This is the Burning Question I want to ask also, Keyword is:
Build Long Term Wealth Slowly, Safely and Surely.
Thanks KC CHONG.
When everyone is making (big) money, and you don’t: kcchongnz
Author: kcchongnz | Publish date: Tue, 4 Apr 2017, 12:34 AM
“Mr Chong,
Recently, there are so many stocks with their share prices going up like rockets but I don’t own a single one of them. Many people are bragging about their prowess in investing, earning millions. Someone even tells me straight to my face that I am a low-class investor, for not buying certain share which has gone up a lot in price recently. How would you feel if you were in my position?”
Dear course participant,
Please recall when you first join my course and started to invest in the stock market. What was your goal in investing? Wasn’t it to build long-term wealth slowly, safely and surely following some proven principles and methodologies in investing?
Five months ago, on 2nd November 2016, I have sent to you a watch list of carefully selected 15 Magic Formula stocks for your to consider for investment for long term.
The portfolio of 15 stocks returns an average of 15.6% during the last five months, including all dividends. The median return is quite similar at 15.1%. This total return is more than 3 times the return of the KLCI of 4.8%, as well as the broader FBM Emas Index of 5.8% during the same period.
Over the last 5 months, I have also progressively given you a total of seven stocks, with detail fundamental analysis, valuations and comprehensive reports, to consider investing in. As on today, those stocks had an average return of 14.5%, more than double the return of the broad KLCI during the same period. Note the stocks were given and returns were progressively over a duration of 5 months, whereas the return of KLCI is from 5 months ago to 31st March 2017.
Hence you would have done pretty well too in your investment if you have invested in the portfolios of stocks in almost any combinations of them. I have shown you that all the stocks made positive returns, and most of them are of double digit returns.
More importantly, by investing in those good companies when they were selling cheap, the very essence of the Magic Formula Investing, entails very little risk and you could sleep well. That is what I have always try to instill into your mind all this while, haven’t I?
So, why envy others? Why should you regret? Have you forgotten what were your goals and expectation when you first invest?
In investing, envy of other’s great success and feel regret is a dangerous thing.
Remember that when someone talks about his investments, he rarely tells you about his losers.
“I made 300%, 500% with L. You are a poor investor as you did not invest in it”.
The above statement is glorifying. However, what is often left out is that they may have lost more in some other stocks; 50%, 70%, or even 90%. It is humiliating to admit that. Who would respect you anymore?
Hence, do what works for you and be happy with where you are. Remember what I have thought you the fundamental way to build long-term wealth, slowly but surely. I emphasize that again and again. Everything else is secondary and only leads to making emotional decisions built around greed and lust which have disastrous long-term implications.
Greed
Most investors want to dabble in the stock market and buy the latest hot stocks like KNM in 2007 when it was damn hot and selling at RM10 a piece, Hibiscus when it was trading at RM2.70 three years nine months ago, MPCorp when it was trading at more than RM10 many years ago, Asia Media when it shares price was more than ten times its price now 5 years ago etc. Look what happen to their share prices now.
http://klse.i3investor.com/blogs/kcchongnz/45373.jsp
Most of them had lost more than 90%. These were the hot stocks which greedy speculators were chasing in those times.
When speculators are making big money, they want to make more, much more, and in shorter time. They attend seminars organized by investment banks, “super-investor” to get hot tips. They are continuously bombarded with stories on how they had made use of other people’s money (OPM), at such a low cost, and made killings in some stocks. Those seminars are often lined up with pretty girls handling out forms to participants for margin financing. Yes, why not? Making money is so easy. why not make use of OPM and make much more, and in shorter time?
What is the problem with that? Yes, there are problems, big problems of propagating this to the naïve and uninformed public, enticing them to be greedy.
http://klse.i3investor.com/blogs/kcchongnz/92114.jsp
http://klse.i3investor.com/blogs/kcchongnz/82699.jsp
http://klse.i3investor.com/blogs/kcchongnz/79429.jsp
“The share has gone up 500%. It will continue to go up as long as the next quarter result is better. To be a super investor, you must buy more. You must “sailang”. Don’t worry about the price. Just buy”
Envy can also easily lead one to lust. Lusting, and “chasing performance” is a guaranteed recipe for disaster as an investor. For most of the time, the share price has already incorporated all information, and likely that the bulk of that cyclical gains in share price are already well exceeded its value.
Just look at the share price movement of Latitude Tree in Figure 1 below. The stock was chased up from RM6.00 to RM8.00 in a matter of a month. Most individual investors who lust for it would have bought at around RM8.00, before the share price plunged to a low of RM4.50, in just a few months when the buying stopped and selling for profit taking took place.
Strangely, when it is really cheap at RM4.50, few want to invest. Most like to follow the principle of “buy high, and (hope to) sell higher.
Figure 1
“Lusting” after past performance leads to “buying high” which ultimately leads to poor outcome in investing. This has been proven again and again in many stocks in Bursa, not only Latitude Tree alone.
Remember, trees don’t grow to sky.
Do not let envy creeps into you and makes you do all kind of silly things. Focus on your original goal, to build long-term wealth safely but surely. Make full use what you have learned in fundamental investing. Do not follow blindly from anybody. Do not chase hot stocks. Do not follow rumours, hypes and fads.
When everyone is making (big) money and you don’t, it is perfectly okay.
That is one of the “Golden rules” of success in investing.
Take care.
KC (ckc13invest@gmail.com)
Source: https://klse.i3investor.com/blogs/kcchongnz/119767.jsp
Recently, there are so many stocks with their share prices going up like rockets but I don’t own a single one of them. Many people are bragging about their prowess in investing, earning millions. Someone even tells me straight to my face that I am a low-class investor, for not buying certain share which has gone up a lot in price recently. How would you feel if you were in my position?”
Dear course participant,
Please recall when you first join my course and started to invest in the stock market. What was your goal in investing? Wasn’t it to build long-term wealth slowly, safely and surely following some proven principles and methodologies in investing?
Five months ago, on 2nd November 2016, I have sent to you a watch list of carefully selected 15 Magic Formula stocks for your to consider for investment for long term.
The portfolio of 15 stocks returns an average of 15.6% during the last five months, including all dividends. The median return is quite similar at 15.1%. This total return is more than 3 times the return of the KLCI of 4.8%, as well as the broader FBM Emas Index of 5.8% during the same period.
Over the last 5 months, I have also progressively given you a total of seven stocks, with detail fundamental analysis, valuations and comprehensive reports, to consider investing in. As on today, those stocks had an average return of 14.5%, more than double the return of the broad KLCI during the same period. Note the stocks were given and returns were progressively over a duration of 5 months, whereas the return of KLCI is from 5 months ago to 31st March 2017.
Hence you would have done pretty well too in your investment if you have invested in the portfolios of stocks in almost any combinations of them. I have shown you that all the stocks made positive returns, and most of them are of double digit returns.
More importantly, by investing in those good companies when they were selling cheap, the very essence of the Magic Formula Investing, entails very little risk and you could sleep well. That is what I have always try to instill into your mind all this while, haven’t I?
So, why envy others? Why should you regret? Have you forgotten what were your goals and expectation when you first invest?
In investing, envy of other’s great success and feel regret is a dangerous thing.
Remember that when someone talks about his investments, he rarely tells you about his losers.
“I made 300%, 500% with L. You are a poor investor as you did not invest in it”.
The above statement is glorifying. However, what is often left out is that they may have lost more in some other stocks; 50%, 70%, or even 90%. It is humiliating to admit that. Who would respect you anymore?
Hence, do what works for you and be happy with where you are. Remember what I have thought you the fundamental way to build long-term wealth, slowly but surely. I emphasize that again and again. Everything else is secondary and only leads to making emotional decisions built around greed and lust which have disastrous long-term implications.
Greed
Most investors want to dabble in the stock market and buy the latest hot stocks like KNM in 2007 when it was damn hot and selling at RM10 a piece, Hibiscus when it was trading at RM2.70 three years nine months ago, MPCorp when it was trading at more than RM10 many years ago, Asia Media when it shares price was more than ten times its price now 5 years ago etc. Look what happen to their share prices now.
http://klse.i3investor.com/blogs/kcchongnz/45373.jsp
Most of them had lost more than 90%. These were the hot stocks which greedy speculators were chasing in those times.
When speculators are making big money, they want to make more, much more, and in shorter time. They attend seminars organized by investment banks, “super-investor” to get hot tips. They are continuously bombarded with stories on how they had made use of other people’s money (OPM), at such a low cost, and made killings in some stocks. Those seminars are often lined up with pretty girls handling out forms to participants for margin financing. Yes, why not? Making money is so easy. why not make use of OPM and make much more, and in shorter time?
What is the problem with that? Yes, there are problems, big problems of propagating this to the naïve and uninformed public, enticing them to be greedy.
http://klse.i3investor.com/blogs/kcchongnz/92114.jsp
http://klse.i3investor.com/blogs/kcchongnz/82699.jsp
http://klse.i3investor.com/blogs/kcchongnz/79429.jsp
“The share has gone up 500%. It will continue to go up as long as the next quarter result is better. To be a super investor, you must buy more. You must “sailang”. Don’t worry about the price. Just buy”
Envy can also easily lead one to lust. Lusting, and “chasing performance” is a guaranteed recipe for disaster as an investor. For most of the time, the share price has already incorporated all information, and likely that the bulk of that cyclical gains in share price are already well exceeded its value.
Just look at the share price movement of Latitude Tree in Figure 1 below. The stock was chased up from RM6.00 to RM8.00 in a matter of a month. Most individual investors who lust for it would have bought at around RM8.00, before the share price plunged to a low of RM4.50, in just a few months when the buying stopped and selling for profit taking took place.
Strangely, when it is really cheap at RM4.50, few want to invest. Most like to follow the principle of “buy high, and (hope to) sell higher.
Figure 1
“Lusting” after past performance leads to “buying high” which ultimately leads to poor outcome in investing. This has been proven again and again in many stocks in Bursa, not only Latitude Tree alone.
Remember, trees don’t grow to sky.
Do not let envy creeps into you and makes you do all kind of silly things. Focus on your original goal, to build long-term wealth safely but surely. Make full use what you have learned in fundamental investing. Do not follow blindly from anybody. Do not chase hot stocks. Do not follow rumours, hypes and fads.
When everyone is making (big) money and you don’t, it is perfectly okay.
That is one of the “Golden rules” of success in investing.
Take care.
KC (ckc13invest@gmail.com)
Source: https://klse.i3investor.com/blogs/kcchongnz/119767.jsp
1 comments:
For your consideration.