I think this is very worth noting down and sharing with everyone who is thinking about the stock market today. I read this in The Star and they were putting up an article about Tan Chong Koay who is Pheim Asset Management Sdn Bhd’s founder and chief strategist. According to the latest Lipper Global classification for International Offshore Universe, Pheim Asean Fund has taken the top position for all the 1-20 year periods among all Equity Asean. It has accumulated a cumulative return of 497.37% in US dollar term. While I do not agree with everything he shared, I think it’s worth looking and deciding. Oh yeah, compared to him, I am just a beginner. 🙂 Let’s read some of his sharing about the secret to successful investing.
- The key to investing is to sell the shares when they are grossly overvalued. Most people do not know how to sell shares even when the price is abnormally high.
2. He prefers medium sized stocks for their less bureaucratic profiles an faster earnings. In fact he said that holding a stock for more than five years is too long.
3. Never be invested at all times and one must understand the volatility of the market. One should only be fully invested near the lowest point of the market even though few will ever know when the exact lowest point is.
4. Be prepared to accept under-performance during the portfolio accumulation phase.
5. Market timing is important to know when to buy. Price Earning’s Ratio (PER) and dividend yields determine the timing to buy. In fact, once PER gets high, dividend yield drops. If current market trades between 10 and 30 times, he will trim his position when the market trades closer to 30 times.
6. Never fight major trends. For example, the 2008/2009 trend where Citibank which used to be US$50 crashed to just US$1. Even when investors bought at US$25 and average all the way down, they would still lose lots of money.
7. Crisis bring opportunity but one can only capitalise with research and knowledge. IF there are no market crashes, how can investors buy at discounted prices?
8. Malaysia, Indonesia and Thailand are starting to look cheap. He said, “I think if you have a three-year view, now is a good time to buy. Don’t buy now with a 3-month outlook. If you buy now, I think there is good opportunity to make money in the next 9 months to one year.”
9. The stock we buy must not only be undervalued but must be undervalued with rising profit. Stocks with market leadership is best because when it is leading, it can run for a few more years.
10. Palm oil stocks are starting to look attractive. It is still the world’s biggest vegetable oil.
11. On a longer term, property stocks are starting to look good.
12. He does not think highly on banks as he feels that after so many years of growth, it will start to face some slowdown.
13. Oil prices will NOT recover anytime soon. There is now a possibly long periods of excess in supply. Typically it lasts 2-3 years.
14. He likes China because the leadership is willing to slowdown its economy. With this correction, there are opportunities to buy. He singled out some pharmaceuticals and banking stocks.
15. He said that for US, Dow Jones is not cheap presently but US is also the only country with solid check and balances.
For the point 15, please take this with a pinch of salt. Do note that it is also in US that the 2008/2009 mortgage crisis happen and that is definitely because there were no checks by relevant authorities along the way before the crisis. Coupled that with the Enron crisis as well as the bailouts of many other huge American companies simply because they should not fall into foreign hands, I do not know if I would like to say that US is the only country with solid checks and balances.
Happy learning from Mr. Tan of Pheim. If you have interest to now about some of Pheim’s funds, it’s here: http://www.pheim.com.my
written on 12 Sept 2015
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0 Responses
Good share.
Persoanlly, i think the knowledge of economics is powerful regardless your background. In Malaysia, our economics has been very stagnate, cost going up higher than before, RM continue to drop, salaries unable to sustain in the long run and etc… so many factors are hurting into the us.
Learning investment should he our first priority to get out of the uncertainty of all these changing.
I think playing stocks market is one of them. Though it is highly risky as it is very liquidity and sometimes is being manipulated. However, it is still given the opputunities to earn some good return of $$ in long run. So long you are equipped with sufficient knowleges, you should be fine in the stock market as you probably by then know how to take calculated risk.
Yes, the keyword is always Knowledge. With knowledge, the opportunities are abound during crisis. With knowledge, undervalued can be spotted among overheated stocks. Just have knowledge and then take calculated risk. Do note, FD may be a huge risk if you only come to notice it’s not enough when we retire.