How to handle a price decline

[¯|_(ツ)_/¯]

@i4value, while you said "sad", for me its actually "interesting" 
Fool was one of my budding teachers.

Value investing is my hobby and learning about business, operation and tactical move is what excite me and sustain my energy here.

I had a chance to attend a training from a CEO in manufacturing company.  Other than the financial accounting, he also touched on operational management.  When I saw valuebuddies hot favourite - Micro Mechanics annual presentation - those KPIs make a lot of sense to me.  When I observed one of the KPI weakened, I could easily relate to the changes in MMH's nature of business and adjust my expectation accordingly.

In another situation, when I read a annual report of a particular listed company in SGX - which happens to be in the same industry that I'm in.  I got a shocked. I was shocked that I read the annual report as if it's written for my company.  I could understand 100% of their strength, weakness, challenges and opportunities. No need to second guess.  I could also easily formed my thesis on how the company could perform in short and mid term.  I dare to says that I had a crystal ball. 

However, strangely (at least to me), I had inclination to read and explore those company that's I'm familiar with.  I find that it's easier to read their annual report and make some sense.  For a lot of companies, when I read their annual reports, I just watch their historical trends and result of latest projects/initiatives for sign of recovery.  I don't really spend time to understand them.

So far, so good. My investment journey had been rather smooth and the time I spend in understanding and exploring opportunities is well rewarded.  This - I must says - thanks to bloggers like your kindself who selflessly shared your experiences.

I benefited from all your kind sharing.

Gratitude!
 

[i4value]

The challenge with value investing is that you need to understand how business works. So if you don't have a business background, you have a steeper learning curve. There are of course ways to make up for this. One way to to read other people analysis of the same company. Today that are sites like The Motley Fool or Seeking Alpha that does this. There are also many bloggers who share their thesis. At the end of the day, it is best to learn how to do it yourself.

[¯|_(ツ)_/¯]

Happy Eid Al-Adha!

Indeed it is better if one learnt how to perform the analysis themselves.

Given the chance, I would like to discover under-value stocks by myself.   

Unfortunately, majority of our value buddies are not professional stock brokers or full time investors.  We just wanted to profit from the market so that we could spend our precious time doing something we enjoy doing.  Studying, analysing and digging for under-value stocks is exactly the things that I enjoy doing - not because I really enjoy doing - but because it's a rewarding hobby. 

We had seen enough.  Throughout our journey, we saw a lot of passionate valuebuddies actively and selflessly sharing their analysis everywhere (including vb.com).  After a while, we will noticed that their passion faded away and their sharing suddenly stopped.  The primary reason why this is happening (based on my observation) is their results.  Their time spend in performing the analysis themselves is not worth their returns.

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Instead of the brute force approached, may be one should consider a short cut to increase the risk/reward ratio?

Of course, first thing first, we should perform the analysis ourselves - no short cut.  What I meant was - do not rely on other valuebuddies analysis blindly - only use them as a starting point, threat those shares identified by valuebuddies as a base to begin your analysis.

This approach is commonly known as "Follow the Guru".
Majority of (professional) valuebuddies will shunt this approach and then quickly warn that it's important not to follow the guru but perform your own analysis.

Well, that's exactly what we should do.  We should ONLY use these stocks as a funnel to begin our own analysis. If our analysis says that this is a go, then we could focus on formulating our market operations. What I meant to says is: Time is spend wisely to collect a stocks instead of brute force analysis.  

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Allow me to share one example.
There was a valuebuddies (K) who shared selflessly on a lot of counters.  The only problem is he only share those counters that deemed as not-investible. You see. When someone posted a good stocks, K will share his view too.  The only thing is, his view is always focusing on the risks which is a counter argument of what was shared by the earlier posts. 

Naturally, I won't spend too much time in these counters as K's argument is sound and always based on facts.

However, after a while, valuebuddies were very frustrated.  We are not very happy that K gun-down our ideas one by one and some one was asking whether K has a favourite stocks that met all his criteria?  The answer is yes and there is one particular SECRET UNDER-VALUE stocks.  

As what they says: the rest is history. 

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Allow me to give an example (from you actually).

Says, PHB.  

Let's says I read and understand why you think that PHB is a fundamentally good company with MOS.  I will perform my analysis using my criteria.  Says, I have 5 criteria and the most important aspect of my criteria is actually, the counter MUST met all my 5 criteria.  If (for example), the counter met 4 of my criteria and missed one, then despite the facts that this counter met the remaining 4 criteria by flying color, it had failed my qualification as a value stocks. FULL-STOP.

Does it means that I don't (or can not) buy this counter? 

No lar. Still can buy because we are all human being and our circumstances are different mah.

The trick (at least for me) is to remind myself that I'm not a value investor.  In this particular case, I am a speculator and I have to behave like a speculator.  I will set my cut-loss and my exit price. This is a speculative market operations and discipline is needed.  Once I psych up myself, then the market operation can begin. 


Back to PHB.

Since your published your trading records and also your average price, I will quickly take note of them as they formed the upper limit for my entry price aka I aimed to buy at a lower price.

If you did not publish your trading records, then I will gauge or I will just use the 52 weeks low as a guided entry price.  

A quick glanced at PHB price chart for the last 1 years shows that 12 cents would be the lowest point and roughly I will begin buying when PHB go down to says 13 or 14 cents (23 May 2023 price).  

With this, I simply put PHB in my watchlist and when I received the alerts, the buying will begin.

A lot of valuebuddies will says that it's not realistic to buy at such a low price.  Well to me that's the point. Isn't it.  At such a low price, I hope to get the most MOS.

A lot of valuebuddies will says that you'll missed the trade because PHB is going up (closing price of 18 cents on 28 June 2023).  I'm not concern. There are ample buying opportunities.  If I missed PHB, so be it. I'm not willing to chase up the price.  I would rather let the seller sell to me and being patient is something I enjoy doing. 

Gratitude!

[i4value]

Detailed analysis and valuation takes time. You would be an idiot to do detailed analysis and valuation of each and every company. The way to handle this time and effort problem is to have a screening process where you are more than 70% sure that if you do the detailed analysis, you will find undervalued companies.

There are many portals today that provide the basic data for you to construct such a screen. The key is that the screen should enable you to answer 2 questions
- is this a good company. In screening lingo, are they doing better than their peers or some benchmark?
- can I make money. In screening terms, are the prices lower compared to some benchmark? If you have been doing this for some time, you will be able to identify the "price patterns" that had enabled you to make money.

[cif5000]

We had seen enough.  Throughout our journey, we saw a lot of passionate valuebuddies actively and selflessly sharing their analysis everywhere (including vb.com).  After a while, we will noticed that their passion faded away and their sharing suddenly stopped.  The primary reason why this is happening (based on my observation) is their results.  Their time spend in performing the analysis themselves is not worth their returns.

Wow!! This really hurts. 

Personally, the effort of posting analyses is no longer worth my time. There are more enjoyable things to do (as you said). Furthermore, there's no advantage in revealing anything when one is accumulating certain stocks. I know some investors may even want to stay below the Top20 just to be more efficient.

[Wildreamz]

Can't be assuming too much, maybe most of our buddies have already achieve F.I.R.E hence not posting much because moving on to the next stage of their lives? 

Personally, I just find the feedback loop on private groups chat such as Discord, Twitter and Whatsapp etc. more active and responsive.

[¯|_(ツ)_/¯]

Hi Valuebuddies,
I'm sorry for my previous posts and please forgive me as I was carried away.

I really grateful of all the help that you had given (whether you know it or not).

It's not my intention to hurt anyone.

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I was really concerned about the dwindling of vb.com and in the beginning I thought of just sharing my travel journey to add some fun to vb.com

I was wrong as I noticed that the travel section was moved.  I think moderator probably felt that I'm too noisy.

Recently, when i4value join in. Since I had a bit of time, I just write a little bit more and I guess I had overdone again.

I will need to be more careful of what I'm writing.

Again, it's not my intention to hurt anyone.

My heart is full of gratitude to our valuebuddies.

Thank you for reading and have a nice weekend.

[weijian]

Wow!! This really hurts. 

Personally, the effort of posting analyses is no longer worth my time. There are more enjoyable things to do (as you said). Furthermore, there's no advantage in revealing anything when one is accumulating certain stocks. I know some investors may even want to stay below the Top20 just to be more efficient.

hi cif5000,

Welcome back. I am empathize with what is said in bold.

90% of my analysis is done offline and only that 10% is been shared. And that 10% takes a lot of effort. In the process of that sharing, I have to review it continuously  (so that I dont embarrass myself in a public forum) and often, the reward is in that review process. My main goal of sharing that 10% is hopefully for someone to come in with an alternate view. Just like looking at "undervalued" stocks, most of that effort does not translate to anything tangible at all.

And with regards to revealing anything....I thought one might be overestimate the power of vb.com? Anyways, most VBs only start to post after they have a position. And from what I observed over the years, a good quality company (or undervalued ones that don't turn out to be value traps) will still make decent money for everyone who decides to participate regardless of when/whether it was posted.

[i4value]

I am a value investor and while I have analyses that I keep private, there are also others that I share publicly. I do the public ones because some times the feedback/comments covered some points that I did not look at. We all have our biases and blind spots and we bring them into our analysis. I find that the feedback helps to overcome this.