Timed the Market

A lot of Warren Buffett followers argue that timing to buy stock is less important as compared to buying under value stock. According to this group of investors, they are prepared to ride through the ups and downs of the market. If a stock is brilliant, they don't mind to practice buy and hold strategy. To them finding a good stock is more fruitful as compared to trying to time market entry.

I am a big fan of Warren Buffett. Did Warren Buffett timed the market? I had asked myself this question previously. My conclusion is Warren Buffett did timed the market. He always bought stocks during down turn and practice buy and hold for long term investment afterward. So people saying Warren Buffet did not timed the market is not right. The different is he only timed the market during crisis. He seldom time for a minor correction because short term up and down is unpredictable. However major correction is unavoidable, that is why he is prepared with huge cash pile for big buy during crisis. He bought Washington Post in year 1974, Coca-cola in 1988 and most recent GE and Goldman Sachs in 2008. If he did not time the market then why he always purchased stock at downtime?

I did write a post regarding a sizable correction every 3-5 years and a major correction every 10-12 years. So should we take advantage of it or ignore it totally??

I sold 70% of my stocks at mid year of 2008 and start buying back from end 2008 until early 2009. Just purely luck. Good timing did help a lot.

Don't forget that we, small investor, don't have constant big cash flow to invest as compared to Warren Buffett. Your monthly saving might be negligible compared to your portfolio, how you going to rely on that? To me, portfolio management and applying appropriate strategy are very important. Especially when your portfolio is already sizable.

Therefore, don't time the "kacang putih" drop, but time for significant correction. Normal day just hold on to your good quality stock, preferred growth stocks or growing stock (mid teen is acceptable) with good dividend.

Value investing did not mean that you cannot time the market.

I wrote this because a question posted to me.

Glove Industry

Few days ago, Am Research issued a report on the glove industry. It raised its concern on the over expansion of the industry players like Topglove, Supermax, Kossan, Hartalega and others. Good job by Am Research, it pointed clearly that there might be margin squeeze due to the over expansion which may cause supply excessively more that demand, appreciation of Ringgit Malaysia and increase of raw material cost. It argues that the profit margin of these companies might be “normalized” to previous level before epidemic of H1N1.

A friend of mine call me, he said he intend to take this opportunity to buy more Topglove and Hartalega. I asked him, do you agree with the arguments of Am Research? I warned him that what Am Research pointed out make sense at surface. I said if you are no sure than what is the reason to buy more, then don’t buy? Then he asked for my opinion, my view will be as below:-

1. This industry still will grow (this market will never shrink – especially for disposable type). There are still huge potential from China and India market due to their level of awareness. The demand of latex glove from these market will increase substantially. While nitrile glove will gain more footings in developed country like US & Europe.

2. Over the past years, glove makers are growing under this so called ““normalized” period of time. So what is so special about the current state of demand over supply for the previous few months? Public Bank is growing year after year although margin is under squeezed, because the overall market is still growing; and it is able to eat into other players’ market share. Similar to glove industry, the most efficient player (latex glove – Topglove, nitrile glove – Hartalega) will grow more than the average growth rate of the industry. They are able to take market share of others. Stay away from inefficient players.

3. The business franchise of this industry still intact. There is no substitute for their product, it so simple. They also still able to pass the cost increase and the Ringgit appreciation to customers. Which business in Malaysia possesses these competitive advantages? Just let me know, sure I will bet big on that.

4. Trust the best captain of this industry instead of analyst. At no time an analyst will know the business better that the player. Analyst will remain as analyst; the businessman will make more money. As investor just applied business-like investment approach and strategy.

I definitely welcome the price dropped, and ready to buy more if the price is right.

两个知讯

经常放工回家的时候都会听 988 的 6点财经短讯，.....今天综合指数报 1300点，上升股有 275支，下跌股有 280支，380支股平盘，560支股没有交易......哼我到底有没有听错，有五百多支股没有交易？？ 现在是什么行情了，已是1300点了还有那么多股没有交易？

最近 bursa malaysia 刚刚一些交易数据，本地机构投资公司的交易共占了总交易量的 55％，外国基金占了25％，而本地散户只有15％。

看了以上两个知讯，你有何感想？

我的解读，
1. 股票流动量的确是个问题，可以说只有大概 20％ 的股票是 efficient罢了，不要以为买了冷门的 ＂价值股＂就一定会有钱赚。

2. 没有机构投资公司留意的股票是不会上的，尤其是小资本的公司，本地加上外国的机构投资公司已经占乐 80％ 的交易了。

high probability （高可能性）

之前我说了high certainty （高确定性），现在要谈谈 high probability （高可能性）。因为高确定性的投资机会不会常出现，你可能等了一整年都没有一次机会。退求其次，高可能性，也是不错的方法。

有研究显示，长期买低 PE 的股票也可以赚钱，这显然这一类的股票不乏追随者。但这结论太过草率了，因为也有大把低 PE 但赚不到钱的股票。所以我们也应该 study 一下到底是那一些原因是 低PE，然后又会上的股票。一般说来，原因不外以下几个：－

1. 公司的盈利可以成长
2. 可以接受的管理层
3. 可以接受的 balance sheet 和 cashflow

今天说说刚刚上市 JCY，因为 book building 的价钱定在 RM1.60，散户的买价只有 RM1.52。它预测今年的盈利有大概 300mil，EPS 有 16仙，所以 PE 大概是 10。因为 IPO 有抽到，也开始有问问在 western digital 工作的朋友。结论是说它的生意模式就是 volume game，就好象 topglove，low cost producer win the game，竞争者要代替它也不容易。多年来它还可以成长，又开始 bid samsung 和 hitacii 的和约，符合以上几点。本来想赚一点水钱就卖的，现在决定不卖。

原因就是有高可能性会有钱赚。

业绩数一数

又过了业绩报告的季节，是时候评估下自己有投资的公司或有留意的公司。

表现出色的有 CIMB，Hartalega，LPI 和 Allianz 。平平稳稳的有 PBB，Aeon。差强人意的有 Digi 和 Jobstreet。还没有公布业绩的有 PPB，Tanjong 和 Topglove。开始留意的有 JCY 和 F＆N。

cimb 强者归来，打从 2003年上市以来，买卖了三次，虽然有钱赚，但看起来，卖掉它都是错的选择。第一次卖是不相信 nazir razak 可以改变 联昌银行（BCB），第二次卖是为了增持现金 ，第三次卖是因为已经赚了。不得不相信 nazir razak 的能力和关系。

Hartalega 表现一流，未来应该可以强劲成长，股息也在增加中。产品创新 （innovation）和 生产技术不断改进。如果无意外现在的七塊多也不算贵。

LPI，也是买卖了三次，卖掉它是错的选择。适度的成长和高股息提供了不错的回酬。唯一担心的是成也郑鸿标，败也郑鸿标。如果没有了 public bank 的 platform 和支持，它是不是可以继续成长？？

Allianz 业绩出色，但现金流不是很好股息也不高，要赚钱真的要有耐心。

Public Bank 我的 core holding， 也是坚持价值投资的支柱。多年来它未成让我失望，会买卖，但长期买会多过卖。

Aeon 成长得看经济的大环境，股票大跌时要买的没轮到它，股票大上时要买的也没轮到它，还是忘记它吧！

Digi 已不在成长了，股息还不赖，看看 ３G 是否可以帮助它成长，不然就留给喜欢高股息的投资者吧！

Jobstreet 虽然有竞争能力和很好的 balance sheet，但它还是经济循环股，加上 monster 的入境，赚幅应该会继续的跌，也要看经济的大环境。

今年有什么策略？

朋友长问今年有什么策略？说真的我还想不道有什么策略。以现在的股市我不敢在加码，也没有个别公司特别有兴趣。想了想，还是增加现金的部分，所以卖了一点点的 PBB 和 PB gold account 的黄金。

新年其间看了不少报章里一些人包过分析员和风水师对今年的看法，大致上结论只有两个：－

1. 今年的股市会特别波动，不会像 2009 年一样大起

2. 今年选股要特别小心，因为整体股市不会全部一起大涨

老实说以上的结论根本不是什么结论，相似客套话多一点。股市是不会说今年比较波动，去年波动不多，明年股市会较平稳的?股市唯一不变的就是波动，这是不变的原则。Ben Graham 说的 投资者应该心理上和金钱上准备好来面对市场的波动，这就是我们应该做的事。熊市有什么可怕？可怕的是你没有准备好。牛市也不必怕错过，你已拥有不错的股票来享受。

为什么只要今年选股要特别小心？？ 是不是明年就可以随便买呢？？ 买股几时都要优先考虑到素质 （qualitative），尤其是在大马，烂苹果太多了。最好是符合 philip fisher 说的 有素质的成长股。

PE + Bench Marking + Appraisal

这篇可能是我今年的重要发表之一，送红包。

每一个有买股票的人都常听到什么是PE。关于 PE，有些人认为它很好用，有些人却认为它不行不准。那到底是谁是谁非呢？

在股票论坛和看了别人的部落阁不短的时间，但却不曾看过有人真正把 PE 解释的或如何利用它说个明白。其实 PE 本身并没有问题，问题是在用的人。人通常都是一样的，赚钱的就说它好用，亏钱的就说它没有用。PE 就好象是你做 modeling 一样，都是 model to ideal situation （假设完美的前提下）。

那么完美的前提又是什么东东呢？
1. 假设公司没有债务
2. 假设公司的盈利都是有素质的 （quality of profit）
3. 假设公司的管理层都是能干的 （competent management）
4. 假设公司把盈利再投资或归还给股东
5. 假设公司的盈利就是 cash flow （profit = cash flow）
6. 等等....

看了以上，你还会认为每一间公司的 PE 是＂应该＂一样的吗？？

我曾经说过，要用 PE 你一定要 bench marking，比方说一流的公司 PE ＂应该＂是 14－16，二流的是 10－13，三流的 8－9，如此类推。单单是 PE 还不够，可以加上 bench marking 就不错，如果再加 appraisal 会更好。

为什么说要再加 appraisal 呢？ 你必须了解股票市场都会 appraise 高成长 和 给高股息 的股票比较高的 PE （16－22）。如果你买的公司 已经 trade 在 PE 20 了，不过它还可以继续高成长，那你根本不应该卖。如果高成长的公司 trade 在 PE 16 以下，那是不是应该买呢？？ 几年钱 VADS 已 trade 在 PE 16 了，了解这间公司后我还是照买，两年后上了100％。

简单来说是 PE + Bench Marking + Appraisal