In my last article published in i3investor, “Don’t listen to stock tips” not too long ago in the link below,
https://klse.i3investor.com/blogs/kcchongnz/2020-04-13-story-h1505955007-Don_t_listen_to_stock_tips_kcchongnz.jsp
I have used those stock tips published in i3investor for the last 6 to 7 years ago as examples of the peril of listening to stock tips. With extraordinarily little exception, their share prices of those stocks tanked, and followers almost lost all their money, even during those good times from year 2009 to 2017. In fact, a loss of 80% or more, or even total loss were common for those stock tips!
How perilous was that!
How to get back up when you have lost 80% on your investment? A simple math will tell you need to make 400% for the balance of your investment, just to break even.
The long-term return of the market is about a CAGR of 10% a year. That means it will take you 17 years earning 10% a year to just breakeven, after you have lost 400% of your money in the stock market.
So, remember this,
It is impossible not to lose money dabbling in the stock market. It does happen especially for the short-term. However, over the long term, it is not difficult to stick to the above rules. That is the message.
My conclusion in my above article is,
“Do some analysis yourselves before investing in tips. It is a must. Check if the stock is of a good company. Then do some valuation if it is worthwhile to invest in.”
So, how to go about not to lose money in the long-term in order to be successful in investing?
I have recently read an article from Mr. Fong as shared by Tan KW, “亲自做功课才能成功/冷眼”. Here is the link below,
https://klse.i3investor.com/blogs/coldeyed_dear_newbie/2020-05-07-story-h1506936220.jsp
The message is as below, first in Mandarin
惟有懂得捕鱼之道的人，才能长期捕获大量鱼虾
所以，股票投资要成功，一定要亲自做功课，不要依靠别人的“贴士”，亲自做功课而成功的人我见得多了，靠别人“贴士”而长期成功的投资者，我几乎没见过。如果你想在股市成功，除了亲自做功课之外，别无他法。
“出错”是投资常态. 我们作为股市的散户，唯一可以做的，是倾全力做功课，把错误减至最低程度。
In summary in English, it says,
“Only those who know how to fish, then only they can catch a lot of fish and prawns.”
“If you wish to be successful in stock investing, you must do your own homework, and don’t listen to stock tips. I have seen many successful investors because they do their homework. I haven’t seen anyone who becomes rich listening to stock tips. Doing homework is the only way to be successful in the stock market”
“Making a mistake, and lose money is normal. The only thing you can do is do your own homework to the best of your ability, and hence, minimize mistakes”
But how to go about doing your own homework which has been emphasized by Mr. Fong?
Knowledge and experience are particularly important.
Read, watch, practice, experience, review, continuous learning, come out with your niche and circle of competence in investing. Spend some time, effort as well as some money too to learn and acquire knowledge of something which is particularly important in your personal finance.
Treat investing in a stock as investing in part of a business. Then you must understand the business; how it makes money, is it making good money, is it a risky business etc. All this information is conveyed through the annual report and financial statements. Hence, first learn about some basic accounting, which I think is the most important in stock investing. There are a lot of resources out there, some are free in the internet, some are paid services of many of them are useful too, which I have seen.
Once you have acquired some accounting knowledge, you will be able to read some “Letters to Shareholders” by some super investors and understand and appreciate them more. Top of the list is “Letter to shareholders” of Warren Buffett’s of Berkshire Hathaway, Memos of Howard Marks of Oaktree Capital, Jamie Dimon of JP Morgan Chase etc. They are good source of investment education.
Incidentally, you can still read great articles written by Mr. Fong in Nanyang, and even in i3investor, courtesy of people like Tan KW. But don’t expect stock tips. His article above already mentioned not to follow stock tips from anybody, even from him. Also do not expect to find what stocks he has. He never like to disclose his portfolio to anybody. You may know a few of his stocks from the list of major shareholders of some companies. Just like any super investor in the world, none like to disclose their stock holding. Whatever information of their stock holding are collected from various annual reports which their funds are one of the major shareholders. Some super fund managers, such as Guy Spier, don’t even disclose their shareholdings to the investors invested in the funds until they are sold.
There are some good writers and individual analyst in i3investor too. DK66 is one of them who is an expert in project costing and financial appraisal of IPP, a good investor, with great humility too. Good job DK, Jie Yu! Choivo Capital, although a young man very assertive and hence may have offended many people, is knowledgeable and good analysis and a great writer too. I believe he has done reasonably well too in his investment. Investbullbear has written a lot of good articles too. Ricky Yeo, a widely read young man, is another one whose articles many people can learn from, including myself. Pity we do not see his articles any more nowadays. My good friend Yi stock has written good analysis of some stocks but also don’t see him writing any more. Anyone interested in stock analysis can also refer to Icon8888. Many of his stocks write-up are good too. There is another good contributor, teoct who has written some of the best articles on QL and I remember a man of great humility too. Not forgetting someone named Philip, appears to be very good in qualitative analysis of business.
The above are just some of the good writers and analysts one can follow in i3investor for free. The list above is not exhausted. There are many more, and sorry if I forgot to mention.
Don’t forget to read some good investment books to inculcate some essential knowledge and philosophy in investing, even before starting to invest. “A random walk down wall street” by Burton Malkiel, “Fool by randomness” by Nassim Taleb, “Winning the losers’ game” by Charles D. Ellis, “The most important thing illuminated” by Howard Marks are some of them. These books tell you the risks in investment, reinforce you to recognize, understand, and manage them, and that making money in the stock market is not that easy and simple as many people tell you.
In my earlier days, I have read “One up Wall Street” by Peter Lynch, “The 5 Rules for successful stock investment” by Pat Dorsey, “Stock for the long run” by Jeremy Siegel, etc. They are easy to read, understand and not bad too. “The little book that beats the market” by Joel Greenblatt is another interesting and easy to read and simple to use book too which I have been using the methodology expounded there. Greenblatt has a harder but very useful book, “You can be a stock market genius”.
Professor Aswath Damodaran, the authority in valuation had come up with some books on relative and absolute valuation techniques. His “Little book on valuation” is a simpler and useful one. “Margin of Safety” by Seth Klarman is useful for more savvy investors. This book was sold at thousands, or even tens of thousands of USD per book, but it is out of stock. Klarman has no intention to reprint more.
Reminiscences of a Stock Operator, written in 1923 by Edwin Lefevre, tells from a first-person perspective the fictionalized tale of the early years of the great trader Jesse Livermore, is also an interesting book to read, especially for traders. Some people think the writer is Jesse himself.
There are some interesting fiction books which are related to investing. “The smartest guy in the room” and “The Conspiracy theory: the true Enron story” were my favorite. From these books, you can get to know how corporate American destroys value and they bring awareness to readers on the peril of investing in public companies, and how and what to watch out for when investing.
There are some useful books by local authors too. The first book I read many years ago was “Stock market investment in Malaysia and Singapore” by Neoh Soon Kian. Regret that I did not follow it and hence unable to make money investing in the stock market then.
There are also a few more books by local authors. Ho Kok Mun’s "How to Make Money from Your Stock Investment Even in a Falling Market" has been in the market for more than 15 years and have sold 350,000 copies. Peter Cheng of Equity Tracker has also written a book on “What I learnt as an analyst”. They are both good sources of stock investment knowledge in Malaysia environment.
For stock investment in Mandarin in the local environment, Mr. Fong has published three books which are very useful for investors. These books have sold for hundreds of thousands of copies so far. He is finalising his latest book and it is on the way to the market soon. Be sure to get a copy of his books each. They are classic investment books published by a local writer, and a successful investor.
Finally, K C Chong has also published a book recently, “Invest like a stock market guru: the complete value investing guide that works!”.
This book provides some especially useful framework, key principles and personal financial and investing guidelines for you to build up long-term wealth following some prove processes. It propagates value investing, quality investing and growth investing. It provides comprehensive guidelines on how to look at the business, analyse and interpret its performance. Most importantly, it provides abundant guideline on how to value the business, from various angles. The examples used for learning in the book are all local companies listed in Bursa.
With the knowledge in the book, and the right mindset, plus the experience you gain, you will find that you will be luckier than others in investing for the long run.
It was a great surprise that the first print of 2000 copies have all been sold out during this lockdown period. New copies have been just printed and they are available for sale now in the major bookshops such as MPH and Popular in the Klang Valley.
Appended below are some of the latest feedback from previous purchasers.
It is a good time to do some useful thing for personal improvement and advancement now during this lock down period. For those who are interested to purchase a copy directly from me, you may email me at,
ckc15training2@gmail.com
There are some additional advantages purchasing directly from me. You will receive the book within 2-3 working days after purchase free of postage. You may also ask me any questions related to the book and value investing. Copies of the Q&A will also be shared among my book purchasers.
Stay safe and be positive.
KC Chong
Appendix
Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime. Whether you are a savvy investor or just a beginner, this is a great book that teaches you how to fish for the right investment. For the beginner, this book offers a detailed step-by-step guide to learn value investing principles. For the more experienced investor, this book serves as a useful refresher to enhance their investment skills further.
There are many ways to make money in the stock market, but one strategy that has proven itself over the years is Value Investing. KC Chong's book contains many timeless value investing wisdom that makes it a useful reference book before one dabbles in the stock market.
As an added bonus, KC Chong made the effort to include several real life examples of stocks listed in Bursa Malaysia to help the readers to put the theory into practice. Coming from a former financial planner, this book is suitable for investors who are serious in building long-term wealth.
Ang Kok Heng, CFA
Chief Investment Officer
Phillip Capital Management Sdn Bhd
Hi Mr Chong,
This was really a very comprehensive book from educating us from managing our personal finance all the way to investment. Very detailed explanation and great demonstration with every principles taught.
Alvin Yeo
Yes i enjoyed it. These days it is hard to find a value investing book packed with solid content while written in an easily understood manner.
It is an enjoyable read with a generous amount of information.
Kudos
Peter
By the way, Mr KC, your book is considered the most comprehensive investment book among all the Malaysian's Author. This is the best investment book about KLCI stocks market that i have ever read in my life. It is really useful for me. :)
Thanks.
Best Regards,
Nick
https://klse.i3investor.com/blogs/kcchongnz/2020-05-11-story-h1506997567-A_stock_investment_tip_Always_do_your_homework_kcchongnz.jsp
