Wednesday, July 19, 2017

Warren Buffett's Ground Rules

I just finished my 21st book "Warren Buffett's Ground Rules" 2 days ago.

Now i am searching for my next investment book, most probably will get it this weekend.


Below are some key points i learnt from the book and i think it is better for me to list them down to remind myself:

(1) Warren Buffet teaches investors that the power of compounded interest is unmatched by any other factor in the production of wealth through investment. Compounding over a life-long investment program is your best strategy, bar none. The two determining factors of the ultimate result of compounding program are: (1) the annual average rate of gain and (2) time.

(2) Investing requires much of our energy & efforts into it, if we are not interested, unable, or unwilling to dedicate the time and efforts to our investments, we should buy index.

(3) Three type of Investment of Warren Buffet:

(3.1) The General: 

The principle of investing in company are investing largely focused on purchase securities at price less than the intrinsic value as determined by careful analysis, with particular emphasis on purchase of the securities less than their liquidating value.

An appraisal of a company can be derived of either the value of the company: [1] assets & [2] earnings power.

While principles never change, methods can be applied differently depending on given investing environment. 
Basically there are 3 methods used by Warren Buffet during his Partnership era:
      [1] The first method is investing with net-net and ultra-cheap stocks based on quantitative approach.
      [2] The second method is investing in companies which are not statically cheap based on quantitative approach but has a tremendous amount of future earnings power.
      [3] The third method is investing in companies which are able to provide high returns of earning, business which are great, enduring and sustainable business model that enables their earnings to be compounded over the years.

(3.2)  Workout: more commonly known as merger arb or risk arb- which involves bets on the likelihood that an announcement transaction (usually one company buying another) will actually close.

(3.3) Controls: Investment is more intelligent when it is most businesslike and business is most intelligent when it's more investment-like. Buying a stock is like buying a business which either discounted to its intrinsic value or earnings power. The continuing of buying part of the businesses through purchasing of the businesses stock at discounted price until we own a majority of the businesses then we become the majority of the shareholders (Controls).

(4) Investing in stock should be done with Conservatism and not Conventional.

Good results in investing come primarily from a properly calibrated balance of hubris and humility: 
1. Hubris enough to think we can have insights that are superior to the collective wisdom of the market and
2. Humility enough to know the limit of our abilities and to be willing to change course when errors are recognized.

We will have to evaluate facts and circumstances, apply logic and reason to find hypothesis, and then act when the facts line up, irrespective of whether the crowd agrees or disagrees with our conclusions.

(5) Concentrating portfolio within our circle of competence can produce the best result.
Concentrating vs Diversification: Better to be roughly right than precisely wrong.

(6) If we can identify 6 wonderful businesses, that is all the diversification we need. And we will make a lot of money. Going into the 7th business instead of putting more money into the 1st business is going to be a terrible mistake.

(7) " I would rather sustain the penalties resulting from over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption of a "New Era" philosophy where trees really do grow to the sky" - Warren Buffet on February, 1960.

(8) We should be looking for the management with 3 things: intelligence, energy, and integrity. Integrity is what counts first. If someone does not have integrity, we want them to be dumb and lazy.

(9) "So the really big money tends to be made by investors who are right on qualitative decisions but, at least in my opinion, the more sure money tends to be made on the obvious quantitative decision" Warren Buffet, 1967.




Wednesday, June 7, 2017

The Next Investment Books in My Target List - to be completed by March 2018


Below are the list of my next target Investment Books which i aim to complete them by March 2018:

1. The Most Important Thing Illuminated by Howard Marks & Paul Johnson

2. Poor Charlie's Almanack by Peter Kaufman

3. The Little Book of Common Sense Investing by Jack Bogle

4. The Outsiders by William Thorndike Jr

5. Jack: Straight from the Gut by Jack Welch & John A. Byrne

6. Warren Buffet's Ground Rules by Jeremy C Miller

7. Where Are the Customers' Yachts? by Fred Schwed

8. Warren Buffet Accounting by Stig Brodersen & Preston Pysh

Good luck to me!!!

My Investment Books - Update

Below are the list of my Investment Books i have read/reading:


(1) One Up on Wall Street --by Peter Lynch

(2) The Zulu Principle --by Jim Slater

(3) Intelligent Investor --by Benjamin Graham

(4) Common Stocks & Uncommon Profits --by Philip Fisher

(5) The Essay of Warren Buffet --by Lawrence A. Cunningham

(6) Behind the Berkshire Hathaway Curtain --by Ronald Chan

(7) Value Investing in Growth Company --by Rusmin & Victor Chng

(8) Investlah --by Serjing, Sudhan, Wei Lin

(9) Buffet's Bite -The Essential Investor's Guide to Warren Buffet's Shareholder Letters --by L.J. Rittenhouse

(10) Your First Million - making it from stock --by Dr Michael Leong

(11) The Neatest Little Guide to Stock Market Investing --by Jason Kelly

(12) The Value Investor --by Ronald Chan

(13) Fooled by Randomness --by Nassim Nicholas Taleb (not completed yet)

(14) Security Analysis --by Benjamin Graham (not completed yet)

(15) The Winning Investment Habits of Warren Buffet & George Soros --by Mark Tier

(16) The Buffet Essay Symposium with Warrent Buffet & Charlie Munger --by Lawrence A. Cunningham

(17) Buffettology --by Mary Buffet & David Clark

(18) Simply Brilliant --by William C. Taylor

(19) Long & Short: Confession of a Portfolio Manager (Stock Market Wisdom for Investors) --by Lawrence Creatura

(20) The Little Book That Still Beats The Market --by Joel Greenblatt



Thursday, May 25, 2017

My Investment Books - Update


Below are the list of my Investment Books i have read/reading:


(1) One Up on Wall Street --by Peter Lynch

(2) The Zulu Principle --by Jim Slater

(3) Intelligent Investor --by Benjamin Graham

(4) Common Stocks & Uncommon Profits --by Philip Fisher

(5) The Essay of Warren Buffet --by Lawrence A. Cunningham

(6) Behind the Berkshire Hathaway Curtain --by Ronald Chan

(7) Value Investing in Growth Company --by Rusmin & Victor Chng

(8) Investlah --by Serjing, Sudhan, Wei Lin

(9) Buffet's Bite -The Essential Investor's Guide to Warren Buffet's Shareholder Letters --by L.J. Rittenhouse

(10) Your First Million - making it from stock --by Dr Michael Leong

(11) The Neatest Little Guide to Stock Market Investing --by Jason Kelly

(12) The Value Investor --by Ronald Chan

(13) Fooled by Randomness --by Nassim Nicholas Taleb (not completed yet)

(14) Security Analysis --by Benjamin Graham (not completed yet)

(15) The Winning Investment Habits of Warren Buffet & George Soros --by Mark Tier

(16) The Buffet Essay Symposium with Warrent Buffet & Charlie Munger --by Lawrence A. Cunningham

(17) Buffettology --by Mary Buffet & David Clark

(18) Simply Brilliant --by William C. Taylor

(19) Long & Short: Confession of a Portfolio Manager (Stock Market Wisdom for Investors) --by Lawrence Creatura (have purchased online and waiting for the book to arrive)




Monday, May 22, 2017

May 2017 Transaction Update


It has been more than one month since i last updated my blog. I have been quite busy recently: both going through some of reports released early of this month and also with my work.


What i have Bought?


I have browsed through total of 339 reports of different companies for this Quarter. As usual, i eliminated all Blue chips & S chips, property, finance, oil & gas, and commodities counters.

Out of the 339 companies, i selected Frencken which met my buying criteria and i quickly bought 100k shares @39cts per share in the morning of 12th May 2017 after they released their Q1 report the night before. I also had went through about 8 quarters of their reports & Annual Reports.

Below are the preliminary thing i am looking at Frencken before going to their subsequents 8 quarters of report & their Annual Reports:

(1) The company reported an increase of 17.9% revenue YtoY in the same quarter.
(2) Gross profit margin increases to 17.2% from 15.2% YtoY in the same quarter.
(3) PBT (Net profit before tax) increases to 8.4mil from 4.4mil YtoY in the same quarter.
(Revenue increases by 17.9% but net profit before tax increases by 91%),
(4) Disposal of PESB (one of the business unit from IMS division) and boosted their cash level to 60mil & 33.2mil after deducting bank overdraft.

Will elaborate more when i have time to do so.


What i have Sold?


I decided to cash out about 18 - 20% of my equity in this quarter, so in the case the market shocks and i will not easily be shocked too.

I sold all my holding of Global Invacom @16.3cts/share & Taisin Electric @43.5cts/share.


What am i holding now?


(1) Sunningdale

(2) Best World

(3) 800 Super

(4) Avi-Tech

(5) Innotek

(6) Frencken