More than 30% of companies in SG on do not add shareholder value.They are better off

[theasiareport]

My bad. I think the word "rotten" gave the wrong impression. I meant companies which are sub-par i.e. not creating shareholder value, and not companies that are frauds.

The former being due to incompetence and the latter due to dishonest intent.

Based on a gut feel, I would agree that net-nets would perform after a careful study of financials. However, extensive back-tests and research has shown that on the contrary, simply buying all the net-nets in the market (without studying the financials) in fact leads to superior out-performance.

Interestingly enough, net-nets with negative earnings seem to outperform net-nets with positive earnings.

I don't exactly know why this is the case but just food for thought.

I guess what I was trying to get at was that some times under-performing companies can make great investments simply because there's so much room for improvement.

Its like going from an F to C+ and going from an A to A*.

[Temperament]

The market actually reflect the real world we live in. There are all types of people making all kinds of living. As long as you know what you are doing, you can make a living. From the Karung Guni man-proprietor to the doctor-specialist.

[wahkao]

I guess what I was trying to get at was that some times under-performing companies can make great investments simply because there's so much room for improvement.

Its like going from an F to C+ and going from an A to A*.

yes i agree.
under-performing companies can improve so much. they can make good turnaround investments


those non-performing companies that claw away at share holder values are the ones to be avoided!