The video below is of Peter Lynch, former manager of the Magellan Fund at Fidelity, where he answers a few questions during a 2002 interview with Louis Rukeyser. This reminds me of an experience which I shared in the book
Tradeview
"Having the opportunity to invest in good companies that deliver consistent earnings growth requires good timing and some luck. With over 937 companies listed on Bursa, only a handful have the qualities of these three companies. Once you let it go, it is unlikely you will be able to buy back at a reasonable entry price unless luck comes your way. I admit that my youth and impatience contributed to my judgment error. After selling these two companies, I could not find a replacement in the same category for a long time. However, I did use the profits to invest in Allianz during the selloff in April 2018, when the share price traded below RM10.
Through this experience, I have learnt that this theory propagated by short term traders, “if you sell now, you can always buy back at a lower price later” is complete malarkey. Short term traders’ mindset is all about immediate profits and they will very likely miss out on consistent rewards."
Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 4, Page 40
Warren Buffet in the video above points out "Some people are not actually emotionally or psychologically fit to own stocks but I think more of them would be if you get educated on what you're really buying which is part of a business and the longer you hold stocks the less risky they become."
In times of uncertainty, I would turn to the best minds for comfort. No matter how many years I have invested in the market, there will be moments of weakness or lack of confidence in my judgment calls. I am after all human. However, the past can always teach us a lot of things. So do not, let the present affect your outlook towards the future.
"Past experience has always shown that the stock market will normalize the gyrations in due course when the forces of demand and supply reaches an equilibrium. If the stock market is not going your way but you are convinced that you have invested in a gem, you can extend your investment horizon further. It will give you more comfort to hold on, sit tight, and ride the rebound in time. No one can time the bottom. I, for one, definitely cannot do it. However, as long as I can buy into a stock at a level on which I am comfortable with, I am unlikely to pass on the opportunity."
Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 10, Page 116
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Li Ka Shing : Cashflow Is The Most Important Thing - Hong Kong's Legendary Tycoon (2016 Interview)
June 08, 2021Li Ka-Shing is one of my favourite businessman of all time. If I must pick the top 2 Asian businessman that is my role model, it would be Li Ka-Shing and Robert Kuok. Li Ka-Shing has long been regarded as the best "Chinese" businessman of all time until of course the recent wave of technology giants that have surfaced in the past 10 years. Why I look up to Li Ka-Shing is not only his business prowess that earned him the nickname "Superman" in Hong Kong but because of his life philosophy and business approach.
He is the epitome of rags to riches and he done so via humility, hard work, sacrifice, brilliance and foresight. His impact is far reaching as he is one of the few Asian businessman who have successfully diversified outside of his home country and succeed globally in his business ventures. Today's topic is not so much about him but rather my emphasis on cashflow. Through him, I learnt the importance of cashflow as it is the secret to longevity of a business in order to sustain through good and bad times.
When I choose to invest in stocks, one of the key metrics I look at is cashflow, specifically "operating cashflow". It is part of "The Money Equation" and believe it or not, it was also the compass that steered me away from companies like Serba Dinamik. In fact, before Serba Dinamik issue surfaced, as early as 2020 I have highlighted to my readers that something is amiss. It is not about proving I am right or how clever I am. On the contrary, I would like to use the opportunity to point out the importance of cashflow when one decides to invest. One can manipulate many things in the company accounts such as receivables, order book, assets value but cashflow is one of the main metrics that you either have it or you don't.
“Operating cashflow is like a blood that flows through the body. The heart will stop pumping when the blood run dry.”
Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 2, Page 24
The Big Short (2015) - Dr. Michael Burry Closes Scion Capital (Final Letter to Investors)
June 03, 2021"The Big Short" is one of my favourite financial markets genre movie. It tells the story of Dr. Michael Burry who was one of the few and earliest fund manager who foresaw the toxic assets of subprime mortgage 2 years ahead of everyone else. He also foresaw the eventual collapse of the property market which led to the 2008 Financial Crisis dubbed "The Great Recession". Most people would know him from the movie as he was relatively obscure prior to the meltdown of the markets.
However, looking back at his outstanding investment track record, he is a true fundamentalist and value investor who subscribed to Benjamin Graham's investment philosophies. Despite so, when he was taking the position to short the market via credit default swaps (a form of derivative which insures against the toxic subprime mortgage assets packaged together by investment banks and sold to investors), his clients started to lose faith in him. This was especially given the entire market was bullish on property and these toxic financial assets. He was a contrarian and he went the other way. He was very much detached from the investment community as a whole. He was alone. Ultimately, he was right. It took awhile to get there, but eventually he did. When times are confusing or challenging, I would always remind myself with inspirations from legends like him. Enjoy the video.
“Winning can mature you, losing can age you”.
Investing in a stock market today may seem like a simple act of inputting numbers online, but the reality is that it does take a toll on you emotionally and psychologically. An investor must be prepared mentally before embarking on this journey as it requires effort, commitment and diligence. The onus is on you to protect your own investment and capital. If you are not prepared to do so, you face the risk of a complete loss of your capital. One is better off leaving the money in fixed deposit or with professional fund managers than to throw away your hard earned money.
Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 10, Page 117
20 years since the Asian Financial Crisis, a look back at how Malaysia's then-Prime Minister Mahathir Mohamad defied the International Monetary Fund, and his subsequent clash with his deputy Anwar Ibrahim. Has Malaysia come out of the crisis for better or for worse in the long run, as a result of his rejection of the IMF's measures?
One of the most frequent questions received from my readers : “The share I bought recently, the price is falling. Should I cut loss or buy more?” My reply will always be : “Why did you buy this share in the first place?”
I think this is the most basic question one have to ask themselves when investing in a particular stock. If you do not know why you buy the share or you have absolutely no sound justification to invest, you are as good as flying blind. Hence, why am I emphasising this now? Because this question will determine whether one should average down / buy more of the same stock where the price is falling. Buying a stock that is trending up is easy - you simply just chase. However, buying a falling stock is truly an art that is very hard to master. Have a look at this video by Peter Lynch.
Passage from "Once Upon A Time In Bursa : The Money Equation", Chapter 10, Page 110
Ray Dalio said being invested in the market for too long is dangerous as the market is becoming increasingly difficult. This is how he thinks investors can win in the share market. Enjoy the learning experience. Once again, these are just my humble sharing, feel free to have some intellectual discourse on this.
Following the good response and feedback on Tradeview video series, I will continue to bring forth curated contents for your learning experience. I continue with Warren Buffet's advice on striking it right even if he rarely swings. You do not need to enter many stocks. Just a handful of good ones and you will be a successful investor.
Many readers and new joiners ask me about Value Investing. Majority of them are not exposed to investing long term. Most look for Fast in Fast out, Punting and Speculating as their means to build their capital. Personally, I do not think that is the best way to start. I am strong advocate for value investing philosophy. Hence, I would like to start a series of video sharing for purposes of learning and knowledge exchange. Do enjoy the learning experience.
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