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Hi. value buddies.
This quetion frustrates me for a long time.
Suppose I identify a stock say, ST Eng, I always dont know when to load it. comparing to it's history, current price 3.4~3.5 not cheap, so do I have to wait until a quite low price, or a relative lower price within 1 or 2 month?
Thanks for every advice .
Jeff
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Why use historical share price as a gauge? You should be looking at whether the price you intend to purchase at offers value.
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The question u ask seems to suggest you are new to stock investing. I suggest u pick up some books from library on value investing and read. You should look at PER and PB instead of share price. Buy at a 10 year average PER or PB should be quite safe for blue chips.
If you totally no interest in reading on shares investments, then buy blue chips like SingTel, StarHub, SingPost, SPH during recession period can be quite safe too. Banks can be tricky but i believe you can count on Spore govt to bail them out  .
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For STEng, if we were to look at their PE alone, it's been hovering aro' 19-21 since FY09. Their EPS had been going up since FY09, that's why share price had been going up, assuming mkt rate it as PE ~20.
Prior to the last major correction in FY08, from FY05 to FY07, the mkt was willing to pay at a PE = ~24.
So, in comparison, using just PE, it's actually still cheaper now...
<Not Vested>
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(18-10-2012, 05:30 PM)Jeff Wrote: Suppose I identify a stock say, ST Eng, I always dont know when to load it.
Some thoughts of mine - hope you don't mind.
Firstly, why have you identified ST Eng? Do you like the business? In what way do you like the business? Defensible earnings? Predictable growth and well managed? Good cash flow generation? Potential catalyst that will change its outlook? Steady dividend yields? Each factor will inform your decision in terms of what do you think is a fair value for this stock.
If a company generates only $10mil and pay it out as dividends, but come with a special guarantee by the Singapore government that it will never go bankrupt and the $10 mil will come rain or shine, I will pay 20x multiple for it in current interest rate environment, until I can find something better. If I can pay less, much better. If it comes at 30x, I'll pass.
If the same company generates $20mil, but can only pay out $10mil because it needs to retain $10mil to maintain the business and operates in a very competitive environment, I will pay much less, or even avoid buying the stock depending on my assessment of the durability of its value/earnings.
When you have in mind a fair value, you can see how the current price compares with your own fair price that you are willing to pay for the stock. If it looks in the ballpark and you think you can roughly accept the market offer then you take in the stock. Price too high? How about looking for other targets and revisiting this whenever the market moves around.
(18-10-2012, 05:30 PM)Jeff Wrote: comparing to it's history, current price 3.4~3.5 not cheap, so do I have to wait until a quite low price, or a relative lower price within 1 or 2 month?
If you know the current price is "not cheap" then you should have an idea about what is "quite low price" or "relative lower price" in the context of what you are willing to pay whether it is 5/10/15/25/50% lower tomorrow, next week, or next year.
If you do not know what is your cheaper price, then I think you probably won't really know if the current 3.4-3.5 is too expensive, if you get what I mean.
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During 06 march to end of March 2009, anyone just throw a dart on dart board peppered with bluechips to even better 2nd liners will hit a counter among them that would have have surely make him money now, 2012.
Don't believe me, try it next time something like 06 March 2009 comes around. Ha! Ha! But remember Caveat Emptor! always apply.
If you know something about value investing at that time and you got the guts, boy i am sure you are laughing to the bank now. Alas, i have yet to learn something more about value investing even now.
So hindsight investment or any hindsight activity is always correct or profitable.  
Just for laugh!
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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18-10-2012, 11:06 PM
(This post was last modified: 18-10-2012, 11:07 PM by Some-one.)
(18-10-2012, 05:30 PM)Jeff Wrote: Hi. value buddies.
This quetion frustrates me for a long time.
Suppose I identify a stock say, ST Eng, I always dont know when to load it. comparing to it's history, current price 3.4~3.5 not cheap, so do I have to wait until a quite low price, or a relative lower price within 1 or 2 month?
Thanks for every advice .
Jeff
ST Eng is a good company but at the current PE, I would not buy. There are different ways to know when to buy. PE is one factor but no, there is no one way which you would know when to buy. You need to set up the criteria on your own. Advices from people here may not be suitable for you.
For me, I use DDM, DCF, Relative P/E to know when to buy a stock. Buying a stock is part art, part science. The art part is something that you would need to decipher yourself.
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19-10-2012, 11:09 AM
(This post was last modified: 19-10-2012, 11:09 AM by Janjansen.)
It is generally not a good time to buy anything now, stock prices have gone up a lot since 2009, and while you can still find some fairly valued companies, there is nothing "cheap" out there. Sometimes when you have missed the boat, the best thing to do is just to wait it out. I know this is not an easy thing especially if you have spare cash in the bank and inflation is eating away at your wealth. But patience is a virtue when it comes to value investing. Just as night will follow day, there will be a down cycle after an up cycle. Economic cycles are getting shorter with each passing year and I believe there will be at least 2 more major crisis in my lifetime to pick-up heavily battered blue chips at bargain prices. Just like the poster above me said, if you buy in 2008-2009, you can close your eyes, pick any stock and chances are you will make significant returns. Opportunities like these doesn't come very often, but it will come, and it is worth waiting for. Meanwhile, just load up your ammunition and wait.
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Ha! Ha!
if i am really brave enough to try what i said above, i will definitely make some money even if i darted 10 counters and 1 or 2 fairly perform now in 2012. But the problem is i have sold some in 2009, 2010 and now still in the process of selling.
So i make some money but not much. Only if i have sold all now and not some in 2009, 2010. You see Mr. Market always lose to Mr. Hindsight. That's the problem i have with Mr. Hindsight. i wish i can befriend his brother Mr. Foresight. Though i am not his friend i know what he has always says about Mr. market. But he may say it differently to some of us.
And what did he says to you? Market Timing? Value Investing? Income investing? Growth Investing? Or some of these? Or all of these? Or something new?
NB:
Just for laugh.
But $$$ is involved, is it really for laugh?
Just relax and you can see further;
Not only with your eyes but your heart too.
And then Mr. Foresight may like you.
Ha! Ha!
Cheers!
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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(19-10-2012, 11:09 AM)Janjansen Wrote: It is generally not a good time to buy anything now, stock prices have gone up a lot since 2009, and while you can still find some fairly valued companies, there is nothing "cheap" out there. Sometimes when you have missed the boat, the best thing to do is just to wait it out. I know this is not an easy thing especially if you have spare cash in the bank and inflation is eating away at your wealth. But patience is a virtue when it comes to value investing. Just as night will follow day, there will be a down cycle after an up cycle. Economic cycles are getting shorter with each passing year and I believe there will be at least 2 more major crisis in my lifetime to pick-up heavily battered blue chips at bargain prices. Just like the poster above me said, if you buy in 2008-2009, you can close your eyes, pick any stock and chances are you will make significant returns. Opportunities like these doesn't come very often, but it will come, and it is worth waiting for. Meanwhile, just load up your ammunition and wait.
I fully concur with your views, and very good advice given as well.
Nothing's cheap right now, fairly valued does not give enough margin of safety. Therefore, patience is needed to wait for the fat pitch. Meanwhile, let the cash build up.
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