There is a time line for wealth
1) Future Wealth
2) Present Wealth
3) Past Wealth
Future, present & past Wealth? What are they?
Let me illustrate
1) Future Wealth is represented by a young graduate fresh from School. Usually a young man in his mid twenties.
He is still young and yet to buy his own house. He might own an affordable car or just a motorbike.
What his he got? HE HAS HOPE. HE IS FULL OF DETERMINATION TO SUCCESS & FULL OF IDEAS!! But he has yet to make any real monies. His Wealth is Yet in The Future!
This is represented by a very young company. Management is full of ideas, ventures & mergers. Full of energy & hope. Lots of enthusiasm during IPO. See how many write up to promote this newly listed company. Gullible people are chasing. But the stock is yet untested. Business yet to prove itself. All hype and hope for Wealth still in the future!
Calvin rarely invest in this type of company. Better avoid.
2) Present Wealth. Represented by Growing Companies with Proven Income. Usually healthy PRESENT Growth that is visible. This is like a mature man in his 30s to 40s. He has bought his house & car. But the bulk of his monies still invested in his growing business.
So his wealth is still being generated in the present.
This is popular growth stocks.
Calvin will buy some. On one condition. He looks for a fair price to enter. Best is during a market crash or overlooked by the market.
Stocks like kimlun at Rm1.28, Masteel at 65 cts, Insas at 65 cts & Prestar at 46 cts or Jaks when it was only 40 cts.
BUT CALVIN WON'T PAY A HIGH PRICE FOR THEM WHEN PRICES ARE INTO OVERVALUATION. IF YOU OVERPAY FOR ANYTHING. CHANCES ARE THEY WILL UNDERPERFORM THE MARKET FOR A LONG TIME TO COME LATER.
3) Past Wealth.
This is an old matured person in his 50s, 60s, 70s or even 80s
He once was a young graduate with Vision. He moved on to be a very successful businessman in his prime. So he has used his earnings to buy lots and lots of Assets like Lands, properties, warehouses, shophouses & other investments of Value. CASH OR EARNINGS CONVERTED TO REAL GOOD SOLID ASSETS - SO HIGH NTA REFLECTED IN BOOK VALUE.
As he is already old his slows down. He takes less risk. He looks for Capital Preservation First with a View to Growth. But usually things are more settled as he is no longer as hungry like he was a fresh graduate once.
In such slow dull stocks people start to lose interest. Stocks like MUI Bhd is sold down all the way from Rm24 a share in its heydays to about 15.5 cts now. IT WAS PRICED RIDICULOUSLY HIGH AT RM26 WHEN IT WAS IN GROWTH STAGE. AND IT WAS BOMBED OUT AND TOTALLY SOLD DOWN TO ONLY 15.5 CTS WHEN OLD & MATURED WITH DEEP HIDDEN VALUE. THIS IS ACTUALLY THE RIGHT TIME TO BUY. BUYING MUI BHD IS LIKE BUYING INTO PAST WEALTH. STILL ABLE TO BUY GOLD AT ONLY RM35 AN OUNCE?
But this old man stock has past wealth. Mui Bhd has 10 hotels in UK, Laura Ashley (over 400 outlets), 2 hotels & high value lands still at ancient book value.
Last time my parents bought Old gold 99% pure at only Rm35 an ounce!
So much past assets are locked up yet at Old Book Value.
DUTALAND is one of them!
And just like Mui Bhd DUTALAND has Immense Value Locked Up.
Calvin specializes in buying into DEEP VALUE ASSETS COMPANIES SELLING FOR A SONG
Bought KPS at 40 cts with NTA over Rm2.00
Bought Perak Corp at 6o cts with NTA over Rm3.00
Both were almost 10 baggars later.
So I avoid buying stocks with "future growth" hype. Selectively buying Present Growth Stock if I SEE VALUE. And love buying into PAST WEALTH STOCKS OF IMMENSE VALUE SELLING AT DEEP DEEP DISCOUNT
I avoid the young man company with hope of future wealth. I will buy some (only selectively) the mature company of present wealth if they sell at reasonable prices. I concentrate on Deep Value Stocks of PAST ACCUMULATED WEALTH SELLING AT DEEP DISCOUNT
Additional comments:
This method of Deep Value Asset Investing was first propounded by Walter Schloss. Since we do not know for sure when or why a share which has High NTA could suddenly come to life - the best strategy is to diversify our investments into at least 30, 60 or 100 stocks to spread out the net far and wide among many individual stocks like Walter Schloss.
The Bible says, "Cast thy bread upon the waters for thou shalt find it after many days. Give a portion to seven and also to eight for thou knowest not what evil shall be upon the earth"(Ecclesiastes 11:1)
In other words try to diversify your investments or don't put all eggs in one basket.
If you have followed Walter Schloss advise you might have bought these 2 dead, forsaken stocks years ago:
1) Focal Aims at 11 sen in year 2009.
Later took over by Ecoworld & skyrocketed to a gain of 4,000%
2) Tebrau at only 10 cts before year 2003.
Now up 2,250% as name changed to IwCity.
Peter Lynch from Magellan Fund diversified into over 2,000 stocks & rotated them over the years. He managed to garner 39% gain. Beating Warren Buffet's 25%. This is Peter's philosophy : If you buy 10 different stocks even if 2 or 3 go bankrupt but one turns out to be a 10 baggars (One that goes up 10 times or 1,000%) you would have done very well.
SO THERE IS PAST WEALTH, PRESENT WEALTH & FUTURE WEALTH:
THERE IS ONE MORE.
Jesus said, "What shall it profit a man if he gains the whole world and lose his own soul. Or what shall a man give in exchange for his soul?"
In other words, the wealth of this life is only temporal but there is an afterlife which is far more important - because this life is eternal.
Warmest regards
Calvin
Jurong, Singapore
http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/118076.jsp
