The Next Big Crash - Are You Prepared?

[felixleong]

actually sometimes investing can be very simple
like buying a hotdog stand business
u will ask, how many hotdogs can it sell per day?
whats the cost of materials?
how much to pay workers?
how much profits/cash at end of the day?
If the hot dog stand makes $100 u may wanna pay $1000 given an expectation of 10% return on investment

Investors become speculators when they hear that peter lim is buying those hot dog stands for $2000 and start buying too at 20 times earnings, LOL

[wahkao]

actually sometimes investing can be very simple
like buying a hotdog stand business
u will ask, how many hotdogs can it sell per day?
whats the cost of materials?
how much to pay workers?
how much profits/cash at end of the day?
If the hot dog stand makes $100 u may wanna pay $1000 given an expectation of 10% return on investment

Investors become speculators when they hear that peter lim is buying those hot dog stands for $2000 and start buying too at 20 times earnings, LOL

good suggestion on the build up method. This is how the marketing/sales managers do it to forecast P&L.

[pianist]

seems like the next big crash coming is a false alarm?

[wahkao]

Common sense, SWOT analysis:
1. Strengths: characteristics of the business or project that give it an advantage over others.
2. Weaknesses: characteristics that place the business or project at a disadvantage relative to others
3. Opportunities: elements that the project could exploit to its advantage
4. Threats: elements in the environment that could cause trouble for the business or project

i always wanted to try SWOT analysis when buying stock but given up because its usually highly subjective analysis.


Take BRC Asia and LeeMetal, i seriously do not know how to drill down to their businesses to conduct a SWOT analysis that can give me valuable insights. I ended up relying solely on their financials alone and discard the rest.
I think porter's 5 forces is a better framework.

If anyone could provide some detail advise on this area where to start, it would be good
BRC ASIA
Company Background

The BRC Group's principal activity is the designing, manufacturing and marketing of steel mesh which is sold under the "BRC" brand name. Currently, the Group has operations in Singapore, Hong Kong and Shanghai. The Company was one of the first companies to pioneer the use of prefabricated steel mesh in the local construction industry and was granted pioneer status by the Singapore government in 1963. It has since denominated the wire mesh market with a 45 percent market share in Singapore

The Company was incorporated in Singapore in 1938 as the Malayan Wire Mesh & Fencing Co Ltd. In 1960, the Company introduced standard mesh and since then, it has extended its product line to include non-standard and customised mesh, which is used mainly in the reinforcement of floors and walls. In the 1990s, the Company developed a wide range of prefabricated products including beam and column cages, completely prefabricated beam and column reinforcement, staggered mesh, twin-wire mesh and pile cap cages.

The Company's holding company is Hall AG, incorporated in Switzerland, while the ultimate holding company is Acertec Holdings Ltd, incorporated in the UK.








Lee Metal
Company Background

Lee Metal Pte Ltd was incorporated in Singapore on 27 December 1982. The name was changed to Lee Metal Group Ltd on 4 April 2000 when it adopted public status.

The Company is an integrated one-stop shop supplying reinforcement steel products without making heavy capital investments in steel mills. Instead it works with a network of steel mills. The Company also has a complementary steel recycling materials (SRM) division which supports its main business as well as land and marine logistics capabilities for the transportation of these products to local and overseas customers.

The Company sources its steel products from various countries including Turkey, Indonesia, Thailand, Mexico, Malaysia, Romania, China and Ukraine. It has a domestic network of suppliers from whom it substantially sources for its SRM. The reinforcement steel products are sold principally to local contractors for use in the domestic construction and infrastructure industry and SRM is exported to regional steel mills for recycling. The Group has an L6 registration status with the Building and Construction Authority (BCA) which allows it to bid for public sector projects of unlimited value and HDB approved supplier status which allows it to bid for bulk contracts for the supply of cut-and-bend reinforcement steel bars to HDB projects.

In 1999, the Group expanded its business activities to include manufacturing of steel welded mesh and has obtained approval from HDB to supply steel welded mesh for HDB projects.

In February 2000, the Company secured land from the PSA for the development of a seafront integrated steel merchandising and cut-and-bend centre at Sembawang Port.

To derive benefits in terms of better operational efficiencies and cost savings in itsSRM operations through economics of scale and synergy, on July 2001, the Company merge its SRM operations with Natsteel Ltd's subsidiary, Materials Recycling Pte Ltd, to form Natferrous Pte Ltd. As a result of the merger, the Group currently owns 20 percent of NatFerrous Pte Ltd. To cement the collaboration, the Company has issued 60m shares of $0.05 each to Natsteel Ltd, representing 16.7 percent of the enlarged share capital after the alloment.

[CityFarmer]

Indeed market timing is not about catching top or bottom... it's an impossible task. But not timing it is even more ridiculous becuase value investing tells you what it is worth now, never when it will be worth. That's why value traps are a consistent reminder.

Fact is even if we say we don't time the market, the management of businesses have to do timing all the time, from hedging, to capex spending to staff and marketing costs. In other words we buy into companies inherently believing that management good track record, including timing, can be extrapolated.

My definition of market timing, is speculative move solely base on market price trends. I agree with you that it's an impossible task to success consistently.

I don't see any ridiculous not to time the market price. It is an underlying assumption for value investing i.e. the market price will catch-up with IV over long term. If we have done right on IV, and intent to hold long term, it should be OK not to time the market price, unless the assumption is wrong.

Hedging, if done right, is to avoid the risk of timing the market, right?

[Temperament]

Indeed market timing is not about catching top or bottom... it's an impossible task. But not timing it is even more ridiculous becuase value investing tells you what it is worth now, never when it will be worth. That's why value traps are a consistent reminder.

Fact is even if we say we don't time the market, the management of businesses have to do timing all the time, from hedging, to capex spending to staff and marketing costs. In other words we buy into companies inherently believing that management good track record, including timing, can be extrapolated.

My definition of market timing, is speculative move solely base on market price trends. I agree with you that it's an impossible task to success consistently.

I don't see any ridiculous not to time the market price. It is an underlying assumption for value investing i.e. the market price will catch-up with IV over long term. If we have done right on IV, and intent to hold long term, it should be OK not to time the market price, unless the assumption is wrong.

Hedging, if done right, is to avoid the risk of timing the market, right?

Can be interpreted as just buying an insurance for your portfolio position.
But funny for me so far the best "hedge" is still asset allocations - looking at my capital allocation as short term, middle term to long term.
In this way i think i can afford "Timing Investment" in the stock market.
But i am going to change to dividend income investment in the stock market.
Which is to be fully invested all the time.
Except looking out for my stock to be changed for better dividend YOC.
For OLDMAN, preservation of capital is more important then ROC.
But if super Bull Market happens, selling a few "run away" stocks is still very irresistible. For i will be very irritable if the stocks stare back at me.
Ha! Ha!
Old habit dies hard is true.
Like to know anyone willing to share better idea or experience.

[smallcaps]

Indeed market timing is not about catching top or bottom... it's an impossible task. But not timing it is even more ridiculous becuase value investing tells you what it is worth now, never when it will be worth. That's why value traps are a consistent reminder.

Fact is even if we say we don't time the market, the management of businesses have to do timing all the time, from hedging, to capex spending to staff and marketing costs. In other words we buy into companies inherently believing that management good track record, including timing, can be extrapolated.

My definition of market timing, is speculative move solely base on market price trends. I agree with you that it's an impossible task to success consistently.

I don't see any ridiculous not to time the market price. It is an underlying assumption for value investing i.e. the market price will catch-up with IV over long term. If we have done right on IV, and intent to hold long term, it should be OK not to time the market price, unless the assumption is wrong.

Hedging, if done right, is to avoid the risk of timing the market, right?

Ya also find it confusing to call it market timing. Its more like business timing as described by philip fischer. Significants and probable events that might act as catalysts.

[kevinvest8]

We know stocks can be valued and buy when it's cheap. However, how do we apply the value principles to buying index, I.e. buy when it's cheap?

What triggers my this thought was the recent dip of STI to below 3000. This level is a psychological level to many, however does it mean dip below 3000 is cheap? How cheap is cheap for such an index?

Any comment/idea?

[Temperament]

There are of course more then one way. The simplest is to look at the STI ETF's historical price relative to STI historical index.

[Ray168]

IMO, the best indicator would be STI's PE ratio.
Historically, STI PE is ~15X.

Base on Bloomberg, ST Index 3013.14; it's PE ratio is 12.86

We know stocks can be valued and buy when it's cheap. However, how do we apply the value principles to buying index, I.e. buy when it's cheap?

What triggers my this thought was the recent dip of STI to below 3000. This level is a psychological level to many, however does it mean dip below 3000 is cheap? How cheap is cheap for such an index?

Any comment/idea?