Quote:to say all is worthless, is saying any companies that deal with china are frauds
Not really. It is just that the risk or probability of fraud is in-deterministic from the viewpoint of a retail investor. Anything that is in-deterministic will render any MoS invalid and since I base my purchase of stocks using MoS, there is no mean to know whether it is or it is not a bargain.
Singapore stocks, collectively, have a low probability of fraud. Since the probability is low, all the financial metrics derived from the financial statements can be used to assess the merit of a stock. So, if the investment period is lengthen to 30-40 years, the probability of someone who is investing in Singapore stocks will, in the worst case, encounters probably 1 or less fraud in his investment journey.
Vice versa. If an investor holds more than 5 s-chips in his portfolio currently, the probability that he will hit a fraud case will be very high based on historical information.
Every investor has their own investment methodology. For myself, I tend to incorporate probability into the thought process.
(28-08-2013, 11:02 AM)yeokiwi Wrote: [ -> ]Every investor has their own investment methodology. For myself, I tend to incorporate probability into the thought process.
I like this... To incorporate probability of fraud is something value investors should take very seriously.
People who want to invest in S-chips just want to think that fraud will not happen to their companies.. It is only when the fraud is announced, then they will start finding reasons to explain why they failed to see it.
However, in the first place, unless you are working in the company, it is very very hard (almost impossible) for retail investors like us to verify if any fraud is involved.
(28-08-2013, 10:44 AM)Greenrookie Wrote: [ -> ]Even d.o.g says he could not find more than 10 s -chips in the most prob not a fraud category, I assume he feel that there might be a handful which he thinks might be worth digging deeper, to say all is worthless, is saying any companies that deal with china are frauds. Please note that frauds dun just happen to s-chips, Singapore companies and us companies have them too.
I seem to have been misquoted and/or misunderstood. Specifically, what I wrote was:
d.o.g. Wrote:For the 170+ S-chips on SGX, I cannot even find 10 that fall into the "most probably not a fraud" category. Perhaps other forum members are more skilled at this. Myself, I just look elsewhere, especially after the expensive Minzhong reminder.
In other words,
I have given up looking at S-chips. The odds are so poor that it is simply not worth my time to do so. Other investors who place a lower value on their time are of course free to spend it on S-chips.
"To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers."
---Warren Buffett
I'd just like to add that S-chips are the proverbial 7-foot hurdles that Warren Buffett says that one should avoid. Too difficult to get it right and too easy to get it wrong.
So please stop trying to find value in S-chips and instead look for one-foot hurdles to step over.
(28-08-2013, 01:19 AM)Jared Seah Wrote: [ -> ]dzwm87,
Well said.
In trading's parlance, a good trade does not always equal a profitable trade.
It's about following our own rules to ensure we have risk/reward on our side.
A bad trade is still a bad trade even if it's profitable (through pure dumb luck).
We can't control the outcome of our trades. We can only control when to enter and when to exit.
Some trading rules can be very relevant to investing - especially those on risk management.
Exactly. Are people invested in dot com smart or dumb? Depends on the timeline and exit we're talking about. Profit and loss alone does not dictate investing capabilities. To be consistent and able to forecast correctly which the share price is reacting to (rather than some lucky events or unknowns) is more important in the long run, than just short term PnL.
I looked at ACCS IPO numbers and their 1st year AR and it looked fishy because they reclassified items so their YoY % looks better. Never touched them but it proceeded to double AFTER bonus issue. But I never regretted it because I realise better to gain on something you know, then gain on something you don't know, because when events happen in the latter, one's psyche will not be able to react
As per my previous post, value investors will inherently be contrarian and invest in S-chips, distressed, undervalued dead money etc. However the question that is most important for S-chip is
legal recourse IN CHINA because that incentive alone will determine whether mgt will be incentivise enough to fraud. I would trust chinese management with a big office building or asset here in Singapore rather than one where all the undervalued assets are in China. But things are changing when RMB internationalises.
http://www.valuebuddies.com/thread-738-p...l#pid59872
"To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers."
---Warren Buffett[/i]
I have no doubts that there are legit S-chips out there but I view S-chips as 7-foot hurdles.
My congrats to forummers who have acquired the ability to clear seven-foot hurdles but for other forummers who are looking to find value in S-chips, I just want to ask the following questions:
1) do you have the ability to clear 7-footers?
2) if not, do you think that it is more profitable to spend your time on looking for one-foot hurdles to step over or on acquiring the ability to clear 7-footers?
Happy value investing and peace out.
As we continue to deliberate on this issue of s-chips, I remembered this article, "BEIJING: Behold the regal lion and hear its mighty ... bark?" which appeared on The Straits Time. I have a good laugh after reading. I thought it might be appropriate to share it here. Just a light read to take a break from the heavy discussion.
But, again, we do have to differentiate the dog from the lion in investment, and to do that, we really need to know how a lion looks like.
This same article is also found in mypaper
http://www.mypaper.sg/news/african-lion-...y-20130816
(28-08-2013, 11:36 AM)minimax Wrote: [ -> ]"To the extent we have been successful, it is because we concentrated on identifying one-foot hurdles that we could step over rather than because we acquired any ability to clear seven-footers."
---Warren Buffett
I'd just like to add that S-chips are the proverbial 7-foot hurdles that Warren Buffett says that one should avoid. Too difficult to get it right and too easy to get it wrong.
So please stop trying to find value in S-chips and instead look for one-foot hurdles to step over.
Agree with minimax here. Reminds me of a conversation I once had with a civil servant friend who was wasting time and money attending various money making workshops.
Friend: I'm attending Adam Khoo's latest Stocks to Riches program
Me: Please lah, all these are just con jobs
Friend: You cannot generalise, there are always black sheeps. Not all are bad.
Me: But you already attended 2 courses before and got conned of 3k to hear basic stuff you can get from Investopedia.
Friend: Not all are bad. Otherwise all would be shut down long time ago.
Me: So how do you know this one is good?
Friend: I heard good reviews online.
Me: Who wrote those reviews? Are they even real? Do they have the expertise to judge what is good?
Friend: Never mind lah. Even if the speaker no good, there will still be a few useful tidbits.
Me: But if you don't even know which speaker is good or bad, how you know which 2 tidbits are the good ones out of that mountain of garbage he spew?
Friend: I go see first.
Me: If you can tell which 1% of the info is real among the 99% fake you can go and conduct your own course liao.
I think Warren Buffett once mentioned something along this same line. Integrity, knowledge and energy are essential traits of the management of a business to look out for.
If the the management has integrity, but not sufficient knowledge and energy, the business will not progress too far.
However, if the management has surpassing knowledge and great energy, but lacks integrity, the knowledge and energy of this dishonest management is going to make its shareholders suffer greatly.
I believe one must always assess the integrity of the people in management of a business first before looking at their performance. A bare minimum way is through attending AGMs to have a first hand experience on who are the people managing the business. If we are not even comfortable and trusting of the people in management, how can we trust them to manage our money when we invest with them?
This brings us to the importance of knowing the people in management well enough as this is part of the due diligence an investor has to perform. If the integrity is not present, all other showings (e.g. financial statements and even things we may observe about the operations of the business may be just pretencious for all we know). It is not easy to assess integrity, so one should be making effort to know the management of a business as much as one can know about them through whatever limited means for the retail investor (e.g. attending AGMs).
(28-08-2013, 12:52 PM)specuvestor Wrote: [ -> ]As per my previous post, value investors will inherently be contrarian and invest in S-chips, distressed, undervalued dead money etc. However the question that is most important for S-chip is legal recourse IN CHINA because that incentive alone will determine whether mgt will be incentivise enough to fraud. I would trust chinese management with a big office building or asset here in Singapore rather than one where all the undervalued assets are in China. But things are changing when RMB internationalises.
http://www.valuebuddies.com/thread-738-p...l#pid59872
The RMB internationalization in Singapore, did catch my attention. I am evaluating its impact on asset investment in China.
It is just sketchy at the moment, doing read-up now, hopefully manage to get a good picture soon ...
