I was born and grew up in a Chinese New Village where we had a lot of fun in catching spider, fighting fish, playing hide and seek, cigarette boxes, long and short stick, jumping around squares drawn on the ground etc. We played a lot of ping pong, badminton and basketball too.
Another past time we did was singing song in our Village Library, and more often in the bathroom. You know at that time we did not have karaoke. One song I remember very well is this song “San Nien” by the then songbird Lee Siang Lan. Here is a link of this beautiful song.
https://www.youtube.com/watch?v=ICL061nPcA8
I like the song so much that I have even incorporated in my investing timeline, that investing for building wealth is a long-term endeavour, a minimum of 3 years, using fundamental value investing (FVI).
In the following recent article “Invest in good and cheap” in the link below,
http://klse.i3investor.com/blogs/kcchongnz/127444.jsp
I have shown a portfolio of ten stocks named “GE13 Stock Watch”, followed the principle of investing in good and cheap, as published on 21st January 2013, have had an investing period of four and a half years, i.e. more than “San Nien”. It gave very good long-term return of an average of 151% as on today, widely out-performed the gain of the broad market KLCI of just 19.1% during the same period.
Just 5 days ago, Again, I introduced a value investing strategy of buying good companies cheap in Bursa, the “ColdEye 5 yardsticks” investing strategy as shown in the link below.
http://klse.i3investor.com/blogs/kcchongnz/127559.jsp
A portfolio of 9 stocks meeting the criteria above and were chosen as good investing candidates at about the time on 17th March 2013 basing on the 5 metrics. After four years and four months, andof course more than “San Nien”, and as on 10th July 2017, the portfolio returned an average of 325%. This return way out-performed the total return of 18.3% of KLCI over the same period.
Two days ago, in order to provide evidence that FVI works again, I have shown another FVI strategy of Magic Formula Investing in the link below,
http://klse.i3investor.com/blogs/kcchongnz/127825.jsp
It shows 11 stocks chosen mostly using the Magic Formula investing strategy from 1st August 2013 to the end of the month. More than “San Nien” but slightly less than four years have passed and as on 13th July 2017, the average total return of the 11 stocks chosen is 175%, way out-performed the total return of 10% of KLCI during the same period.
As you can see, evidence from my personal experience in FVI did provide high extra-ordinary return over a period of more than “San Nien”.
That is the reason why I still love the song “San Nien”.
However, it is really very hard to convince people that FVI works, more so to tell them to wait for a minimum of 3 years investing horizon. I can easily say less than 5% of the people here have an ear to hear this, even though I have provided ample personal evidence that it did, and continues to work.
That is also why I have kept on harping about FVI and stubbornly providing my personal experience that it worked. Otherwise what else can I do to substantiate it?
Recently, I received this comment in my mail box after I wrote the article above.
[Blanked has left a new comment on your post "Invest in good and cheap kcchongnz":
do you know why you have less subscribers than OTB?
OTB's strategy is 3 to 6 months to see money come, your strategy takes 3 to 6 year to see a good result if we are lucky ……..]
OTB does have a lot of subscribers, no doubt about it. If someone has been very successful in stock pick in the last few years, and the money really “come” in 3 to 6 months, it is natural that he will have a lot of followers. Yes, he made a lot of money in the 3-6 months’ time frame as he has shown us that. But bear in mind that although he emphasizes on technical analysis, he also checks with fundamentals. Hence, we can say that he also believes in FVI. He certainly has his niche. If you have not subscribed to his service, you should do so.
But is this statement on my investment strategy that “your strategy takes 3 to 6 years to see a good result if we are lucky” correct?
I had started my stock pick service about a year ago as an additional service to my FVI course participants who are busy in their work as many of them are in senior positions in companies. Let us look at the return of those stocks picked following FVI with detail analysis and valuations, specifically those meeting the principle of the Joel Greenblatt’s Magic formula investing, for this short time frame.
Please note that those stocks were picked some time ago and prices have changed, many have changed substantially, and hence the investment thesis may be different now.
Return of Stock Picks in the last one year
Table 1 in the Appendix shows 12 stocks met the criteria of good companies selling cheap then, especially using the Magic Formula Principle, were chosen as good investing candidates starting a year ago. How has the portfolio performed?
As on 15th July 2017, the average total return of the 12 stocks chosen is 36%, way out-performed the total return of just 7.6% of KLCI, or the broader FBM Emas Index of 9.5% over the same one-year period.
KESM, picked exactly a year ago, has the best total return of 186%, followed by Magni-Tech at 80.3%, picked just 7 months ago. Superlon, picked just 4 months ago, had a return of 67%. OKA and Luxchem, picked 1 to 2 months ago, returned 22%.
There are 3 stocks, or 25%, making negative returns ranging from just -10.9% to -1.3%. Incidentally, WTK, the worst performer at -10.9%, was selected based on deep value asset-based investing.
Again, as other portfolios I have posted before,
Heads we win; tails we don’t lose much.
That is the very essence of FVI, low risk and potentially high return, even in the shorter term.
Conclusions
Again, and repeatedly, I have shown you, with my own personal experience, that FVI, whether using the ColdEye 5 yardsticks investing, the Magic Formula, or other FVI strategies of buying good companies cheap, have worked, and worked very well, and I believe it will continue to work. Furthermore, these strategies are low risk investing strategies.
It is intuitive. It is logical. it is plausible. It provides potential high return with limited downside.
It is easy to pick up the FVI skill. However, most people do not have the interest nor time to learn the skill. Here is where people like us are providing this service of stock picks for them to consider investing to build up long-term wealth, safely but surely.
More importantly, while you are investing, you are also learning about FVI simultaneously in a structured manner. You would understand the process and rationales of why certain stocks are picked. Eventually, if one has the interest and the determination to learn about this special skill of FVI, he would be able to invest confidently by himself.
Here are a couple of testimonials,
[Blanked
Jul 3 (13 days ago)
Hi K C,
I am delighted the NAV broke the RM1m hurdle, both Foreign (in 8 months) & Local ( I a year) Portfolio return more than 41%.
Thank you for the continue good performing of the portfolio.
Blanked]
[Blanked
Jul 3 (13 days ago)
Well done KC.
Pleased to have made the PD trip and to have met up with you.
The growing fellowship inspired by you is testament to your efforts in promoting FA, particularly benefiting the young but still not too late for old guys like me and Swee Loh!
Keep well.
Blanked]
Again, if you are interested in getting some guidance on what to invest in Bursa and at the same time, to learn up the FVI skills, you may contact me at
ckc14invest@gmail.com
K C Chong
Appendix
Table 1: 1-year return of stock picks
http://klse.i3investor.com/blogs/kcchongnz/127935.jsp
