from publishing a book. Many writers in fact have to subsidize the cost just to have your book published. That was what I initially intended to do, to subsidize a little to get the book published. But right now, I don't have to come out money any more.

I have received hundreds of comments, all are good. there has not yet a single bad comment, none at all for those who have purchased my books and have read it. Why does the writer attract such an abhorrent remarks from one who has not even read the book, continuously?

As you can see, I try to sell this book to more people through my articles. I believe this book is very useful for those who treat investing in a stock as investing in part of a business.

Why is that people are so against me doing something which I think is very useful to the public?

Posted by DK66 > May 13, 2020 8:18 AM | Report Abuse
Dear KC Chong,
I m proud to be named by you but calling me a financial expert in IPP is too highly of me.
Just recently, I realised that it is quite a burden to be relied upon. I3 is full of unreasonable attackers. Some of the good writers named may have quit for this reason.
I wish i3 could be a better place.

DK, there are all sorts of people in a public forum. Don't expect everyone is nice. Some are extremely nasty. Now I only realize people like qqq3 is relatively not so bad. These nasty people even dig through what you have shared many years ago, 6, 7 years ago, just to find something to discredit you and make you look bad. I could not imagine it even happen to such a nice man and a great contributor in i3investor like you.

Well, what I can say is you have the choice. If you still wish to share because you like to, just do it and ignore those people, and don't waste time on it.
People like us would immediate know from what you write that you are a good man. It is not difficult to read those comments and know who those haters are. I also mongchacha why they behave as such.

So, be happy. That should be your choice.

Posted by Ng Shu Tsung > May 12, 2020 12:38 PM | Report Abuse
Dear Mr KC Chong,
You have mentioned a few names. How about Calvin Tan? Most of my investments are in index funds and low cost mutual funds.
Thank you
Ng Shu Tsung

Calvin has his own investing strategy which apparently, works for him.

I think he writes well too.

He is a nice guy to be as a friend.

Posted by Tiger66 > May 12, 2020 11:49 AM | Report Abuse
The more you read Kcchong blog, the more confuse one will be. Better don't read. No head and no tail. Directionless !!!

There could be two reasons; either my English is not good, or your comprehension needs vast improvement.

The other reason could be when you see the name of kcchongnz's name appears in an article, you just feel sick.

Don't get sick, just avoid reading anything written by kcchongnz. Navigate to other threads or blogs. Be happy.

Posted by Cnlim > May 12, 2020 7:30 AM | Report Abuse
Normally good writers are not good in investment in stock market cas investment has alots of others factors if so good no need to write n investment in the market better

Are the following super investors who have made billions for their investors and themselves good investors?

Warren Buffett, Charles Munger, Howard Marks, Seth Klarman, Mohnish Pabrai, etc.

Is our local super investor a good writer?

It is worthwhile for you to goggle who they are, what they write, what their investment philosophies are etc.

Posted by enigmatic ¯\_(ツ)_/¯ > May 4, 2020 10:24 PM | Report Abuse

tl;dr version:

Buy companies which has positive cashflow, even better if it has free cash flow.
Avoid cash burning, debt-laden companies.

I always find that you are the very few who catch what I like to convey in my articles in very precise manner. Besides you have many attributes of a fine gentlemen;

Honesty
Respectfulness
humility
compassion
encouraging
kindness

Posted by supersaiyan3 > Apr 20, 2020 7:41 AM | Report Abuse
Mr. Chong, we were talking about Jack and Jill right? Simple question of "can you lose 90%", I think we found the answer "yes".
Then there are people with good imaginative ability say actually Jack could make 10% instead. Eager to see their maths.

Yes, we are talking about an issue here. It has nothing to do with any one. Ordinary investors Jack and Jill were used to illustrate the bright and dark side of margin finance. The assumptions were clearly spelt out. It provide some useful information for any one who thinks that using OPM is such a wonderful thing in investing.

If anyone deviates from the assumptions, of course the speculative outcomes are all different.

Posted by supersaiyan3 > Apr 19, 2020 4:59 PM | Report Abuse
Hi, Mr. Chong.
1. The margin finance given normally ranged between 2 - 2.5 times. If you adjust that (from 50%), at RM2.95 Jack would have 40m shares or so worth 120m, with 85m or so debt. Multiplier magnifies.
2. I am not going to go on because I don't like Dayang. You can see the problem already, the largest chunk of shares (17m or so) with highest margin limit (50m or so) is bought at highest price.
3. By the way, margin call actually saves Jack.
4. He is lucky with 10% left.

supersaiyan3, thanks for your correction. I learn something here. As I have never used any MF, I did not know you can get that for 2-2.5 times the money one has in the share. My assumption of 50% of increased in value of shares used for additional MF was certainly way understated if Jack is the type of player who "use MF to the max".

Hence the scenario on the dark side in the story could be much worse. I tend to agree with your point 4 now.