MARKET METLDOWN AND COIN FLIPPING

MARKET METLDOWN AND COIN FLIPPING

15 February 2018

Nobody knows when the stock market meltdown except those that do not know that they can’t.

What did the recent plunge in Dow Jones and S&P 500 or even Bursa Malaysia (little slip in KLSE index only) implies?

            -the current stock valuation is too high on average PE of more than 15

            -the mentality of hit and run is common in market (like gambling, after I win this round then I will stop playing, only that the last round never come except when they lost majority/ all their money)

            -more and more people willing to fool their mental and believe that some tools (like Bit coin) will make them rich and they can outwit the other players. (With some unknown reason and confidence some people believe that they are smarter despite they are basically doing the same things like the general)

            -when they are panic, they sell the stock. Despite the losses (actually some of them don’t care their lost, they just want to hand off from stock as the stock is burning iron that will hurts their hands)

If we scrutinize the history of stock market, I found that the chance of stock market meltdown is a random event.

            It occurred out of the general people expectation (including those financial experts)

            It is always after it happened those financial pundits know that is the cause

            Human behavior play an important part in those meltdowns

However, if one people can predict when the market will crash, he/she will be able to exploit such information to gain substantial advantages in stock investing.

Therefore lots of people love to predict when the stock market will crash but in fact no human being will be able to do that. Yet the market meltdown is sure to happen after certain time period, which the duration is also variable.

So predicting when the market will crash, to me is similar to flipping a coin and see when the coin will be standing on its edge.

The probability is low but if you kept flipping it, numerous failed attempts is a certain. But when the time has come, it will be standing on its edge.

Instead of eyeing or worried about when the coins will stand on its edge, as an value investor, we should be more focus on the individual stock and maintaining reasonable cash reserve that which can be used when the appropriate has come.

Contemplator

PS: Will the trade war between US and China really breaks out?

I think US is acting drama under influence of Trump and China has been forced to play this soap drama along.

I think that trade war will not happen in full scale of 1 or 2 trillions, both economy entity will suffer damages and US will take more.

Trump is keen to exert unreasonable taxation to import items not only at China's goods. I think the taxes on imported goods are to fill in the gap/ compensate the financial deficit due to tremendous taxation cut for US's companies. 

Trump obviously enjoyed in his own made soap drama as he can be in the central of the theater and we should see how he is going to end his soap drama.

One of the most important reason why US is great is because of its open trading and globalization concept. 
The is no reason why US will not continue to do so or she is digging her own grave.

Buy Low Sell High... ... The missing part?

Buy low sell high...... the missing part???

Whether you are a Fundamental or Technical investor, buy low sell high is the rule to earn money isn't it? 

But what is the catch here?

When the stock's price really fall hard, for example supermax. It fall from rm 2-2.2 to rm 1.75 and still in falling trend. 

Buy or sell???

Dilemma again.

For TA, if the chart showing oversell signals, they will dump the stock (if my understandings towards TA is not wrong). This will cause the aldy low stock plummets further to the ground (or hell?). They will feel happy whereby in the short duration (which i believe within 1yr) their fund has not beed caught by the falling stock price. And therefore the capital can be used for other investments to generate income. 

Their concepts and methods are not wrong (for sure) but i felt i am not comfortable with it and i can't master it. 

Therefore buy low sell high for TA will become buy in raising trend and sell in down trend. (This is subject to argue depending on the time you access the entry and exit point) 

As for fundamental or value investor, the pivotal thing is to estimate the intrinsic value of the stock. 

Discounted cash flow, dividend model, nta, PE, npv etc has been used as measurement method for intrinsic value. 

As warned by Mr Charlie Munger; an investor should avoid the man with one hammer syndrome, the value investor should access all the methods of measurement and aware that for certain situation, one method will be preferred/ more suitable over others. 

Investing is an art, it is not a rocket science but neither an precise science. It couldn't be as precise as mathematic but shouldn't sway much also if correct method being implied. 

Seth Karman's book Margin of Safety have some examples of accessing stocks in different situations. A brief example, for stock going to be bankrupt and filed for dissolution, nta ( net tangible asset) will be a more appropriate way to measure intrinsic value rather than DCF (no future to worry about isn't it?) 

That maybe is the situation for stock in USA but in Msia the dissolution procedures for bankrupt company may take way too long time to process and assets forced to be sold way below its price. Different situation required different consideration and thus the art. 

兵无长势，水无长形。

Back to intrinsic value measurement. If the stock's price dropped way below its intrinsic value then a margin of safety will be formed. 

However...... When the stock's price drop, sure it is a sequela to some bad news, bleak future outlook, uncertainty, doubt, weak financial results, operating problems, government policy change, fierce peer competitions etc etc. 

The value investor has to logically considers these factors and determine whether the intrinsic value still remain intact as before the bad newssss hit or its intrinsic value simply has to be adjusted. 

Good stock should has fundamentals that are difficult to change and competitive advantages (moat of the company). <easier to talk than pick. LoL i confide to this> 

However... Even for a poor company, when the price dropped to a very low level, then even a lousy company can give an adequate amount of margin of safety thus contributing profit to investor. 

Certainly the decision to invest more or sell in this situation is difficult, thus the investor has to have crystal clear mind about the intrinsic value of company and able to act correctly while withstanding the psychological pressure to act as contrarian. (being be greedy when others are fearful and be fearful when others are greedy)

The value investor has to be able to roughly estimate the time required by company to improve its bottom line together with the magnitude of possible profit (selling point, or time to leave the party). This should be done to access the worthiness of the investment. 

Formula from Benjamin Graham:

Let G be the expected gain in points in the event of success;
L be the expected loss in points in the event of failure;
C be the expected chance of success, expressed as a percentage; Y be the expected time of holding, in years;
P be the current price of the security 

Indicated annual return = GC – L(100% - C)/YP 

We may take as a current example the Metropolitan West Side Elevated 5s selling at 23. It is proposed to sell the property to the City of Chicago on terms expected to yield in cash about 35 for the bonds. For illustrative purposes only (and without responsibility) let us assume (a) that if the plan fails the bonds will be worth 16; (b) that the chances of success are two out of three—i.e., 67% (c) that the holding period will average one year. Then by the formula: 

Indicated annual return = 12 x 67% - 7 x 33%/1 x 23 = 24.7% 

Note that the formula allows for the chance and the amount of possible loss. If only possible gain were considered, the indicated annual return would be 34.5%. (Sequel: The purchase was affected, and the bondholders have since received $33.5 in cash, retaining also “stubs” currently worth about $5.) 

☝🏻info of this formula comes from Value Walk's article

Security Analysis, 1951 edition (Pages 729 – 734) by Benjamin Graham 

The opinion of majority usually is not much worth for investment opportunity because that piece of knowledge already knew by everyone. But if you make a choice in contrary to the crowd, the peers will try to influence you. In between you may feel uneasy or stressed because acting in contrary to others. 

Psychological factors are important for value investor. 

Following the crowd will get average results; going contrary will get better or worse results. 

For value investing to works, the stocks should be bought by cash and not by margin. Margin call will force you to sell the stocks that went south while actually you should buy more (for good stocks of course). 

Buy low, sell high. Easy to say, difficult to do and so thus to become rich and financially successful. 

Lastly although the future can not be predicted precisely, we should know where we stand today (ideal from Howard Marks). 

Something about Bitcoin. 

The excitement for majority of people is not its function as an alternative currency but its speculative trading nature. 

It is just a greater fool game that waiting/ hoping another greater fool to pay for the bills. 

It would be a WORST scam than the tulip mania. 

The market is never efficient, the madness flows in humans' blood. 

Only when the tide cease we know who is swimming naked. 

勤能补拙。

一点善心胜过一桶黄金。

Contemplator

24 Sept 2017

All copy rights reserved!!! 

AGREE THE DISAGREE, DISAGREE THE AGREE

AGREE THE DISAGREE, DISAGREE THE AGREE

                As a value investor, act against the flock has been one of its most essential skills.

 The common adage of a value investor will always be buy low, sell high. However, in order to do so that value investor needs to have crystal clear view on the intrinsic value of that particular share and psychologically calm and confident to executive such action plan.

Perhaps due to the biological instinct, follow the flock will generally give a sense of security a particular person (although the facts frequently proved the otherwise is true).

Picture from: www.pinterest.com

As Howard Marks points out: the piece of information that everyone knows is worthless. Value investor has their own unique notion that the general population don’t aware of. The value investor then has to convince themselves that their notion is correct based on the fundamental facts. The value investor therefore owns the undervalued stock earlier than the crowd and thus enjoys the capital appreciation better than the crowd.

孙子兵法曰：先入战地者逸。

The contemplating process doesn’t stop there as the value investor has to constantly evaluate the fundamental elements (not stock price or humors and neither does some prominent bought or sold the stock). When the conditions differ from what is perceived before then the sell button should be considered (this simple maneuver doesn’t apply to marriage).

The fundamental elements to be evaluated will always be the microeconomics of that particular business (not macroeconomic). Perhaps this process is easier than the attempt to understand women’s thinking.

Nevertheless, I believe that understanding owns psychological characteristics and strength and weakness is also paramount while deciding the business and stock you want to invest.

The sharing of stock information from others maybe altruistic but you should keep this in your mind:

The share you bought is like your own wife, you will be the one who get all the benefits (and hopefully no cons, and I assume no logical people will share their wife with other man).

Recommended books for new value investor:

1.       Warren Buffett Way by Robert G. Hagstrom

2.       The Intelligent Investor by Benjamin Graham

3.       Security Analaysis by Benjamin Graham

4.       Any accounting book or course that you found interesting.

LASTLY, I urge you to help others that need our help. Do donate those who need our help (2.6 billion ringgit is not a donation).

                                                                                         

                                                                                                                

INVESTMENT IS MOST INTELLIGENT WHEN IT IS MOST BUSINESS LIKE-- Benjamin Graham

Contemplator

13/5/2016

THIS IS AN ORIGINAL ARTICLE :)

INTERESTED READER CAN CLICK ON MY BLOG:

https://contemplatorvalue.blogspot.my

IMPROVING VALUE INVESTING

WHY YOUR VALUE INVESTING RESULTS IS NOT AS GOOD AS WARREN BUFFETT'S

1. Investing is most intelligent when it is most business like. Benjamin Graham.




Did you buy the company that has durable competitive advantage?

The companies that Warren Buffett bought have a myriad of durable competitive advantage. If you grumble that you followed Warren Buffett's investing style and yet having mediocre investing results.

One moment of self-reflecting is required.
How much do you know your company?
What is the competitive advantage of the company you bought?
Did you bought your share because some banking analyst saying they "revised" their target price?
      (And one thing to ponder is that the banking analyst profoundly like to "revise" their target price frequently without very much business sense. Well does which perfume seller will says their selling perfume smells terrible?)


DID you perform the ritual that Warren Buffett compelled amateur value investor to do?
Which is standing in front of a mirror and tell yourself (provided your mirror doesn't shows anything else which is undersirable) the reasons to buy that stock.


Charlie Munger will ask: God... Why??? Why I should buy this stock and WHY others doesn't notice it?




Each business has own myriad of indicators that can be used to assess its underlying business strength.


In my opinion, banking analyst often "very late" to detect/predict  the changing business strength of a particular company. In a simple language, they often (been thinking can the word OFTEN be obliterated) reported something that already happened in their analyst's report.


On the other hand, ability to accurately "predicting" the changing business will be a MILLION DOLLAR ability. So why should that talent sharing its precious findings in a FREE banking analyst report.


Is banking analyst report a rubbish? NO. But if you utilize as an important tool to determine your investing decision, then your method is not value type. Albeit, your investing results shouldn't be compared to Warren Buffett's.



How to assess a business's strength?
Well if somebody wants to find you to do a business (for example selling banker's analyst report), what is the questions you will ask?


Will you lost money?
What type of product you are selling
Who are the people buying your products?
How much is your profit margin (gross and net)?
How is the cost of doing the business?
How is the company's financial status?
How is the company's cash flow?
WHO IS YOUR MAJOR business partner? Are they honest?
How much is the intrinsic value of the business?


DID YOU REALLY PERFORM THE INVESTING RITUAL COMPELLED BY WARREN BUFFETT?





2. How much is the intrinsic value of the company you buying?


For a value investor, buying a company's stock is definitely became a dormant business partner.


Dormant meaning that you are being inactive, sleeping, shaking your legs while watching TV and no very limited power to influence the cooperate decision personally with assumption that your shares do not constitute more than 1% of total shares. (Please don't be angry, unless WE (ME INCLUDED) as minor shareholder work in seamless way, our influence is very limited.)


So in order to be safe, albeit not to lost money as it is the command of Oracle of Omaha, is to buy the stock when it is a bargain.


This is to attain certain magnitude of Margin Of Safety between the price you pay and the value you get.


Valuation of a company, is more of an art than science. Why? Because the myriad of factors to be assessed and the variability of each factor. Too much objectivity is needed. It is impossible to every single types of business on this Earth.


Warren Buffett and Charlie Munger are really smart. They avoided the company that they can not give valuation with plausible intrinsic value that they comfortable with. In the same time they waited the price of the company they interested to drop to their perceived REASONABLE price before they buy it.


PSYCHOLOGICAL STRENGTH OF WARREN BUFFETT AND CHARLIE MUNGER is superb. They are comfortable with stashes of cashes lying over their tables without doing anything unrational.


DID you keep cutting your selling price of a stock because you want to sell it immediately? Or did you keep increasing your bidding price because you want to possess the shares of certain company immediately?
Did you ever thought of what is the intrinsic value of your share before you selling/buying it?


Speaking of intrinsic value, Warren Buffett only value business which is very simple and easy to predict in the future. The method he uses is discount cash flow method (DCF). It is not a best valuation method (as what we know, valuation is an art not science), therefore Warren Buffett opt to be roughly right than precisely wrong.


Warren Buffett uses a conservative discount factor (should be much more than that banking analysts using; presumably more than 12%) and lower projected growth rate together with owner earning rather than EBITA or else fancy flower name.


Please read BOOKSSS related to Warren Buffett and discounted cash flow.
This is a million skill that you should earn yourself.


Did you value of company conservatively? Do you have margin of safety???




3. Psychological strength


This can also be translated into: did you fall into human psychological misjudgements?


Time for me to eat the reunion dinner...


Happy CNY everyone!


LASTLY, I urge all of us to help others that need our help. Do donate those who need our help (2.6 billion ringgit is not a donation).





INVESTMENT IS MOST INTELLIGENT WHEN IT IS MOST BUSINESS LIKE-- Benjamin Graham


Contemplator
7/2/2016

THIS IS AN ORIGINAL ARTICLE :)

PLEASE CLICK ON MY BLOG:
 http://contemplatorvalue.blogspot.my/2016_02_01_archive.html

HOW MUCH DO YOU KNOW ABOUT ROE? ARE YOU SWINDLED BY THE INFLATION?

HOW MUCH DO YOU KNOW ABOUT ROE? ARE YOU SWINDLED BY THE INFLATION?

Author: contemplator   |   Publish date: Wed, 13 May 2015, 02:38 PM

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This is an article originally shared by MR Tan KW, i found the ROE discussion by Warren Buffett is SUPERB.

please read the article by this link:
http://klse.i3investor.com/blogs/kianweiaritcles/75046.jsp

Orginally article from the Forbes:
http://fortune.com/2011/06/12/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/

WB explore more than the mere DuPont ROE that usually get analyzed. Every value investor should know the importance of ROE.

Following the thought of an legendary investor thrills me and it is fun (hopefully you also, I read this article twice only can understand it).
The presentation of data and thought is, I must say (in promotional tone) eloquent!

Enjoy your reading, the time will be well spend.

THE ULTIMATE QUEST OF VALUE INVESTORS

THE ULTIMATE QUEST OF VALUE INVESTORS

Author: contemplator   |   Publish date: Thu, 13 Aug 2015, 12:33 PM

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This article is dedicated for value investors.




In October of 2009, Charlie Munger was interviewed on the BBC.


Here's what he had to say about Berkshire Hathaway's (BRKa) stock (it was down quite a bit at the time) and, more generally, the decline in common stocks.

So how much does Charlie worry when Berkshire's common stock declines?

"Zero. This is the third time that Warren and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%. I think it's in the nature of long term shareholding of the normal vicissitudes, in worldly outcomes, and in markets that the long-term holder has his quoted value of his stocks go down by say 50%. In fact, you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations."

In this BBC interview with Warren Buffett, also from back in 2009, here's what he had to say about the nature of stock markets.

"The very liquidity of stock markets causes people to focus on price action. If you buy an apartment house, if you buy a farm, if you buy a McDonald's franchise you don't think about what it's going sell for tomorrow or next week, or next month, you think about how is this business going to do. But stocks with this huge liquidity suck people in and they turn what should be an advantage into a disadvantage."

Then, later in the interview, Buffett said this about investment: 

"...you compare the net return to how much money you are laying out, that's investment." 

Finally, he added this:

"...you can still get in trouble if you pay too much, but you are focusing on the right thing if you look at the stream of income that the asset is going to produce over time."

Source of reference: http://theinvestmentsblog.blogspot.com/2013/02/charlie-munger-warren-buffett-market.html

Soooooo... what is the ultimate quest for an value investor?

1. Determine the intrinsic value of a business that has durable competitive advantages.

2. Buy at discount to its intrisic value. Price is what you pay value is what you get. (Shouldn't you be happy when the stock crashed by 50%? ringgit is definetely on big sales now yet the stock market on a tiny sales)
- the calculation of intrinsic value is an art rather than science. I believe the use of DCF, reverse DCF, evaluation of business indicators, scuttlebutt method should be applied and evaluated based on different situations.

3. Control your psychological misjudgements. If you can not tolerate the stock prices fall by 50%, you should buy very low cost index fund like Vanguard's. Sadly as i know, the ETFs in Bursa charges heavenly. Who knows how to buy the Vanguard's in US from Malaysia or Singapore please kindly enlighten me here. :)
- Charlie has a wonderful work on Human Psychological Misjudgement. Visit his Poor Charlie's Almanac will pay you handsomely.
- Price of stock has not relation to its value. Volatility is an intrinsic characteristic of stock. Measurement of beta is a foolish game. You just need to make sure you doen't overpay.
- Focus on absolute return but relative return.
- Microeconomics is what you should really focus rather than the macroeconomics. (You didn't play FOREX right?)


4. Value investment is simple but not easy.

Nooo stock  recommended by me to buy. Why?
-there is no free lunch in this world.
-many others already recommended stocks to be bought. Yet the decision for purchase will depends on your own answer to ULTIMATE QUEST (did this sounds like an examination?)
If you found my writing sounds logic, you can visit my previous blog:
http://klse.i3investor.com/blogs/contemplator_bursamalaysia/76177.jsp



LASTLY, I urge all of us to help others that need our help. Do donate those who need our help (2.6 billion ringgit is not a donation).




INVESTMENT IS MOST INTELLIGENT WHEN IT IS MOST BUSINESS LIKE-- Benjamin Graham


Contemplator
13/8/2015

SOME THOUGHT ON ESOS, BONUS SHARE, SHARE SPLIT AND SHARE PRICE

SOME THOUGHT ON ESOS, BONUS SHARE, SHARE SPLIT AND SHARE PRICE

Author: contemplator   |   Publish date: Fri, 22 May 2015, 09:55 AM

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THIS ARTICLE APPLIES TO VALUE INVESTING ONLY

I would like to point out a few irrational investing behaviours exhibited by some investors.
As important as it is to make correct decision, also equally essential to avoid mistake. As Charlie Munger urged: Inverse! Always Inverse!


1. ESOS (EMPLOYEE SHARE OPTION SCHEME)
ESOS is a scheme whereby the employee will be granted the right to subscribe the share option which enable them to buy the shares of the listed company at price far lower than its current market price.
From the view of a business owner, issuing ESOS is one of many ways for an employer to reward its employee. The unique thing about this scheme is that it enables its subscribers to own a fraction of the company they work for. In optimal situation, the option subscriber will work harder for that company that he/she also a fraction of it. Symbiosis for short.

Situation in Malaysia:
Warren Buffett: honesty is an expensive gift, don't expect it from cheap people.
Real situation here is whereby rather than concern about the benefits of shareholders (who is also owner of the company), the directors in the some companies care about themself more. One of the infamous thing that board of directors like to do is issue a large amount of ESOS and when they reach the limit of ESOS, they enlarge the limit. (No limit on irrationality either)
(A recent example would be VS, increasing its ESOS from 10% to 15% of total shares issued; I don't own shares of VS, i don't know what is its business, just giving an example)
The board of directors will eloquentlly argued that the issuing ESOS is to make sure all its outstanding employees contribute more to the company by increasing it ownership feeling and increase the willingness to retent in the company.
HOWEVER, THINK TWICE. Look into the ESOS scheme (another company that voraciously issue ESOS is Favelle Favco, IOI corp and IOI property). WHO GET MOST OF THE ESOS? The CEO/ directors of the board who are ALSO ALREADY THE LARGEST SHAREHOLDER. Meanwhile, the employees will get the smallest slices of the cake (ESOS subscription right). Directors who use the fund of the shareholders to fatten their own wallet is not a honest-to-god act.

ESOS will dilute the EPS, ROE and DY (anything else good missed?). Using the money and trust from the shareholders to voraciously enlarge their already biggest shareholding via ESOS, well can be viewed as a warning sign of no integrity in the management board. Furthermore, you will notice that the one who will rubberstamps the ESOS will be the largest shareholders as well. More viciously, they enlarge it when it limit of ESOS is reached. If such a company also "coincidentally" pays a lot of salary to its CEO, these combinations mean no good to your own wallet.

ESOS is not all bad, it is a good strategy, if used prudently. However if it turn sour, don't forget Warren Buffett's first and second rule of investing (don't loose; sounds don't buy their stock to me). Becareful when you see someone put too much source in your plate, like chilli sos, ketchup sos, soy bean sos etc, especially ESOS. It sucks.
Warren Buffett:
“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.”


2. Bonus share -- more correctly is Distrubution of treasury share or share dividend
The company fork out the its treasury shares (shares that the company buy back from the stock market) and distribute them to its shareholders by proportion of shares owned.
Regarding this, please read the Warren Buffett's letter to shareholders, the logic is all there. Thank you Warren.

Thinking back in Malaysia, although the shares buy back can be violated but the largest shareholders also receive collateral damage. Not as abusive as voracious ESOS.

3. SHARE SPLIT
A TOTALLY LESS USEFUL THING THAN IT PROPOSED and sometimes awful.
A simple arithmetic :
1 share of RM 10 = 2 shares of RM 5
An unusual phenomenon that yet keep happening in KLSE is that the share price of a stock will rise (without intelligent reason) after the share split. The board of directors will proudly say that the reason for share plit is to increase the availability/liquidity of the share. However I would say the unusual share price surge is the main factor that propels the directors to make such split.

The truth is:
1 share of RM 10 = 2 shares of RM 5 ≠ 2 share of RM 10

In fact what you need to sacrifice to get the "availability/liquidity"
a. lower EPS
b. lower DY

(again anything good not ruined?)

Some argued that share split will "release" the value of the company. Well what is its effect to EPS, DY?
Share split certainly have it purpose. But if you see a stock that have decent daily trading volume being proposed by its directors to do 1 to 1/2/3/4/5 split, after harness the unreasonable price hike, try to look for an exist mechanism when the risk outweight the profit.

4. SHARE PRICE
There is an unusual psychological misjudgment that happens to certain investors.
Stock price of RM 1 with PE 15 is more "buyable" than stock priced RM 10 but PE of 5.
Every often, some of my friends will tell me this stock is not suit for them because the price is over RM 10 so it is expensive.
This psychological misjudgment unfortunately is quite common. Again les't see what simple arithmetic will reveal:

Same share: 1 share of RM 10 = 2 shares of RM 5 = 4 shares of RM 2.5 = 8 shares of RM 1.25 = 16 shares of RM 0.6125

Oh arithmetic, is the mother of safety. John Bogle

The smallest quantity of share you can buy from KLSE is 100 shares. 100 shares of RM 10 will cost you 1K.
Stock ABC: ROE 10%, share price RM 1, cost of holding 1000 shares = 1K. Invested 1K have ROE of 10%
Stock XYZ: ROE 10%, share price RM 10, cost of holding 100 shares = 1K. Invested 1K have ROE of 10%
Stock 123: ROE 15%, share price RM 10, cost of holding 100 shares = 1K. Invested 1K have ROE of 15%

Avoid this simple psychological misjudgment if you meant to be a value investor.


In conclusion:
Becareful, sometimes the calculator of certain board directors works in arcane way, and your will found that you can outwit them in term of mathemetic.

A visit to Charlie Munger's Poor Charlie's Almanac is recommended. (I am gonna read some parts of it, again esp the psychological misjudgments)

Benjamin Graham:
Investment is most intelligent when it is most business like

Contemplator,
22/5/2015
-edited 27/5/2015

PS: if KLSE drop to 1000 points what will do you? Are you prepared for rainy day? Read my first blog if you are interested, my notions is shared there.