Many are holding Cash like TTB of Icapbiz due to the uncertainty of Dnoald Trump triggering another Stock Market Crash.
One Remisier is already holding 70% cash. Others are keeping to 50% to 70% in Cash position waiting for another market crash.
And Foreign Funds have pared down their investments in Malaysian equities to their lowest levels now. Right when KLSE is in weakness & ringgit has fallen sharply. So they have cut their losses and left for good?
Ha! I have told many in i3 forum that I only invested 3% of my Capital in the Stock Market. Why is it so? The answer is this. I have invested 90 over percent of my capital in my own business. And investing only 3% in other people's businesses so far. Yes, investing in the KLSE equals to investing in other people's businesses.
Never for once did I hold cash. Except for year 1997/98 just before the onset of the Asian Financial Crisis! How did I escaped the Asian Financial Crisis?
This is my story.
In those days I was fully invested in Shares. And I just sold Bj Capital at Rm3.00. The next day to my chagrin Bj Capital jumped to Rm3.80. Let me quote from my past post
Posted by calvintaneng > Apr 1, 2015 11:51 PM | Report Abuse X
Kcchongnz,
Thanks for highlighting these interesting events.
In 1994 I started investing for the First time. The moment I invested the market had a mini crash and I got burnt. I missed the Strong Bull Run of Year 1993. I am so glad looking back that I was not caught in the euphoria of 1993.
I knew of 4 Business Friends who made a lot of easy money in the 1993 Bull Run. In the Crash of 1997 3 gone bankrupt and disappeared due to harassment from loan sharks. One lost RM5 millions, one lost RM3 millions & one RM500K.
One more 4th Guy who didn't go bankrupt told me this. He said he made RM800K in the 1993 Bull Run. Money was made in the comfort of airconditioned room, why sell cars under hot sun?
He kept playing the market till he lost a cool RM2 millions (Rm800K profit earlier plus RM1.2 million of his own hard earned money).
I am so glad I escaped unscathed.
This was how I escaped. Sometime in 1997 I just sold BJ Capital for RM3.00. After selling BJ Capital for RM3.00 the next day the price shot up to RM3.80. Then I sold Aokam Perdana at RM5.00. Again after selling the next day Aokam rose to RM5.50!
I felt the pain keenly. If still rising, why should I sell?
That afternoon after share market closed, I drove out from the Remisier Firm in KL. It was drizzling and I saw Alfred, my Remisier's colleague they called "Big Mouth". Among the 20 or more Stock Brokers in the Trading Hall was Alfred Ong.
I don't know much about Alfred Ong. What I know was Alfred used to shout "Gin Gin Chow" in Hokkien or "Run Quick Quick". Since every body thought he was just a joker few pay him any attention.
As it was starting to rain I stopped the car and asked Alfred where he's going? He said, "To the Train station to catch a train to Shah Alam". "Hop in", I told him, as I drove towards KL Train Station.
Then I said,"I just sold BJ Capital & Aokam Perdana. And after selling both went up to cause me heart pain. I think we are in a bull run & I will not sell any more share from now."
"Not selling your shares? We need people like You!!" Alfred mocked. He said further in very serious tone ,"This is Not a bull run at all. This is but only a bull fart!! You better sell off all your shares & run!"
The KLSE Index was above 1,250 points. He said it will crash through the 1,000 barrier and drop to 800! A crash of 450 points to be expected. And he said his brother who worked as a Fund Manager for Singapore Temasek told him that shares worth RM10.00 to RM20.00 might even drop to only 50 cents to RM1.00. Sound crazy?
Wow! I was at my peak in euphoria & this fella was telling me "The Darkest Picture of Doom & Gloom!!" Like coming out from the hottest sun of summer to the deepest freeze of the bleakest winter. We were Poles Apart in directions! I was fully optimistic & he was deeply pessimistic!
I was totally shocked with disbelief as I dropped him off at the train station.
The next day I went to the share market. And Alfred said, "I just sold all my last 50% shares finally. I sold off 50% yesterday. And I am now 100% out of the market. He continued, "I also told my wife who is a Remisier with Omega Securities To completely Sell Off All Her Shares!"
Just then KLSE was a sea of red. Ha! I saw one of my counter still green. TA Enterprize at RM4.00. So I sold off TA at RM4.00. The next few days the Share Market rebounded & I sold off more than 70% of my shares. Still holding 30%. The index has dropped to about 1,100 points by now. I remember selling Kim Him Industry into strength at RM6.00.
I was waiting for rebound before clearing off the rest. Weeks passed. Then One Day Mr. Yahya the Proton King's helicopter crashed. He was killed instantly! The next day 6 Yahya's related counters got suspended momentarily.
I called my Stock Broker, "Please sell off every last share I still have".
The KLSE Index was now near 1,000 points as I came out 100%!
After that it crashed & crashed to the lowest of 262 points.
I was in Grand Season Hotel when my friend Mr Gan said, "Today Anwar goes to jail. Dr M imposed Capital Control. On Monday When Stock Market reopen Dr M will throw RM50 Million PNB Money to push up Bursa. If not enough he can throw another RM50 Million Petronas Money". Being quite an illiterate car broker I wondered how Mr. Gan got such foresight.
On the same weekend, Dynaquest's Boss Dr Neoh Soon Kean came out with a HEADLINE
page article in Malay Mail, "KLSE At 262 Points Index NOW THE BARGAIN OF THE CENTURY!"
At 262 points at it lowest I drove with great excitement to the share market.
What happened then?
And later during the Dot. Com Bubble
I bought 10,000 shares of MPI at RM4.50. MPI later shot up 1,000% to over RM50.00
Did I make RM500,000?
To be continued...
Posted by kcchongnz > Apr 2, 2015 02:06 PM | Report Abuse
Calvin,
Please carry on with your valuable comments. Oh yeah, I have incorporated some of your comments in my posts.
Posted by calvintaneng > Apr 2, 2015 07:48 PM | Report Abuse
X
Thank you, Kcchongnz,
On the fateful Monday as I arrived in Am Securities of AMBank HQ in KL I received a call from Mr. Ho. He exclaimed, "Ngor Yiu Tiew Lau" in cantonese; translated it means, "I want to jump off a tall building (And commit suicide)"
I froze in my track! This is my mechanic boss who lost RM3 millions. He had 9 motor repair shops with 70 workers. Everything was gone in a puff of smoke when KLSE crashed from 1,250 to to 262 points. Mr. Ho later went into hiding and changed his name twice. My heart sank as I thought of him.
With index at 262 points I met my Remisier, still shaking with fear that Mr. Ho might kill himself that morning. My Remisier Mr. Ng looked at the screen & pointed to Tenanga at RM2.80. "Why don't you just buy a 100,000 shares of TNB for RM280,000?, Mr Ng said. I had no mood to think about shares then. My worry for my friends distracted me. So I picked only 2,000 shares of AMMB around RM4.20. Looking around I think AMBank should have survived the crash. And I was correct.
After T + 7 was up I called my remisier. He said, " Your AMMB Already Gone Up in price. Why don't you contra and take the profit?" I took his advise and accepted the small contra gain. Only to see AMMB go up all the way from RM5.00 to RM20.00!
My small fortune just flew away.
I think I did what I did for 3 reasons
1) Mr Ho was the one who brought me first to the share market. If he is finished I have no other friend talking about shares. And he was a passionate punter.
2) Mr. Alfred Ong is another gambler. He said, "Forget about PE because PE stands for Punter's Expectation." In fact Aflred lost RM600,000 when KLSE Crashed on January 1994 right after the KLSE Bull Run ended in December 1993. Alfred's father bailed him out then. So Alfred practiced hit & run tactic all the time although he could read the market and pick the correct stocks. Buy and hold was not in Alfred's vocabulary.
3) And I have yet to read "THE INTELLIGENT INVESTOR". That's 9 more years away in Year 2006 when I first read it. And it really opened my eyes!
So, Kcchongnz, if you were around then with your investment advice I would have made lots more money.
This same method of hit & run and not holding longer term also caused me to sell MPI so early in the bull run in year 2,000. I bought 10,000 shares of MPI at RM4.50 but sold it before it crossed RM5.00. After selling it was my everlasting regret to see MPI rise & rise all the way to RM50,000 a share. A huge fortune flew away!
Note:
One day I bought a Company car from Guolene Metal Can, a subsidiary company of MPI. The Accountant told me MPI is making lots of money. By then MPI has already crossed RM30.00. Too high for me to chase.
Only after many years later Alfred told me about "buy and hold" strategy. And before Alfred migrated to Melbourne, Australia, he gave me "Beating The Street" by Peter Lynch. I owe Alfred a big debt for what he did at the most crucial moment of my investing life. If not for him my future course would be quite different.
Note:
My 3 Friends who lost
1) Mr. N of Batu Pahat lost RM5 Millions. He owed the banks & loan sharks. He also caused 6 of his own relatives to go bankrupt during the 1997 KLSE Crash when each name could borrow up RM200,000 each. All in all these 6 relatives became victims of his greed when Mr. N ran away & disappeared. Currently Mr. N is a part time car broker. He was the 2nd Riches Car Dealer in Batu Pahat at one time
2) Mr Ho of SP Motor has 9 car repair shops with 70 employees. One day he brought me to see his mezzanine floor office in Sri Petaling (SP Motor means Sri Petaling Motor). It was newly renovated for RM50,000. He boasted that "All these renovations are free due to his winnings from KLSE" It sounded so easy to make money in the Gogo years. Until crisis struck he lost everything & ran away into hiding from loan sharks.
After he resurfaced he told before the crisis he had net net of RM3 millions. I asked him why not sell away SP Motor & just retire with RM3 millions then. He said he wanted to make SP Motor a Public Listed Company. All it was all gone in the Crash of KLSE.
3) Mr Lee of Sungai Way/Subang also lost RM500,000 in the Share Market & went into hiding. Mr. Lee was the first to contact me after 3 months. For Mr. N & Mr Ho they only contacted me after 6 months to a year when harassment from loan sharks subsided.
(Calvin comments: See I have warned and warned about gambling in i3 forum about ifca, sumatech, vsolar, xox and other dangerous overvalued hot air balloon stocks!! I hope someone will escape losses like the fate of Mr. Neoh, Mr. Ho & Mr. Lee!!))
Posted by kcchongnz > Apr 3, 2015 05:14 AM | Report Abuse
Calvin,
Excellent relate of you true experience in the stock market. I hope you don't mind I will be using some of your examples in my book later.
I would like to summarize some points in your comments.
1)The stock market can offer one excellent opportunity to build up wealth. Imagine if you have invested after the crash of 1998 when KLCI dropped to its lowest at 262?
2)The market is also a place where huge destruction of wealth occurs as shown by Calvin's narration of his friends punting experience in the stock market. Some of them were contemplating suicide. Well it happened to the legendary trader Jesse Livermore.
3) Market is unpredictable. So don't be greedy like Calvin's three friends who already had a few million net worth which was substantial in 1998, and wanted to make more by borrowing huge amount of money. Yes, never borrow money to invest. Never use margin financing. It is extremely difficult for you to get up after these kinds of fall if you borrow to speculate. Some people made big gain by leveraging and boast around, but most of them having seen a black swan before. There would be a few times more people who used margin finance and lost their underwear. Of course these people wouldn't tell you that.
4) Do invest in the stock market, note the word "invest". Invest with the money you have, and can afford to put there for years. As we have seen, market is a place to build long-term wealth. See how after the crisis, good stocks all recovered and to much higher prices even before the plunge; Maybank, Public Bank, Nestle, BAT, Tenaga, Guiness, and many more.
5) Is it really easy to time the market as posted by Kevin here?
Posted by Kevin Wong > Apr 2, 2015 11:27 AM | Report Abuse
who said its impossible to time mkt, Bogle got it all wrong!
Anyone foresaw that the Second Board Index ran up by 156% to 656 points in just 16 months on March 1997? And who had timed it correctly by selling their shares off then before SBI plunged to by 43% in just 5 months, up 32% one month later, and then crashed by 62% to 77 points half a year later at the end of August 1998?
Bogle's data were based on academic research with all the rigorous computer back testing. He didn't just plug figures from the sky. What is the basis of that statement that states that "Bogle got it all wrong?"
Calvin continues..
So since that time of 1997/98 Crisis I have always invested defensively. And when I visted USA in 1999 I saw the Subprime Reckless Lending by Banks
I quote from my past article:
8) THE US HOUSING BUBBLE & SUB PRIME PROBLEMS.
Of all problems created this is perhaps the most dangerous and damnable!
In Year 1999 we paid a visit to the US – San Francisco, California, Los Angeles, Las Vegas, Hoover Dam, Lake Mead, Universal Studio, Nevada & Beverly Hills (Hollywood).
What a Great Nation is the US!
However, everywhere we went, we saw flyers & handbills in the bins provided. At every street corners you will see huge piles of free printed materials for the taking.
Let’s take one and see what is it? It says, “WANT TO BORROW MONEY?” So Easy. It went on to say, “No Job?” No Problem. “No Income?”. No Problem. “No Asset?” No Problem. “Are You Blacklisted?” No Problem. “Are You A Bankrupt?” Also No Problem! Come and See Us!!
You can find these handbills – yes, millions and millions of them in Los Angeles, Las Vegas & California & San Francisco. At that time we don’t know what’s going on in USA. We sensed that something must be wrong.
Now we know. The Housing Bubble had burst. The loans given out from Year 1999 to 2006 were called Liar Loans or also called “NINJA” Loans. The word “NINJA” stands for “No Income, No Job & No Asset” Loans.
And because under normal circumstances these people will never, ever qualify for a housing loan. Unless they are willing to Pay A Higher Interest Rate. You see, they don’t qualify as Prime Borrowers Who Have Jobs & Assets as collateral.
Since they don’t have proper jobs they are Classified as Sub prime – And so Pay Higher Interest for added risks. And they are risky indeed. Compounded by the following reasons Risk has spread Over the Entire World!
Since the US is no longer competitive, they fiddled with low interest rates to promote growth by cheap credit. Here, let us share our US Hired Car Experience. One Day we rented a US made car for a day trip to Hoover Dam & Lake Mead.
We found out to our amazement the low quality of the US made car. You see, the automatic window on the driver side cannot close properly. Even the Malaysian made Proton Saga is better than the US made car. And US put the first man on the moon?
As the US cannot compete externally, it turned inward and created the NASDAQ Bubble. When Internet Technology Shares Crashed in Year 2,000 – Attention Shifted To The Great US Housing Bubble.
Suddenly, everyone is caught up in The Housing Frenzy! Prices stared to rise and rise till Year 2006. And with Rising Equity In House Prices The Masses Started To Speculate,
Borrow and Spend, Borrow and Spend. The Great American Dream Is Here At Last! Your Home Is Your ATM Or Cash Cow.
Let’s Say, “House Prices Started in Year 2,000 at US$50,000. And jumped US$50,000 every year till 2006. In year 2001 Prices Have doubled to US$100,000. Year 2002 US$150,000. Year 2003 US$200,000. Year 2004 US$250,000.
You see, the Frenzy of Price Rise Year after Year has caught many by surprise. Suddenly, they feel very rich.
At every US$50,000 price gain they could refinance the house and take out another US$50,000 for consumption.
Buy that new car this year!
Next Year – Price gone up another US$50,000. Refinance again. And get that US$50K. Buy that New boat for fishing.
So they go from BANK A to BANK B,then to Bank C,and then to Bank D & E. They Change Banks like Changing clothes! Every year go to a different Bank for Refinancing and get another US$50K for consumption.
Consumption? Yes. The wastrel American spent as though there is no tomorrow. Prices will only go up. The sky is the limit.
But how come the Banks are so foolish? Don’t they know that there is great risk and money lent out will never be paid back? What if the bubble burst? Of course they do.
They have vested interests- these Bank officers. In cahoots with Housing Agents, Valuers & Credit Assessors they give out Liar Loans to borrowers.
Someone who is a road sweeper, is given a title called “President of Health Department”. Property value is overstated. Liar Loans are given out for kick backs & commissions. The Go-Go years Of US Housing Bubbles.
Prices Will Go Up Next Year. So easy. Just Refinance It For A Higher Price With Another Sucker Bank! Everyone is making money, who cares?
And So The Banks Gave Out Trillions and Trillions of Liar Loans. And something new and funny (fishy) happened.
These Banks Lumped & Bundled Together These Loans that were Given Out At High Interest Rates With Projected High Profits. Then They Sell Them Like Bonds Called “COLLATERALIZED DEBT OBLIGATIONS” Or CDO.
Collateralized by What? By These Houses At Bubble Prices, Of Course. And “Debt Obligations” by Who? By the road sweeper called “President of Health Department”. In Malaysia, we call them “Longkang” cleaner. And chances are they will never, ever be repaid – all these liar loans with so called “sub prime higher interests”.
And now these packaged millions and millions of CDOs are Sold All Around the World To Banks in USA, UK, Germany & Many Other Countries. Thank God that Malaysia Is Not One Of Them. According to the Economist Marc Faber, Malaysian Banking System Is Very Sound.
Some years ago, Singapore Newspapers Advertised “Mini Bonds” at 5% Interest rates. Many who bought got into trouble later. So were those in Hong Kong. Some have lost their entire life savings.
You see, By Selling these packaged CDOs, the Risk is transferred from the US Banks To Foreign Banks All Over The World. And if Your Local Banks Happen To Be The Unfortunate Ones, and If They Sell Them To You As Mini Bonds – Then You Are At Risk Yourself!
Those Banks That Swallowed These Toxic CDOs Have Gone Bankrupt Or Taken Over One By One – LEHMAN BROTHERS, BEAR STEARNS, MERRILL LYNCH, MORGAN STANLEY, GOLDMAN SACHS & MANY OTHERS…
To Prevent Further Insolvency Or Bankruptcy, The Federal Reserve Improvised QE & Pumped Trillions And Trillions Of Fiat Money Into The US Banking System.
Until today Many Banks In Many Countries On This Planet Earth Still Have Unresolved, Toxic and Poisonous CDOs in their Falsified Balance Sheets.
No one knows WHICH IS THE NEXT BANK or WHICH IS THE NEXT COUNTRY TO GO BURST! And many properties in the US Are Still Under Water. The Day of Reckoning is postponed indefinitely by Continual QE.
Calvin updates:
In year 2005 George Soros came out to warn about the US Subprime Bubble. And I sold off all my shares again except OPCOM.
OPCOM was an isolated & insulated stock when I bought as low as 30 cts then. And it gave good dividends throughout the Crisis.
Now I am not into Cash anymore because of these 2 reasons:
1) US HAS INVENTED THE MONEY PRINTING MACHINE CALLED QUANTITATIVE EASING. SO IS JAPAN, BRITIAN & ALL OTHER COUNTRIES JOINING IN THE NEW GAME OF CREATING FIAT CURRENCIES FROM THIN AIR.
So the equation has totally changed! People like TTB of ICapbiz has held on to cash for more than 5 years now. I think he will be holding cash for an indefinite number of years more as Trump will start printing another US$1 Trillion for US Infrarstructure jobs. The US Debt Clock has now crossed US$18 TRILLION. When Obama started his Presidency US Debt was $10 Trillion. He ended his term when US Debt crossed US$18 Trillion (Up by over 70%)
See http://www.usdebtclock.org/
http://dailysignal.com/2014/12/03/since-obama-took-office-federal-debt-increased-almost-70-percent/
2) SO INSTEAD OF HOLDING CASH AS A FORM OF SAFETY. CASH ITSELF IS NOW NOT SAFE AT ALL DUE TO RAMPAGING MONEY PRINTING AND ENDLESS INFLATION!
I thought of the time 50 years ago when I was a young boy. A red bean bun (tau sar pau) cost only 10 cents each. Coffee was also 10 cents a cup.
Today a red bean pau cost Rm1.70 each.
So it has gone up from 10 cents to Rm1.70 in 50 years or an astounding 32% inflation per year.
Just think. The guy who kept his money in the bank earning a compound 3% to 6% interest a year is now suffering from the devastation of his new wealth. He will end up in poverty in his golden years.
Will the market crash again like 1997/8 & 2007/8? I really don't know for sure. But I think we are now into another time zone of the newly fangled peril of one QE after another QE.
I hope all i3 forumers will invest carefully through these difficult times.
Now I am happy to see Prestar crossed Rm1.00 finally. This is another milestone of a 100% gain.
This makes it no. 11th to touch 100%
http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/92509.jsp
http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/92608.jsp
As Prestar is already up more than 100% Calvin calls for caution & please don't chase it now.
About 10 years ago Calvin together with Johor Sifu bought Prestar around 65 cts. I also bought lots of Prestar warrant then. Suddenly Prestar declared a 22% gross dividend & Prestar price shot to a high of Rm1.05 then
We both sold off all Prestar then at peak prices. Prestar is now at 10 year high already. Will it go higher or not I cannot tell. But I bought Prestar when it was back down again at 46 cts when no body wanted.
This is the Top Secret of Investment
The time to buy is when prices are cheap. Price to book value is low. This qualifies Calvin's 3rd Investment Rule
HE THAT IS LOW NEEDS FEAR NO FALL
The time to sell is when everybody else is excited!
Happy investing
Best regards
Calvin Tan
Jurong West, Singapore
http://klse.i3investor.com/blogs/www.eaglevisioninvest.com/113272.jsp