Buy and hold is dead?

Buy and hold is dead. I heard people are talking like this a few months back. My opinion is this may be right if you taking a short term perspective. At the current market state, is more easy to trade rather than buy then hold for a long period to realise the "intrinsic value" or "fair value". If you apply trading strategy for last few months, you may sit on handsome profit. People tend to talk louder when they are making good profit. I also have to admit that trading is more appropriate currently. If you traded correctly, making >20% is not a mammoth task, and you are on par with all the investing gurus. There are no reason not to shout about. I have seen enough people or so called "investor" huhaa at bull market but eventually disappear after bear market.

Investing in stock market is a long term business. To survive or making money in stock market is not how much you made in this year alone but consistency of profit you make year after year. All the gurus build their wealth and reputation due to they had achieved a long history of consistent above average profit. Any given year there are sure some "smart alec" is making more money then these gurus, but where are they?

The gurus must sure have some strategy to out last the bull and bear market that is unavoidable. And i am sure that their strategy is not short term oriented, since they are building wealth and furtune over a long duration. I am not against trading, but you have to limit your exposure. Is fine to trade 10-20% of your capital, but dont forget you must also ready for long term cycle of stock market.

To trade or not to trade? Is up to you. Frankly, i spend lesser time in stock market for last couple of months. The reasons are is stock market is high although is not forming bubble yet (my opinion. Contrary to year 2008 the market was traded above 1400. i sold most of my stock) and good buy would not appear now. The other reason is i spend more time in property investment.

Streamline of Portfolio....again

I have streamlined again my stock portfolio. My core holding reduce to Hartalega, Public Bank and Allianz. All my Topglove has been converted to Hartalega and Public Bank. The reasons i did so are nitrile glove is cheaper than latex glove, there may be foundamental change of latex glove producer because high raw latex price. It look like latex glove going to lose its edge. I dont foresee price of commodities going to drop in the offing. This going to hurt latex producers, especially players are not competitive in their price. Although Topglove is still the low cost producer of latex glove, and nitrile glove capacity is still unable to eat big market share from latex glove, but over time it will. Can you imagine that a premium product (nitrile glove) is selling cheaper than non-premium product (latex glove), what going to happen? Hartalega going to enjoy the wide profit margin and demand increase. I consider Hartalega is "able and lucky" as describe by Phlip Fisher. Bullish on it.

In early of year 2009, i converted my LPI to Hartalega. After that both also flying high. However as on today, net profit of Hartalega is more than LPI. Is a matter of time the market capital of Hartalega will outpace LPI. The distintive difference between the two is LPI paying good dividend, Hartalega is growing faster. Which one you prefer is depend on which camp you in.

For same sector comparison, Allianz is making comparative net profit as to LPI, however it is trade at steep discount to LPI. The market capital of Allianz (inclusive if Allianz PA) is aroung 1.4 billion but the market capital of LPI is around 2.5 billion. LPI is paying good dividend but Allianz is going to pay good dividend after settlement of loan from parent company. Again it depend on which you in. (P/S: Allianz is a low liquidity stock)

As for Public Bank, i knew it not going to fly but it still able to grow and paying good dividend. Again is balancing value and growth stock. It still not trading at the reasonable prospective PE (i peg at 16) of a well run business.

Underperform - Year 2010

Is about 2 months i did not update this blog. I am not out of the market but less attention. I did make some adjustment to my portfolio, this is due to i need more capital for my property investment. My holding currently just consist of Public Bank, Hartalega, Top Glove and Allianz. I am still holding stocks consist of value and growth. It look like i am going to underperform the market for the 1st time in 10years since 2000, but it did not bother me at all. I am not chasing the short term performance. I rather to stick to my strategy and investing method which has beaten the market for a long duration. I am looking at long term competitive advantages of my holdings not the short term share price fluctuation. As long as i am satisfied with their competitive edges i will hold them as long as i could. I am long enough in the stock market, i knew how to beat it in long run.

For property investment i just bought my 2nd and 3rd property with friend. One is for rental income and the other one is for capital appreciation. I prefer not to talk too much on property since i am still learning, limited sucessful case able to share. Furthermore, there is a debate on property bubble or property super cycle.

Allianz 的 appraisal change

Allianz，最近买入了这间公司。有朋友问说，它也不怎么样 undervalue，underwriting 也不是非常出色，dividend 也很低，怎样看都不是很值得？？

保险公司是我一路以来都有留意的行业。打从10 年前看了评述 warren buffett 的书后，就买了 P＆O 和 LPI，也曾买过 Kurnia Asia。亏过也赚过。这行业的重点是管理层，只有好的管理层才能创造价值。

从cimb 那里买入普险业务后，跟母公司借了 490 Mil。问题也从这里开始，虽然是零利息的贷款。还有就是 bank negara 对资本要求的提高。为了解决这问题， Allianz 通过优先股筹了 611 mil。

那又有什么卖点呢？是 appraisal change。

通过优先股，它解决跟母公司的贷款 和 bank negara 对资本要求。从现在开始，它的盈利都可派发给股东。还有它的管理层也不差，形象会改变！

情绪切入法

Behavioral finance 华语我不知如何翻译，在佳礼的 Jeangrey网友 称它为情绪切入法。这东东的佼佼者是 bill miller 和 charlie munger。在美国 subprime 发生之前，bill miller 在这方面是非常出色的。

bill miller 在还未成为 fund manager 之前是读心理学的，在成为 fund manager 后，他把心理学的人性的弱点或盲点用在投资。在1985年开始，他就研究 warren buffett，benjamin graham 和 philip fisher 的学说，学的是 value investing （价值投资）。在他投资生涯的初期，多数投资在 old economy 的行业如银行和零售。在90年代中期开始，他把 value investing 用在科技行业上，买的公司有 Dell，AT＆T 等等，在2000年的科技泡沫前减持科技股。他的看法是 value investing 也可以用在这些科技股上。他的专长是研究投资大众对某些公司或行业有没有 mis－perception，而造成股价的 mis－price。

N年前，当 google 要上市的时候，他就马上成立了一个小组来研究 google。结果他得到的结论是市场或投资大众严重的对 google 不了解，也造就了 google 当时的 IPO 的 book building 被低估，他的平均买价是少过 100 美元。事后证明他的眼光独到，也赚了大钱。

他另外的观点有如 amazon 的 profit margin 和 Borders 同样是 8％ 是否也存在着 mis－perception 等等........

其实 behavioral finance 早在 benjamin graham 的 ＜inteligent investor＞ 一书出现，里面的 fear ＆ greed 也就是情绪切入法的一环。

当 Jeangrey 在两年前的佳礼发表，造成论坛的一小震荡，原因不外是人们没有听过，内心的求知欲望造成羡慕，也不停的猜测，不知觉中也掉入 behavioral finance 里的 mis－perception。我曾在佳礼说过 情绪切入法 只是 value－added，如果独立的在用会使你走入猜测股市短期的波动，那你就是在投机！！

我说它是 value added，是因为前提是你要会用 value investing！不然你会越踩越深，掉入别人或自己的情绪里。我也对佳礼的一些网友说，这情绪切入法不适合他们，因为他们的价值投资的基础不强，但听得进去的又有几个呢？

谁又会承认自己的基础不强呢？这也是人性的盲点！！！

新投资或加码

投资股票常常会遇到短期的投机（或投资）机会，这些机会不外是 IPO， M＆A，某些股票突然被压卖，贴士，他人介绍，突然发现某股被严重低估，某些行业股被抄......等等。

以我的过去经验，这些短期的获利（有时候还要亏）都比不上你继续持有或再加码你现在已有的股票。有时候朋友有叫我去看看某些股票，原因通常都是看起来瞒吸引人的，应该被低估，应该有可能被市场重估等等。我一般的回答都是买股票是不需要攒牛角尖的，你所谓的股票有没有比 hartalega，topglove， public bank 好？ 有没有比 hartalega 低估？ 成长有没有比 hartalega 和 topglove 高？以什么 basis 市场重估你讲的股票？

市场重估某股票（或 trade 在更高的PE）一般上只有两个原因：－
1. 高成长的公司
2. 给高股息的公司

看看 hartalega，它现在是 trade 在 prospective PE 10倍以下，高成长，cash flow 又强，市场重估的机会是不是更高呢？？

要买其他股票是别忘了跟你已拥有了的股票比一比，大部分时候加码比买新投资更好！前提是你拥有的已是一流的公司.

风险和质量

常常都会被问到如此的问题，为什么要买 topglove 和 hartalega，不买 supermax， kossan，adventa 或 latexx呢？为什么要买 public bank 和cimb， 而不买 ammb， hongleong bank 呢？这些比较起来较便宜也较值得！

如果投资股票是单单这样，那为什么还有大把人还在问如何长期在股市里赚钱呢？？ 里面牵涉到了风险和质量的东东。

风险，简单来说所有的数字包括 PE，NTA，Discounted Cashflow， margin of safety，Dividend yeild， balance sheets，cash flow statement，income statement 都不能有效的减低风险。有人说投资股票最重要的就是管理好你的风险，我很赞成这说法。看过不少人对这些数字了如指掌，不过还赚不到钱，分分钟还亏钱。很多人买股票的首要考量或出发点就是这股票可以上到多少钱，以这价钱买回酬有几多巴仙？我的出发点通常都是想想买这股票风险有多低，再来看它的价钱。

还有就是大把人认为价值投资重点是 margin of safety，然而它的中心点却是质量 （qualitative）。它包括如下：－


1. 管理层的素质 （competency of the management）
2. 营利的素质 （quality of profit）
3. Economic franchise
4. Pricing Power
5. 成长的行业
6. Low cost producer
7. Innovation
8. Efficient 的管理
9. 保守的 company policy