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.
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.
Take NAIM for example
It has lots of Past Wealth
With Cash earned it invested in Dayang until Naim is the Top holder of Dayang. So is its investment in Perdana
Naim also acquired lots of Prime Lands through the years in Sarawak plus Hotel, Condos, Real estate & Industrial Lands
So the NAV (Net Asset Value) of Naim is now Rm2.60
Calvin specializes in buying into DEEP VALUE ASSETS COMPANIES SELLING FOR A SONG
Now that Naim is unlocking Value Again by Asset Disposal we are very fortunate to participate in it at a Very Attractive Price of Only 82 sen a share while so many others have bought from Rm3.00 to Rm6.00 in time past.
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
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.
SO THERE IS PAST WEALTH, PRESENT WEALTH & FUTURE WEALTH
Investing in PAST WEALTH IS CERTAIN BECAUSE WE CAN OBSERVE, QUANTIFY & VALUE ITS WORTH IN REAL TIME
Now if you look at NAIM 30 Top Holders you will find lots of Funds are in Majority Shareholders of Naim. Among them is Hong Leong Income Fund.
Naim used to pay very good dividends years back. Now it has resumed a nice 18 sen dividend we can expect Naim to continue as it continues to unlock value
One more thing
Among Top 30 Holders of Naim is
Lee See Jin (Boss of NTPM)
What a nice name
Lee is a Sir Name
See as in "See or Observe"
Jin means "gold"
So the Boss of NTPM also see "GOLD" in Naim?
All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.