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

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. :)


  1. In fact, i keep receiving your updated post on "Industry Knowledge and Other Information" through, that is really useful information to me. Sometimes, i can't understand how do you get those statistic^^
    Thanks a lot for that, although i normally do not give comment on it.

    If your argument is the chance of ten-bagger is 1 in a 100 in SG, may i know the probability on US stock market? There should have more ten baggers on US stocks, but part of the reason is their base is a lot bigger.
    (Sorry for i am not able to calculate its chances currently.)

    10 baggers, it is something like, as what Peter Lynch said,
    'The more right you are about any one stock, the more wrong you can be about all the others and still triumph as an investor.'

  2. A few sources, but mostly from newspapers and magazines (local and foreign like Financial Times, WSJ, fortune, forbes, Economist etc)

    Other sources: Bloomberg, wikipedia, brokers' reports (can ask a good broker to send you) and internet basically.

    Not entirely sure if there would be copyright issues involved hehe. For now, just post whatever I find...

  3. Sechai, sorry I have no idea what is the ratio for US market, I don't think it can be as high as 1 in 10. So may not be that different. But as you point out, their base in much bigger. 12,000 listed co. in US, if I am not wrong.

  4. Hi Jay,

    Thanks for the updates. I have also included your new site into my site as well.


  5. 2 lesser soon, MER and LEH :)

  6. Hi 8percentpa,

    Some stocks have done stock spilts, bonus issues etc. Therefore, just looking at the number of stocks with trading price more than $5 is not accurate.

    Example: SPH, F&N, Keppel etc all gone through stock spilts throughout the years.

  7. Hi Ricky, maybe more like all US inv banks wipe out...

    MS and Goldman will be looking for commercial banks to support them, just to lend credibility, if nothing else.

    Hi ghchua, nice to see you pop by! Yes you are correct, stock price doesn't say anything. I am just taking a very simplistic view of things here.

    However it is also true that chances are the higher the absolute dollar price, the greater the market cap. We definitely don't see a stock at $0.29 with market cap of SGD 1bn.

  8. Despite all the warnings that China might falter and etc when world economy slows etc, I believe China will be the better place to find ten-baggers since its economy have the potential to overtake US and Japan.

    So, I would look at companies (in any of the major exchanges) with significant exposure in China.

    They have an economy that can be self-sufficient, have critical mass for internal consumption and do not need to depend on exports if they choose to.

  9. you are so spot on. GS and MS became commercial banks LOL!
    I am tickled to think who would risk placing deposits into these banks to help them "shore up their balance sheets".
    What do you think abt the 700 billion bailout plan? Too little? :)

  10. Hihi,

    Wealth journey, investing in China definitely makes sense. I think it is one of the biggest thing in our lifetime. The Lyxor China ETF listed on SGX may be another way to invest in China.

    Ricky, I wasn't spot on, the reporter who wrote the article was. Can't remember where I read it, WSJ or something. There will always be pple who would place money with them. Give pple a carrot big enough, they will bite. FD rate 5% or something. Hehe.

    The bailout looks ok. In the past, mkts rebounded when such major policy moves took place. Interesting to see how this will turn out. 700bn should be enough to recapitalize the main players in US. But there are regional banks, Europe, etc. So the concerted effort at the other central banks. Honestly, now I am not sure how to read all these.

    1. Mkts have fallen some 30-70% globally

    2. Real economy slowdown barely started

    3. But there is this bailout, which may mark the bottom

    4. Historically, bear mkts don't just last 1 yr

    Lots of conflicting info. Hope to to a post on this. Cheers!

  11. Seems like this bailout might be unveiled next monday, probably with some alterations. Taxpayers are outraged but they are still powerless if the lawmakers decides to go ahead with it. Wonder if they can sue the government? It looks like blatant mis-use of national debt. Not that they can repay it anytime soon.

  12. Taxpayers always have to pay for other's mistakes. That is the sad truth. In the end, it is always the common folks who suffer. Look at the Lehman notes. Wonder if the govt will do something about it. After all DBS bank was a national bank. Probably not though, unless someone high up in the hierachy also bought the notes...