(19-09-2013, 06:08 PM)KopiKat Wrote: Thanks! What you're referring to is similar to what Philip Fisher described in his book "Common Stocks & Uncommon Profits" ie. talking to everyone connected to the listco - competitors, customers, suppliers, staff,...
What I was referring to is what I'd have deemed to be "material" disclosures that a listco ought to have first announced thro' SGX ie. not for us to read it first from analysts / journalists, who'd interviewed them. I suppose the lines are rather blurred here and my interpretation of what's "material" is too stringent....
So, yes, read Stocks Exchange Annc (both listco & competitors, can include foreign ones), Analysts' Reports, News Articles, Magazines Articles and supplement with Trade / Industry Reports. Where possible, talk to the people who're involved in the entire value chain, mgmt, staff, competitors, suppliers, customers,.... Lastly, walk / browse (online) around... to get a better feel....
Sounds like a lot of work? No problem... there're always other approaches, like those of Benjamin Graham, which involves mainly looking at the numbers... Anyway, we have the choice to select the combo that suits our time & temperament best... Some days, just sit in our armchair, in aircon comfort and research thro' the internet. Other days, can walk aro' to see for ourselves the actual biz / office. Also, can call the IR to arrange for chit-chat session with them, either thro' email, phone or in person...
Yes, I read Philip Fisher's book, and struck a chore with his scuttlebutt approach.
It is tedious. At the end of the day, on top of clearer picture on the stock, added knowledge and wisdom (hopefully) are also make me feel good, and make the effort worthy.
(19-09-2013, 03:26 AM)d.o.g. Wrote: The only truly reliable data source is the one you make yourself from the companies' announcements. This is free, but of course time-consuming.
There are paid providers who supply data, such as ThomsonReuters, Bloomberg, Capital IQ etc but these typically cost upwards of US$10k per year, not feasible unless your portfolio is in the seven-digit zone. Also keep in mind that these providers also enter the data by hand, so there will also be occasional errors.
For retail investors, there is no real alternative to doing it the hard way. That's how I started. I still keep a master spreadsheet but don't update it that frequently any more, it's more of a list of ideas these days (grouped by industry). I now find peer comparisons more useful than a single giant spreadsheet.
Keep in mind that many of the brokers have some sort of stock screener now, this can help narrow down the list of companies for which you wish to do data entry.
Given the time-consuming nature of data entry, for retail investors it makes sense to limit the number of stocks in the portfolio. Academic research suggests that diversification benefits are already mostly captured at 30 stocks, so there's no real need to hold 100 stocks. If you cover 300 stocks it should not be too difficult to identify the best 30 ideas and buy those, whether in equal weight or weighted by attractiveness.
Thank you very much, d.o.g. for your detailed explanation. Very appreciated.
It seems even for fund managers equipped with data subscription have to do some of the data crunching jobs to discover the uncovered gems, especially if several exchanges are considered. In that sense, Mr Kong's previous work experience is a transferable skill.
I agree that for myself 30 stocks will be enough, ideally across several countries. It will take some time.
(19-09-2013, 07:00 AM)yeokiwi Wrote: Since fund manager had replied... (and i definitely is not Mr Kong, in case you mistaken)
Generally, reading the daily SGX announcement on the quarterly financial statements of listed companies is probably a good filter.
one look at P/L, loan amount, cashflow, EPS, NTA and another look at the current share price will probably give you a idea of whether the company is worth doing further research.
The workload is reduced by skipping some "branded" companies like China XXX, Sun or Moon. Those companies that is inside my black list will also be skipped.
In fact, the life of a boring SGX announcement scanner is, you really hope that the next financial statement that you open up will reveal a gem.
Warren was doing the similar things as us --scanning through the financial statements.
"Warren: managing a million dollars is entirely different than running Berkshire or a $20 or $50 billion fund of money. If Charlie and I were running $1 million or $100,000 we would be looking in some very small things, probably small descriptions in certain situations and opportunities are out there."
It seems there is no free shortcuts available rather than hardwork.
(19-09-2013, 08:40 AM)HitandRun Wrote: zf87
When I was getting an average 20% of my earned income from investments, I spent around 10-20 hours per week on research.
Nowadays, I am spending somewhat less time on research but all the previous efforts (including experience, lessons learnt, etc) do not go to waste but have a good cumulative effect, i.e. the batting averages just keep getting better.
A interesting tool shared by rogerwilco is the stock screener provided by Financial Times. However, do note that it could be inaccurate and one should verify them against stock exchange announcements.
Thank u for sharing.
I agree investing is accumulation of knowledge, skills then comes the wealth. I try to improve/optimize the FA database->screening->analysis process.
I note that well-established stock screeners are available for US market, but for SGX, most of the screeners are far from perfect. Many of the local counters mentioned by VB are out of radar in such screeners.
Zf87,
I started off using the stock guide in the 90s. It use to cost like 100 bucks. Now you can use the weekly guide or the Bloomberg in NLB.
Once you have identified 5-10 stocks for study, just pick one. For starters, 30 undervalued stocks should do the job, if you know what you are doing.
Because I am not always sure, I prefer to build up to 100 stocks or more.
If you don't have a lot of time to analyze or follow the story...
Just buy stocks with at least 5 years of no skipping dividends and priced below their net asset. I prefer to buy assets than earnings because I do not have a high IQ.
(18-09-2013, 10:16 PM)opmi Wrote: What the point of getting a 5 baggers when it is only 1% of portfolio?
Aggregate is probably using law of averages. 100 X 1% bets. On average, they should come out ahead.
IF their system has an % edge over the market. AND they are disciplined enough to follow the system strictly.
Maybe that why their company is called Aggregate. Cannot possibly be named Average Investment Mgt??! Haha.
It is pretty well establised literature that effect of diversification drop off dramatically after 25-30. I'm not sure what's so magical about the number 100 except psychologically.
Think it all buoys down to whether one thinks it is riskier to have 100 stocks that u know little about, or 10 stocks that you know a lot about.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
(18-09-2013, 10:16 PM)opmi Wrote: What the point of getting a 5 baggers when it is only 1% of portfolio?
Aggregate is probably using law of averages. 100 X 1% bets. On average, they should come out ahead.
IF their system has an % edge over the market. AND they are disciplined enough to follow the system strictly.
Maybe that why their company is called Aggregate. Cannot possibly be named Average Investment Mgt??! Haha.
It is pretty well establised literature that effect of diversification drop off dramatically after 25-30. I'm not sure what's so magical about the number 100 except psychologically.
Think it all buoys down to whether one thinks it is riskier to have 100 stocks that u know little about, or 10 stocks that you know a lot about.
The "establised literature" is using a slightly different definition of risk i.e. volatility, while the risk considered in the fund, is very likely the possibility of losing. The two are distinctly different, under a longer term perspective.
I reckon there are at least two key factors in play for diversification in the fund
- number of stock
- allocation per stock
I don't know the right answer, but based on other similar case studies, I reckon a configuration of number of stock >50 and <5 mil per stock, seems an optimum one.
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