Nokia

(02-10-2012, 10:35 PM)Some-one Wrote: Call me stupid or what. I am vested in Nokia shares and yes, I am sufferring 50% losses now . However, the major losses does not come from the falling price of Nokia but from the depreciation of USD against SGD. In any case, I still believe in the Nokia story. If not because of QE3 which devalues USD, I would have buy more Nokia shares. Again, this form only 0.32% of my portfolio.

The success of investing (gains in $) needs two things right

- the right choice
- the right timing

Either one wrong, you might not succeed.

IMO, the choice might be right, but timing is definitely not right

(03-10-2012, 09:01 AM)CityFarmer Wrote: The success of investing (gains in $) needs two things right

- the right choice
- the right timing

Either one wrong, you might not succeed.

IMO, the choice might be right, but timing is definitely not right

Let me expand it further, if I may.

The right choice boils down to an understanding of businesses, valuations and an investor's psychology.

If one were to read random news articles on Nokia since 3-4 years back, it would have been obvious that they were rapidly losing market share to players like Samsung, Apple and RIM. While I still use my old trusty Nokia X3 which serves me well for phone calls and SMS, I don't see this happening for people around me. Most either have an iPhone, Blackberry or Samsung Galaxy Tab.

(02-10-2012, 10:35 PM)Some-one Wrote: Call me stupid or what. I am vested in Nokia shares and yes, I am sufferring 50% losses now . However, the major losses does not come from the falling price of Nokia but from the depreciation of USD against SGD. In any case, I still believe in the Nokia story. If not because of QE3 which devalues USD, I would have buy more Nokia shares. Again, this form only 0.32% of my portfolio.

For you to believe in the Nokia turnaround, the potential gain should be at least a 3-4 bagger from current levels. In this context, a 20% loss in currency value from 1.3 SGD/USD today to 1.1 SGD/USD would theoretically be small beer. If you think this has investment merit, it should not stop you from putting additional capital. If there is no merit, you should not be holding it. What you have now, and the proportion it forms as percentage of your portfolio, is irrelevant.

Every instance of deploying capital should be seen on its own merit, without the baggage of what is already owned and the historical cost of that ownership.

(03-10-2012, 09:06 AM)Musicwhiz Wrote: If one were to read random news articles on Nokia since 3-4 years back, it would have been obvious that they were rapidly losing market share to players like Samsung, Apple and RIM. While I still use my old trusty Nokia X3 which serves me well for phone calls and SMS, I don't see this happening for people around me. Most either have an iPhone, Blackberry or Samsung Galaxy Tab.

This is still hindsight. Nokia can also choose to go Android+windows mobile model 2-3 years ago and they will probably be doing ok now.
There's nothing wrong with their hardware but windows mobile is simply a hype till date.

Forex risk is real. If people thinks exchange rate works like a pendulum, you may have a rude awakening.

Some people will also say argue we use US$ loan to invest so no diff. However at the point of invest, you did convert SG$ or you can convert to SG$. So it does matter as you need to trace back to the point you made to measure and not just the absolute return of "toilet" money with "toilet" capital.

For the all years i have capture on S$ rate against US$, there maybe occasional spikes but the broad trend is one way down working against your US$ investment.

USD vs SGD
Which is 30% down. How many of us can recover from it ?

So be sure your return did beat local investment when we leave the S$ Currency, our golden currency for the era.

Nokia is getting money from MSFT to make Windows Phone. If Nokia went to Android at that time, MSFT would not pay that kind of money to Nokia. Nokia needs that cash flow for survival.

As for Nokia's patents, Nortel and Kodak both have valuable patents. It did not stop them from bankruptcy. Buying patents from bankruptcy courts could be much cheaper.

(03-10-2012, 09:31 AM)yeokiwi Wrote: This is still hindsight. Nokia can also choose to go Android+windows mobile model 2-3 years ago and they will probably be doing ok now.
There's nothing wrong with their hardware but windows mobile is simply a hype till date.

I do agree about the hindsight part, though my counter-argument would be that if you were investing in technology companies, then one should demand an even greater margin of safety as new technology moves so fast as to render old ones completely obsolete. History has shown this - an example would be the CD/DVD replacing casette tapes.

its' all marketing lah, I mean do most users know that android and OS X are actually derived or a variant of unix/linux operating systems? Most of the people are only "savvy" in using apps developed for layman use but don't know what the operating system is really capable of and I doubt they really care. If you can bluff and put another linux distro with an "OS X theme" on an iphone most users will still think it's os x.

(03-10-2012, 09:59 AM)Musicwhiz Wrote:

(03-10-2012, 09:31 AM)yeokiwi Wrote: This is still hindsight. Nokia can also choose to go Android+windows mobile model 2-3 years ago and they will probably be doing ok now.
There's nothing wrong with their hardware but windows mobile is simply a hype till date.

I do agree about the hindsight part, though my counter-argument would be that if you were investing in technology companies, then one should demand an even greater margin of safety as new technology moves so fast as to render old ones completely obsolete. History has shown this - an example would be the CD/DVD replacing casette tapes.

I agreed margin of safety is always necessary for investment, but may need a slightly different approach for technology stock

IMO, margin of safety solely on market price is flaw.
No amount of margin of safety in price is sufficient, if the choice is wrong. The price can go as low as zero
Any amount of margin of safety in price is too much, if the choice is right. You will always miss a gem.

Technology stock is always a special breed, and conventional wisdom might not applies fully

The concept of margin of safety on other fundamentals still relevant.

To share my 2 cts

(03-10-2012, 10:57 AM)CityFarmer Wrote: IMO, margin of safety solely on market price is flaw.
No amount of margin of safety in price is sufficient, if the choice is wrong. The price can go as low as zero
Any amount of margin of safety in price is too much, if the choice is right. You will always miss a gem.

How do you know the choice is right?
I only depends on margin of safety and hope that the choice is correct.

In Nokia case, I am assuming that the company will slip to oblivion and therefore, the margin of safety required is beyond what the market can offer.

I may be wrong but it does not matter since there are other investment opportunities available.