Value Investing 01 (May 08 - Dec 08)

[la papillion]

Cheng, buy 4D also 50-50 mah. You either win or lose Hahaha! Can go buy any stocks also, either win or lose

[Cheng]

eh my thread tio hijack with pictures already hahaha....

[Cheng]

Cheng, buy 4D also 50-50 mah. You either win or lose Hahaha! Can go buy any stocks also, either win or lose

Cannot man, TOTO or 4D probability not 50-50 hahaha...

But seriously, if traders are disciplined enough, they can earn money even at 25% chance of success.

[blid2def]

eh my thread tio hijack with pictures already hahaha....

Haha sorry sorry. Like watching TV mah... got commercial breaks. Okay, back to Value Investing.

[HengHeng]

My feeling to value investing is the same as my motto.

Market sentiments always rules the market before fundamentals.

Of course there are times where fundamentals prevails but that is if market sentiments allows it to.

One simple example , the recent subprime issue. It has almost nothing to do with us but why are we affected? Why do we need to follow global economies if fundamentals are sound?

Well at the end of the day , i still follow my rule of thumb.... beh ki ji loh beh lou jiu ki.. LOL

i don't have as much experience as compared to the da ge's in the forum but i would share what little knowledge i know from things i learnt.

[Cheng]

Generally the consensus seems to be that value investing is close to impossible in Singapore market because of the low volume, small market and lack of sophistication. Value investors also generally get more flak as compared to other types of investors/speculators (for some reason).

I am not here to debate the merits or demerits of value investing vis-a-vis other methods, but I think value investors should be accorded some respect for their belief system even though it may be flawed in certain ways. We are all learning and a value investor is human too, thus is bound to make mistakes and "slip up". This does not mean the method does not work, it is simply the practitioner who needs to improve.

I do note that other methods which incorporate some form of market timing or market psychology reading do seem to be more popular than "pure" value investing. Perhaps it's a sign of the times.....

I agree with you mw. I'm a fan of value investing and everyone has to constantly keep learning. I admit I'm not the pure graham style but im the buffett-fisher-peter lynch style haha...

This is my first bear market and has taught me a lot about market psychology and value investing.

To all value investors alike, if the financial results of your company are doing well but the prices are not reflecting what you think it is worth in the future with a huge margin of safety, do not feel troubled by the bear. History tells us that nothing is new, the market shall rise again. Each bull usually runs further than the previous 1. Correct me if I'm wrong.

PS: mw, im a fan of yours also

[Cheng]

My feeling to value investing is the same as my motto.

Market sentiments always rules the market before fundamentals.

Of course there are times where fundamentals prevails but that is if market sentiments allows it to.

One simple example , the recent subprime issue. It has almost nothing to do with us but why are we affected? Why do we need to follow global economies if fundamentals are sound?

Well at the end of the day , i still follow my rule of thumb.... beh ki ji loh beh lou jiu ki.. LOL

i don't have as much experience as compared to the da ge's in the forum but i would share what little knowledge i know from things i learnt.

US is a major consumer of global products and services. If their spending slows down they are going to affect global economies, so fundamentals are affected as we can see from their recent drop in earnings. The low market sentiment in this respect is logical. However if earnings are increasing excluding nonrecurrent items and prices continue to drop, it is illogical. We should investigate it carefully to see if there are any other negative reasons. If no, it may be a good buy. Value investors should also be cautioned about catching a falling knife(buying when price is falling fast) cause you will definitely get hurt. This is taught by Peter Lynch.

Heng heng, I like your rule of thumb, very direct haha...

[Cheng]

Hello Cheng, your post certainly generated alot of views..

Let me be the first person to welcome you to Huatopedia and thanks for your first posts. We looked forward to many of your posts in the future.

FA/TA, growth, value whatever lah... as long as it makes you money and minimizes your losses in a bear market, that is a good strategy.

We all have to learn our way thro' the market cos' it is the best teacher

MM, I've been reading huato and have learnt a lot from your posts. Thanks!

[Cheng]

well said, grandrake... it is HA here man....
HA = Huatopedia Analysis... as long as you can make money, well... thats it!

well, with regards to the initial post... i think the examples cited might be well... ermm... personal opinion / analysis of what mr WB is thinking? I try to be careful, when I quote examples, cos even with the full context, the takeaway is different for everybody...

anyway, i much prefer mr munger's explanation of the stock market being the horse-racing track (sortof)... again i run the risk of mis-quoting/mis-understanding mr munger...

from my impression, mr munger compares the stock market to the horse-race, where the odds and bets are always changing.... and there are always people who bet against and bet for the particular horse....

most of the times, the house wins, coz there is a 'tax' / 'fee' when placing bets... so the odds is against the gambler, rather than the house...

anyway, there are occasions, when the odds is very skewed, to the benefit of the gambler, but it takes a very experience guy to figure out when such a situation arises... most of the times, i think mr munger just sifts through the numbers, understand them and try to wait out for the appropriate situation...

so, it is not impossible to beat the house and win big, just that it takes a lot of hardwork and experience... even then, there is always the risk of mis-calculating the odds...even for very experienced guys...

oh just for the record, i'm now more belong to the FA/VA camp... but on occasions previously, I sometimes think I'm more TA... of coz there was a 'dark' period that I consider myself GA (gambler analysis)....

have fun,
fc

I am of the opinion that investing should be flexible. Cannot just stick to one method of valuation because all companies are different. The probability of your prediction being correct is also different depending on how well one understands the company. That probability is our margin of safety. One can be 80% sure or 50% unsure. FA/TA/VA are just different models of thoughts, their sole purpose is to look for good companies with ultimate increase in stock price. We can combine them or use them independently. If I'm a value investor, TA may be my 2nd opinion vice versa.

We don't want to catch the disease called "the man with a hammer syndrome".

[Cheng]

mei mei is speaking from a Brand perspective,

i would define Value as the freeplay rights that a listed Company is able to separate/ extract its Brand identity, further exploit on its Brand (& the customer goodwills aspects that it has built up) ... e.g. it is the free use [licence] of the Virgin Brand and replicate this on multi-businesses - in dynamic situations.

for example, Virgin has detailed an agreement between themselves and different entities it represents. This kind of agreement would mean to re-brand all consumer operations with the Virgin brand within one year of the Virgin board approval of the brand license. Why do they need to do Valuation in their portfolio? Because combining their businesses will make them the first UK company to offer quadruple play to customers – Virgin Airlines, Virgin Mobile, Virgin Broadband, Virgin TV, Virgin Records ... (this list can be endless)

So, the different Virgin business entities will need to enter into a 30 year exclusive brand licence with Virgin Enterprises Limited for the use of the Virgin brand. And, Richard Branson’s Virgin Enterprises stands to make 0.25% of ntl Telewest revenue from licensing the Virgin brand to ntl Telewest, and at minimum £8.5million per year.

i know, many aisa brands are unable to capitalise on their Brands due to the lack of critical mass, as musicwhiz has mentioned - it is the small market size - who knows? MZ can be a good marketeer?

What if, Mr. Ho [or the bank] sells off the Banyan Tree to another hospitality player? he still holds the Banyan Tree Brand Licence, right? he explictly mentioned this ideology in the Dialogue Forum. (oh, i don't know if he can be as rich as Richard B.?)

What is deemed as the instrinsic value to the buyer? this will need to be rated, audited, and valuated through complex metholody. Yes, as Winston has highlighted, these are M&A opportunities and consolidations ... hence, intangible assets [values] will be recognised by investors/ buyers?

for example, in China micro-environment, we have OEM players to become OBM ... (own Brand Manufacturer) ... then, we are now shifting our gears to talk about Value in the eyes of the Chinese being able to grow the brand business into sustainable brands ahead of times.

my bottomline: sustainability is value.

San Jie Jie, I recently realised that value investing is very profound, not as direct as TA, I may be wrong.

Your Brand Perspective I dont really understand, perhaps my brain is not wired this way. Would prefer if you explain in another way like how the brand generate more cashflow or sustain it's market position. It is just another way of valuation. Yours would be more like liquidating the company?