Investing

Investment talk at RHB, Ipoh on 27th Feb 2017

In 1983 I started with Rm 200K capital after heart operation when HK crashed – need only bravery – no skill. Within 3 years I bought 46% of Kaiser Stock and Shares Co Ltd. HK.

2 After enjoying huge profit from HK crash, making money was not so easy. I read about Warren Buffet, Peter Lynch and Benjamin Graham. They all preached value investing. This method was too slow eg currently most property shares are undervalued due to oversupply in Malaysia. If you buy these shares, you have to wait many years for the share price to go higher than your cost.

3 That is why I formulated my share selection golden rule. The share I want to buy must show increasing profit in the last 2 quarters and the projected P/E ratio must be less than 10. I must also know what kind of business is the company doing. I will not buy GLC, oil and gas, Banks, plantation and property shares. You must now check your holdings to see that they comply with my golden rule.

4 My Track Record: I have been using my golden rule to become the 2nd largest shareholder in Latitude and Lii Hen both went up 800% and also I was 2nd largest shareholder of VS went up 550%, owning 102 million shares as shown in 2015 annual report.

5 No share can go up or down indefinitely for whatever reason. Don’t sell if it continues to show increasing profit. Sell as soon it shows reduced profit.

6 Three person buy same share at same price and same time can get 3 different result. A day trader will sell when its price has gone up 20 or 30%, a normal investor, would be happy to sell if the price has gone up 100%. But a super investor will not sell as long as the company continues to show increasing profit. That is how I managed to buy so much of Latitude, Lii Hen and VS Ind.

7 our brain has 3 basic function Auto, Emotional and logical. The auto function is to control your breathing and blood circulation. If everyone can control his emotion and think logically, all shares will be fully valued, But that is not the case. That is why you can always find undervalued cheap shares to buy.

8 Beside FA and TA must have some business sense to be a good investor. Do not buy or sell blindly.

9 When do I sell? As I said before, I will not sell as long as the company continue to show increasing profit. As soon as the company shows reduced profit or when a lot of people are rushing to buy like crazy, I will sell.

10 Trend – never buy down trend because you don’t know when the price will go higher than your cost for you to sell to make profit.

11 Always buy up trend because you know the price will continue to go higher and you can sell to make money.

12 Use margin finance if you have the experience. Margin finance can help you double your profit. Remember it is a double edge sword.

13 RHB representative will talk on margin offer at 4.8% pa interest rate.

 

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