This book is a must read for all investors. Die die must read this book.
Philip Arthur Fisher (1907 – March 11, 2004) is the author of Common stocks and uncommon profits, a guide to investing that has remained in print ever since it was first published in 1958. Perhaps the most well-known of Fisher's followers is Warren Buffett.
Fisher suggested using 15 questions to evaluate a company:
1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
3. How effective are the company's research and development efforts in relation to its size?
4. Does the company have an above-average sales organization?
5. Does the company have a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10.How good are the company's cost analysis and accounting controls?
11.Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12.Does the company have a short-range or long-range outlook in regard to profits?
13.In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholder's benefit from this anticipated growth?
14.Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
15.Does the company have a management of unquestionable integrity?
According to Phil Fisher these questions should be posed to suppliers, competitors, and consumers.
Five Don'ts for Investors
1. Don't buy into promotional companies.
2. Don't ignore a good stock just because it is traded "over-the-counter."
3. Don't buy a stock just because you like the "tone" of its annual report.
4. Don't assume that the high price at which a stock may be selling in relation to its earnings is necessarily an indication that further growth in those earnings has largely been already discounted in the price.
5. Don't quibble over eighths and quarters.
Fisher's most famous investment was his purchase of Motorola, a company he bought in 1955 when it was a radio manufacturer and held until his death in March, 2004 at the age of 96.
Next Book Review - Common Stocks and Uncommon Profits.
Book Review - How to Make Money in Stocks By William J.O'Neil
This is a wonderful book to start investing with and I am fortunate to read it. Below is a summary of the CANSLIM criteria.
CANSLIM
1. C = Current Quarterly Earnings Per Share
- Earnings must be at least 18-20%
2. A - Annual Earnings Per Share
- These figures should show meaningful growth for the last 5 years.
3.N = New Things
- Buy companies with new products, new management , or significant new changes in the industry conditions. Most importantly, buy stocks when they start to hit new highs prices. Forget chearp stocks they are there for a reason.
4. S = Shares Outstanding
- This should be a small and reasonable number. CANSLIM investors are not looking for older companies with large capitalization.
5.L = Leaders
- Buy market leaders, avoid laggards.
6. I = Institutional Sponsorship
- Buy stocks with at least a few institutional sponsors who have better than average recent performance record.
7.M = General Market
- The market will determine whether you win or lose so learn how to discern the market's overall direction, and interpret the general market indexes ( price and volume changes and action of the individual market leaders.
Cup and Handle Formation
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has low trading volume. It can be as short as seven weeks and as long as 65 weeks.
As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. Below is an example of a cup and handle chart pattern:
CELESTIAL NUTRIFOODS
OSIM INTERNATIONAL
A couple points on trying to detect cup and handles: Length - Generally, cups with longer and more "U" shaped bottoms, the stronger the signal. Avoid cups with a sharp "V" bottoms. Depth - Ideally, the cup should not be too deep. Also, avoid handles which are too deep since the handles should form in the top half of the cup pattern. Volume - Volume should dry up on the decline and remain lower than average in the base of the bowl. It should then increase when the stock finally starts to make its move back up to test the old high. Retest (of old high) - doesn't have touch or come within a few ticks of old high. However, the further the top of the handle is away from the highs, the more significant the breakout needs to be.
Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information.
Opportunity
Seize the day! It's easy to forget that time and life is limited amidst the golden rays each sunshine floods us in. The reality is our lifespan and opportunities are limited.
Niversphere
Waiting for a Rabbit under the Tree
There was a farmer who lived during the Song period. While working in the field one day ..... A rabbit rammed into the tree and died. The farmer got a free lunch without working at all. The next day, the farmer sat under the same tree and waited for the whole day. No rabbit appeared. He decided to try again the following day. Many days passed without any sign of a rabbit. The farmer's crops withered a little each day and his field is wasted away. It's an elusive dream to hope to gain without working hard.
"Nothing replaces hardwork and only hardwork can lead me to my Goals" -- Niversphere
"Dreams are illusions but success is made of toil and labour." -- Lu Sheng
Wealth Plans
Using the wealth planner assuming no initial savings and $2M Sing as a initial target of wealth.
Average Monthly Savings Required
S$ 4,778
You can also achieve your goal by progressively increasing your savings to match the expected inflation indicated by you (3%). In that case, your monthly savings requirement in Year 1 would be:
S$ 3,892
From Year 2 onwards, you would need to increase this amount by 3% per year (as per the expected inflation indicated by you).
Based on the information you have input:
Wealth Target (today's prices) (S$) 2,000,000
Wealth Target (adjusted for inflation) (S$) 3,612,222
Time allowed to reach wealth target, (years) 20
Expected rate of return from investments (% per annum) 10
Amount already saved towards your wealth target (S$) 0
The figures above are really just figures to me. Wealth creation goes deeper than this and takes a lot of discipline , good luck and good health.
Retirement Plans
Using the retirement calculator. With a monthly retirement expenses of $3000 assuming no savings.
Average Monthly Savings Required
S$ 1,217
You can also achieve your goal by progressively increasing your savings to match the expected inflation indicated by you (3%). In that case, your monthly savings requirement in Year 1 would be:
S$ 1,025
From Year 2 onwards, you would need to increase this amount by 3% per year (as per the expected inflation indicated by you).
Based on the information you have input:
Retirement Amount per month (today's prices) (S$) 3,000
Retirement Amount (adjusted for inflation) (S$) 4,814
Time allowed to achieve retirement amount, (years) 16
Expected rate of return from investments (% per annum) 10
Amount already saved towards your retirement (S$) 0
"Stop Dreaming. Take ACTION. " -- Niversphere
Ethical Investing.
The following is a piece of news that delights me. The richest man in Asia is an ethical investor same as me.
HONG KONG (XFN-ASIA) - Hong Kong businessman Li Ka-shing may sell his stake in Suntec Singapore International Convention and Exhibition Center if the company's plan to participate in a bid for the casino-resort project in Singapore proceeds, The Standard said, citing sources close to Li.
Suntec Singapore has signed an agreement with the joint venture between Harah's Entertainment and Keppel Land to develop the casino-resort project, the report said.
Li, chairman of Hong Kong's largest property developer Cheung Kong (Holdings), will sell "over 10 pct stake" in Suntec Singapore as he does not want to be linked to any gambling business, the sources said.
leonora.walet@xfn.com
lw/net MMMM
Mobius record...
MARK MOBIUS: GLOBAL PIONEER
Some international investors make a few trips a year to far-flung countries in search of new ideas. Then there's Mark Mobius. With a corporate Gulfstream IV jet as his personal vehicle, Mobius spends 300 days annually shuttling from one exotic locale to another in search of emerging-market values. But lately, investors might be wondering if Mobius, a Massachusetts Institute of Technology economics and political science PhD who manages about $14 billion, has lost his touch.
An aggressive, bottom-up value manager, Mobius was blindsided by Asia's collapse. He started an offshore Thai fund on June 20, just 12 days before the country's currency devaluation triggered Asia's financial crisis. By Mar. 31, the fund was down 53%. His Indian and Japanese offshore funds have each lost 27% since their launch last June. And a Korean fund introduced in '96 had fallen 67% by the first quarter's end. ''It has been rough,'' he says.
But nobody's writing Mobius off yet. Declaring that Asia offers ''once-in-a-generation bargains,'' he's moving back into Thailand, Malaysia, and Hong Kong--as well as Mexico, Argentina, and Brazil, which have drifted this year. Indeed, over the long term, Mobius' perennial optimism about emerging markets has paid off. His flagship $285 million Templeton Emerging Markets Fund, one of the few funds of its kind with a long-term record, has produced a 23.4% annual return for the 10 years ended on Feb. 28, despite losing 12.4% in the past six months.
Mobius buys stocks with the idea of holding them for five years. He says investors in emerging-market funds should adopt the same time horizon. ''Mobius is one of the best, because he has been in emerging markets longer than everyone else,'' says Kevin McDevitt, a Morningstar analyst.
Perhaps Mobius' long-term success has contributed in part to his recent comedown. As emerging-market investing gained respectability, assets in Mobius' funds exploded. That prevents him from taking meaningful positions in small-cap stocks that may have the greatest hidden values. Instead, he is forced to buy big caps. For example, a quarter of his China Fund's assets are in five Hong Kong blue chips, including HSBC Holdings, parent of Hongkong & Shanghai Bank. As Asian flu has swept Hong Kong, the offshore China Fund has ended up losing 25% of its value since its 1994 debut.
PROXY FIGHT. Franklin's drive to expand its global empire has also pushed Mobius to start several single-country funds that so far have been washouts. Take the New York Stock Exchange-listed Vietnam Opportunities Fund. Angered that the closed-end fund did not invest in Vietnam as promised, shareholders have sued Mobius and Templeton in U.S. District Court in Florida. Mobius says the suit is without merit and the company will ''vigorously contest'' it. He says the problem arose because Vietnam failed to open a stock market as expected. Mobius beat a proxy fight to liquidate the fund, and shareholders approved a change in the fund's mandate to include Southeast Asian stocks. The fund is down 34% for the year ended Mar. 31, making it the worst performing of the four Vietnam funds in existence.
Mobius is snapping up Thai stocks, including a chunk of Thai Farmers Bank, in hopes of a turnaround in the sector. He also placed a big bet on a beaten-down Thai telecom provider, Advanced Information Service. His Emerging Markets Fund has taken large Malaysian positions recently, including power producer YTL and Malaysian Airline System. And recently, Mobius' old friend Philip Tose, co-founder and former chairman of bankrupt Hong Kong-based Peregrine Investments Holdings, joined Templeton to help expand its Asian business.
Mobius' record suggests he has a good chance of restoring his luster. In emerging markets today, ''the opportunities are there--amazing, incredible opportunities beyond anyone's reckoning,'' says Mobius. But will his investors have the patience to wait for these opportunities to pay off?
By Mark Clifford, with Toddi Gutner
EDITED BY AMY DUNKIN
My Investment Philosophy
All investors should have an investment philosophy and here are mine as follows :
1. A concentrated portfolio of no more than 5 holdings at anytime.
2. Business must be highly scalable. This simply means that the company must offer me good growth in its own core business.
3. Management must be ambitious and capable to lead the healm to bring the company to greater heights. Setting up a business and growing the company are completely different issues and challenges to me.
4. Set high barriers to entry. Having high barriers to entry to me is not that important as it's probably pertained to the industry that the company is in. Ability to set up high barriers to entry is of greater importance to me.
5. Company must have its own R&D team. Needless to say, when we buy into a company, we buy into its future and not its past. R&D is a must to stay ahead of competition.
6. Business should be concentrated on its core business. Speaks for itself.
7. Good mix of products with a ready new line of products coming up.
8. Potential to be a multi-bagger.
9. Company must have a positive cashflow and preferrably free cashflow.
10.A market leader in its own industry.
11.Ethical investing. No livestocks, gambling or moral degrading companies.