Posted by popo92 > May 27, 2016 09:36 PM | Report Abuse
KC, i agreed and respect that its unwise for you to publish your intrinsic value for reasons. And i couldn't agree more with your concerns with low liquidity, existing of short-term traders, "believers", downside of margin calls and "golden rule" players. However, I find it hard to resist myself from this cash cow bargain. Any advises for me?

"Cash cow bargain"? I kind of agree with you. But note these again

"low liquidity, existing of short-term traders, "believers", downside of margin calls and "golden rule" players."

However, you don't have to play in their field. Instead, focus on the business, treat buying a stock as investing in part of a business, oh yes, for longer term.

Posted by shareinvestor88 > May 26, 2016 02:46 PM | Report Abuse
Dear KC apart from forex gain or losses , if USD strengthens or weakens what is the impact on FLB profitability and net profit margin ?

If USD strengthen, its product will appear cheap in USD term and it may be able to sell more as most of its products go to US.

Posted by TAH > May 25, 2016 04:50 PM | Report Abuse
Mr Kcchongnz,can u please calculate for us the intrinsic value for Focus Lumber?

Posted by popo92 > May 25, 2016 05:43 PM | Report Abuse
Kc, so far my fundamental philosophy on flbhd has not changed yet. Current price 2.04-2.07 already provide me enough margin of safety to sleep well. Mind sharing your price tag for peace of mind too? :)

While I do have an estimate of Focus Lumber intrinsic value, It is unwise to publish here for a few reasons.

Its share price can be volatile because of its low liquidity, coupled with substantial holding by some short-term traders, some of whom have huge margin. If the market turns bad, the fall of its price can be ugly in the short term because of margin calls, even if its intrinsic value is high, which is suitable for long term investor.

Some of them with some sort of "Golden rule" may also just dump the share without understanding or bothering what causes the drop in profit.

It is not good to invest in this share for short term due to the above reasons, though long term investing in it may be good.

Posted by stockmanmy > May 26, 2016 02:51 PM | Report Abuse
we can only guess at what super investor did / is doing.
we cannot be sure except..............super investor cannot be super investor without margin accounts.


Please carry on guessing, use margin to the limit, worship your super investor, or whatever.

We are talking about investing here.

Posted by raitospk > May 25, 2016 11:10 AM | Report Abuse
so your opinion is woth for long term?

Have you ever wonder most, 90% of retail investor under-performed, or lost money in the stock market?

That is because of the get-rich-quick mentality trying to make big money in the shortest time possible. They become the victims of syndicates, big time speculators and manipulators.

There is only one way which can consistently provide you with better return from the stock market; play at your own field, invest rather than speculate, and know yourself how to invest smartly to build long term wealth.

Posted by shareinvestor88 > May 24, 2016 11:00 PM | Report Abuse
Dear KC since USD has strengthen today 4.11-4 12 what is the impact on FLB ?


If USD stays at this 4.12 level, or strengthen further, Focus would likely to have a lot of foreign exchange translation gain at the end of this period.

But if it weakens to say 3.50, there will be substantial foreign exchange translation loss.

But why worry it so much in your investing decision as foreign exchange rate can go up and down and no one has any control over it?

Posted by vinext > May 24, 2016 09:54 PM | Report Abuse
Kc u write so long for what? some ppl have to pay tuition fee to the mkt to learn. I appreaciate ur writing but a shorter 1 wil do la, best to use the time for other writing, haha

The tuition fee they paid to learn through following rumours, hot tips, hypes and fads in the stock market is very costly. Why not learn with a small fraction of what they pay through a well structured course and well equipped themselves such that they can consistently build long-term wealth slowly but surely?

Posted by popo92 > May 25, 2016 10:24 AM | Report Abuse
Kc is always a fundamental investor who don't have a trade mindset strategy. Buy to sleep well tomorrow is what he always seek for at the first place.


what is your price tag for peace of mind?

Posted by shareinvestor88 > May 24, 2016 11:00 PM | Report Abuse
Dear KC since USD has strengthen today 4.11-4 12 what is the impact on FLB ?

If USD continue to strengthen until end of the next reporting period, I think its foreign exchange translation gain may be more than its loss in this quarter.

But seriously, focus on things you can control, and forget about what you can't control. Be conservative.

Posted by iamsoonoob > May 24, 2016 08:37 PM | Report Abuse
kc,what u say is low free float or public float means that counter can easily become one man show counter?that also mean one can easily jack up the price

Yes, he just need to use say RM10 own money and another RM10m borrowed money to jack up the share price from RM2.00 to RM3.00.

But beware when share price falls heavily, margin calls will come and RM3.00 can fall to less than RM2.00 in a short time.

Posted by iamsoonoob > May 24, 2016 10:25 PM | Report Abuse
"Focus Lumber only has a total number of 103.2m shares outstanding with a total market capitalization of RM258m at that price of say RM2.50. The free float is even less. With just a capital of RM18m, you can buy and own 7% of its total market capitalization. If one uses 50% margin finance, he just needs RM9m in capital outlay. There are some players in the market who have that amount of money, and much more. Hence it is very easy to jack up the price, isn’t it?"
then we should avoid investing in low free float counter eventhough the fundemental is intact?

Yes, if you are a short-term trader.

If you are an investor, then you must be able to answer all the questions posed in the article and make an informed judgment.

Often, more opportunity for higher gain investing in a smaller company then a big one, which most probably is fully valued.

Posted by coolinvestor > May 15, 2016 01:36 PM | Report Abuse
Kc what about iculs? I can never understand this. Thx


iculs stand for irredeemable convertible loan stocks. They are a hybrid instrument acting as a loan stock as well as a warrant.

I think when listing, the reference price is the par value of the iculs.

Posted by Henry Tan > May 5, 2016 11:27 PM | Report Abuse

By the way kc, today ECS quarter report shows that it is 45% drop in profit YoY. Do you think it is good time to accumulate more if there is panic sell tomorrow?

I would think so if you follow the school of buy low sell high, instead of buy high and hoping to sell higher.

Posted by ks55 > May 3, 2016 10:41 PM | Report Abuse
One and only one message sifu want to get it through:-
BUY GOOD SHARE CHEAP

Yes, buy good shares chea is the Holy Grail of building long-term wealth.

It is foolish to pay RM5m for a nice BMW. Don't let any super salesman fools you.

Posted by duitKWSPkita > May 3, 2016 10:40 PM | Report Abuse
kchong...
Hi and bye... hope everything is fine there.

Thanks Duit. Hope the same for you.

Posted by Icon8888 > May 3, 2016 09:45 PM | Report Abuse
Sifu KC long time no see. Glad to see your article again

Thanks icon. I was trying to beat your 3m views in i3investor. But it looks like I am trailing far far away now.

Posted by zxinvest > May 3, 2016 09:42 PM | Report Abuse
Hi KC Chong, good day. I had sent you an email for the inquiry of your online stock investment learning. Please check, thank you. :)

Thanks, I have received it.

osted by Henry Tan > Apr 3, 2016 11:24 PM | Report Abuse

Can I understand why the profit margin is <2%? Should investor worried about it?


Trading business is generally come with low margin. As long as the margin is still positive, then the more important thing to look at is return on capital, or rather ROE. High ROE above its cost of equity is a good business. High ROE can also be achieved with volume of sales wrt it assets, or asset turnover.

And that is what ECS is able to do, so far so good.

Everyone talks about the most is if the business is a good business, and buy only if it is good. But few talk about if the price is right.

Even a so so business is a good investment if the price is cheap.

Reversed discounted cash flows analysis, a powerful tool to gauge whether the market expectation of the growth of the business in the future is reasonable.

Where did JT Yeo say the IV of APM is RM3.95?

Posted by speakup > Apr 2, 2016 10:18 PM | Report Abuse
if your intrinsic value for APM is 3.95 and the share price now is 3.95, that means dont buy now coz there is NO margin of safety!

Posted by limko1 > Mar 25, 2016 10:50 AM | Report Abuse
Most people won't bother to invest in equipping themselves with the right attitude and knowledge on Investing. They just want the easy way by listening to tips and rumours. They just want to gamble.


How ironic is it! But it is true. The truth is reflected here.


Posted by stockraider > Mar 25, 2016 10:54 AM | Report Abuse
That's why majority retailer usually lose monies...bcos they are playing the loser game mah....!!
That's why raider also always say majority margin holders lose monies.


It is really hard to comprehend why do they prefer to lose their hard earned money, instead of spending a little money, time and effort to learn some basic and proven useful fundamental knowledge in investing, and play in their own field, to build long-term wealth, instead of becoming a sucker in the stock market.

Posted by SALAM > Mar 24, 2016 01:06 PM | Report Abuse

Hi KC, how to be your subscriber and what specifically do I get for being a subscriber how much do you charge?


Do you wish to benefit all of the above? Please email me at

ckc14training2@gmail.com

Posted by 3iii > Mar 24, 2016 08:11 AM | Report Abuse
KC, On this topic of yours, perhaps I may add. It is great to know you are conducting courses to educate and equip those interested in fundamental investing. This is commendable. The truth and this is also borne out from my observations and interactions, only a minority will be in the position to benefit totally from everything you share.


3iii, you are right. The biggest hurdle is most people won't commit to spend some time and effort to acquire this knowledge of investing, something which is so important for their life long personal finance. It is psychological and some kind of strange mindset which is hard to comprehend.

Once this hurdle is cleared, one would be able to fully arm himself to build long-term wealth slowly but surely.

Posted by stockraider > Mar 23, 2016 10:58 PM | Report Abuse

ALTHOUGH RAIDER SAY AVOID THE MARKET...IF U R NOT COMPETENT....WHAT RAIDER MEAN, IS THAT U SHOULD ACQUIRE THE COMPETENCY BEFORE U INVEST LOH....!!
THERE IS GOOD OOPORTUNITY TO MAKE MORE....DO NOT AVOID MAH.....!!


Wise words. The stock market is a good place to build up long-term wealth, slowly but surely.

But that only applies to competent investors. Competency can only come with knowledge, skills and experience, in that sequence.

Posted by pisanggoreng > Mar 21, 2016 10:33 PM | Report Abuse

KC,

I think you should thank me also

I contributed greatly to the "agree amongst the disagree" here .


Pisanggoreng,

You know although I don't know you in person at all, but you are the few who always give me moral support. So it is understood that i always appreciate your kind words, just like a few others.

May be I have taken your kindness for granted.

Posted by stockraider > Mar 21, 2016 07:14 PM | Report Abuse

When Raider say crawl....raider is not saying u go to learn margin financing straightaway....!!

U start with what is a prudent way of investing....Go and learn from Good guys like Kcchong....!!



Thank you very much stockraider

Posted by donfollowblindly > Mar 21, 2016 05:48 PM | Report Abuse
Agree. Hence paperplane2016 said KC is a bias people which I supported.

Posted by Desa20201956 > Mar 21, 2016 05:44 PM | Report Abuse
Kc....you have heard of strong profits weak cash flow.....cannot buy according to you.
Have you heard of strong cash flow weak profits? can buy?
Coastal will have strong cash flows weak profits this year....can buy?
Coastal has 1 billion inventories of generic boats, another 1 billion of designed to order contracts.
In view of market conditions, their contracts will have thin margins and they intend to dispose of their inventories at low to negative margins just to get rid of the inventories.....They will have two billion dollars cash flows , very weak profits.......can buy?


First I will answer that always follow blindly fellow first.
I, kcchongnz, is just one person. I am not having two heads and two bodies. So I am a person, not a "people".

Just what do you mean by "KC is a bias people"? Again you are following blindly on what others said. Everything you do is just following blindly. the one you follow didn't even understood what I was trying to convey in my article. Why do you use this name "dontfollowblndly"?

Next one is this Desa's comment.

Investing is not so simple. Anybody who thinks it is easy is stupid!

The above is said by a well-known super investor in the world, Charles Munger, who had made billions USD for himself and his investors, not just any Tom, Dick and Harry who claims to be super investor.

Investing is not that simple like what you are shouting, what "x" or "f" factor lah, instinct lah, make fast decision lah, quoting from what Robbin something lah. They are all craps. Nonsense craps!

Whether a company with strong profit and poor cash flows or vice versa can invest or not, there are many things to consider. Anybody who knows about proper investing won't just ask a simplistic yes or no question like that, unless he has no clue of what investing is about.

Posted by stockraider > Mar 20, 2016 02:16 PM | Report Abuse
A GOOD STOCK MAY SUBJECT TO FORCE SELL....AND AGAIN TAKE SOME TIME FOR IT TO RECOVER MAH...!!
JUST LIKE CIMB....IT USE TO BE AROUND RM 8.00....BUT IT WAS SELLDOWN TO RM 4.00....AND NOW HAD RECOVERED SLIGHTLY LOH....!!
SOME IMAGINE U R A CASH HOLDER OF CIMB....HOLDING COST OF RM 8.00..NOW AT RM 4.70....U WILL MAKE A SUBSTANTIAL LOSS OF MORE THAN 50% LOH..!!
BUT MARGIN HOLDERS....THE SELL TRIGGER WILL ALERT THEM TO SELL WHEN IT IS RM 7.00 TO RM 6.00 MAH....!!

A cash holder of CIMB, using his own money of RM100000 to buy CIMB at RM8.00, would have lost only RM33000 at the present price of RM4.80, even if he is still holding the shares. The loss is 41%, and not your “U WILL MAKE A SUBSTANTIAL LOSS OF MORE THAN 50% LOH..!!”

For simplicity sake, let us look at a simple case.

You advised a newbie to invest in CIMB shares “using margin to the limit”. You asked him to invest RM200000, RM100000 is his own money and the other RM100000 from margin finance, because the interest rate was so cheap, and it is stupid not to use margin finance to make more money to buy a good share like CIMB, plenty of margin of safety mah!

Then the poor fellow encountered force selling at RM6.00, or 25% drop of the share price. He has now incurred a total loss of RM500000 because of the margins.

Nevertheless, the margin user seems to be happier, according to you, because his shares have been forced sold at RM6.00, and now he has “build up his capital” of RM50000, although he has made an exaggerated loss of RM50000 already.

Now you advise him to buy CIMB at RM4.80, a much lower price than his forced sold price, and that CIMB is such a good company.

Questions:

1) Are you advising him to buy using his own money of RM50000, or “use margin to the limit” again by using another margin finance of RM50000?

2) If the earlier option, he has lost RM50000, or 50% of his own capital, he needs to make 100% to recover. How long do you think he has to wait, just to recover his loss?

3) If the option is the later, what would happen if CIMB drops another 30%?

4) Or you think the scenario is (3) above won’t happen? Why are you so sure?

Have you seen a couple of stocks in the portfolio posted here, a genuine portfolio, and not randomly selected stocks to fail margin finance, have lost more than 50% in just three months, even when the overall market went up?

5) If (3) above happen, what would be your advice again? And why?

Posted by Desa20201956 > Mar 20, 2016 05:10 AM | Report Abuse

stock picking is not just about number crunching....its about strategies and strategic management and about the X factors.



"A head full of dew water"

Posted by latjiu > Mar 19, 2016 08:26 PM | Report Abuse

Hi Kcchongnz, is Scientx worth the current price tag? It's CY has dropped but profit margin has improved for 1Q2016.


You and only you should decide on it. If you need guidance on how to make your own decision, you are encouraged to refer to these posts:

http://klse.i3investor.com/blogs/kcchongnz/92580.jsp
http://klse.i3investor.com/blogs/kcchongnz/92871.jsp
http://klse.i3investor.com/blogs/kcchongnz/93172.jsp

Good luck.

Yes, investing needs luck too.

Posted by stockmanmy > Mar 19, 2016 06:15 PM | Report Abuse

risk management......risk management is done by adjusting the amount bot and the diversification appropriate at the moment not by avoiding margin all together.

ME: YOU ARE RIGHT. AVOIDING MARGIN FINANCE IS NOT A RISK MANAGEMENT. NOBODY SAYS STUPID THING LIKE THAT.

INSTEAD USING MARGIN FINANCE IS GAMBLING.

BUT I DON'T REALLY KNOW WHAT YOU ARE SAYING ABOUT RISK MANAGEMENT.

no one ever become a tycoon without facing risks.

YOU MAY BE RIGHT TOO HERE. BUT FOR EVERY ASPIRING TO BECOME A TYCOON, ONE SUCCEEDED AND 100 GET INTO BANKRUPTCY.

face up to risk like a man

what to die, die with honor.

ME: IS THAT HOW YOU LOOK AT INVESTING? GOOD LUCK TO YOU.

kc do a model margin portfolio and immediate starts with losing money.

ME; THAT IS NOT MY "MODEL PORTFOLIO". PLEASE GO AND CHECK YOURSELF WHOSE PORTFOLIO IS THAT. IT IS ALL OVER THE INTERNET.

the opposite is a margin that starts to make money immediately and equity start accumulating and growing immediately

PLEASE PUT UP ONE PORTFOLIO IN I3INVESTOR. A YEAR OR SO DOWN THE ROAD, THEN ONLY CLAIM WHATEVER YOU HAVE BEEN CLAIMING.

Posted by Mr. M > Mar 19, 2016 04:26 PM | Report Abuse

KC, thanks for sharing. 1 question. What's P/D ratio referring to?

Price to dividend, the flip side of dividend yield.

Posted by pisanggoreng > Mar 19, 2016 04:16 PM | Report Abuse
KC,
thank you very much, at one point I nearly use MF
luckily I read you table 3
I noticed,If I use mf and do not know how to cut loss fast
30% loss in the portfolio ,already enough power to send me to Holand.
how can I not grateful to you

Pisang Goreng,Your last sentence makes my day.

It now dawned to me that using margin is like an addiction. One can't pull himself out of the deep black pit.

But bear in mind that, go ahead with your addiction. do whatever you like. This is a free world.

But when you starts to preach an addiction, and encourage the young ones to get into this addiction, you are doing a great disservice to the society.

Posted by paperplane2016 > Mar 19, 2016 03:21 AM | Report Abuse

How we can know if tht random portfolio is chosen random? And not without bias to show how great your portfolio is in comparison?


You got to read and understand the article rather than making so many presumptions.

Where have I compared my the return of my portfolio and the Random Portfolio?

Do you understand the gist of the article? And what message is it trying convey?

Whether the portfolio is randomly chosen or not, it doesn't matter. it is the perfect portfolio to use to convey an extremely important maxim is investing; Never follow anyone's advice to buy stocks, whether good or bad, with margin finance.

That perfect portfolio used shows that margin calls were effected with the sharp drop in prices of the portfolio, some of them even very good stocks,even though the overall market has gone up.

Google and read more about the serious consequences of margin calls. Or google the "advantages", and "benefits" of margin calls if you like, and see if you can find any.

Posted by singh1 > Mar 18, 2016 09:26 PM | Report Abuse

Kcchongnz thanks for the great effort. A growing cash balance is something I always look at, management, debt levels (currency matters here),growing assets , NTA and so much more. I am still puzzled by some counters that are growing internally but on the external are not showing growth in share price. On the other hand the share price is at near historical low level. Could you kindly look at TA GLOBAL and tell why it is behaving so sickly. Thanks.


First of all I don't know about TA Global. If you want my opinion about it, you should show me some figures why you think its share price should be higher, such as its ROE, ROIC, cash flows, P/E, FCF/P, or whatever you think is relevant.

Posted by curious2 > Mar 18, 2016 11:33 PM | Report Abuse
Why KC never talk about AirAsia?
Agree with both paperplane2016 and raider. If follow KC only 10-20 stocks can buy the rest cannot.


Me: I am triple curious about your above statements.

Shy must I talk about Air Asia?

Where did I say “only 10-20 stocks can buy the rest cannot”.

Do yu have any idea how many companies are listed in Bursa?

Posted by paperplane2016 > Mar 18, 2016 11:30 PM | Report Abuse

I agree with raider loh, kc is bias. How u call those pick are random? It is just picked based on certain perception.


Me: Where did I say those picks are random?

I said i choose a random portfolio.

Posted by stockraider > Mar 18, 2016 06:56 PM | Report Abuse
THE PORTFOLIO GIVEN BY KC, IN THIS EXAMPLE HAS BEEN RIGGED LOH..!!
IT IS DESIGN TO FAIL THE MARGIN INVESTOR LOH....!!

IF THE AUTHOR KC...IS GENUINE TO USE AS A CASE STUDY....WHY DON HE USE HIS 2013 PORTFOLIO, THAT IS HAS BEEN SUCCESSFUL & SEE WHETHER IF USE MARGIN, WILL HE MEET WITH FAILURE LEH ??


The portfolio was published in public forums on 26th December 2016. It is publicly available information with the prices at the time of publish.

Why is the “example has been rigged loh”? Who “designed to fail the margin investor loh”?

Yes, my 2013 portfolios, two of them made about 130%. However, the test of the survival of margin finance is not to choose a successful portfolio. Any portfolio using margin finance must be able to survive any market condition, especially in the short term, and a six-sigma market distress condition. And we aren’t even any time near to that yet. In fact, the broad market was up but that portfolio already suffered a big setback of 28.9%. How brutal it will be if there is a sharp drop of the market like the recent Shanghai Stock Exchange, that of 2008, 2001, 1998 etc.?

Posted by jeremiah1983 > Mar 18, 2016 08:06 AM | Report Abuse

Also, i observed that the examples of Homeritz and Magni given above, the CFFO is very different from the ones i obtained from the annula report.... May i know how do u derive the CFFO? can i take the real CFFO from the annual report to calculate CY? pls advice. thanks


FCF = CFFO – Net Capex


CY = Free cash flow (FCF) / Price,

Yes, NI is net income


Posted by jeremiah1983 > Mar 18, 2016 07:41 AM | Report Abuse

kcchongnz : Nobody wishes to share any NBI here?

Let me start with one, Homeritz.

Below shows the FCf for the last 5 years

Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 29637 18647 20071 4395 16785
Capex -1766 -982 -1146 -8090 -1953
FCF 27871 17665 18925 -3695 14832
FCF/Revenue 21.9% 15.6% 18.3% -4% 13%
CFFO/NI 122% 104% 120% 40% 84%

The average FCF for the last three years is 21.5m, with the last year FCF at 27.9m. We take the average of last three years' FCF.

At RM1.21 closed last week, and no. of shares 200m, CY = 21.5/200=8.9%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. It also has high cash return on invested capital CROIC of 50% lat year. Looks like a NBI to me.


KC : What does NI mean here? is it Net income? pls help. thanks

Posted by jeremiah1983 > Mar 17, 2016 11:03 PM | Report Abuse
Hi kc, thanks for your guidance on NBI....
can u help and guide me about Karex and FLBhd?> thanks a million


I used to do this last time in i3investor a lot. However, it is very time consuming. If you want, you can learn this thing from my online investment course for a small fee and then you can actually do this on any stock all by your own.

It is good to learn how to fish rather than grabbing any fish thrown at you. I am sure many people like you would have bad experience recently with all the peddling of stocks, especially those export stocks which had gone up in price hugely before retreating by 30% recently.

Look at the FCF over a few years, and if they are consistent, better still increasing, use the average and divide by present market cap.

If it is 5% or above, good, because higher than fixed deposit rate. if >10%, fantastic.

If >15%, buy by lorry loads.

Posted by ag397 > Mar 16, 2016 07:18 PM | Report Abuse

what is the facebook gruop name kc? tq


This is a closed group for those attending my online investment course and set up by a participant of my course.

Posted by Probability > Mar 16, 2016 03:06 PM | Report Abuse
KC..its been quite sometime since you made some stocks comparison like you did for furniture stocks earlier....it will be nice to have such comparison again for furniture / any other competitors of similar nature if possible.

I have been doing this for a number of times in this forum, and I encourage you guys to do it now. It will definitely improve your thought process and analytical and report writing skills.

If you want to get investing ideas, there are some good ones here too. If you want more, you can go to our Facebook group. There are plenty of good ideas from many good analysts in our group now. They are even better than many professionals. No need to look too far.

Excellent analysis and well written report.

Just a small question,

"OKA's current EV/EBIT is very likely to fall to around 5x and EV/FCF to 6x once the 4th quarter results come in"

That FCF here mentioned above, is it FCFE or FCFF?

Posted by Ah Gan > Mar 12, 2016 06:26 PM | Report Abuse
Kcchong, when you add these stocks into your portfolio, will you consider other factors like forex? oil price? sectors?
or just base on the roic & ev/ebit?
thank you!


Focus on what one can control. Nobody knows exactly what will happen to all those macro thingies next year.

Posted by 3iii > Mar 11, 2016 03:25 PM | Report Abuse
KCChong, Thanks for sharing your portfolio and Joel Greenblatt strategy. I noticed your portfolio is concentrated and has been held for 3 years. If I recall Joel Greenblatt's book, he advocated for a diversified portfolio which he rebalanced every year using his strategy. He creamed the stocks in the market (the top 10%) that satisfied his screening criteria of high ROIC (quality) and high EBIT/EV (low priced). Joel Greenblatt might have mentioned that his strategy is based on betting on the overall market and not specific stocks. Would you like to comment to guide our learning? Thanks again.


Greenblatt use his Magic Formula investing (not betting) on stocks (not market) meeting the two criteria. Yes, he was doing quantitative investing in scores of stocks with the top scores in Magic Formula, and as you said, re-balanced them based on the criteria.

This style is more suitable for those harvesters with a lot of money such as fund managers.

As a retail investors with limited financial resources, I am not exactly doing what Greenblatt is doing with his Magic Formula, rather using his principles of the Magic Formula to hunt for some good buys, ie buying good company (with high ROIC)at cheap (high EY) price.

In fact I will add another essential criterion on top of it later.

Posted by PureBULL . > Mar 11, 2016 02:06 AM | Report Abuse
Hi Guru kcchongnz ,
Wow u quoted my name.
That means u also peek into my stuff. TQ GURU.
Fully agreed with u, stick to whatever u know that works, esp for yourself.
All sport coaches' famous lecture :
Know your weak pts n turn them into your strong pts.
Your own Strong pt will take care of itself.


PureBULL,

I quote you because you are one of the few more respectable gurus here in your own right, although we differ in investment strategy.

It is good to play in our own game. It is good to have a say 58 degree wedge in our golf bad, but it is really not a must and yet still can play a good round of golf.

Thanks for your recommendation for other to learn from me an FA. I never know teaching finance and investment is such a joyful thing to do, besides earning some money.

Posted by murali > Mar 9, 2016 09:49 PM | Report Abuse

But personally I saw a lot of the old folks kena burnt badly during 1998, including few senior remisiers too...I guess besides the age factor which u always hentam there is more to do with greed and self dicipline as well...To drag the age matter alone into margin is just a reflective of yr personal feelings towards somebody


If old remisiers kena burnt like you said, what do you think about young chiku using margin finance and market tanks?

I am not young too and hence how can I have anything against old people. Do you see me complaining about anything on old people?

Posted by Icon8888 > Mar 9, 2016 09:37 PM | Report Abuse
not easy to make money in stock market .... I mean it...


"You are not alone" Muhyiddin Yassin

We also got Charles Munger, Howard Marks, Seth Klarman, and Joel Greenblatt etc.'s company.

That is why you, and me too, kena Pong Pong Pong, when market retreats and the one or two shares you and I wrote about, went south in prices, because market just changes its direction, just like that.

But that is the short-term. If you shares are good, in the long term, it will likely recover, and rise up more in price. And I can only say "likely".

But you have to survive the short term too if you are on margin finance, don't you think so? Because if someone on margin and concentrate on one of the shares which go down by more than 30%, that guy would have got margin calls and all his shares would have been sold of by investment banks at exaggerated loss.

Posted by Icon8888 > Mar 9, 2016 09:31 PM | Report Abuse
same happen when Uncle Koon said margin facility charge you only 5%
I asked my IB why they charged he 8% ? my IB said 5% is for either (1) blue chips, or (2) lower than normal gearing ratio )instead of RM1 borrow RM1, maybe only borrow 0.7).
If you want a normal margin facility, you need to pay 8%


Few people actually know how to calculate their actual costs and returns. Those who have no finance literacy, a little advance finance literacy, usually have no clue about it.