Posted by stockraider > 2019-09-14 15:07 | Report Abuse

Pitfall #1: Having No System
Many people want to make money from the stock market.
The quicker, the better.
They have dreams and fantasies of how they would buy a certain stock at $1.00 and would sell them at $1.50, $2.00, … etc in a short period of time.
Some even dream about owning multi-baggers.
But, don’t get me wrong. I am for dreams and visions. Nothing happens if none of us dream. So, please dare to dream big.
With that being said, many people want to make money. But, many ignored the importance of having a system to make money sustainably in the stock market. They do not have a system in place to sift out good stocks from bad ones which caused many to experience inconsistent investment results.

How can one attain consistent results when he has both good and bad stocks?
Therefore, Rule #1 in stock investing is to first set up an Investment System that is efficient to make money in the stock market sustainably.

Pitfall #2: Chasing Hot Stocks
This is a continuation of Pitfall #1.
With the absence of an Investment System, many new investors would buy and trade stocks blindly for they are more prone to stock tips, rumours, news, … etc sourced from friends, families, brokers, analysts, gurus, and publications, either online or offline. Information is plentiful. Intelligence to decipher is lacking. The result is catastrophic with many had invested into stocks that should have been avoided in the first place.
Investors would have done better without the information stated above.
In contrast, value investors who are able to make profits consistently from their investments would find money-making stock information from elsewhere. For a start, they include information obtained from official documents which include: Annual Reports, Quarterly Reports, Press Releases and Investors’ Presentations.

Regrettably, most retail investors do not read them. It is a costly mistake. This is because you can’t tell a good stock from a bad stock without reading them. It is a bet or a gamble if you buy stocks without reading the above documents. So, if you do not know how to read them today, it’s okay. Start learning about it. That would be your homework to become a better investor.

Pitfall #3: Buying Expensive Stocks assuming they are cheap.
Many people think that a stock which trades at $1.00 is cheaper than one stock which trades at $10.00.
It is flawed thinking.
Let me put it this way.
You are two choices between two tins of Milo: Tin A and Tin B. Tin A is priced at $10.00 and Tin B is priced at $12.00. Which of the two tins is cheaper?
Some of you may ask: ‘How big is Tin A and Tin B?’
If that is you, I believe you are getting the idea. It is very possible for Tin B to be cheaper than Tin A.

If we find that Tin A contains 500g of Milo Powder and Tin B has 850g, then, it’s obvious that Tin B offers better value than Tin A in terms of the amount of Milo Powder per Dollar and thus, is cheaper. You get more Milo Powder per Dollar if you buy Tin B than Tan A.
Likewise, stock prices alone does not tell you whether or not a stock is cheap or expensive. Stock prices should be compared relatively with its earnings to really find out of its true worth. This would tell us effectively whether or not a stock is undervalued or overvalued, which enables us to make better decisions.

Pitfall #4: ‘Fairy Tale’ Investing
Many people hope that the price of their stocks would go up after they bought their shares. They would be disappointed if their stocks behave otherwise. This is especially for people who intend to reap quick gains from buying these stocks in the market. I call it ‘fairy tale’ investing as it is not realistic.
This is because it is only realistic to expect one of the three things to happen as soon as you bought shares of a company (stock).

First, the price will go up.
Second, the price will go sideways.
Third, the price will go down.

It is nothing new. But, the difference between the masses and value investors is that value investors have a game plan for all of the three situations above. True investors are prepared to face them financially and mentally for ups and downs in stock prices are the norms in the stock market.

Pitfall #5: Not Learning from Mistakes It’s okay to have mistakes made or money lost from unwise investments. Learn from it. Grow from it. Don’t waste your ‘tuition fees’.
But, due to culture and upbringing, it can be difficult to admit a mistake. This is because a mistake may indicate that we are ‘stupid’ and it can be embarrassing.
Instead of admitting our lack of knowledge, we have the tendency to place the blame onto the market, the government, the broker, the analyst, the CEO, CFO, or Chairman of the company … etc for our own mistakes. It is human nature to put some blame on others so that we don’t look foolish by ourselves.

Posted by stockraider > 2019-09-14 15:08 |

Post removed.Why?

Posted by G00Shen > 2019-09-14 15:17 | Report Abuse

stockraider

diam lar ...

holland master

Posted by stockraider > 2019-09-14 15:19 | Report Abuse

Tak mahu dengar pergi tidur loh...!!

Posted by G00Shen > Sep 14, 2019 3:17 PM | Report Abuse

stockraider

diam lar ...

holland master

Posted by G00Shen > 2019-09-14 15:21 | Report Abuse

woohoo holland master angry d hahaha

no more appear in hengyuan thread like last time ?

posting like a stupid hahaha

Posted by G00Shen > 2019-09-14 15:22 | Report Abuse

no people read ur comment already as you are certify holland master

Posted by stockraider > 2019-09-14 15:22 | Report Abuse

lu suka hengyuan pergi beli manyak manyak loh...!!

Posted by G00Shen > Sep 14, 2019 3:21 PM | Report Abuse

woohoo holland master angry d hahaha

no more appear in hengyuan thread like last time ?

posting like a stupid hahaha

Posted by (HK1997 again) Philip > 2019-09-14 15:24 | Report Abuse

This concept, while I agree very much, is also mm in complete thinking.

The concept of comparing stocks to milo tins is more in relation to buying commodities and bonds rather than stocks.

Buying stocks based on past earnings is a recipe for disaster, as the stock prices goes up or down based on future earnings and results, not the past.

Instead, a better comparison would be this by Philip Fischer. You have a choice of giving £100 to one of the students in the graduating class of Harvard. Each one will take your money for a future share of his salary years from now when he gets a job. Who do you choose?

You will quickly realize that the smartest students with the best results usually get the best jobs writing for large corporations. They will give you the biggest long term results.

But also, do you sell your share when the smartest student becomes senior manager of the company and instead invest in the worst performing student of the class just because he has not found a job yet, based only on the assumption that since he did not get a job yet, he might have a better one in the future?

No of course not. There is no guarantee that the senior manager top student might lose his job, in fact, there is usually a high chance that such a well performing achiever might just become the vice President of the company in the near future.

In fact that is what stock picking is about, trying to predict future performance of a stock based on an evaluation of the current and past earnings of the company, the managerial performance, the industry and the company characteristics and it's long term capability versus peers.




>>>>>>>>>

Pitfall #3: Buying Expensive Stocks assuming they are cheap.
Many people think that a stock which trades at $1.00 is cheaper than one stock which trades at $10.00.
It is flawed thinking.
Let me put it this way.
You are two choices between two tins of Milo: Tin A and Tin B. Tin A is priced at $10.00 and Tin B is priced at $12.00. Which of the two tins is cheaper?
Some of you may ask: ‘How big is Tin A and Tin B?’
If that is you, I believe you are getting the idea. It is very possible for Tin B to be cheaper than Tin A.

If we find that Tin A contains 500g of Milo Powder and Tin B has 850g, then, it’s obvious that Tin B offers better value than Tin A in terms of the amount of Milo Powder per Dollar and thus, is cheaper. You get more Milo Powder per Dollar if you buy Tin B than Tan A.
Likewise, stock prices alone does not tell you whether or not a stock is cheap or expensive. Stock prices should be compared relatively with its earnings to really find out of its true worth. This would tell us effectively whether or not a stock is undervalued or overvalued, which enables us to make better decisions.

Posted by stockraider > 2019-09-14 15:28 |

Post removed.Why?

Posted by 3iii > 2019-09-15 09:08 | Report Abuse

>>>


stockraider Tak mahu dengar pergi tidur loh...!!

Posted by G00Shen > Sep 14, 2019 3:17 PM | Report Abuse

stockraider

diam lar ...

holland master
14/09/2019 3:19 PM

>>>>


GOOShen

Ignore the creaking troll-ey.

Tolerate the annoyance.

Learn from Mr. Market's mistakes. Take advantage and profit from Mr. Market.


3iii

Posted by stockraider > 2019-09-15 12:08 | Report Abuse

Armada have the following good news & catalyst and its share price will keep shooting upwards on sustain basis loh...!!

1. Armada equity and contract on hand much bigger than yinson.

2. Armada latest to qtr earnings has exceeded yinson. With its last qtr earnings exceeded yinson profit 2x.

3. Armada borrowing has been reduced by 1 billion & coming down further.

4. The new ceo has initiated alot of wealth creation initiative.

5. Most importantly armada share price already breakout from rm 0.30 resistance and expected the momentum to carry it higher loh...!!

6. EPF has been regularly buying armada recently with large quantities.


Yes u will see better days for Armada, just hang tight loh...!!

Posted by stockraider > Sep 15, 2019 11:45 AM | Report Abuse X

Saudi issue add Extra boost for armada....which already riding on string of extremelly bullish news mah...!!

Posted by 3iii > 2019-09-17 07:41 | Report Abuse

My preferences:

Companies without debt
Undervalued
With a history of impeccable trajectory behind
That already give dividends more profitable than risk free interest rates.


Housing market is a bubble which has or will burst soon. You can expect problems here.

Posted by 3iii > 2019-09-17 07:48 | Report Abuse

2018 was a bear market.

Money can be made in a bear market. In 2018, my portfolio delivered positive gains in the bear market, my portfolio tend to do rather well. When the stock market is rising, everyone benefits but in lean times many do poorly.

Given the low interest environment and the correspondingly high asset values, the returns on offer from the stock market are low, in the mid single digits.

Posted by 3iii > 2019-09-17 08:01 | Report Abuse

Try to avoid problems by steering clear of questionable companies.

Posted by stockraider > 2019-09-17 18:54 | Report Abuse

Is time to avoid overvalue bluechips stock, it is end of the road for them loh......!!

Posted by 3iii > Sep 17, 2019 7:48 AM | Report Abuse

2018 was a bear market.

Money can be made in a bear market. In 2018, my portfolio delivered positive gains in the bear market, my portfolio tend to do rather well. When the stock market is rising, everyone benefits but in lean times many do poorly.

Given the low interest environment and the correspondingly high asset values, the returns on offer from the stock market are low, in the mid single digits.

Posted by 3iii > 2019-09-17 19:56 | Report Abuse

>>>

Posted by stockraider > Sep 17, 2019 6:54 PM | Report Abuse

Is time to avoid overvalue bluechips stock, it is end of the road for them loh......!!

>>>>


Poor raider.

He has sung this tune for the last 10 years.

Accordingly, he avoided great companies because they are all overpriced.

Portfolio management is as important as stock selections.

Posted by 3iii > 2019-09-18 07:39 |

Post removed.Why?

Posted by 3iii > 2019-09-18 10:18 | Report Abuse

Business Quality


Business quality is defined by the return on capital employed, calculated before goodwill.

The implication is that better returns are synonymous with a better-quality business.




Buy great company at fair or bargain price. You can also pay a little bit more to own it for the long term investors.

Avoid gruesome company at ANY price.

Posted by 3iii > 2019-09-18 10:19 |

Post removed.Why?

Posted by stockraider > 2019-09-18 12:59 |

Post removed.Why?

Posted by 3iii > 2019-09-18 13:04 | Report Abuse

>>>

Posted by stockraider > Sep 18, 2019 12:59 PM | Report Abuse

Posted by stockraider > Sep 16, 2019 2:38 PM | Report Abuse X

Mark this statement & see how this sohai 3iii fare loh....!!

Armada is Rm 0.305....when 3iii make this stupid statement loh..!!

Posted by 3iii > Sep 16, 2019 1:36 PM | Report Abuse

Still a very gruesome company.

Huge debts.

>>>


raider should look again at his Hengyuan's promotions. Many are thankful they were not trapped by raider's intentions.

raider was willing to pay $45 to own this Hengyuan because it was undervalued and driven by his margin of safety principle.

Posted by qqq3 > 2019-09-18 13:49 | Report Abuse

quality first is correct especially in a public forum...........


https://klse.i3investor.com/blogs/qqq3/225318.jsp

Posted by stockraider > 2019-09-18 19:17 | Report Abuse

When people don understand quality & value of a stock....they will run for a well known brand on the pretext of quality loh...!!

If u master the selection of stock using the balance of quality & value u will be a complete investor mah....!!

Posted by qqq3 > Sep 18, 2019 1:49 PM | Report Abuse

quality first is correct especially in a public forum...........


https://klse.i3investor.com/blogs/qqq3/225318.jsp

Posted by qqq3 > 2019-09-18 19:18 | Report Abuse

well known brand is ok.....


the rest up to market condition.

Posted by Icon8888 > 2019-09-18 19:20 | Report Abuse

No need argue

You reap what you sow

Posted by stockraider > 2019-09-18 19:21 |

Post removed.Why?

Posted by qqq3 > 2019-09-18 19:29 | Report Abuse

u value investors,

going after unknown brands, u want to do it, do it for yourself, don't teach others your value investing "skills".......

Posted by qqq3 > 2019-09-18 19:31 | Report Abuse

https://klse.i3investor.com/blogs/qqq3/225318.jsp

Posted by qqq3 > 2019-09-18 19:33 | Report Abuse

going after unknown brands, u want to do it, do it for yourself, don't teach others your value investing "skills".......

use own money to buy...even promote in i3 like KYY is ok one.....after all free forum....


but only certain kinds of people think he is God, want to teach people their value investing skills for a fee.............don't make me laugh................

Posted by stockraider > 2019-09-18 19:34 | Report Abuse

Thats what a value investor should do loh....!!

They buy quality value no frill brand with confidence....if u chase brand u need to pay unnecessary premium loh....!!

Posted by qqq3 > Sep 18, 2019 7:29 PM | Report Abuse

u value investors,

going after unknown brands, u want to do it, do it for yourself, don't teach others your value investing "skills".......

Posted by qqq3 > 2019-09-18 19:40 | Report Abuse

people ( including KYY) make money not due to value investing skill, but got sailang and margin skill ( and luck)...........

Posted by stockraider > 2019-09-18 19:48 |

Post removed.Why?

Posted by (HK1997 again) Philip > 2019-09-19 00:50 | Report Abuse

Dear Lee Soon Sheng,

I find that you keep using this wrongful misconcept of the meaning of PE in your valuation of companies. I hope to explain to you once and for all so you can put it into your lexicon and stop asking preposterous questions.

"May I ask, in order for company shares to deserve a PE of more than 50X what should be the yearly growth rate of revenues and earnings?"

There is no correlation between PE and the prediction of future returns or growth of a company.

PE is merely what the financial community (to paraphrase peter lynch) is willing to pay for a companies earnings RIGHT NOW. IT DOES NOT MEAN THAT A COMPANY WITH HIGH GROWTH RATE DESERVES HIGH PE OR A COMPANY WITH LOW GROWTH RATE DESERVES A LOW PE.

As far as I can tell, the Price that the investing community is willing to pay for a stock right now is based on:

a) how transparent the business is ( how consistent the growth is, how much debt, what is the historical performance of the business, how clear is the earnings and growth estimates)
b) how confident the public is in the growth of the business (businesses that consistently beat earnings expectations will have higher pe compared to those that meet or fail those expectations), also historical growth rates true.
c)news and rumours (public or insider announcements)
d) market maker, movers and institutional buying

As I have tried to explain to you many times, PE does not predict future returns, only current interest.

Let me give you a simple example:

Amazon in:

2006 Earnings 0.45, share price of 39.46, PE of 87.69 (426 million shares)
2010 Earnings 2.28, share price of 135.77, PE of 59.55 (456 million shares)
2018 Earnings 7.94, share price of 1477.34, PE of 182.28 (500 million shares)

the revenue growth would be:
2006 10 billion 191 million profit
2010 34 billion 1 billion net profit
2018 233 billion 3.974 billion net profit

Do you see how silly it would be to apply just one metric in measuring the quality of a company and thus paying PE for it? If you had paid a pe of 87.69 in 2006, do you think that 10 years on you would be using a simple growth rate of revenue and earnings yield to judge a simple online store? of course not. As long as the business performs and grows, the share price of the business will always goes up as confidence grows. Using your simplified concept, you will never invest in gems like APPLE, QL, TOPGLOVE, AMAZON etc forever as you have screened youreself out of the keyword PE. businesess that keep on growing and growing will ALWAYS command a premium. Especially those with a huge moat.

QL in:

2006 Earnings 24 sen, share price of 4.86, PE of 20 (220 million shares)
2010 Earnings 27 sen, share price of 3.51, PE of 13 (390 million shares)
2018 Earnings 13 sen, share price of 6, PE of 46.15 (1622 million shares)

in the meanwhile, the revenue and earnings growth went from:

1 billion, 48 million in 2006
1.4 billion, 106 million in 2010
3.26 billion, 215 million in 2018

my question is SSLEE. how can you use PE to define the future of a company? or if a company deserves it or not? share price is guaranteed to go up if the business fundamentals perform well. If you pay pe50 for a wonderful company today, you will probably far more for the same company tomorrow, if it continues to grow and grow and grow.

THANK YOU.

>>>>>>

Posted by Sslee > Sep 13, 2019 12:30 PM | Report Abuse

Dear 3iii,
My Golden Rule of Investing: “Companies that grow revenues and earnings will see share prices grow over time.”

May I ask, in order for company shares to deserve a PE of more than 50X what should be the yearly growth rate of revenues and earnings?

Do QL deserved PE of more than 50X with it past, current and projected growth rate? and with CAPEX more that the net profit?
Long term borrowings (LT Debts/Total Equity): 30%

Thank you

Posted by (HK1997 again) Philip > 2019-09-19 01:17 | Report Abuse

Here is another example:

INSAS

2006 share price 0.38 cents 163 million revenue 21 million profit 618 million shares outstanding PE 12.6
2010 share price 0.53 cents 423 million revenue 60 million profit 660 million oustanding shares PE 5.88
2018 share price 1.00 cents 341 million revenue 90 million profit 663 million oustanding shares PE7.4

the question here is why has INSAS been on a low end of financial community analysis of PE value? The exact reason escapes me: but I will try my best to explore:

1) The businesses that INSAS is in is not a growth industry, therefore the prospects are low and not expected to warrant a high PE (as seen from revenue and earnings growth from 2006 to 2018)
2) INSAS management has not found the ability to turn profit into more future revenue and business units (as seen from growing NTA but management unable to grow business). sagging revenues and sagging profits will deter investors, unless point 3 is done.
3) if unable to grow business units, management should return unused capital back to investors in terms of share buyback/dividends. This is not very apparent.

Here is my point, if you know the future of INSAS, and you treat it as only a fixed deposit account, when matured in february 2020 you will take it out and get back your premium, would you pay a higher PE for the company? Probably not. You will in the end pay the exact amount of the business itself with no premium for the future.

PE cannot tell you about the future of the company, but it can tell you how the financial community thinks about the future of the company,

Thank you

Posted by qqq3 > 2019-09-19 01:46 | Report Abuse

this forum too long dominated by low PE investors... time for some reeducation

Posted by 8888_ > 2019-09-19 02:44 | Report Abuse

If PE too high can drop like what D Lady did yesterday?

Posted by Icon8888 > 2019-09-19 05:16 | Report Abuse

Dutch Lady is heading back to RM30

Grossly overvalued at this price

It has corrected from 70 to current 56 over just few weeks and looked like more to come

Posted by Sslee > 2019-09-19 09:07 | Report Abuse

Dear Philip
Thank you for your explanation on PE and the example given, I appreciate your explanation.

Please also do not mistaken that I harbor any bad intention on your QL, I only use it to test out professor 3iii how he measured quality and gruesome company.

Please allow me to explain my investment thesis is trying to get a return better than Bank fixed deposit rate either by dividend or share price appreciation and the company I invested in must have a strong balance sheet.

I quote from 3iii, “SSLee is a novice in investing. Still a lot to learn. A very long journey to travel still and he is obviously taking the less productive route.” I admit I had made many past mistake and my current concern is to survive and then prosper.

I was a business development manager before and had done and make presentation on project flexibility study. The common term for reference is pay-back period. Hence naturally I equate PE 50 as pay-back period of 50 years if there is no yearly increase rate of return (growth rate). We then used the past 10 year market data available to project the best case and worst case growth rate to derive at the projected pay-back period.

Let’s compare: PE and Profit growth
Amazon:
2006 10 billion 191 million profit
2010 34 billion 1 billion net profit: Growth rate of 3.40X
2018 233 billion 3.974 billion net profit: PE of 182.28: Growth rate of 11.70X

QL
1 billion, 48 million in 2006
1.4 billion, 106 million in 2010: Growth rate of 2.21X
3.26 billion, 215 million in 2018: PE of 46.15: Growth rate of 2.02X

Insas
2006 share price 0.38 cents 163 million revenue 21 million profit 618 million shares outstanding PE 12.6
2010 share price 0.53 cents 423 million revenue 60 million profit 660 million oustanding shares PE 5.88: Growth rate of 2.86X
2018 share price 1.00 cents 341 million revenue 90 million profit 663 million oustanding shares :PE of 7.4: Growth rate of 1.5X

https://klse.i3investor.com/servlets/stk/fin/5183.jsp?type=last10fy
Pchem
2010 12.20 billion 2.2 billion
2018 19.57 billion 4.98 billion: PE of 14.93: Growth rate 2.26X

I do not claim to know about PE and now I am even more confuse on PE. Hopefully 3iii can explain what type of quality companies in Malaysia deserves PE of 50X and when it is time to sell these quality companies stock.

My intention and perhaps Icon8888 intention are noble as we only suggest perhaps d) market maker, movers and institutional buying is the cause for PE50X as they have too much cash chasing after perceived safe heaven “quality stocks” in recent year and it is not sustainable. Thus it is time for retailer to sell some of those quality stocks and keep cash as a form of investment as you can always buy back the stocks during discount day or you have to endure long period of price stagnation or regression until the next big catalyst of growth materialized.

Thank you
P/S: Investment is a very boring as watching the paint to dry. Sometime I envy trader Paktua and hng33, so please pardon me for doing some trading on Pchem to feel the excitement of trading.

Posted by 3iii > 2019-09-19 09:22 |

Post removed.Why?

Posted by (HK1997 again) Philip > 2019-09-19 10:37 | Report Abuse

This concept is wrong. This common term of reference is taught wrongly. You can use this for bonds or fixed income vehicles or buying a business outright.

Your concept of paying pe50 as unsustainable is also patently wrong, as any short term differences in earnings ( example bumi armada or sapura) where past pe and forward pe is destroyed by shareholder dilution, a sudden shift in industry prospects, or a suddenly force majeure which changes short term or long term pe ratios.

If you believe this common reference of the world is flat I do not blame you, but as proof to the contrary abound (and earnings multiplication turn pe50 now into pe50 in the future but with huge earnings growth), I would sincerely advice you not to bring others to this "pay-back period" concept.

Buying stocks signify risk. That risk is what we look at PE as a market indicator.

It doesn't make sense to use PE as a predictive method.


>>>>>
The common term for reference is pay-back period. Hence naturally I equate PE 50 as pay-back period of 50 years if there is no yearly increase rate of return (growth rate). We then used the past 10 year market data available to project the best case and worst case growth rate to derive at the projected pay-back period.

Posted by 3iii > 2019-09-19 15:22 |

Post removed.Why?

Posted by Icon8888 > 2019-09-19 16:08 | Report Abuse

Armada 33.5 Sen

Buffett wannabes laughed at me when I called buy at 22 Sen

They said Dutch Lady better quality woh

Posted by qqq3 > 2019-09-19 16:17 | Report Abuse

Posted by Icon8888 > Sep 19, 2019 4:08 PM | Report Abuse

Armada 33.5 Sen
============

because contrarians beat blue chips. Contrarians not easy to teach. It is to be applied by the pros....not for the novices, teachers don't teach contrarians to students, easy to teach numbers not easy to teach contrarians.

Posted by 3iii > 2019-09-19 16:18 |

Post removed.Why?

Posted by Icon8888 > 2019-09-19 16:38 | Report Abuse

34...

Posted by Icon8888 > 2019-09-19 16:39 | Report Abuse

Nobody wins argument in stock market by arguing

You win when you make money

Posted by Icon8888 > 2019-09-19 16:41 | Report Abuse

Sochai now regrets

"Should have sold my high PE stocks and buy armada..."

: (

Posted by Icon8888 > 2019-09-19 16:51 | Report Abuse

Everyday talk warren buffett but cannot make money...

Posted by Icon8888 > 2019-09-19 16:52 | Report Abuse

345

: 0

Posted by stockraider > 2019-09-19 17:14 |

Post removed.Why?