Dear stock pick service participants,
Do people make 20% in two months from the stock market? What about 50%, or even 100%?
Sure, there are, but what is the percentage of those who can obtain those returns in such a short period? Are they also able to get consistent outsized return over a long investing period?
If one reads public forums such as that of i3investor, you would have read about some people carried out day trading, and as if they have made a lot of money by trading like this, in out, in out, in out, just for a profit of a sen or two. Do you really believe they can make money, taking into the consideration of all the transaction costs? I highly doubt so.
If one reads i3investor, you would also have noticed some people claimed that they have some kind of Holy Grail in investing, and have crystal balls in front of them, had made a few hundred percent return in Bursa from a few stocks, and that their new stocks touted will do the same magic in the future. But have you checked through their records over the last few years to see if the majority stocks being touted really had made that kind of returns, and if there was consistency in their methods and their returns on investment?
I have also shared a number of portfolios of stocks, and shared my investment thesis with detail analysis for a number of stocks since 5 years ago, and you can also checked them in i3investors. Who knows, as some critics claimed, I may be misleading you too when I am promoting my online investment course and stock pick service too.
I bet you would be highly surprised if you have done your homework, and have followed all the calls in the past, and you may not follow blindly again buying stocks touted by them in the future.
However, I do know there were a number of super investors following the school of value investing, especially in the US market, who managed to make a compounded annual rate of 20% a year over a period of 10 years, 20 years, or even 30 years or more as described in the link below here:
http://klse.i3investor.com/blogs/kcchongnz/50988.jsp
These were all established records, one can obtain from public available information, and not just hearsay. The investment philosophies, strategies and methodologies are those we follow closely in our investing journey.
When one invests in the stock market, it is important to treat investing in a stock as investing in part of a business. In order to have good probable investing outcome, one must understand the business, and follow some plausible, proven successful investing strategies and methods, following a proper process in order to have consistent satisfactory return, with little risks.
That is what I have been doing in my stock pick service, and I have always been advocating it in your investment journey. Please keep that in mind, always.
Mid-term Review of the stock pick service
This stock pick cum practical investing service was first offered to my past online investment course participants in May 2017 with the first pick on OKA Corporation Berhad on 28th May 2017.
Slightly over half a year has passed since the first stock pick. A total of five stocks were given so far in this service with the fifth one, Homeritz a month ago on 22nd November 2017. Detail financial analysis and valuations were done on the stocks, and comprehensive reports written, given to participants and posted in the blog for discussions.
I have also made some reviews of the stocks after their quarterly reports were published, mostly during end of November 2017. Please go to our blog to read those reviews.
The principle of selection as you all would have known well, is based on buying good companies at cheap or reasonable prices, or mediocre companies at very cheap price. We have better chance to find them in the small and medium capitalized stocks. Almost all of them were selected based on high return on capitals, good earnings and cash flows, high dividend yield, and some with good growth potential. These metrics were “Goodness” metrics which you have learned through the fundamental value investing course. One of them, Insas, besides earnings, was also based on an asset-based investing strategy.
We have many critics who constantly criticising us for relying on the old records, the published present and past financial performance of a business. They said we have no business sense doing so.
We agree that in investing, it is the future that matters, not the past. But I wonder how do they come up with their “business sense”. How come they are so certain about the future will be bright when their present and the past sucked. Is their “business sense” a common sense?
We have strong sense of price versus value. We strong believe the investment outcome of a stock depends on the price you pay. But this is also criticised as “business sense”? It really beats me.
In general, our selections of the stocks were based on the very basic principle of what I have been propagating and imparting to you in your online course, and in public forums;
“Take care of the downside; the upside will take care of itself.”
There were also a number of stocks recommended by analysts and investment bankers, which I thought were interesting investing candidates, and a couple of watch lists of stocks posted in the blog based on some FVI strategies such as Magic formula and investing for dividends, etc. for you to consider for investment.
As you have also gone through my online fundamental value investing course before, or in concurrently, you are able to analyse and make your own decision on which stocks to invest in. That is the beauty of this service.
Bursa faced some turbulence recently with the sell-off, especially for the smaller capitalized stocks which the portfolio is mostly made up off. How has the portfolio of stocks selected performed?
Performance of stock picks
Table 1 in the Appendix shows the performance of the portfolio of the five stocks which were selected progressively over the last 6 months.
Despite the headwind, this portfolio made an average return of 11.8%, compared to the loss of 1.1% of the broad KLCI index, or -0.6% of the broader FBMEMAS Index during the same period. The excess return, alpha, of the portfolio is hence +12.9%. Not bad at all.
Four stocks made positive and excess return over the broad index, except for Insas, which incurred a small single-digit loss of 7.0%. There were three, or 60% of the stocks made double-digit return with the highest return in SKP Resources at +31%, in two months.
The share prices of Luxchem and OKA have retreated substantially from their peaks of 85 sen and RM1.95 not long ago to 73 sen and RM1.68 respectively now after their not-so-good quarterly results, which we have not anticipated. However, their returns are still commendable.
Insas remains a very interesting asset play with its 20% Associate company Inari’s share price risen to RM3.26 at the close on 15th December 2017.
With the updated quarterly reports and the new stock prices which have generally gone up, are these stocks still worth investing?
That will be the content of the next article.
Bear in mind the following, although you have made good returns over the last 6 months while the general market retreated,
Please contact me at my email below if you have any questions.
ckc13invest@gmail.com
KC Chong
Appendix
http://klse.i3investor.com/blogs/kcchongnz/141664.jsp
