Posted by: donmihaihai | October 1, 2008

Cheap stocks, cheap portfolio and a frustrating market place.

Cheap stocks, cheap stocks, the market is flooded with cheap stocks or at least the places I am looking at. Buying them is like boarding a train for good return in the next 3 to 5 years. This train does not have a fixed departure time which mean it can leave anytime whether I am onboard or not. If the driver decided to have another few round drinking sessions with no urge of starting the train, I am fine with it even if cheap stock become cheaper stock. At times, I just can’t resist myself and picking up stock like Pfood which slumped like a rock in 2 to 3 days. Hey, it is my hands, I don’t mind going to train station dirty floor and look at what are being throw away.

My portfolio is in red! And it must happen after August as it was still green at that time. The feeling is GREAT. My portfolio hasn’t been in red since 2003 is I remember correctly. This is a good sign because when it is in red, the future return will be good.

My latest pet game is checking and buying stock at below BV and I just played a game today by looking at my portfolio in Wt. average. Using 30/09/08 closing price :

China Angel P/BV = 0.48X

Full Apex P/BV = 0.53X

TPV P/BV = 0.56X

Pfood P/BV = 0.58X

Celestial P/BV = 0.83X

Bright World P/BV = 0.99X

Beauty China P/BV = 1.27X

SP Chemicals P/BV = 1.52X

Jaya P/BV = 1.81X

Micro Mech P/BV = 2.15X

Sarin P/BV = 2.22X

Portfolio Wt. Ave P/BV = 1.38X

Portfolio Wt. Ave P/E = 6.01X

Portfolio Wt. Ave ROE(1 year) = 22.51%

Portfolio Wt. Ave ROE(5 years) = 29.87%

I just can’t stop smiling when looking at the valuation, individual or on portfolio basis with the exception of SP Chems. With China Angel, Full Apex, TPV and Pfood trading at below 0.6X P/BV, I have an evil thought, someone please shot the other 7 stocks so that every single one will be trading at below 0.6X BV….. Oh please don’t let it happen, if not I will rob a bank for cash.

Not a frustrating market but frustrating market place. The market is ok, current situation is like clock hit 12am, everyone is leaving the party but there is just a small exit door. The market place of market/economics commentaries is not ok, it is frustrating, especially for me. Reading these “smart Alex” which include Internet forum/blog make me feel sick. Like the latest US$700 billion bailout plan, which newspaper is not commenting about it for days? Anyway who care about what they write now a few months later? I almost wanted to dig out their past writings and throw at their ……. faces. Anyone still talk about MBIA, the talk of the world a few months back? It seem like MBIA is doing pretty ok after being dropped out of the market place. Thomas Brown from Bankstock.com did a write up on MBIA recently. I like this website as it does not belong to the usual market place.

And there is another new blog in town which is very interesting. It belongs to Sechai, someone who willing to unlearn academic theory like DCF after winning an ACCA world prize(never heard of it) on it. I wonder whether I am able to do the same….. It is not easy as I know peoples who rather use a garbage model(not necessary DCF) even after figure out it is fundamental wrong or just because there is commonly being used or no alternative model. I still remember my lecturer who is an ex. banker, unable to figure out why Value at Risk(VaR) is correct and useful said something like “It is something because every modern bank is using it.” I wonder what will he said to his new students as VaR happened to be useless in the current situation.

The only interesting stall in market place is commentaries on companies like JP Morgan, Berkshire Hathaway, Wells Fargo, etc with strong capital able to buy out competitors or investment at depressed price. “A kid in a candy store.” Commented by Wells Fargo Chairman. Currently, I am that kid, hoping that the candy I am buying is another kid in a candy store.

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Responses

  1. It’s amazing to see that there is nothing in common in the make-up of our portfolios while practicing the “value” approach.

  2. If the majority of the stocks in our portfolios are similary, I am worry… 🙂

    The beauty of so call “value investing” is the approach not the stock.

    Anyway I have interests in some of your stocks like ARA, China Lifestyle, Cerebos, Finaone and Food Empire. They are in my watchlist and very interested in knowing more on Oriental Century and Thai Beverage.


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