Posted by (US/CHN trade war doesn't matter) Philip > 2019-07-12 14:03 | Report Abuse

Most of us, however, are specialists. Instead of a latticework of mental models, we have a few from our discipline. Each specialist sees something different. By default, a typical Engineer will think in systems. A psychologist will think in terms of incentives. A biologist will think in terms of evolution. By putting these disciplines together in our head, we can walk around a problem in a three dimensional way. If we’re only looking at the problem one way, we’ve got a blind spot. And blind spots can kill you.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-07-12 14:09 | Report Abuse

As a engineer one of the popular mental models I use is the law of motion.

In stock picking this is how I relate with it.

Force= mass x acceleration.

Therefore a object in motion trends to stay in motion, while an object at rest trends to stay at rest.

In other words triggers! A bad business will usually tend to stay a bad business, unless certain triggers that are enough to counteract the motion and push it the other way around happens.

At the same time a good business will have a lot of benefits like low interest rates, reputation and good management that will keep it moving forward.

Only when triggers occur that allow down velocity will business status change.

My mental model then is to find the triggers in economies that change a business fundamentals.

That is probably why I rarely buy net asset companies ( like property developers), because the triggers required to turn it to profitability have nothing to do with mass of the company ( assets), but they need a huge amount of acceleration to make it improve.

I believe the acceleration triggers will be very clear and concise before I jump into those kind of businesses.

Posted by Shinnzaii > 2019-07-12 14:16 | Report Abuse

Most common problem

2. Bias from Incentives
Highly responsive to incentives, humans have perhaps the most varied and hardest to understand set of incentives in the animal kingdom. This causes us to distort our thinking when it is in our own interest to do so. A wonderful example is a salesman truly believing that his product will improve the lives of its users. It’s not merely convenient that he sells the product; the fact of his selling the product causes a very real bias in his own thinking.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-07-12 15:36 | Report Abuse

yes, it is common issue in psychology.

I love applying all the mental models that I gain in analyzing a stock qualitatively and not only quantitatively.

The biggest question to answer in stocks is not whether the share price is going up or down.

The most important question to answer in stocks is to answer the question: what is the economics of the business 5 - 10 years from now?

A quantitative analysis can only get you so far. It shows a snapshot of the NOW: how much debt is accrued, what the business makes the last few years, how the revenues are trending, the dividend payout etc.

But this will not tell you how the business will do in the future.

For that you need to understand the economics of the business, its business fundamentals (qualitative, not quantitative), and how able it is in meeting challenges and growth.

That is the difficult path, and it involves removing as many unknowns and assumptions as possible.

only when the assumptions are minimized, can the mental models come to work in projecting the business and its real world capabilities compared to its competitors long term.

Find the moat. Understand the knight.

Posted by Jason Gilbert Ho > 2019-07-12 15:39 | Report Abuse

Amazing, now I understand how thought process links with each other, and why some people are "street smart" and others are "book smart".

Real life knowledge is applying the general rules of life (in different disciplines) in attacking a problem.

No wonder I failed in my College A levels. haha

Posted by (S=QR) Philip > 2019-07-12 15:44 | Report Abuse

This is probably the most important concepts in my life which changed my investing methods and made me a millionaire. Sad to be you.


>>>>>>>>>>>>>

Posted by SPMstudent > Jul 12, 2019 3:32 PM | Report Abuse
tldr

Posted by qqq3 > 2019-07-12 15:56 | Report Abuse

AI just beat professional poker players............can AI beat stock market?


Previously AI has licked chess and the game of Go........

Posted by qqq3 > 2019-07-12 16:07 | Report Abuse

Make money is not smarter..........


make money is just being foolish and when market rewards foolish.........

Posted by (S=QR) Philip > 2019-07-12 18:13 | Report Abuse

Oh... Warren buffet must be the most foolish human in Earth. Market keep rewarding him.

Posted by qqq3 > 2019-07-12 19:04 | Report Abuse

by (S=QR) Philip > Jul 12, 2019 6:13 PM | Report Abuse

Oh... Warren buffet must be the most foolish human in Earth. Market keep rewarding him.
=========


maybe.....but now he so big, people just keep giving him money.

Posted by qqq3 > 2019-07-12 19:53 | Report Abuse

not saying u and I are foolish....just saying stock market cannot be programed into AI.................

Posted by qqq3 > 2019-07-12 20:19 | Report Abuse

d by deMusangking > Jul 12, 2019 7:56 PM | Report Abuse

u sound foolish !!!

haha
======================================


enough people throw coins, someone is going to get 100 heads in a row.

Posted by (S=QR) Philip > 2019-07-12 20:26 | Report Abuse

Efficient market analysis?

Haha qqq3 I would have thought people have given up on it by now. Still have believers?

Posted by Sslee > 2019-07-12 21:06 | Report Abuse

Dear Philip,
https://investors.beyondmeat.com/news-releases/news-release-details/beyond-meatr-reports-first-quarter-2019-financial-results/
• Net revenues were $40.2 million, an increase of 215%;
• Net loss was $6.6 million, or a loss of $0.95 per common share, compared to net loss of $5.7 million, or a loss of $0.98 per common share in the year-ago period; Pro forma basic and diluted net loss per common share, which is a non-GAAP financial measure, was $0.14 per common share in the first quarter of 2019 compared to $0.13 per common share in the year-ago period; and
• Adjusted EBITDA, which is a non-GAAP financial measure, was a loss of $2.1 million compared to a loss of $4.3 million in the year-ago period

Tell me base on all your different mental models of human behavior what are at play in valuation of Beyond Meat?

Thank you

Posted by qqq3 > 2019-07-12 21:29 | Report Abuse

I say its evolution. Certain climate certain local conditions favor certain strategies and no strategy is suited for all climates and all local conditions.

Posted by qqq3 > 2019-07-12 21:56 | Report Abuse

Beyond meat..............u either believe or u don't believe they are in the early stages of achieving the growth................and there is enough risk money money to buy their shares..................................

Posted by probability > 2019-07-12 22:21 | Report Abuse

walao....too much stories from sifu philip...my processor cannot process

i am looking forward for another yinson discovery from him

advance thanks

Posted by cheoky > 2019-07-12 22:26 | Report Abuse

Got buddha way? Wisdom from heart..Too lengthy and sleepy.
Speculation survive since stone age.
Investing survive since Ben Graham.
Speculation got infamous with Jesse Livermore.
Investing got famous with WB.
But if we invert.
How about Seykota.
How about people practise value investing still getting noway after said 20years. These are not known.
Just curious.

Posted by (S=QR) Philip > 2019-07-13 08:54 | Report Abuse

I'm not familiar with beyond meat, but let me put into play another similar business that is losing money, but if now valued at 170 billion.

Waymo.

The King of self driving technology is a loss making company for the last 13 years since 2006. Google has plowed more than 5 billion USD into the company that has never made a profit for 13 years. The revenues are growing exponentially while there is no profits.

However, here are qualitative facts.

Waymo had bought 62,500 minivans from GM. It is all driverless in California ( best testing ground flat land, easy climate). Their driverless tech has beaten every single other company from Apple to Uber to facebook in total by a huge factor. It has driven more miles safely than all of them combined.

Now it is set to make huge profits, as their LIDAR technology is so far ahead of everyone else it is like introducing the Apple iPhone into a world of Nokia flip phones.

They are finally selling their finished tech to end users and partners. Costco is using their LIDAR sensors to do robotic self fulfillment of shelves and storage. The California county is purchasing the tech for use in their garbage disposal truck and bin removal. John deere is using their tech for the crop detection, collection farm equipment. Not to mention the future of driverless taxis and lorries.

The mental model you need to understand is MARKET DISRUPTION and TOTAL ADDRESSIBLE MARKET.

If you went back 150 years ago and you told them we could call someone in Europe from Asia with no delay they would call you nuts. If you showed them a smartphone, they would fall down on their knees and worship you.

For beyond meat, the qualitative analysis is amazing.

3 questions that for thousands of years have been inescapable:

1. How does vegetables taste, smell and sounds and feel like meat? All are organic carbon based lifeform.
2. What is the cost of this vegetable "meat" vs real meat?
3. What are the future economics of beef vs vegetables?

Once you realized that meat technology is as efficient as it will ever be, you will realize that the only possible disruptor is for making vegetables taste, feel,look and smell like meat.

If you could buy a burger at half the price of real meat at nearly the same flavor? The market is endless.

The contention is the word "nearly". I've seen the beyond meat commercials, but have yet to try. My daughter in California has tried it and she says it tastes amazing. It even has blood and crackle when you cook it. Juice dripping from the meat.

I believe if the revenue has increase that much they must be doing something good.

If profit is still not there, they need time to master to recipe.

How long before Facebook, Amazon, Google and Netflix turned a good profit?

Anyway, I'll tell you more once I get a taste.



>>>>>>>>>>>

Posted by Sslee > Jul 12, 2019 9:06 PM | Report Abuse

Dear Philip,
https://investors.beyondmeat.com/news-releases/news-release-details/be...
• Net revenues were $40.2 million, an increase of 215%;
• Net loss was $6.6 million, or a loss of $0.95 per common share, compared to net loss of $5.7 million, or a loss of $0.98 per common share in the year-ago period; Pro forma basic and diluted net loss per common share, which is a non-GAAP financial measure, was $0.14 per common share in the first quarter of 2019 compared to $0.13 per common share in the year-ago period; and
• Adjusted EBITDA, which is a non-GAAP financial measure, was a loss of $2.1 million compared to a loss of $4.3 million in the year-ago period

Tell me base on all your different mental models of human behavior what are at play in valuation of Beyond Meat?

Thank you

Posted by (S=QR) Philip > 2019-07-13 09:16 | Report Abuse

https://youtu.be/PqVBInU0A8s

This is something that I saw before in understanding the economies of plant based meat.

A very strong metric, plant based food grew by 24% yoy, while the meat industry grew by 2%.

In the long run the 10 years future economics will favor plant based meat.

Mental Models I use:

Lowest cost differentiator.
( It takes 308 gallons of water to process 1 lb of beef. Not to mention feed and killing, skinning and processing). Plant based food will win in the end, if everything else stays the same ( price, flavor, demand)

1st mover advantage.
Only impossible foods and beyond meat are going the extra mile to make plants cook and taste like near ( blood is from beet juice). With enough demand and r&d, they will have an unedible unassailable lead in the plant based food future.

Supply versus demand.
Similar to how chicken is popular in Malaysia because it is the only meat that Indians and Muslims have no issue with, vegans and health organic people ( getting more every day) will be provided with an alternative option when previously there was none. Before vegetables burgers were dry and not tasty. But the new burgers from beyond meat had the same amount of fat as a real beef Patty. Oven carnivores are buying beyond meat.

Economies of scale.
Currently I believe the losses are due to r&d, marketing and growing costs. But once they achieve a tipping point, it is a business model where industrialization and ramp up of production is far easier to process than growing beef. As long as revenues grow, the profits will definitely come.

Posted by (S=QR) Philip > 2019-07-13 09:28 | Report Abuse

Sslee,

If you look beyond( pardon my pun) past financials and try to understand the long term economics of the business, you may have a better understanding of it.

https://youtu.be/4R-xu9OmrQM

Or you can let Dr. Oz tell you all about it.

Posted by RainT > 2019-07-13 11:02 | Report Abuse

omg...so long

Posted by (S=QR) Philip > 2019-07-13 12:28 | Report Abuse

Einstein says we must make every effort to make something as easy as possible, but not simple.

In this case, this is the easiest way I can explain my selection of YINSON, QL and TOPGLOV through the years.

Easy, but not simple.

If following PE alone works, it would be simple.

If following NTA alone works, it would be simple.

If following golden rule growing earnings alone works, it would be simple.

But if it was simple, how come kyy lose money? Calvin tan lose money? Icon8888 lose money? Qqq3 lose money? Philip lose money?

The answer is: investing is not simple.

Posted by stockraider > 2019-07-13 12:36 |

Post removed.Why?

Posted by Sslee > 2019-07-13 12:39 | Report Abuse

Dear Philip,
Thank you for the explanation and the youtu.be link.
I think American society is going into a very extreme where the super-rich control/monopoly all the big business and shut off the common people of any chance to own a piece of wealth from the growth of MARKET DISRUPTION and TOTAL ADDRESSIBLE MARKET where common people are on the receiving end of losing their jobs and the super rich become even richer.
A thousand dollar will go a long way for the commoners whereas a multi-million dollar to a billionaire is just another figure in his book generating no economic activities or value.
https://www.marketwatch.com/story/the-richest-1-people-in-the-world-are-on-track-to-control-two-thirds-of-wealth-by-2030-2018-04-10
It is a scary future when richest 1% will control 2/3 of wealth.

Thank you
P/S: Luckily in Malaysia we are still able to own a piece of wealth from listed companies in Bursa if we do our homework well. I had to admit that I’m no way near Philip level in term of owing well managed and growth stocks. It seems I always end up with some stocks where I hope to make a different and unlock its value.

Posted by stockraider > 2019-07-13 12:45 | Report Abuse

Posted by DickyMe > Jul 13, 2019 12:00 PM | Report Abuse

(S=QR) Philip "Sapura and Armada share price crash is because debt generation and interest repayments has increased, while their profit margins and revenues has dropped tremendously. ***With looming maturity of borrowings to be repaid in the very near future***, and no one willing to buy their bonds, it extend loans, their only option is to do rights issue, warrant or cash call. "

https://klse.i3investor.com/servlets/stk/7293.jsp



Posted by stockraider > Jul 13, 2019 12:42 PM | Report Abuse X

It is true or not ??

If it is true then what about Yinson with gearing even higher than armada and with order books even lower than armada leh ??

REMEMBER SHARE PRICE IS WHAT U PAY, AND VALUE IS WHAT U GET LOH...!!

ALWAYS GO FOR MARGIN OF SAFETY LOH...!!

Posted by stockraider > Jul 13, 2019 12:31 PM | Report Abuse X

The new FPSO will result in YINSON borrowing even exceeding Armada on an absolute basis, that means Yinson gearing will be very high loh...!!

That confirm armada mkt cap Rm 1.4b order books Rm 21b a better investment compare with Yinson mkt Cap Rm 7.2b order books Rm 4b loh.......!!

Rightfully armada should be value much higher than Yinson loh...!!

The good news for goreng Yinson will definitely raised & confirmed armada investment profile as a strong margin of safety & turnaround stock loh...!!

Posted by stockraider > 2019-07-13 12:58 | Report Abuse

Posted by stockraider > Jul 13, 2019 12:57 PM | Report Abuse X

Inari is the greatest beneficiary from 5G loh...!!

Insas will benefit too loh...!!

Posted by Vorster89 > Jul 13, 2019 12:55 PM | Report Abuse

Broadcom up 3%， Monday should follow

Posted by deMusangking > Jul 13, 2019 12:49 PM | Report Abuse

whatever lah... raider... sell insas n buy jaks!!!

hahaha

Posted by (S=QR) Philip > 2019-07-13 13:12 | Report Abuse

Please check your details, yinson is the only tenderer left for 3 FPSO jobs where the total order book will be huge, Brazil Marlim 1 they are the only reference left, 709k usd day rate 25 year contract, whale park sgp was disqualified so only yinson left 22 year contract 650k, Ghana contact 15 years 650k contract they are 2 left but only one tenderer gas job experience in Ghana ( yinson). I leave you to calculate order book and why valuation for YINSON now at rm10.



>>>>>>>>>
Yinson mkt Cap Rm 7.2b order books Rm 4b loh.......!!

Posted by (S=QR) Philip > 2019-07-13 13:14 | Report Abuse

Wrong. They will raise perpetual bonds with maturity tenure of 999 years. No dilution of SHAREHOLDINGS and no default risk from payment if matured bonds unlike armada and sapura.


>>>>>>>>>

The new FPSO will result in YINSON borrowing even exceeding Armada on an absolute basis, that means Yinson gearing will be very high loh...!!

Posted by stockraider > 2019-07-13 13:22 | Report Abuse

Remember the new Armada Kraken FPSO ??....One mistake or dispute like Armada kraken in north sea could wipe off almost Rm 10 billion of Armada market capitalization loh...!!

Here in Yinson we are talking of 3 new FPSO costing at least Rm 2.5 billion each and not 1 new armada kraken...if one mistake like the case of armada kraken will turn it into a bankrupt company loh...!!

Just ask yourself, why only Yinson...why the rest not interested on this job...must be very fishy loh...if not...very good they will like ants all going for these jobs, if it is highly profitable & low risk loh...!!

Furthermore...u need to commit about 3 yrs in construction of FPSO, b4 u can see your 1st billing loh...!!

Just becareful with this type of deals, is too good to be true mah..!!

Normally ala udang di sebalik buntut in this case loh...!!

Posted by (S=QR) Philip > Jul 13, 2019 1:12 PM | Report Abuse

Please check your details, yinson is the only tenderer left for 3 FPSO jobs where the total order book will be huge, Brazil Marlim 1 they are the only reference left, 709k usd day rate 25 year contract, whale park sgp was disqualified so only yinson left 22 year contract 650k, Ghana contact 15 years 650k contract they are 2 left but only one tenderer gas job experience in Ghana ( yinson). I leave you to calculate order book and why valuation for YINSON now at rm10.



>>>>>>>>>
Yinson mkt Cap Rm 7.2b order books Rm 4b loh.......!!

Posted by stockraider > 2019-07-13 13:24 |

Post removed.Why?

Posted by stockraider > 2019-07-13 13:47 | Report Abuse

No such thing loh....all loans got a callable element or clause in the agreement whether short or long term or even perpetual loh...!!

Just like case of London...when they default on short term loan of Rm 10m all the debts are triggered even the loan is loan term loh...!!

Posted by IronShirt > Jul 13, 2019 1:30 PM | Report Abuse

Depends on how you see sukuk, it has 2 cutting edges. No Biz, All form of short term Debt is equally fatal.
1) Armada got short term Debt 6.78Bil and Yinson got 346mil-----Yinson is 20X "safer"

Epf, Kwsp, Pnb all got stuck-in Sap, Velesto and worst Mas.....To made their Balance Sheet looks
Good, they have to Goreng atleast one less Trouble one and Yinson looks Good for 1st half of 2019......2nd half 2019 might see Other stocks get goreng by "them"

Posted by (S=QR) Philip > 2019-07-13 14:11 | Report Abuse

Here is the difference between qualitative and quantitative analysis.

If you have a bank loan where you have to pay back the principal in 999 years, is this considered borrowings or equity?

When you have short term debt, long term debt and 999 years debt you need to call a spade a spade. Yinson is excellent in their financial raising capability.

>>>>>>>>>
I invite you to read first before commenting the SC document on the property bond raised in SGX and BURSA.

No such thing loh....all loans got a callable element or clause in the agreement whether short or long term or even perpetual loh...!!

Posted by stockraider > 2019-07-13 23:57 |

Post removed.Why?

Posted by (S=QR) Philip > 2019-07-14 06:03 | Report Abuse

Accounting rules say you are wrong. Understand the business first itself then look to the debt.

If you understand this better you will understand why foreign investors and major institutions have been buying yinson from 4.09 to 7.20 today.

And you will probably understand better what they don't touch Armada.

Posted by qqq3 > 2019-07-14 09:53 | Report Abuse

(S=QR) Philip > Jul 14, 2019 6:03 AM | Report Abuse

what they don't touch Armada.
========

they don't touch because they are not supposed to be contrarians.......but contrarians make a lot of money........

Posted by qqq3 > 2019-07-14 09:55 | Report Abuse

buy Armada now like buying Jaks at 50 sens...........

and KNM at 15 sen..........

Posted by stockraider > 2019-07-14 10:44 |

Post removed.Why?

Posted by stockraider > 2019-07-14 10:48 | Report Abuse

Finally qqq talk some sense here loh....!!

But definitely Armada & sapura is very much better than jaks & knm loh....!!

Yes armada & sape can classify as big margin of safety turnaround big quality stock loh....!!

Posted by qqq3 > Jul 14, 2019 9:53 AM | Report Abuse

(S=QR) Philip > Jul 14, 2019 6:03 AM | Report Abuse

what they don't touch Armada.
========

they don't touch because they are not supposed to be contrarians.......but contrarians make a lot of money........


qqq3
11971 posts
Posted by qqq3 > Jul 14, 2019 9:55 AM | Report Abuse

buy Armada now like buying Jaks at 50 sens...........

and KNM at 15 sen..........

Posted by qqq3 > 2019-07-14 10:52 | Report Abuse

contrarian play or non contrarian play?

big picture/ theme play or company specific play?


for the masses, for fund managers, for teachers ....stick to quality, stick to non contrarian play, stick to company specific play like philip...............



for pros, for speculators and traders , for higher risk/ rewards....u can look for contrarian plays, theme plays, big picture plays..............

Posted by qqq3 > 2019-07-14 10:57 | Report Abuse

for investors, quality should take precedent over value investing.


too many amateurs forget about quality when they call themselves value investors..............

Posted by qqq3 > 2019-07-14 11:02 | Report Abuse

too many amateurs forget about quality when they call themselves value investors..............

not just amatuers, IB analysts are also guilty because there are more comfortable with numbers than with quality and deep understanding.....................

Posted by stockraider > 2019-07-14 11:18 | Report Abuse

A CLASSIC MISUNDERSTANDING OF MARGIN OF SAFETY & QUALITY FROM A TRADER LOH....!!

Posted by qqq3 > Jul 14, 2019 11:02 AM | Report Abuse

too many amateurs forget about quality when they call themselves value investors..............

not just amatuers, IB analysts are also guilty because there are more comfortable with numbers than with quality and deep understanding.....................

Posted by qqq3 > 2019-07-14 11:56 | Report Abuse

caveat...if investment is defined as profiting from the growth of excellent companies , timing and bull and bear markets plays no role...it depends on the investee company delivering.

for speculations, trading, theme plays, contrarian play, timing is everything and depends on bull and bear.

Posted by qqq3 > 2019-07-14 11:58 | Report Abuse

ed by stockraider > Jul 14, 2019 11:18 AM | Report Abuse

A CLASSIC MISUNDERSTANDING OF MARGIN OF SAFETY & QUALITY FROM A TRADER LOH....!!

======

for so called margin of safey in Insas is exclusively due to ignorance...........

Posted by stockraider > 2019-07-14 12:00 | Report Abuse

Investment is define as profiting on something with certainty of return over time mah.....!!

That is MARGIN OF SAFETY loh.....!!


Posted by qqq3 > Jul 14, 2019 11:56 AM | Report Abuse

caveat...if investment is defined as profiting from the growth of excellent companies , timing and bull and bear markets plays no role...it depends on the investee company delivering.

for speculations, trading, theme plays, contrarian play, timing is everything and depends on bull and bear.

Posted by Sslee > 2019-07-14 12:06 | Report Abuse

Hahahaha,
qqq3 quality here quality there, your JAKS ALP any quality compare to Dato’ Sri Thong of INSAS who had accumulated so much wealth into INSAS.
https://klse.i3investor.com/blogs/Sslee_blog/214988.jsp

Posted by qqq3 > 2019-07-14 13:12 | Report Abuse

Jaks is contrarian play
Insas is value trap.

Posted by qqq3 > 2019-07-14 14:47 | Report Abuse

Jaks is contrarian play
Insas is value trap.

why? how?

Jaks future is better than its past suggest
Insas best is behind it already......

Posted by The One and Only Heavenly Punter > 2019-07-14 14:52 | Report Abuse

https://klse.i3investor.com/servlets/pfs/121748.jsp

A gentle reminder. It seems that your JAKS not performing so well.