Sunday, September 14, 2008

Advertisement for my other blog and penny stocks on SGX

After 3 years and 120 posts I think I have covered more or less 80% of value investing, and 50-60% of investment and finance in general. I reckon there are about about 50-60 core concepts in value investing and I have more or less touched on all of them: margin of safety, circle of competence, value trap, economic moat/barrier to entry, stock markets' mechanism etc.

There may be a few more stuff to expand on Financial Statement Analysis. But it's very dry and I don't really enjoy writing about Financial Ratio and Cashflow. I am sure most people read those posts only when they want to get some sleep.

In the past 2 yrs, new posts have been slow at about 2 weeks per post bcos I can only write when new ideas, key concepts enter my knowledge base and well, new ideas and key concepts don't really come by the minute, hour or even days or weeks.

Meanwhile I have been working on another blog which I have simply named "Industry Knowledge and Other Information" which contains snippets of useful stuff (I think!)

The link is here http://industryk.blogspot.com/

It's in a very informal style and lots of no.s and statistics are included. More useful for myself than for pple who don't really want to think about what the statistics mean. Yes, the messages in the posts are not so clear cut. And sometimes, no message at all! :)

Well the latest post is about an interesting statistic: 84% of the stocks, or a whopping 600+ stocks listed on SGX are penny stocks (ie trading below $1). Of course, we are in a bear market, so what do you expect right? But let me share another statistic: less than 10 stocks trade more than $10 and less than 20 stocks trade more than $5. And in my short investment career, actually I can't really think of that many stocks trading at a high dollar amount. (Yes I know dollar amt doesn't mean anything, market cap is much more impt, but I am arguing from a simplistic angle).

I think all these statistics reflect a point: finding a real ten-bagger on SGX is 1 in a 100 or even less probable. Why? Bcos if the SGX has been around for more than 20 yrs and you see less than 20 counters trading at $5 or more. Assuming no stock split, and stocks IPO at $0.50 or so, it means you must be really good or damn lucky to identify that handful of $5-10 stocks.

Yes there are stocks that IPO at 20c, rally to $2 which would make it a ten-bagger. But they subsequently falter and return to their IPO price of 20c or even lower. Hence in my definition, they cannot really be considered "real" ten-bagger, right? So what does this all mean? Food for thought huh? I guess I will share my conclusions in another post. :)
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