Tuesday's explosive rally surely gives ammunition to those who say, "Yes." By rallying more than 400 points, the Dow Jones Industrial Average on Tuesday turned in the biggest percentage gain in over five years.
But this correction has seen explosive rallies before that turned out not to mark the final bottom. So it behooves us to dig deeper.
I turn first to investment newsletter sentiment. A contrarian analysis of that data supports the notion that Monday was the end of the correction, since in recent sessions enough editors have turned bearish -- in effect throwing in the towel.
Consider the latest readings of the Hulbert Stock Newsletter Sentiment Index, which reflects the average recommended stock market exposure among a subset of several dozen short-term market timing newsletters tracked by the Hulbert Financial Digest. At minus 22.5%, the HSNSI is even lower than it was at the beginning of last week, when I had already concluded that the market was close to a bottom.
In fact, the HSNSI is now lower than it has been since October 2005, some two and one-half years ago. This is a big contrast to the sentiment situation that existed at the Jan. 22 market low, when the editor of the average market-timing newsletter wasn't even as bearish as he was during the market's corrections of last summer and fall.
Technical support for the idea that the correction's bottom has been seen comes from the market's diminished trading volume in recent weeks. Bob Brinker, editor of Bob Brinker's Marketimer, the newsletter with one of the best market-timing records over the last two decades, explained why in the March issue of his newsletter, published earlier this month:
"The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."
Yet another perspective, which also supports the notion that a bottom of at least some import has been registered, comes from Richard Russell, editor of Dow Theory Letters. Though Russell is officially bearish on the stock market's primary trend, he has noted in recent weeks a potentially bullish non-confirmation in the refusal of the Dow Jones Transportation Average to join the Dow in breaking its January low.
Writing before the close on Tuesday, Russell wrote that, at Monday's close, "The market was severely oversold. But what interested me was that the market was not only oversold -- but it was severely oversold in the face of a flagrant non-confirmation on the part of the Transports. This unusually bullish combination provided the basis for a violent turnaround. In fact, it could turn out to be more than 'just a turnaround.' Ideally, what I'd like to see now is a 90% day on the upside. If that were to occur, we could be seeing a key reversal -- with the stock market perhaps having discounted the worst that can be seen ahead."
By the close on Tuesday, Russell's wish for a 90% up day apparently was granted: Up volume on the NYSE represented almost precisely 90% of the combined up and down volume on the exchange.
Wednesday, March 12, 2008
Tuesday, March 11, 2008
美次贷危机损失可能超过7200亿美元
次贷危机是美国经济进入下降周期的结果而非原因。自2002年以来的经济增长周期消费增长起着核心作用，而消费动力来自于房地产和金融资产升值带来的财富增加。在房地产的繁荣中，以次级债为代表的金融创新是最有力的推动因素，房地产与金融的互动是资产投资收益不断攀升的主要拉动力。次级房贷的扩张增加了对房屋的有效需求，推动了价格上涨和刺激了房屋建设。但是以资产投资收益刺激消费所带来的经济增长超过了美国经济实际的增长潜力，是无法持续的，在以房地产价格为标志的资产价格达到高点以后经济进入下降周期不可避免。随着经济进入下降周期，次债危机随后发生，是本轮经济周期中以房地产刺激经济的必然结果。
目前各金融机构已经公布的损失超过了1000亿美元，我们以美联储与IMF等机构所公布的数据为基础，计算出与次贷相关的风险资产总额约35000亿美元，估计的损失可能超过7200亿美元。目前美股跌幅远低于此前东南亚金融危机与新经济泡沫破裂后的市场跌幅，同时由于对滞涨担忧的加剧，我们认为，美股跌破1月底美联储救市以后形成的平台将是不可避免的。
目前各金融机构已经公布的损失超过了1000亿美元，我们以美联储与IMF等机构所公布的数据为基础，计算出与次贷相关的风险资产总额约35000亿美元，估计的损失可能超过7200亿美元。目前美股跌幅远低于此前东南亚金融危机与新经济泡沫破裂后的市场跌幅，同时由于对滞涨担忧的加剧，我们认为，美股跌破1月底美联储救市以后形成的平台将是不可避免的。
Saturday, March 8, 2008
巴菲特让市场很受伤
巴菲特的衰退论一出，对美国经济尚抱希望的“乐观派”们有些茫然起来
毫无疑问，巴菲特是一个“活着的传奇”，他独特的市场见解和投资哲学被时间证明是投资界的金科玉律。所以当本周一巴菲特在接受美国电视台采访时给美国经济打上“衰退”标签，并表示不再愿为三大债券保险商MBIA、Ambac和FGIC的8000亿美元市政债券提供担保后，对美国经济尚抱有希望的“乐观派”们也不禁有些茫然起来。
我就是这信心动摇者中的一个。原因其实并不在于我是多么忠实的“巴迷”，而是在于巴菲特唱衰对美国经济中长期走向的潜在影响令人担忧。
实际上，巴菲特看空美国经济也并没有抛出令人信服的论据，而仅仅只是表明了一种玄妙的、所谓“常识性”的感觉。
虽然现在正值风声鹤唳，但平心而论，还并没有足够的数据证明美国经济已经或即将步入衰退。2月28日确认后的2007年第四季度美国GDP增长依旧为黯淡的0.6％，但这一个时点的短期数据并不能说明任何趋势问题。读懂美国经济的关键，实际上在于参透其结构特征。众所周知美国GDP中消费占据七成，投资和净出口占比分别为15％和10％左右，比这些比例数字更重要且更不易察觉的核心特征是，消费是中长期增长的稳定主引擎，而投资波动往往是构成短期增长波动的主要原因。结合这个特征品味美国最新经济数据传递出的信息，很难嗅出衰退的味道。因为次贷风波后的2007年第四季度，美国投资的异常波动与经济增长骤然放缓如影随形，而美国长期消费倾向并没有显露出持续萎靡的迹象。
但巴菲特让这一切都有些变味了。投资大师对美国经济的悲观预期，与前期美联储前主席格林斯潘、美国经济研究局主席费尔德斯坦以及各类权威人士的“衰退论”相互映照，给市场信心带来致命打击。这种来自权威的预期对美国经济中长期走向的影响不容忽视。从行为金融学的理论观点来看，美国战后透支消费、超前消费和炫耀性消费中凸显的欲望、张扬和享乐特征，是“美国梦”的经济表现，其深入骨髓的乐观倾向支撑了美国透支式消费的长久维持。从某种意义上讲，美国经济持续增长很大程度上是因为大多数美国人都坚信美国经济将持续增长，并无所畏惧地维系着强势的消费倾向。
巴菲特的论断可能会让美国人真正害怕起来，而预期走弱无疑将削弱美国消费的稳定趋势，从而进一步加大美国经济陷入衰退的风险。而这一点，正是让我害怕，并真正担心起美国经济未来的根本原因。
至于巴菲特唱衰美国经济的原因，以我的智慧显然无法领悟。我只是依稀记得，巴菲特在那个被人津津乐道的2008年致股东信中说过：“要当心那些油嘴滑舌的所谓专家顾问，当你被他们的夸夸其谈骗得头脑发热，就是他们填满自己腰包的时候。”而且我们都知道巴菲特虽然很有钱，但作为商人，他不可能丢掉赚钱的原始本性。
毫无疑问，巴菲特先高调抛出8000亿美元救市计划，再断言衰退并宣布放弃拯救，对市场信心而言就像是一种使人“从天堂到地狱”的双倍打击。
那么如果美国经济真陷入衰退了，巴菲特会获得什么好处吗？一种可能比较肤浅的猜测是，也许此前宣称“未到抄底时机”的巴菲特会因此找到一个合适的抄底时机？而且，就算跌跌不休之中连抄底时机都没有，至少多元化的巴菲特还能继续将投资目光投向璀璨的新兴市场。
不管巴菲特意欲何为，他的唱衰论调无疑会让市场很受伤。
毫无疑问，巴菲特是一个“活着的传奇”，他独特的市场见解和投资哲学被时间证明是投资界的金科玉律。所以当本周一巴菲特在接受美国电视台采访时给美国经济打上“衰退”标签，并表示不再愿为三大债券保险商MBIA、Ambac和FGIC的8000亿美元市政债券提供担保后，对美国经济尚抱有希望的“乐观派”们也不禁有些茫然起来。
我就是这信心动摇者中的一个。原因其实并不在于我是多么忠实的“巴迷”，而是在于巴菲特唱衰对美国经济中长期走向的潜在影响令人担忧。
实际上，巴菲特看空美国经济也并没有抛出令人信服的论据，而仅仅只是表明了一种玄妙的、所谓“常识性”的感觉。
虽然现在正值风声鹤唳，但平心而论，还并没有足够的数据证明美国经济已经或即将步入衰退。2月28日确认后的2007年第四季度美国GDP增长依旧为黯淡的0.6％，但这一个时点的短期数据并不能说明任何趋势问题。读懂美国经济的关键，实际上在于参透其结构特征。众所周知美国GDP中消费占据七成，投资和净出口占比分别为15％和10％左右，比这些比例数字更重要且更不易察觉的核心特征是，消费是中长期增长的稳定主引擎，而投资波动往往是构成短期增长波动的主要原因。结合这个特征品味美国最新经济数据传递出的信息，很难嗅出衰退的味道。因为次贷风波后的2007年第四季度，美国投资的异常波动与经济增长骤然放缓如影随形，而美国长期消费倾向并没有显露出持续萎靡的迹象。
但巴菲特让这一切都有些变味了。投资大师对美国经济的悲观预期，与前期美联储前主席格林斯潘、美国经济研究局主席费尔德斯坦以及各类权威人士的“衰退论”相互映照，给市场信心带来致命打击。这种来自权威的预期对美国经济中长期走向的影响不容忽视。从行为金融学的理论观点来看，美国战后透支消费、超前消费和炫耀性消费中凸显的欲望、张扬和享乐特征，是“美国梦”的经济表现，其深入骨髓的乐观倾向支撑了美国透支式消费的长久维持。从某种意义上讲，美国经济持续增长很大程度上是因为大多数美国人都坚信美国经济将持续增长，并无所畏惧地维系着强势的消费倾向。
巴菲特的论断可能会让美国人真正害怕起来，而预期走弱无疑将削弱美国消费的稳定趋势，从而进一步加大美国经济陷入衰退的风险。而这一点，正是让我害怕，并真正担心起美国经济未来的根本原因。
至于巴菲特唱衰美国经济的原因，以我的智慧显然无法领悟。我只是依稀记得，巴菲特在那个被人津津乐道的2008年致股东信中说过：“要当心那些油嘴滑舌的所谓专家顾问，当你被他们的夸夸其谈骗得头脑发热，就是他们填满自己腰包的时候。”而且我们都知道巴菲特虽然很有钱，但作为商人，他不可能丢掉赚钱的原始本性。
毫无疑问，巴菲特先高调抛出8000亿美元救市计划，再断言衰退并宣布放弃拯救，对市场信心而言就像是一种使人“从天堂到地狱”的双倍打击。
那么如果美国经济真陷入衰退了，巴菲特会获得什么好处吗？一种可能比较肤浅的猜测是，也许此前宣称“未到抄底时机”的巴菲特会因此找到一个合适的抄底时机？而且，就算跌跌不休之中连抄底时机都没有，至少多元化的巴菲特还能继续将投资目光投向璀璨的新兴市场。
不管巴菲特意欲何为，他的唱衰论调无疑会让市场很受伤。
价值投资已经不管用了
A股已经进入“牛市下半场”了.
牛市下半场”有四个基本特征：
一是板块之间移动快速，
二是个股暴涨暴跌现象严重，
三是赚了指数赔了股价，
四是与国际股市联动加强。
这种情况下股民该如何操作呢？
下半场肯定还会“高潮迭起”，但是这种市场环境下价值投资已经不管用了，因为已经不存在“价值洼地”了，下面必须完全依靠技术分析才能取胜，股民尤其应该注意对消息的收集和分析。
牛市下半场”有四个基本特征：
一是板块之间移动快速，
二是个股暴涨暴跌现象严重，
三是赚了指数赔了股价，
四是与国际股市联动加强。
这种情况下股民该如何操作呢？
下半场肯定还会“高潮迭起”，但是这种市场环境下价值投资已经不管用了，因为已经不存在“价值洼地”了，下面必须完全依靠技术分析才能取胜，股民尤其应该注意对消息的收集和分析。
熊市短线买卖股票纪律
* 强做多，弱做空，多持币，常轻仓（空仓）， 常捂资金短捂股。
*大盘强势60-80%仓位. 大盘弱势20-40%仓位. 千万别满仓（85%）
1. 大盘跌破25日均线和13日均线则轻仓或空仓休息，大盘不站稳13日均线不加仓.
2 买股要选收盘股价站在25日均线上的.跌破25日均线的个股千万别买.
3. 各条均线成多头排列,个股股价在7日均线,13日均线,25日均线的上面.
4. 强势个股成交量缩量收阴线,股价在盘中有触击7日均线或13日均线后收起成下影线,在7日均线或13日均线附近大胆买入.买错也要买.（注意7日均线或13日均线的买点）.
5. 必须选择近5天内最少有3天主力大单动向收红的强势股.
6. 买了个股股价超过7日均线的1.1倍则一定要止赢.
7. 个股股价收盘连续2天跌破13日均线,则一定要止损全卖,卖错也要卖.
8. 任何股票买入后不赚钱一律不得补仓, 弱市中涨5%就卖, 跌破13日均线也卖，无论那只股票，只要亏损达到10%立即割了，永远不要再看他！因为你和他前世无缘！
9. 买进股票的时机最好选择下午2：30以后，第二天开盘有盈利5-10%个点立即卖出.
10. 知足常乐. 千万不能贪. 贪则贫. 个股有赚坚决减仓.
*大盘强势60-80%仓位. 大盘弱势20-40%仓位. 千万别满仓（85%）
1. 大盘跌破25日均线和13日均线则轻仓或空仓休息，大盘不站稳13日均线不加仓.
2 买股要选收盘股价站在25日均线上的.跌破25日均线的个股千万别买.
3. 各条均线成多头排列,个股股价在7日均线,13日均线,25日均线的上面.
4. 强势个股成交量缩量收阴线,股价在盘中有触击7日均线或13日均线后收起成下影线,在7日均线或13日均线附近大胆买入.买错也要买.（注意7日均线或13日均线的买点）.
5. 必须选择近5天内最少有3天主力大单动向收红的强势股.
6. 买了个股股价超过7日均线的1.1倍则一定要止赢.
7. 个股股价收盘连续2天跌破13日均线,则一定要止损全卖,卖错也要卖.
8. 任何股票买入后不赚钱一律不得补仓, 弱市中涨5%就卖, 跌破13日均线也卖，无论那只股票，只要亏损达到10%立即割了，永远不要再看他！因为你和他前世无缘！
9. 买进股票的时机最好选择下午2：30以后，第二天开盘有盈利5-10%个点立即卖出.
10. 知足常乐. 千万不能贪. 贪则贫. 个股有赚坚决减仓.
Friday, December 21, 2007
Thursday, December 20, 2007
食物漲價第二波開始
明年係美國經濟軟陸年，但全球GDP增長率不俗；歐羅價進入回落期。瑞銀建議增持科技、電訊和工業板塊。
至於對石油股睇法？供應鏈非常緊，足以抵銷OECD國家經濟放緩所帶來影響，但大體上持樂觀態度，平均油價較今年高。
對於2008年展望，基本上認為進入半周期性調整，此乃經濟上升四、五年後必然現象，調整幅度少於2010至2012年。美國經濟2010年3月至11月放緩，股市要到2012年10月才見底，主因係當年資本開支減少。
呢次經濟放緩今年第二季已開始，估計明年第一季見底，股市後市表現係點較難估計。
財政部同國家稅務總局發出聯合通知，決定今年12月20日起取消小麥、稻穀、大米、玉米、大豆等原糧及製粉出退稅，理由係今年11月中國CPI較去年同期上升6.9％，因此本月20日起上述糧食及製粉出取消退稅。若國內糧食緊張程度不變，將對出糧食進行徵稅，直至情況改變為止。睇落香港人明年要食貴米！
提高出口稅後原油、煤、銅、稀土金屬分別下降42.8％、17.6％、27.4％及24.1％，精煉銅、鉛、木片同木粒下降50％以上，鋼坯、鋼材下降13.1％。
今年8月至10月出口及外貿盈餘升幅較前七個月下降6.1％及50％，估計龐大外資盈餘明年應可大幅減少。
《金融時報》認為，食物漲價第二波已經開始，美國農業部估計全球糧食存量跌至四十七年內最低，只夠九點三個星期食用（玉米跌至三十三年內最低，只夠七點五個星期食用）。油價及肥料價格上升（例如尿素售價升86％，磷酸肥更升150％），小麥年產量六百零三百萬噸，但年銷耗量六百一十一百萬噸，已出現短缺。穀物類價格上升帶動所有食物價上升。
對高收入家庭而言，例如月入10萬元者，花食物方面只係1萬元，即使上升30％，亦只增加3000元，佔總開支3％；反而對月入1萬元家庭而言，花食物方面係5000元，上升30％係1500元，即增加開支15％。換言之，食物價格上升對低收入家庭打擊大於高收入家庭好多好多。
中國人均收入唔及美國人十分一，如中國人改變飲食習慣變到一如今天美國人（中國有十三億人口，美國只有三億），多一個地球都唔夠應付。中國因素近七年已令全球鐵礦砂、銅、鋁、鎳、石油漲價，依家輪到食物，你說怎麼辦？
至於對石油股睇法？供應鏈非常緊，足以抵銷OECD國家經濟放緩所帶來影響，但大體上持樂觀態度，平均油價較今年高。
對於2008年展望，基本上認為進入半周期性調整，此乃經濟上升四、五年後必然現象，調整幅度少於2010至2012年。美國經濟2010年3月至11月放緩，股市要到2012年10月才見底，主因係當年資本開支減少。
呢次經濟放緩今年第二季已開始，估計明年第一季見底，股市後市表現係點較難估計。
財政部同國家稅務總局發出聯合通知，決定今年12月20日起取消小麥、稻穀、大米、玉米、大豆等原糧及製粉出退稅，理由係今年11月中國CPI較去年同期上升6.9％，因此本月20日起上述糧食及製粉出取消退稅。若國內糧食緊張程度不變，將對出糧食進行徵稅，直至情況改變為止。睇落香港人明年要食貴米！
提高出口稅後原油、煤、銅、稀土金屬分別下降42.8％、17.6％、27.4％及24.1％，精煉銅、鉛、木片同木粒下降50％以上，鋼坯、鋼材下降13.1％。
今年8月至10月出口及外貿盈餘升幅較前七個月下降6.1％及50％，估計龐大外資盈餘明年應可大幅減少。
《金融時報》認為，食物漲價第二波已經開始，美國農業部估計全球糧食存量跌至四十七年內最低，只夠九點三個星期食用（玉米跌至三十三年內最低，只夠七點五個星期食用）。油價及肥料價格上升（例如尿素售價升86％，磷酸肥更升150％），小麥年產量六百零三百萬噸，但年銷耗量六百一十一百萬噸，已出現短缺。穀物類價格上升帶動所有食物價上升。
對高收入家庭而言，例如月入10萬元者，花食物方面只係1萬元，即使上升30％，亦只增加3000元，佔總開支3％；反而對月入1萬元家庭而言，花食物方面係5000元，上升30％係1500元，即增加開支15％。換言之，食物價格上升對低收入家庭打擊大於高收入家庭好多好多。
中國人均收入唔及美國人十分一，如中國人改變飲食習慣變到一如今天美國人（中國有十三億人口，美國只有三億），多一個地球都唔夠應付。中國因素近七年已令全球鐵礦砂、銅、鋁、鎳、石油漲價，依家輪到食物，你說怎麼辦？
Monday, December 17, 2007
準備迎接「1月效應」
感恩節後股市回升，我老曹一早已指出只係反彈，希望幫到各位趁反彈減持藍籌股。
近日美國銀行業面對嚴峻嘅信貸問題，令股市又再受壓；加上內房股漸染秋涼（感冒），加快令恒生指數回落。
漲潮總有落潮時，今年人行已十次提升存款準備金率、五次加息，經濟過快增長勢頭有望受壓抑。呢次只係樓市降溫而唔係地產整體休克；影響之下，香港不但內房股受壓，本港地產股亦由於在响地投資漸多而逃不了一跌命運。
雖然係咁，各位應準備「1月效應」（即12月24日至1月初股市再上升）此乃典型櫥窗裝飾。
近日股市愈係下跌，出現回升機會愈大；唔排除港股下周見底回升。
近日美國銀行業面對嚴峻嘅信貸問題，令股市又再受壓；加上內房股漸染秋涼（感冒），加快令恒生指數回落。
漲潮總有落潮時，今年人行已十次提升存款準備金率、五次加息，經濟過快增長勢頭有望受壓抑。呢次只係樓市降溫而唔係地產整體休克；影響之下，香港不但內房股受壓，本港地產股亦由於在响地投資漸多而逃不了一跌命運。
雖然係咁，各位應準備「1月效應」（即12月24日至1月初股市再上升）此乃典型櫥窗裝飾。
近日股市愈係下跌，出現回升機會愈大；唔排除港股下周見底回升。
Saturday, December 15, 2007
Fear Brings Opportunity and Digging for Value
Whitney Tilson is the founder and Managing Partner of T2 Partners, a hedge fund, as well as a mutual fund operation. He has co-founded a terrific newletter and established a semi-annual investment conference, Value Investing Congress, where he features a number of legendary investors.
As an extension of the conference, he has introduced a new blog to highlight value investment thinking. One of the recent posts is, in my opinion, quite demonstrative of the "inverse emotionalism" that is required to be a successful value investor.
Zeke Ashton of Centaur Capital describes the fear that has infected financial services stocks very aptly:
"Clearly, we’ve got fear now, and at the epicenter of that fear is the U.S. real estate market. This fear is reflected in extraordinary volatility and stock price declines for those companies seen most vulnerable to the real estate bust – most notably homebuilders, mortgage lenders, and mortgage guarantors – coupled with all-time high prices for disaster protection on these names."
If there is a single mantra for value investors, Ashton nails it here:
"But as all value investors know, fear brings opportunity. One of the axioms of fear-based selling is that everything viewed as being in proximity to the danger gets sold."
Indeed, fear brings opportunity, and panic is never discriminating.
Damage occurs at the periphery of the disaster and securities are unjustly marked down. True value investors sift through the rubble to unearth the bargains that were caught in the cross-fire.
Timing is impossible, but strict adherence to a discipline and patience will provide great long-term returns.
In a behavioral sense, it is always difficult to overcome the social pressure to conform. Being ostracized by others (especially clients who don't yet "get it") is a difficult position to maintain. No wonder closet-indexing is so prevalent; closet indexers turn out to be momentum players, just like the indices they hug!
But, doing your own thing, ignoring the noise, celebrating the fear of others is a good high probability bet if your decisions are disciplined.
As an extension of the conference, he has introduced a new blog to highlight value investment thinking. One of the recent posts is, in my opinion, quite demonstrative of the "inverse emotionalism" that is required to be a successful value investor.
Zeke Ashton of Centaur Capital describes the fear that has infected financial services stocks very aptly:
"Clearly, we’ve got fear now, and at the epicenter of that fear is the U.S. real estate market. This fear is reflected in extraordinary volatility and stock price declines for those companies seen most vulnerable to the real estate bust – most notably homebuilders, mortgage lenders, and mortgage guarantors – coupled with all-time high prices for disaster protection on these names."
If there is a single mantra for value investors, Ashton nails it here:
"But as all value investors know, fear brings opportunity. One of the axioms of fear-based selling is that everything viewed as being in proximity to the danger gets sold."
Indeed, fear brings opportunity, and panic is never discriminating.
Damage occurs at the periphery of the disaster and securities are unjustly marked down. True value investors sift through the rubble to unearth the bargains that were caught in the cross-fire.
Timing is impossible, but strict adherence to a discipline and patience will provide great long-term returns.
In a behavioral sense, it is always difficult to overcome the social pressure to conform. Being ostracized by others (especially clients who don't yet "get it") is a difficult position to maintain. No wonder closet-indexing is so prevalent; closet indexers turn out to be momentum players, just like the indices they hug!
But, doing your own thing, ignoring the noise, celebrating the fear of others is a good high probability bet if your decisions are disciplined.
Phil Town's Four Ms
Whenever we look at buying a stock, we should have Warren Buffett's main philosophy ingrained in our minds. That is....
We want the business to be
(1) one that we can understand,
(2) with favorable long-term prospects,
(3) operated by honest and competent people, and
(4) available at a very attractive price.
This core framework can be easily remembered reading Phil Town's book,
Rule #1. It refers to the four Ms.
1. Does this business have Meaning to you?
2. Does the business have a wide Moat? (duarable competitive advantage)
3. Does the business have great Management?
4. Does the business have a big Margin of Safety?
This is a great book and it reconfirms to me about Buffett's teachings.
It actually teaches you step by step how to buy companies and get a 15% compounded return.
In analyzing the company, the order of importance is
1. Return on Invested Capital (ROIC)
2. Sales growth
3. EPS growth
4. Equity growth
5. Free Cash Flow or Cash growth
With calculating intrinsic value with future EPS growth rate, I liked the idea of using the equity(book value) growth rate vs analysts EPS growth rate(whichever is lower) because what good is a business if earnings grows but you have to take money and put it back into capital expenditures and no surplus cash is generated ?
Warren Buffett says the best proxy for the growth of intrinic value is the growth of equity.
We want the business to be
(1) one that we can understand,
(2) with favorable long-term prospects,
(3) operated by honest and competent people, and
(4) available at a very attractive price.
This core framework can be easily remembered reading Phil Town's book,
Rule #1. It refers to the four Ms.
1. Does this business have Meaning to you?
2. Does the business have a wide Moat? (duarable competitive advantage)
3. Does the business have great Management?
4. Does the business have a big Margin of Safety?
This is a great book and it reconfirms to me about Buffett's teachings.
It actually teaches you step by step how to buy companies and get a 15% compounded return.
In analyzing the company, the order of importance is
1. Return on Invested Capital (ROIC)
2. Sales growth
3. EPS growth
4. Equity growth
5. Free Cash Flow or Cash growth
With calculating intrinsic value with future EPS growth rate, I liked the idea of using the equity(book value) growth rate vs analysts EPS growth rate(whichever is lower) because what good is a business if earnings grows but you have to take money and put it back into capital expenditures and no surplus cash is generated ?
Warren Buffett says the best proxy for the growth of intrinic value is the growth of equity.
Simplicity is the secret to investing
I'm reading the book, the Dhandho investor, by Mohnish Pabrai, and it states:
Simplicity is a very powerful construct.
Henry Thoreau recognized this when he said, "Our life is frittered away by detail... simplify, simplify."
Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics.
He noted that the five ascending levels of intellect were, "Smart, Intelligent, Brilliant, Genius, Simple."
For Einstein, simplicity was simply the highest level of intellect. Everything about Warren Buffett's investment style is simple.
It is the thinkers like Einstein and Buffett, who fixate on simplicity, who triumph. The genius behind E=mc squared is it's simplicity and elegance.
Simplicity is a very powerful construct.
Henry Thoreau recognized this when he said, "Our life is frittered away by detail... simplify, simplify."
Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics.
He noted that the five ascending levels of intellect were, "Smart, Intelligent, Brilliant, Genius, Simple."
For Einstein, simplicity was simply the highest level of intellect. Everything about Warren Buffett's investment style is simple.
It is the thinkers like Einstein and Buffett, who fixate on simplicity, who triumph. The genius behind E=mc squared is it's simplicity and elegance.
Warren Buffett - Preservation of capital
Preservation of capital should be your number 1 priority in stock investing. If you lose 50% of your investment portfolio, you will have to double it just to get back where you started. It will take you six years to get it back if you average 12% a year (about 4 years if average 20% a year).
The next time you plan to buy a stock, the question should not be, "how much can I make?", but "how much can I lose?".
Figure out the risk/reward factor (ie. I think this stock has 2 down but 10 points up.) Jim Cramer says if you speculate, make it only a small percentage of your portfolio...
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1" - Warren Buffett
"An investor needs to do very few things as long as he or she avoids big mistakes." - Warren Buffett
The next time you plan to buy a stock, the question should not be, "how much can I make?", but "how much can I lose?".
Figure out the risk/reward factor (ie. I think this stock has 2 down but 10 points up.) Jim Cramer says if you speculate, make it only a small percentage of your portfolio...
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1" - Warren Buffett
"An investor needs to do very few things as long as he or she avoids big mistakes." - Warren Buffett
Warren Buffett - Have infinite patience
At Berkshire Hathaway's 1998 annual meeting he told shareholders:
"We haven't found anything to speak of in equities in a good many months. As for how long we'll wait, we'll wait indefinitely.
We're not going to buy anything just to buy it. We will only buy something if we think we're getting something attractive... We have no time frame. If the money piles up, then it piles up.
And when we see something that makes sense, we're willing to act very fast and very big. But we're not going to act on anything if it doesn't check out.
You don't get paid for activity. You only get paid for betting right"
"The trick is, when there's nothing to do, do nothing" - Warren Buffett
"We haven't found anything to speak of in equities in a good many months. As for how long we'll wait, we'll wait indefinitely.
We're not going to buy anything just to buy it. We will only buy something if we think we're getting something attractive... We have no time frame. If the money piles up, then it piles up.
And when we see something that makes sense, we're willing to act very fast and very big. But we're not going to act on anything if it doesn't check out.
You don't get paid for activity. You only get paid for betting right"
"The trick is, when there's nothing to do, do nothing" - Warren Buffett
Finding the next hot stock!
By far the best stock screener on the web is Yahoo's stock screener .
I use it maybe once or twice a week and I have to say, it's a great tool to have in finding stocks that are undervalued but you have to make sure you use the Java version vs the basic HTML because it gives you a lot more criteria to work with.
You can even save these screens so you can come back and use it again without starting all over.
My Stock Screens
------------
1. Trading at 1 or below book value
2. PEG between 0 and 1.00
3. P/E under 10
4. Yields over 4%
So try using it and I'm sure, you'll find some hidden gems!
I use it maybe once or twice a week and I have to say, it's a great tool to have in finding stocks that are undervalued but you have to make sure you use the Java version vs the basic HTML because it gives you a lot more criteria to work with.
You can even save these screens so you can come back and use it again without starting all over.
My Stock Screens
------------
1. Trading at 1 or below book value
2. PEG between 0 and 1.00
3. P/E under 10
4. Yields over 4%
So try using it and I'm sure, you'll find some hidden gems!
Investing decisions are best made on weekends
When the markets are open especially when you see quotes in real time and have CNBC on, it's an adrenaline rush.
Your mind is not clear. When stocks are moving, you feel like buying and selling.
My best decisions, however, are always made after the market's close especially on weekends when you have 2 days to evaluate what you want to do.
If you can discipline yourself to make decisions on weekends, then that's only 52 decisions in a year and most of the time, you'll be content with your positions already...the lazy way to get rich.
Your mind is not clear. When stocks are moving, you feel like buying and selling.
My best decisions, however, are always made after the market's close especially on weekends when you have 2 days to evaluate what you want to do.
If you can discipline yourself to make decisions on weekends, then that's only 52 decisions in a year and most of the time, you'll be content with your positions already...the lazy way to get rich.
Lou Simpson - Warren Buffett's rumored successor
Lou Simpson, who has run the equity portfolio at Berkshire's wholly owned auto insurer, Geico, for the last 25 years.
As Buffett laid out in Berkshire's 2004 annual report, Simpson's investment record is impressive in its own right, having outpaced the S&P 500 by an average of almost 7% per year. (Simpson's average annual gain from 1980-2004 is 20.3% vs S&P 13.5% during the same period.)
Lou Simpson manages his portfolio according to five basic principles.
He outlined these timeless principles in GEICO’s 1986 annual report, and he explained them at greater length in an interview with the Washington Post the following year:
1. Think independently.
We try to be skeptical of conventional wisdom, he says, and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street. We don’t ignore unpopular companies. On the contrary, such situations often present the greatest opportunities.
2. Invest in high-return businesses that are fun for the shareholders.
Over the long run, he explains, appreciation in share prices is most directly related to the return the company earns on its shareholders’ investment. Cash flow, which is more difficult to manipulate than reported earnings, is a useful additional yardstick. We ask the following questions in evaluating management: Does management have a substantial stake in the stock of the company? Is management straightforward in dealings with the owners? Is management willing to divest unprofitable operations? Does management use excess cash to repurchase shares? The last may be the most important. Managers who run a profitable business often use excess cash to expand into less profitable endeavors. Repurchase of shares is in many cases a much more advantageous use of surplus resources.
3. Pay only a reasonable price, even for an excellent business.
We try to be disciplined in the price we pay for ownership even in a demonstrably superior business. Even the world’s greatest business is not a good investment, he concludes, if the price is too high. The ratio of price to earnings and its inverse, the earnings yield, are useful guages in valuing a company, as is the ratio of price to free cash flow. A helpful comparison is the earnings yield of a company versus the return on a risk-free long-term United States Government obilgation.
4. Invest for the long term.
Attempting to guess short-term swings in individual stocks, the stock market, or the economy, he argues, is not likely to produce consistently good results. Short-term developments are too unpredictable. On the other hand, shares of quality companies run for the shareholders stand an excellent chance of providing above-average returns to investors over the long term. Furthermore, moving in and out of stocks frequently has two major disadvantages that will substantially diminish results: transaction costs and taxes. Capital will grow more rapidly if earnings compound with as few interruptions for commissions and tax bites as possible.
5. Do not diversify excessively.
An investor is not likely to obtain superior results by buying a broad cross-section of the market, he believes. The more diversification, the more performance is likely to be average, at best. We concentrate our holdings in a few companies that meet our investment criteria. Good investment ideas--that is, companies that meet our criteria--are difficult to find. When we think we have found one, we make a large commitment. The five largest holdings at GEICO account for more than 50 percent of the stock portfolio.
Buffett, also quoted by the Washington Post, Lou has made me a lot of money. Under today’s circumstances, he is the best I know. He has done a lot better than I have done in the last few years. He has seen opportunities I have missed. We have $700 million of our own net worth of $2.4 billion invested in GEICO’s operations, and I have no say whatsoever in how Lou manages the investments. He sticks to his principles. Most people on Wall Street don’t have principles to begin with. And if they have them, they don’t stick to them.
"When you ask whether someone is a value or growth investor--they're really joined at the hip. A value investor can be a growth investor because you're buying something that has above-average growth prospects and you're buying it at a discount to the economic value of the business." - Lou Simpson
As Buffett laid out in Berkshire's 2004 annual report, Simpson's investment record is impressive in its own right, having outpaced the S&P 500 by an average of almost 7% per year. (Simpson's average annual gain from 1980-2004 is 20.3% vs S&P 13.5% during the same period.)
Lou Simpson manages his portfolio according to five basic principles.
He outlined these timeless principles in GEICO’s 1986 annual report, and he explained them at greater length in an interview with the Washington Post the following year:
1. Think independently.
We try to be skeptical of conventional wisdom, he says, and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street. We don’t ignore unpopular companies. On the contrary, such situations often present the greatest opportunities.
2. Invest in high-return businesses that are fun for the shareholders.
Over the long run, he explains, appreciation in share prices is most directly related to the return the company earns on its shareholders’ investment. Cash flow, which is more difficult to manipulate than reported earnings, is a useful additional yardstick. We ask the following questions in evaluating management: Does management have a substantial stake in the stock of the company? Is management straightforward in dealings with the owners? Is management willing to divest unprofitable operations? Does management use excess cash to repurchase shares? The last may be the most important. Managers who run a profitable business often use excess cash to expand into less profitable endeavors. Repurchase of shares is in many cases a much more advantageous use of surplus resources.
3. Pay only a reasonable price, even for an excellent business.
We try to be disciplined in the price we pay for ownership even in a demonstrably superior business. Even the world’s greatest business is not a good investment, he concludes, if the price is too high. The ratio of price to earnings and its inverse, the earnings yield, are useful guages in valuing a company, as is the ratio of price to free cash flow. A helpful comparison is the earnings yield of a company versus the return on a risk-free long-term United States Government obilgation.
4. Invest for the long term.
Attempting to guess short-term swings in individual stocks, the stock market, or the economy, he argues, is not likely to produce consistently good results. Short-term developments are too unpredictable. On the other hand, shares of quality companies run for the shareholders stand an excellent chance of providing above-average returns to investors over the long term. Furthermore, moving in and out of stocks frequently has two major disadvantages that will substantially diminish results: transaction costs and taxes. Capital will grow more rapidly if earnings compound with as few interruptions for commissions and tax bites as possible.
5. Do not diversify excessively.
An investor is not likely to obtain superior results by buying a broad cross-section of the market, he believes. The more diversification, the more performance is likely to be average, at best. We concentrate our holdings in a few companies that meet our investment criteria. Good investment ideas--that is, companies that meet our criteria--are difficult to find. When we think we have found one, we make a large commitment. The five largest holdings at GEICO account for more than 50 percent of the stock portfolio.
Buffett, also quoted by the Washington Post, Lou has made me a lot of money. Under today’s circumstances, he is the best I know. He has done a lot better than I have done in the last few years. He has seen opportunities I have missed. We have $700 million of our own net worth of $2.4 billion invested in GEICO’s operations, and I have no say whatsoever in how Lou manages the investments. He sticks to his principles. Most people on Wall Street don’t have principles to begin with. And if they have them, they don’t stick to them.
"When you ask whether someone is a value or growth investor--they're really joined at the hip. A value investor can be a growth investor because you're buying something that has above-average growth prospects and you're buying it at a discount to the economic value of the business." - Lou Simpson
Risk Management Investing
When it comes to investing in the stock market, you have to be humble.
Nobody is bigger than the market.
You can never predict a top and never predict a bottom.
Nobody’s that good.
If you’ve done your research and found the stock that you predict will give you a 20% return, there are still certain rules you need to stick to, in order to manage your portfolio correctly.
The following are five rules that I abide by. If you apply these strategies, your margin of safety and return on your money will be that much greater.
Rule #1: Invest in Market Leaders
If at all possible, try to invest in best of breed companies. Figure out who has the biggest market share in the sector, or compare each companies financials and you will know who’s the better company. In the long run, market leaders outperform the sector and command a higher P/E premium.
Rule #2: Buy in Wide Scale Stages
Never buy all at once. Like I said before, nobody is that good in predicating a top or a bottom. You need to buy in stages. With discount brokerages like TD Ameritrade and Etrade, commissions have come down so low, it shouldn’t be a costly issue.
Example: ABC stock at $20 and you plan to buy 100 shares.
Buy 25 shares at $20 and hope it goes down some more. Wait for it to go down 10-20%. Don't keep buying every time it drops 1%. Buy in wide scales and only add to your position if you believe it’s still undervalued (future prospects still look bright). Buy at $17, $14.50, and $12. Arrogance is a sin and if were to buy $20 all at once and the stock is at $12, that’s a 66% loss. By staging your buys in wide scales, you lower that % loss.
If the stock goes higher, please don’t chase. It only lowers your return and the stock might come right back down. Keep your money in cash and wait for a pullback and if it doesn’t, look for other stocks to invest elsewhere.
The stock market is like baseball. Each ball coming over the plate is the price of a stock. You don’t have to swing at every pitch that goes over the plate. Just swing at good pitches that are in the strike zone (bargain prices of good companies) and go for singles rather than home runs (buying in wide scale stages). You’ll strike out less and have a better batting average. That’s the disciplined investor.
Rule #3: Diversify or Die
You’ve probably heard the old adage “Don’t put all your eggs in one basket”. This is true when it comes to investing. Whether you have $100,000 to invest or $2000 to invest, diversification is important to protect yourself from downside risk.
The “all in one basket” portfolio example is much like gambling. It’s either lose big or win big. If the stock is down, you’re stuck in the mud waiting for it to go up. By diversifying, it allows you to stay in the game and trade the ones that are up. You can still get a stellar return with a diversified portfolio and lower the volatility. I advocate no more than 10% of your portfolio in one stock.
If you don’t have a lot of money to begin with, don’t be ashamed to buy 10 shares or even 1 share of a company. So long as you calculated a good return on investment factoring in commissions, 10 different stocks getting 20% is the same as 2 stocks getting 20% return. But you have reduced your risk.
Diversification also entails diversifying in different sectors. Usually if one sector is out of favor, another will pick up. That’s called “sector rotation”. If you were to buy all retail stocks for example, and the sector is in a slump, you’re stuck waiting for a rebound while others are handsomely profiting because their sector is moving up. Stocks tend to move in groups and if you get the sector right, normally you get the stock right too. This is why you need to invest in different industries to keep you in the game.
Rule #4: Buy, Sell a little, and Hold strategy
A big question always is when to sell. As a rule of thumb, if your stock goes up 15-20%, it’s time to ring the register and sell a little and let the rest of your position in the stock ride. You haven’t really made a profit until you sell. If it were to go back down, you missed that potential profit. But if you sold some, and it were to go down, you can buy back what you’ve sold. That’s called “trading around your core position.”
By not selling all of your position prevents you from kicking yourself if the stock doubles or triples in value. So I am not advocating a “Buy and Hold” strategy, but a more prudent approach of “Buy, Sell a little, and Hold strategy.”
Rule #5: Sell on strength, Buy on weakness
“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffet
Most traders like to buy in a bull market (market rallying higher) and sell in a bear market (market correction). But as a contrarian value investor, I do the exact opposite. However, it’s easier said then done because it takes a lot of discipline. Nobody wants to miss a huge run up and greed sets in. But believe me, when the market keeps going up, you need to build your cash reserves because at any time, the market can change in a heartbeat. When the market is up and rallying in a bull market, sell a little into the strength. When the market is irrational and feels invisible in a bull market, cash is king!
Sooner or later, the market will correct itself and you will be ready to stage your buys.
Honestly, the best time to buy is when it feels most awful.
When the market’s crashing, there’s tons of negative news, and you’re patiently picking up stocks in wide scales while others are panicking and waiting on the sidelines because they have no cash to buy.
Nobody is bigger than the market.
You can never predict a top and never predict a bottom.
Nobody’s that good.
If you’ve done your research and found the stock that you predict will give you a 20% return, there are still certain rules you need to stick to, in order to manage your portfolio correctly.
The following are five rules that I abide by. If you apply these strategies, your margin of safety and return on your money will be that much greater.
Rule #1: Invest in Market Leaders
If at all possible, try to invest in best of breed companies. Figure out who has the biggest market share in the sector, or compare each companies financials and you will know who’s the better company. In the long run, market leaders outperform the sector and command a higher P/E premium.
Rule #2: Buy in Wide Scale Stages
Never buy all at once. Like I said before, nobody is that good in predicating a top or a bottom. You need to buy in stages. With discount brokerages like TD Ameritrade and Etrade, commissions have come down so low, it shouldn’t be a costly issue.
Example: ABC stock at $20 and you plan to buy 100 shares.
Buy 25 shares at $20 and hope it goes down some more. Wait for it to go down 10-20%. Don't keep buying every time it drops 1%. Buy in wide scales and only add to your position if you believe it’s still undervalued (future prospects still look bright). Buy at $17, $14.50, and $12. Arrogance is a sin and if were to buy $20 all at once and the stock is at $12, that’s a 66% loss. By staging your buys in wide scales, you lower that % loss.
If the stock goes higher, please don’t chase. It only lowers your return and the stock might come right back down. Keep your money in cash and wait for a pullback and if it doesn’t, look for other stocks to invest elsewhere.
The stock market is like baseball. Each ball coming over the plate is the price of a stock. You don’t have to swing at every pitch that goes over the plate. Just swing at good pitches that are in the strike zone (bargain prices of good companies) and go for singles rather than home runs (buying in wide scale stages). You’ll strike out less and have a better batting average. That’s the disciplined investor.
Rule #3: Diversify or Die
You’ve probably heard the old adage “Don’t put all your eggs in one basket”. This is true when it comes to investing. Whether you have $100,000 to invest or $2000 to invest, diversification is important to protect yourself from downside risk.
The “all in one basket” portfolio example is much like gambling. It’s either lose big or win big. If the stock is down, you’re stuck in the mud waiting for it to go up. By diversifying, it allows you to stay in the game and trade the ones that are up. You can still get a stellar return with a diversified portfolio and lower the volatility. I advocate no more than 10% of your portfolio in one stock.
If you don’t have a lot of money to begin with, don’t be ashamed to buy 10 shares or even 1 share of a company. So long as you calculated a good return on investment factoring in commissions, 10 different stocks getting 20% is the same as 2 stocks getting 20% return. But you have reduced your risk.
Diversification also entails diversifying in different sectors. Usually if one sector is out of favor, another will pick up. That’s called “sector rotation”. If you were to buy all retail stocks for example, and the sector is in a slump, you’re stuck waiting for a rebound while others are handsomely profiting because their sector is moving up. Stocks tend to move in groups and if you get the sector right, normally you get the stock right too. This is why you need to invest in different industries to keep you in the game.
Rule #4: Buy, Sell a little, and Hold strategy
A big question always is when to sell. As a rule of thumb, if your stock goes up 15-20%, it’s time to ring the register and sell a little and let the rest of your position in the stock ride. You haven’t really made a profit until you sell. If it were to go back down, you missed that potential profit. But if you sold some, and it were to go down, you can buy back what you’ve sold. That’s called “trading around your core position.”
By not selling all of your position prevents you from kicking yourself if the stock doubles or triples in value. So I am not advocating a “Buy and Hold” strategy, but a more prudent approach of “Buy, Sell a little, and Hold strategy.”
Rule #5: Sell on strength, Buy on weakness
“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffet
Most traders like to buy in a bull market (market rallying higher) and sell in a bear market (market correction). But as a contrarian value investor, I do the exact opposite. However, it’s easier said then done because it takes a lot of discipline. Nobody wants to miss a huge run up and greed sets in. But believe me, when the market keeps going up, you need to build your cash reserves because at any time, the market can change in a heartbeat. When the market is up and rallying in a bull market, sell a little into the strength. When the market is irrational and feels invisible in a bull market, cash is king!
Sooner or later, the market will correct itself and you will be ready to stage your buys.
Honestly, the best time to buy is when it feels most awful.
When the market’s crashing, there’s tons of negative news, and you’re patiently picking up stocks in wide scales while others are panicking and waiting on the sidelines because they have no cash to buy.
Wednesday, December 12, 2007
Business-like investing
“Investing is most intelligent when it is most business-like” –Ben Graham.
Imagine a close friend who owns a restaurant and is thinking of opening up one in another city but requires additional capital to expand his operations. He gives you a call hoping you would join in as a silent partner. Would this be a wise investment?
Below are some questions that you may ask. Take a moment and think about what questions you would ask before looking at the list.
The questions you should ask yourself are:
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
“What do I know about the restaurant business? (Do I understand it?)”
“How well is the restaurant doing currently?”
“How well has the company done in the past? (Does it have good financials?)”
“How well should the new restaurant perform?”
“What price should I pay to receive a good return on investment? (What should be my % of ownership based on my investment?)
“What’s my time horizon for cashing out of this business?”
These are just some of the relevant questions you should be asking yourself and if you were a serious investor, I’m sure you would do a lot more research such as going to the restaurant periodically, eating the food, verifying the financials with an accountant, and visiting the competition. These are the traits of a good business analyst and if you can take that same mentality and apply it to stocks, you are on your way, to becoming a better investor. That is lesson number one.
Understanding the Business
“Invest in your circle of competence” – Warren Buffett
Your investing success will be determined by how well you understand the company. Always try to invest in easy to understand companies that have great long term future.
Newspaper stocks of are an example of a slowing business. It used to be a cash cow because of its monopoly (one or two newspapers that represent the town) and low cost (equipment doesn’t need to be updated). Now future prospects don’t look so bright because of the growing competition and ease of use of the Internet. So when studying companies, ask questions like:
“What’s the competition landscape in 5 years?”
“Will profit margins be lower because of competition?”
“Can the company raise prices?”
“Can technology or new innovations affect the company?”
Honest and Competent Management
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
Imagine if you had a hockey team and you could pick any player from any era to be the team captain. Who would it be? Wayne Gretzky? Bobby Orr? Or what if you had a basketball team and you could pick anybody you wanted. How about choosing Michael Jordan in his prime? The point is, the team leader can have a dramatic effect to the performance of your team. The same goes with stocks. The CEO (chief executive officer) plays a vital role in the company’s success.
Examples of great CEO leadership:
In 1997 Steve Jobs became Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio. Under Jobs' guidance the company increased sales significantly with the introduction of the innovative products such as iMac, iPod, & iTunes. Apple stock has continued to go higher and higher! In Oct 1, 2001, it was $8.07 (stock split adjusted), and has gone to $74.08 in Oct 2, 2006. That’s a 55.80 % compounded rate of return for 5 years!
Mark Hurd replaced Carly Fiorina who left at the advice of Hewlett Packard’s board of directors after the difficult merger with Compaq and a struggle with the HP board after reports of disappointing earnings. Under Hurd’s leadership, the company’s earnings improved dramatically through cost cutting and market share gain. The stock has performed brilliantly! In Sept 30, 2002, HPQ was $11.45 (stock split adjusted), and has gone to $37.42 in Oct 2nd, 2006. That’s a 34.45% compounded rate of return for 4 years!
Eddie Lampert was able to emerge Kmart out of bankruptcy in 2003. Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million. He sold 68 stores -- less than 5% of Kmart's real estate assets -- for about the same price that he had paid for control of ALL of Kmart's 1,500 stores and 16 distribution centers during bankruptcy proceedings! Lampert also took measures to improve Kmart's operating results and cash flow, leading to a string of profitable quarters for the resurgent retailer. It has now merged with Sears and continues to blow away quarterly earning numbers.
The management is just as important as the business itself. Whenever you mention a stock, you should immediately be able to mention the CEO or chairman who runs the company. If not, then start practicing. Now the next question is how can you figure out the management is any good? Here are some signs:
Management’s history:
What’s the track record and biography of management? If they have been with the company for a long period of time, has the stock appreciated in value during their tenure?
Conference calls:
Listen to the quarterly earning conference calls. If they made a mistake, do they openly admit to it or place the blame somewhere else? Are they candid when answering questions or dodge the bullet? Do they under promise and over deliver (UPOD) by beating earning expectations each quarter? Are they humble or arrogant?
Annual reports:
Every company gives their annual reports. In addition to the positives, do they openly express the negatives that have happened during the year? Are the reports spent with glossy and colorful designs or are they just plain black and white and stick to the facts and figures?
Ownership:
Does management have a significant ownership in the company? Are they the founders of the company?
Compensation:
Is the management pay reasonable based on past stock performance?
Every great company you discover that has honest and competent management should be a part of your stocks to track list. It will give you the opportunity to buy the stock the moment you see the price drops to an attractive value. But how do you know determine if it’s the right price to buy? Read on.
Fundamentals
So the million-dollar question is “How can I get a 20% return on my money?”. The answer can be broken down into two parts. “What stock should I buy and what’s price that I should pay?” Ultimately here some of the possible results.
Investing in:
Bad company bought at an overpaid price
= negative return.
Bad company bought at a fair price
= poor return.
Bad company bought at a bargain price
= average return.
Good company bought at an overpaid price
= poor return.
Good company bought at a fair price
= average return.
Good company bought at a bargain price
= high return. (20%+)
Figuring out what to buy and at what price is crucial to getting a high return on investment over the long term. So let’s investigate on the first part, what makes a company good.
Return on Equity (ROE)
“Time is a friend to a wonderful business” – Warren Buffett
So if you want to find a 20% return on investment, doesn’t it make sense to start by looking at companies that can return 20% consistently year after year? This is called the return on equity (ROE), defined as: the rate of investment return a company earns on stockholders' equity. Return on equity is calculated by dividing net earnings by average stockholders' equity.
Below shows Coca Cola’s financial ROE over the last 10 years.
1996 60.5%
1997 61.3%
1998 45%
1999 27.1%
2000 23.1%
2001 38.5%
2002 34.3%
2003 33.6%
2004 32.3%
2005 30.2%
Compare this with Nortel’s yearly ROE.
1996 14.4%
1997 17.4%
1998 NM
1999 NM
2000 NM
2001 NM
2002 NM
2003 7.5%
2004 NM
2005 NM
NM means it was a negative figure because it lost money that year. Which one is the better company? It’s really a no-brainer.
For Coca-Cola, is ROE expanding or contracting? If the trend is expanding, it’s a sign the company is doing well and sign of good management. If the trend is contracting, it could mean poor management, saturation, or more fierce competition.
Again, ROE is just a good starting point to finding great investment opportunities. In addition to ROE, the following are also important measures in finding a good company.
Revenue and Earnings growth:
Revenue (Sales) and earnings (net income) are consistently growing year over year.
Profit margin:
Profit margins (% of Net Income of Revenue) are better compared to the competition. It’s even better if it’s growing year over year.
Debt ratio:
Preferably I like companies with little or no debt but there’s the exception if that type of industry requires a high level of debt. It’s good if the debt is decreasing year over year?
Capital Expenditures:
How much money does it have to spend to maintain its operations? It’s a good sign if it’s growing modestly because that means earnings are going to its bottom line rather than depreciating equipment.
Book value growth:
Book value is what the company is worth if it were to go bankrupt and liquidate itself. I like to see this grow consistently because every year, the earnings retained should add to its bottom line.
Common Equity:
Is the number of shares outstanding increasing or decreasing year over year? If it’s decreasing, then the company is buying back it’s stock to increases shareholder value.
To get this information, my TD Ameritrade account offers the S&P Report that shows the companies’ ten years history. I think many other discount brokerages also offer this service so please check with your account. It is an invaluable tool and I wouldn’t invest without it. To me, finding good fundamentals is like finding the next Picasso.
Imagine a close friend who owns a restaurant and is thinking of opening up one in another city but requires additional capital to expand his operations. He gives you a call hoping you would join in as a silent partner. Would this be a wise investment?
Below are some questions that you may ask. Take a moment and think about what questions you would ask before looking at the list.
The questions you should ask yourself are:
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
“What do I know about the restaurant business? (Do I understand it?)”
“How well is the restaurant doing currently?”
“How well has the company done in the past? (Does it have good financials?)”
“How well should the new restaurant perform?”
“What price should I pay to receive a good return on investment? (What should be my % of ownership based on my investment?)
“What’s my time horizon for cashing out of this business?”
These are just some of the relevant questions you should be asking yourself and if you were a serious investor, I’m sure you would do a lot more research such as going to the restaurant periodically, eating the food, verifying the financials with an accountant, and visiting the competition. These are the traits of a good business analyst and if you can take that same mentality and apply it to stocks, you are on your way, to becoming a better investor. That is lesson number one.
Understanding the Business
“Invest in your circle of competence” – Warren Buffett
Your investing success will be determined by how well you understand the company. Always try to invest in easy to understand companies that have great long term future.
Newspaper stocks of are an example of a slowing business. It used to be a cash cow because of its monopoly (one or two newspapers that represent the town) and low cost (equipment doesn’t need to be updated). Now future prospects don’t look so bright because of the growing competition and ease of use of the Internet. So when studying companies, ask questions like:
“What’s the competition landscape in 5 years?”
“Will profit margins be lower because of competition?”
“Can the company raise prices?”
“Can technology or new innovations affect the company?”
Honest and Competent Management
“How trustworthy is my friend?”
“Is he any good at running a restaurant business?”
Imagine if you had a hockey team and you could pick any player from any era to be the team captain. Who would it be? Wayne Gretzky? Bobby Orr? Or what if you had a basketball team and you could pick anybody you wanted. How about choosing Michael Jordan in his prime? The point is, the team leader can have a dramatic effect to the performance of your team. The same goes with stocks. The CEO (chief executive officer) plays a vital role in the company’s success.
Examples of great CEO leadership:
In 1997 Steve Jobs became Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio. Under Jobs' guidance the company increased sales significantly with the introduction of the innovative products such as iMac, iPod, & iTunes. Apple stock has continued to go higher and higher! In Oct 1, 2001, it was $8.07 (stock split adjusted), and has gone to $74.08 in Oct 2, 2006. That’s a 55.80 % compounded rate of return for 5 years!
Mark Hurd replaced Carly Fiorina who left at the advice of Hewlett Packard’s board of directors after the difficult merger with Compaq and a struggle with the HP board after reports of disappointing earnings. Under Hurd’s leadership, the company’s earnings improved dramatically through cost cutting and market share gain. The stock has performed brilliantly! In Sept 30, 2002, HPQ was $11.45 (stock split adjusted), and has gone to $37.42 in Oct 2nd, 2006. That’s a 34.45% compounded rate of return for 4 years!
Eddie Lampert was able to emerge Kmart out of bankruptcy in 2003. Lampert sold 68 of the firm's stores to Home Depot (HD) and Sears for $850 million. He sold 68 stores -- less than 5% of Kmart's real estate assets -- for about the same price that he had paid for control of ALL of Kmart's 1,500 stores and 16 distribution centers during bankruptcy proceedings! Lampert also took measures to improve Kmart's operating results and cash flow, leading to a string of profitable quarters for the resurgent retailer. It has now merged with Sears and continues to blow away quarterly earning numbers.
The management is just as important as the business itself. Whenever you mention a stock, you should immediately be able to mention the CEO or chairman who runs the company. If not, then start practicing. Now the next question is how can you figure out the management is any good? Here are some signs:
Management’s history:
What’s the track record and biography of management? If they have been with the company for a long period of time, has the stock appreciated in value during their tenure?
Conference calls:
Listen to the quarterly earning conference calls. If they made a mistake, do they openly admit to it or place the blame somewhere else? Are they candid when answering questions or dodge the bullet? Do they under promise and over deliver (UPOD) by beating earning expectations each quarter? Are they humble or arrogant?
Annual reports:
Every company gives their annual reports. In addition to the positives, do they openly express the negatives that have happened during the year? Are the reports spent with glossy and colorful designs or are they just plain black and white and stick to the facts and figures?
Ownership:
Does management have a significant ownership in the company? Are they the founders of the company?
Compensation:
Is the management pay reasonable based on past stock performance?
Every great company you discover that has honest and competent management should be a part of your stocks to track list. It will give you the opportunity to buy the stock the moment you see the price drops to an attractive value. But how do you know determine if it’s the right price to buy? Read on.
Fundamentals
So the million-dollar question is “How can I get a 20% return on my money?”. The answer can be broken down into two parts. “What stock should I buy and what’s price that I should pay?” Ultimately here some of the possible results.
Investing in:
Bad company bought at an overpaid price
= negative return.
Bad company bought at a fair price
= poor return.
Bad company bought at a bargain price
= average return.
Good company bought at an overpaid price
= poor return.
Good company bought at a fair price
= average return.
Good company bought at a bargain price
= high return. (20%+)
Figuring out what to buy and at what price is crucial to getting a high return on investment over the long term. So let’s investigate on the first part, what makes a company good.
Return on Equity (ROE)
“Time is a friend to a wonderful business” – Warren Buffett
So if you want to find a 20% return on investment, doesn’t it make sense to start by looking at companies that can return 20% consistently year after year? This is called the return on equity (ROE), defined as: the rate of investment return a company earns on stockholders' equity. Return on equity is calculated by dividing net earnings by average stockholders' equity.
Below shows Coca Cola’s financial ROE over the last 10 years.
1996 60.5%
1997 61.3%
1998 45%
1999 27.1%
2000 23.1%
2001 38.5%
2002 34.3%
2003 33.6%
2004 32.3%
2005 30.2%
Compare this with Nortel’s yearly ROE.
1996 14.4%
1997 17.4%
1998 NM
1999 NM
2000 NM
2001 NM
2002 NM
2003 7.5%
2004 NM
2005 NM
NM means it was a negative figure because it lost money that year. Which one is the better company? It’s really a no-brainer.
For Coca-Cola, is ROE expanding or contracting? If the trend is expanding, it’s a sign the company is doing well and sign of good management. If the trend is contracting, it could mean poor management, saturation, or more fierce competition.
Again, ROE is just a good starting point to finding great investment opportunities. In addition to ROE, the following are also important measures in finding a good company.
Revenue and Earnings growth:
Revenue (Sales) and earnings (net income) are consistently growing year over year.
Profit margin:
Profit margins (% of Net Income of Revenue) are better compared to the competition. It’s even better if it’s growing year over year.
Debt ratio:
Preferably I like companies with little or no debt but there’s the exception if that type of industry requires a high level of debt. It’s good if the debt is decreasing year over year?
Capital Expenditures:
How much money does it have to spend to maintain its operations? It’s a good sign if it’s growing modestly because that means earnings are going to its bottom line rather than depreciating equipment.
Book value growth:
Book value is what the company is worth if it were to go bankrupt and liquidate itself. I like to see this grow consistently because every year, the earnings retained should add to its bottom line.
Common Equity:
Is the number of shares outstanding increasing or decreasing year over year? If it’s decreasing, then the company is buying back it’s stock to increases shareholder value.
To get this information, my TD Ameritrade account offers the S&P Report that shows the companies’ ten years history. I think many other discount brokerages also offer this service so please check with your account. It is an invaluable tool and I wouldn’t invest without it. To me, finding good fundamentals is like finding the next Picasso.
Shelby Davis Demystified
One of my favorite investing stories is the one where Shelby Davis...... turns a paltry $50,000 into a fortune of $800 million by the end of his life. It's a story that lures ordinary folk into thinking they too can make it big in the stock market.
There a couple of problems to this story for us ordinary folk today, which indicate to me that it is highly unlikely anyone in our generation will match the performance.
First, his $50,000 start was in about 1946. Using my favorite inflation calculator, I see that $50,000 in 1946 would be equivalent to about $540,000 in 2006 money. So, Mr. Davis was hardly an ordinary working stiff who happened to know how to value insurance companies.
Second, if I remember the story correctly, the Davis family bought their house during the Great Depression for about $5,000. Assuming he bought in 1936, that means he picked his house up for about $71,000 in today's dollars. See any houses for that price you'd want to live in?
Third, buying stocks in the late 40's and early 50's was brilliant because they were starting from very low values. It was precicely these low values that led to the legendary "Davis Double Play" where the earnings rise and P/E ratios also rise due to better prospects. Picture this: a company earns $1 per share, but trades at 5X earnings. Share price = $5. A few years later, company earns $2 per share, but trades at 20X earnings. Share price = $20. 700% gain.
Put it all together, and we find our man had substantial means to begin with and almost no overhead due to buying an inexpensive house at the bottom of the market. This allowed him to use all of his earnings to buy more stock, which was severely undervalued during the first decades of his investment career.
I am not trying to demean what Mr. Davis accomplished. It is still a phenomenal record which shows the power of value investing over the long haul. It also shows that a housing crash and a prolonged bear market in stocks, combined with a bit of cash, patience, and a long-term buy and hold strategy can lead to huge wealth.
What I am saying is that with current values for houses and stocks, it will be difficult for an Average Joe to acheive the same performance as Mr. Davis over the next 50 years. Bring on the housing crash and bear market, that's what I say...
There a couple of problems to this story for us ordinary folk today, which indicate to me that it is highly unlikely anyone in our generation will match the performance.
First, his $50,000 start was in about 1946. Using my favorite inflation calculator, I see that $50,000 in 1946 would be equivalent to about $540,000 in 2006 money. So, Mr. Davis was hardly an ordinary working stiff who happened to know how to value insurance companies.
Second, if I remember the story correctly, the Davis family bought their house during the Great Depression for about $5,000. Assuming he bought in 1936, that means he picked his house up for about $71,000 in today's dollars. See any houses for that price you'd want to live in?
Third, buying stocks in the late 40's and early 50's was brilliant because they were starting from very low values. It was precicely these low values that led to the legendary "Davis Double Play" where the earnings rise and P/E ratios also rise due to better prospects. Picture this: a company earns $1 per share, but trades at 5X earnings. Share price = $5. A few years later, company earns $2 per share, but trades at 20X earnings. Share price = $20. 700% gain.
Put it all together, and we find our man had substantial means to begin with and almost no overhead due to buying an inexpensive house at the bottom of the market. This allowed him to use all of his earnings to buy more stock, which was severely undervalued during the first decades of his investment career.
I am not trying to demean what Mr. Davis accomplished. It is still a phenomenal record which shows the power of value investing over the long haul. It also shows that a housing crash and a prolonged bear market in stocks, combined with a bit of cash, patience, and a long-term buy and hold strategy can lead to huge wealth.
What I am saying is that with current values for houses and stocks, it will be difficult for an Average Joe to acheive the same performance as Mr. Davis over the next 50 years. Bring on the housing crash and bear market, that's what I say...
Tuesday, December 11, 2007
羅奇警告美國風險
外資大行多數以吹淡風為主，花旗(Citi Bank)發表研究報告表示，亞洲股市有強勁的增長前景，但以市盈率和市帳率反映股價太高，有下跌風險，預期MSCI亞洲指數將下跌 20至25%至明年中的480至510點，令估值返回合理水平，並預期明年底回升至570。
花旗認為，港股風險回報屬吸引，但內地A、B股則最為脆弱，該行並建議買入過往一直跑輸大市的大型股.
摩根士丹利亞洲區主席羅奇(Stephen Roach)警告，由美國次按危機帶起的全球商業周期轉捩點可能出現，外部依賴性非常大的中國絕對會受影響。
美國現在的問題是要迎接美國的樓市和信貸市場泡沫的破裂。
7年前的互聯網泡沫破裂已經使得商業機構的支出大規模地縮減，導致美國經濟衰退。但互聯網的資本支出僅佔美國GDP的14%，這次產生泡沫的信貸和樓市佔美國GDP的70%以上，泡沫破裂會引發美國消費的大幅收縮及經濟衰退。
羅奇認為，中國不應該被視為一個綠洲，不會受到世界經濟衰退的影響。
中國是外貿主導型的經濟體，出口佔到了整個GDP的40%，是世界上到目前為止對外依存度最大的經濟體。如果消費大國美國出現經濟衰退，中國肯定會受到影響。
陸羽仁認為，羅奇講的是宏觀分析，但美國泡沫破裂的危險的確存在，大家設計明年投資計劃時，一定要計入此一風險。
花旗認為，港股風險回報屬吸引，但內地A、B股則最為脆弱，該行並建議買入過往一直跑輸大市的大型股.
摩根士丹利亞洲區主席羅奇(Stephen Roach)警告，由美國次按危機帶起的全球商業周期轉捩點可能出現，外部依賴性非常大的中國絕對會受影響。
美國現在的問題是要迎接美國的樓市和信貸市場泡沫的破裂。
7年前的互聯網泡沫破裂已經使得商業機構的支出大規模地縮減，導致美國經濟衰退。但互聯網的資本支出僅佔美國GDP的14%，這次產生泡沫的信貸和樓市佔美國GDP的70%以上，泡沫破裂會引發美國消費的大幅收縮及經濟衰退。
羅奇認為，中國不應該被視為一個綠洲，不會受到世界經濟衰退的影響。
中國是外貿主導型的經濟體，出口佔到了整個GDP的40%，是世界上到目前為止對外依存度最大的經濟體。如果消費大國美國出現經濟衰退，中國肯定會受到影響。
陸羽仁認為，羅奇講的是宏觀分析，但美國泡沫破裂的危險的確存在，大家設計明年投資計劃時，一定要計入此一風險。
Singapore's revamped Straits Times Index to go live on January 10
The revamped Straits Times Index (STI) that will comprise the 30 biggest listed companies in terms of capitalization will go live on January 10, said bourse operator Singapore Exchange, FTSE Group and Singapore Press Holdings in a statement.
Changes made to the STI, which was announced on October 8, reflect the increasing importance of China and the diminishing significance of a once-booming technology sector.
Chinese companies -- shipbuilder Yangzijiang Shipbuilding and property developer Yanlord Land Group -- were added to the index, joining COSCO Corp Singapore, a unit of China's COSCO which operates bulk carriers, in the 30-stock index. The existing STI is made up of 48 stocks.
The three local banks, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank; property developers CapitaLand, City Developments and Keppel Land; and Singapore Telecom, Southeast Asia's biggest telecommunications company will continue to be the index heavyweights.
Chip-maker Chartered Semiconductor and electronics contract manufacturer Venture Corp were taken out of the STI and relegated to the FTSE Straits Times mid-cap index.
Changes made to the STI, which was announced on October 8, reflect the increasing importance of China and the diminishing significance of a once-booming technology sector.
Chinese companies -- shipbuilder Yangzijiang Shipbuilding and property developer Yanlord Land Group -- were added to the index, joining COSCO Corp Singapore, a unit of China's COSCO which operates bulk carriers, in the 30-stock index. The existing STI is made up of 48 stocks.
The three local banks, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank; property developers CapitaLand, City Developments and Keppel Land; and Singapore Telecom, Southeast Asia's biggest telecommunications company will continue to be the index heavyweights.
Chip-maker Chartered Semiconductor and electronics contract manufacturer Venture Corp were taken out of the STI and relegated to the FTSE Straits Times mid-cap index.
Monday, December 10, 2007
股票究竟是什麼？其價值又如何衡量？
這問題看似很複雜，但有時亦可變得佷簡單。就以一個蛋糕比喻為一間公司，股票便是各件切下來的蛋糕，而股票的價值，則根據那件蛋糕的大小來判斷。
經常買賣股票的投資者，往往不會衡量公司的整體價值。我則喜歡先替整間企業把脈，然後再細心研究它的股票。
這正好解釋我愛以市值來評核公司，市值的計算方法，是以公司發行的股票數量，乘以股價得出，代表現時市場認為它值多少。假設中移動發行了二百億股，股價一百四十元計算，市值便高達二萬八千億元。
這些天文數字，已大大超出普通人的金錢概念，一般接觸得較多的大數目，應該是百萬元計。
惟中移動的規模就是如斯龐大，○六年盈利達六百六十億元人民幣，今年估計可賺八百五十億元人民幣，因此市值逾一萬五千億元相當合理，尤其它仍能高速增長。預料○八年盈利可達到一千零五十億元人民幣；若保持這速度推進，中移動市值二萬八千億元，相信很快可獲得接受。
剛才我以市值作例，說明股票與整間公司的關係。只要能評估一間公司的價值，自然容易計算每股的價值。
公司價值幾多，對每位投資者而言未必相同，但仍有兩種清楚辦法釐定。第一種是以資產淨值，你可從資產負債表中查看，將資產減去負債後，便是資產淨值。這方法甚少用，因很多公司擁有商譽，而商譽並非一定加進資產負債表內，令公司資產淨值被低估。
中移動的商譽龐大，即使你加入最慷慨的商譽價值，仍會嚴重低估公司的價值，因此很難用資產值來評估它。
盈利推算估值
第二個方法是以盈利來評估價值，但其參差可以很大。我經常掛在口邊的市盈率，是以盈利由多少股份分配來計算。若你將中移動○七年所賺的八百五十億元人民幣，攤分給二百億股，每股盈利便是四元二角五分。以現價一百四十元計，市盈率三十二倍。
若你將市盈率倒轉，便得出回報率，讓你更方便與銀行存款息率比較。中移動的三釐一回報，比只放在銀行還要好，何況這是以人民幣計算。雖然三釐一的回報並非很吸引，但中移動持續有增長。以下是我的推算：
彼得連治在他的著作《One Up On Wall Street》中，提出以預期增幅來評估合理的市盈率，但單靠推算並非太準確，我會以歷史及預期來混合計算股票價值。中移動平均市盈率二十五倍，以此推算，○九年每股價值約一百七十四元。這推算或許存有誤差，尤其要假設盈利能夠不斷增加；雖然這公司現已十分壯大，惟用戶人數的增幅終會放緩。
經常買賣股票的投資者，往往不會衡量公司的整體價值。我則喜歡先替整間企業把脈，然後再細心研究它的股票。
這正好解釋我愛以市值來評核公司，市值的計算方法，是以公司發行的股票數量，乘以股價得出，代表現時市場認為它值多少。假設中移動發行了二百億股，股價一百四十元計算，市值便高達二萬八千億元。
這些天文數字，已大大超出普通人的金錢概念，一般接觸得較多的大數目，應該是百萬元計。
惟中移動的規模就是如斯龐大，○六年盈利達六百六十億元人民幣，今年估計可賺八百五十億元人民幣，因此市值逾一萬五千億元相當合理，尤其它仍能高速增長。預料○八年盈利可達到一千零五十億元人民幣；若保持這速度推進，中移動市值二萬八千億元，相信很快可獲得接受。
剛才我以市值作例，說明股票與整間公司的關係。只要能評估一間公司的價值，自然容易計算每股的價值。
公司價值幾多，對每位投資者而言未必相同，但仍有兩種清楚辦法釐定。第一種是以資產淨值，你可從資產負債表中查看，將資產減去負債後，便是資產淨值。這方法甚少用，因很多公司擁有商譽，而商譽並非一定加進資產負債表內，令公司資產淨值被低估。
中移動的商譽龐大，即使你加入最慷慨的商譽價值，仍會嚴重低估公司的價值，因此很難用資產值來評估它。
盈利推算估值
第二個方法是以盈利來評估價值，但其參差可以很大。我經常掛在口邊的市盈率，是以盈利由多少股份分配來計算。若你將中移動○七年所賺的八百五十億元人民幣，攤分給二百億股，每股盈利便是四元二角五分。以現價一百四十元計，市盈率三十二倍。
若你將市盈率倒轉，便得出回報率，讓你更方便與銀行存款息率比較。中移動的三釐一回報，比只放在銀行還要好，何況這是以人民幣計算。雖然三釐一的回報並非很吸引，但中移動持續有增長。以下是我的推算：
彼得連治在他的著作《One Up On Wall Street》中，提出以預期增幅來評估合理的市盈率，但單靠推算並非太準確，我會以歷史及預期來混合計算股票價值。中移動平均市盈率二十五倍，以此推算，○九年每股價值約一百七十四元。這推算或許存有誤差，尤其要假設盈利能夠不斷增加；雖然這公司現已十分壯大，惟用戶人數的增幅終會放緩。
US market will be flat over the next decade
John Mauldin, the author of the NY Times top ten best-selling investment book, “Bull’s Eye Investing” and the President of Millennium Wave Investments sets out to prove that in ten years' time the US stock market will likely be no higher than it is now, and possibly significantly lower.
The stock market's future level will be determined by
(a) earnings growth and
(b) the value the market places on those earnings (ie. P/E ratios),
so Mauldin focuses on these two elements.
First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%.
Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically.
He assembles a battery of arguments to prove his case.
Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios.
Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market.
With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.
The stock market's future level will be determined by
(a) earnings growth and
(b) the value the market places on those earnings (ie. P/E ratios),
so Mauldin focuses on these two elements.
First, he argues that earnings growth will be disappointing. Companies' earnings will be depressed by the adoption of stricter accounting standards, the expensing of options, and higher pension costs. Combine that with anemic economic growth due to the aging of the population, the current account deficit and the budget deficit, and earnings are unlikely to exceed their historical growth rate of under 6%.
Next, Mauldin argues that P/E ratios are unlikely to rise over the coming decade, and may in fact fall dramatically.
He assembles a battery of arguments to prove his case.
Secular bull markets have never started from times when the market's P/E ratio was as high as it is today. The market is currently overvalued according to multiple measures, and will likely revert to its historical mean. The risk premium is currently low, and a recovery to more sensible levels would depress P/E ratios.
Finally, P/E ratios fall as inflation rises or an economy slips into deflation; so given the US economy's current inflation rate (close to zero), there's nowhere to go that would result in a higher P/E ratio for the market.
With mediocre earnings growth and falling P/E ratios, the market is therefore headed nowhere or a lot lower.
努力射中牛眼
財富來自新概念（innovation）及解決難題方案（problem solution），而非勤勤力力。勤力人只可搵兩餐，但好難發達，最多成為中產階級，但地產商財富卻來自七十年代開始解決港人居住難題。
未來財富主要來自引入新概念，例如過去兩個多月港股A股化，為唔少人帶來財富，請留意邊D企業剛完成大轉身。我地已唔需要大牛市去賺錢，而係努力去射中牛眼，追求100％回報（或跌15％離場）。
Trading is hard work但值得,一份射中牛眼所帶來感覺，除金錢回報外，更帶來一份光榮感。
另一方面，要留心自己係咪過分自信，而睇唔到投資股份缺點？
又或者過分猶豫？
又或者太蠢太早減持，讓太多利潤從自己手中流走？
Trading有如《洛奇》電影中D主角，打倒別人之前，自己先被別人打到面腫！射中牛眼D感覺好比一次又一次追求、戀愛及成功贏得女性芳心。
現實生活中，人只能瘋狂地追求一次、戀愛一次，當贏得芳心後便要結婚，唔容許有第二次。股票市場卻容許一次又一次追求、甚至苦戀，而最後成功。
牛眼投資法強調揀股，較少理會指數高低（恒生指數8000點時亦有唔少股份偏高，恒生指數32000點一樣有唔少股份偏低），採用者必須係對個別股票有深入了解者而非初哥（神槍手通常只有兩粒子彈，第一粒射唔中便第二粒，再唔打中便走頭。只有新兵才使用機關槍，亂槍掃射下，希望有一粒射中）。
未來財富主要來自引入新概念，例如過去兩個多月港股A股化，為唔少人帶來財富，請留意邊D企業剛完成大轉身。我地已唔需要大牛市去賺錢，而係努力去射中牛眼，追求100％回報（或跌15％離場）。
Trading is hard work但值得,一份射中牛眼所帶來感覺，除金錢回報外，更帶來一份光榮感。
另一方面，要留心自己係咪過分自信，而睇唔到投資股份缺點？
又或者過分猶豫？
又或者太蠢太早減持，讓太多利潤從自己手中流走？
Trading有如《洛奇》電影中D主角，打倒別人之前，自己先被別人打到面腫！射中牛眼D感覺好比一次又一次追求、戀愛及成功贏得女性芳心。
現實生活中，人只能瘋狂地追求一次、戀愛一次，當贏得芳心後便要結婚，唔容許有第二次。股票市場卻容許一次又一次追求、甚至苦戀，而最後成功。
牛眼投資法強調揀股，較少理會指數高低（恒生指數8000點時亦有唔少股份偏高，恒生指數32000點一樣有唔少股份偏低），採用者必須係對個別股票有深入了解者而非初哥（神槍手通常只有兩粒子彈，第一粒射唔中便第二粒，再唔打中便走頭。只有新兵才使用機關槍，亂槍掃射下，希望有一粒射中）。
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