KLSE Market PE 18.84 (6.7.2018)

6.7.2018
KLCI	1663.86
Stock	Mkt Cap (b)	Last Price	PE	DY	ROE	Equity (m)
AMBANK	11.273	3.74	9.96	4.01	6.85%	16517.7
ASTRO	8.499	1.63	11.34	7.67	109.72%	683.0
AXIATA	34.841	3.85	66.61	2.21	2.24%	23348.0
CIMB	49.732	5.31	10.81	4.71	9.65%	47662.2
DIGI	32.5	4.18	21.82	4.5	212.85%	699.8
GENM	28.503	4.8	23.87	3.54	6.02%	19833.3
GENTING	32.022	8.3	23.15	2.59	4.11%	33642.4
HAPSENG	24.15	9.7	21.88	3.61	17.59%	6274.0
HLBANK	39.452	18.2	15.81	2.47	10.09%	24733.4
HLFG	19.944	17.38	11.65	2.3	9.68%	17683.4
IHH	49.385	5.99	88.61	0.5	2.61%	21353.4
IOICORP	27.526	4.38	8.24	3.65	36.66%	9112.5
KLCC	13.757	7.62	15.6	4.74	6.77%	13016.8
KLK	25.876	24.24	29.92	2.06	7.79%	11101.9
MAXIS	40.725	5.21	18.43	3.84	31.41%	7035.0
MAYBANK	98.178	8.97	12.77	6.13	10.46%	73507.6
MISC	26.426	5.92	16.35	5.07	4.89%	33077.1
NESTLE	34.612	147.6	53.53	1.86	74.93%	863.0
PBBANK	87.426	22.52	15.54	2.71	14.88%	37816.0
PCHEM	67.52	8.44	17.11	3.2	14.42%	27360.0
PETDAG	24.638	24.8	16.37	3.91	26.30%	5722.4
PETGAS	33.48	16.92	18.47	3.9	14.33%	12650.0
PMETAL	15.707	4.06	25.96	1.48	19.80%	3056.3
PPB	23.26	19.62	22.44	1.53	5.13%	20225.1
RHBBANK	20.732	5.17	10.16	2.9	9.14%	22336.0
SIME	15.982	2.35	6.87	0.85	16.45%	14145.8
SIMEPLT	35.772	5.26		0.67	0.00%	13941.6
TENAGA	80.971	14.26		4.28	0.00%	57928.9
TM	12.777	3.4	14.92	6.32	11.32%	7564.7
YTL	12.438	1.14	20.14	4.39	4.29%	14401.9
	1028.104					597293.1
Market PE	18.84
Market DY	3.41%
ROE	9.13%
P/BV	1.73x

TOTAL
Mkt Cap 1028.104
Earnings 54560.3
Dividends 35007.8
Equity 597293.1






18.1.2018
KLCI 1824.81
Market PE 17.76
Market DY 3.04%
ROE 10.27%
P/BV 1.82

TOTAL
Mkt Cap 1,118.64
Earnings 62,980.4
Dividends 34,010.3
Equity 613,166.7

Study the best to become the best. Study and learn from Warren Buffett.

Study the best to become the best.  Study Warren Buffett. and learn from him.


1.   Warren is the Best

Warren is the best at creating wealth by investing in other people's businesses.  No one comes a close second.

Warren studies the best in every field of endeavour.  Wise investors study and understand Warren Buffett.


2.  Wealth is created through owning a business.

Wealth is created through owning a business.  Wealth is also best preserved through owning a business.  These concepts are the essence of capitalism. 

Warren has become the world's foremost capitalist by deploying earnings from various enterprises into the ownership of more businesses in order to generate more earnings to redeploy - a virtual snowball at the top fo an economic mountain with enough time to create a huge, ever-expanding and momentum-increasing capital avalanche.


3.  Stay focus through investing in someone else's businesses

The best athletes become the best at focusing all of their gifts, time and energy on becoming the best in their sport.  Likewise, unless one has the benefit of inheritance or marriage, great fortunes have been created by an entrepreneur who focused all of his or her gifts, time, and energy on one business. 

Only one person has created billions in wealth by not only investing in someone else's businesses and managers in which to invest.  Others can do this - simple in theory and practice, but not easy.

Buffett announced that if he were managing money in the millions instead of billions, he could compound money at an even faster rate - probably twice as fast - which has always been and will always be the average-investor advantage.




Take home messages:

Warren Buffett hasn't invented anything new and doesn't own any patents.  He has never started a business an has never taken on the day-to-day management of one.  The Oracle of Omaha is so good that he doesn't even need to talk with management, access inside information, or even visit company headquarters of the businesses in which he invests. 

Assuming, however, that you study, understand, and employ the same Buffett principles, you too can achieve outstanding market-beating results.  Knowledge counts more than experience and business contacts.

Buffett's life is one of extraordinary wealth built on exemplary character traits.

The true measure of a successful investor

The true measure of a successful investor is not a comparison of performance against a stated index, but rather how well a portfolio performs during down markets.


Warren Buffett is unique in measuring himself annually against changes in book value (the simple calculation of assets minus liabilities).  He then compares this annual percentage against the S&P 500 with dividends to determine if he has added value or not. 

Buffett has not only added value.  He has done the remarkable.  Buyiing earnings of companies at attractive prices with outstanding management and with remarkable competitive advantages have all led to mind-blogging increases in book value.

A metric that Warren Buffett never reports or comments on is the actual market price of his stock.  He reports the value of his business because he can control purchases, ongoing management, asset purchases and sales, liabilities, and other things that affect changes in book value.  Conversely, he ignores the share price because often it has nothing to do with what is going on inside the business.

Value is inside.  Price is outside.

Two reasons to buy insurance

Buy insurance for protection.

There are 2 reasons for buying insurance:

1.  To protect against loss which you are unable or unwilling to bear.

2.  The insurance company is selling you a policy that is too cheap.

Choose an insurance company with the ability to pay out, even in the most extreme situation.

How to measure investor sentiment and how you can profit from this?

Closed-end funds

Individual investors are the primary owners of these funds as opposed to institutions.

Institutions such as mutual funds don't buy shares of closed-end funds or other mutual funds because their customers don't like the idea of paying two sets of fees,.

We can postulate that individual investors would be more flighty than professional investors, such as pension funds and endowments, and thus, they would be subject to shifting moods of optimism or pessimism ("investor sentiment").

When individual investors are feeling perky, discount on closed-end funds shrink and when they get depressed or scared, the discounts get bigger.


Small companies

Individual investors are also more likely than institutional investors to own shares of small companies.

Institutions shy away from the shares of small companies because these shares do not trade enough to provide liquidity a big investor needs.



How to measure individual investor sentiment?

So, if the investor sentiment of individuals varies,  it would show up both in the discounts on closed-end funds and on the relative performance of small companies versus big companies.

That is exactly what was found.  The average discount on closed-end funds was correlated with the difference in returns between small and large company stocks; the greater the discount, the larger the difference in returns between those two types of stocks.



How to profit from this investor sentiment variability?

The strategy of buying the closed-end funds with the biggest discounts earned superior returns (a strategy also advocated by Benjamin Graham).  Burton Malkiel, author of A Random Walk Down Wall Street, has also advocated such a strategy.

Genuine News and Noises

Intrinsic value cannot be determined with precision, which makes it hard to prove that stock prices deviate from intrinsic value.


An important principle at the heart of the Efficient Market Hypothesis is the law of one price.  The law asserts that in an efficient market, the same asset cannot simultaneously sell for two different prices.  If that happened, there would be an immediate arbitrage opportunity, meaning a way to make a series of trades that are guaranteed to generate a profit at no risk.


News and Noises

The only thing that makes an investor  change his mind about an investment is genuine news.

But humans might react to something that does not qualify as news, such as seeing an ad for the company behind the investment that makes them laugh.  In other words, there are many who make decisions based on noises rather than actual news.  These are called "noise traders".  They trade on noise as if it were information.  "THERE ARE IDIOTS.  Look around."

Picking the best stocks is like picking out the prettiest faces in a beauty contest.

Keynes wrote:  "Day to day fluctuations in the profits of existing investments, which are obviously of an ephemeral and non-significant character, tend to have an altogether excessive, and even an absurd, influence on the market."

Keynes was also sceptical that professional money managers would serve the role of the "smart money" that Efficient Market Hypothesis defenders rely upon to keep markets efficient.  Rather, he thought that the pros were more likely to ride a wave of irrational exuberance than to fight it.  One reason is that it is risky to be a contrarian.  "Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally."



Keynes's beauty contest analogy

This is still an apt description of what money managers try to do.

Many investors call themselves "value managers," meaning they try to buy stocks that are cheap.

Others call themselves "growth managers," meaning they try to buy stocks that will grow quickly.

But of course no one is seeking to buy stocks that are expensive, or stocks of companies that will shrink.

So what are all these managers really trying to do?

They are trying to buy stocks that will go up in value - or , in other words, stocks that they think OTHER investors will LATER decide should be worth more. 

And these other investors, in turn, are making their own bets on others' FUTURE valuations.

Buying a stock that the market does not fully appreciate today is fine, as long as the rest of the market comes around to your point of view sooner than later!