Café de Coral – Hong Kong Fast Food Giant Stock (Investment Trip with Personal Analysis)

Ein55 Newsletter No 031 - image - Cafe de Coral

In the vacation trip to Hong Kong with family, I also take the opportunity to study a few good Hong Kong stocks through actual involvement as a customer of their business.  This strategy is called Personal Analysis (PA), also applied by Peter Lynch, the best Fund Manager, who identified the best businesses through daily life observations.

Since we were hungry, we have decided to go around the Nathan Road near Mong Kok area. We ran across Café de Coral (大家乐), a local Hong Kong fast food restaurant. We could not even find a seat at 6pm, business was so good. Then we walked further, there is another branch, manage to find a seat after waiting.

We ordered baked rice, the portion is so big and the taste is good, although it was prepared in about 5 min. The business continue to be good, full house until 7:30pm when we left.  We walked further, seeing a few more Café de Coral. It seems to be more popular than McDonald in Hong Kong, so many branches and business are good.

Daily life observation is a powerful investing technique (Personal Analysis, PA) when combined with Fundamental Analysis (FA) to confirm Café de Coral indeed has strong earning and cash flow records. An investor could then apply Optimism Strategy to buy a share of this business through stock market, ideally at Level 3 or Level 4 crisis for investing, or Level 2 crisis for trading, adding Technical Analysis (TA) and macroeconomy analysis of Kong Kong if needed.

Ein55 Newsletter No 031 - image - Cafe de Coral Optimism

Café de Coral (HKEX: 0341) has increased in share price by more than 11 times in the last 16 years.  Long-term Optimism of this giant fast food stock is 9% at current share price, low downside (9%) and high upside (91%).  This is a rare opportunity for investor, share price correction is partly due to economy slowdown in Hong Kong and major correction in Hang Seng Index (HSI). Optimism is a probability calculator, we could estimate the reward to risk ratio, we could safely consider a good stock if we could wait for the giant to fall down.  However, the short term trend is negative due to bearish global stock market sentiments, therefore only investors with long term holding power could enter with counter trend (price could become lower in short term). If not, trading strategy could be considered.

 

 

How to Gamble Safely with Casino Stocks?

Ein55 Newsletter No 030 - image - Casino Banner

As we know, casino has unfair advantage of over 51% chances for all the games, therefore even a gambler has a 49% winning rate, over a long time with many times of gambling, the survival rate could be very low.  However, in the world of stock market, we could reverse the situation, playing the role as casino with unfair advantage on us, if we know how to position the right strategy, aligning with our personalities.

Genting Singapore (SGX: G13) has suffered huge correction in share price to about 1/3 of the peak price.  In the past few years, earning of Genting Singapore and global casino stocks have declined due to slowdown in global economy.  Weaker Malaysian Ringgit and anti-corruption in China have further reduced the gamblers from these 2 main markets.  The net asset value (NAV) of Genting Singapore is still growing gradually, helping to stabilize the business.

Long-term Optimism of Genting Singapore is 9% at current share price, low downside and high upside.  This is a rare opportunity for investor (second best opportunity after the last global financial crisis in 2008-2009).  Optimism is a probability calculator, we could estimate the reward to risk ratio, we could safely consider a good stock if we could wait for the giant to fall down.  However, the medium term trend is negative due to weak fundamental of business, therefore only investors with long term holding power could enter with counter trend (price could become lower in short to medium term). If not, trading strategy could be considered, waiting for higher share price with breakout of next resistance, buying after short-term uptrend is established.

At the same time, trader could also profit from shorting the casino stocks at short to medium-term high optimism.  There is no single answer to trading or investing decision which has to be aligned with one’s personality (short term trader, medium term trader or long term investor).

Ein55 Newsletter No 030 - image - Genting SG

Currently global casino stocks are under Level 2 crisis, suitable for medium term trading but technical analysis should be applied before entry.  For long term investing, this stock may be considered during Level 3 (regional crisis) or Level 4 crisis (global financial crisis) one day when optimism of world stock indices are low. Global casino business is at winter time now but this is a cyclic business, a gambler may not stop gambling forever.  When global economy has improved, the gamblers will come back again to support the casino business.  For trader and investor, the only question is what price to buy for casino stocks?

 

Opportunity in Best Bank Stock in Malaysia – Public Bank

Ein55 Newsletter No 027 - image - Public Bank Photo

Due to slowdown in economy in Malaysia, combined with Oil & Gas crisis and falling of Ringgit currency, many giant stocks in Malaysia are at attractive low price.  Public Bank (1295.KL) is a growing bank in Malaysia, share price went up 5 times from $4 to $20 in the last 15 years while earning per share (EPS) went up about 3 times consistently over the same period with strong ROE (see chart below).

Following traditional value investing principle, it is hard to buy growing stocks below the intrinsic values, unless there is a major market crisis.  Public Bank share price has been stable in the last few years but Ein55 Optimism has dropped to 24% while the earning is still growing steadily.  It means the stock has 24% downside and 76% upside.  Ein55 Optimism is a probability calculator, no one could know the future, but we may use knowledge of probability wisely to protect our investment.

Ein55 Newsletter No 027 - image - Public Bank Optimism

While waiting for the giant stock to recover, the Public Bank pays about 3% dividend yearly to shareholders, which is comparable or better than interest rate of fixed deposit in bank which has no capital appreciation.  One should learn to take calculated risk, investing in bank stocks (as a partner of bank), instead of lending money as cheap loan to bank (as a customer of bank), because the difference in long term investment return is tremendous: average of 15% yearly return in stock investment vs 3% yearly return in fixed deposit return.

Investment in good bank stocks are suitable for longer term investors who have holding power of a few years.  At the moment, Public Bank is an opportunity with Level-2 (sector) crisis.  If one could wait even more patiently, Level-3 (country) and Level-4 (global) crisis is even a better time to buy Public Bank and other giant stocks globally.  Ein55 Optimism investing strategies developed by Dr Tee will help to grab these golden opportunities in future.

Ein55 Newsletter No 027 - image - SGD-MYR Optimism

There is additional advantage for Singaporeans to invest in Malaysia stock market from forex perspective.  SGD vs Ringgit has reached a new high of 3.0 in the past 1 year, this is the second weakest time of Ringgit in the past 20 years (since Asian Financial Crisis in 1997, see forex optimism chart above). This implies that Ringgit has higher potential to grow. If one could buy a Malaysian giant stock at low optimism, holding until high optimism of stock price one day, likely the Ringgit will be stronger at that time.  We could have double advantages, enjoying higher potential upsides of both low optimism of Malaysian stocks and low optimism of Ringgit (high Optimism of SGD).

We should learn to find the top 10 global bank stocks with excellent business for our investment portfolio, buying at discounted price at low optimism, ahead of other potential big buyers who are also looking for these valuable assets.  Certain Bank stocks could be in crisis when there is global economy slowdown with high debt.  Therefore, we should only consider giant Bank stocks with strong fundamentals, not just any stock with price discount, buy low and sell high or hold patiently for both capital appreciation and passive income.

How to Choose Stocks which Could Grow 30 Times in Price?

Ein55 Newsletter No 023 - image - Jardine Banner

Jardine Matheson Holdings (JMH) / Jardine Strategic Holdings (JSH) has over 180 years of history, the group includes famous brands such as Dairy Farm, Jardine Cycle and Carriage, Hong Kong Land, Mandarin Oriental, etc.  Although JMH and JSH were removed from 30 STI components in 2015, it is still considered a blue chip, suitable for investing.

The chart below shows the stock price history of JMH over the past 18 years.  For long term investors, there are 2 strategies for capital growth to achieve higher stock price:

1) Market Cycle Investing (Buy Low Sell High)

Long term optimism chart developed by Dr Tee could show the timing to Buy Low Sell High (circled, see chart), upside potentially in a few years usually could be around 50% – 200% (3X).  This is an investing strategy integrating trading principle of buy low sell high, following the market cycles to buy/sell blue chips.

2) Value Investing (Buy Low Hold Forever)

Some investors prefer to buy and hold the stock over the lifetime. If the right stock is chosen, one could benefit from passive income (consistent yearly dividend) and also tremendous capital gains.  From the chart shown, one could earn 30X if able to buy and hold JMH for the last 18 years.

Ein55 Newsletter No 023 - image - Jardine Matheson Holdings

The strong fundamental stocks with consistent earning could help to sustain the growing price over many years.  Whether to Buy Low Sell High or Buy Low Hold Forever, it depends on investor personality.  Not everyone can be a long term value investor because it involves 4 knowhow:

1) Know What to Buy

– not every stock is suitable for long term investing

2) Know When to Buy

– one could lose money if buying blue chips at high price, the ability to buy low will create safety margin to reduce the future risk

3) Know When to Sell or Continue to Hold

– a good stock now may not be a good stock in future, careful monitoring of yearly business performance is a must for long term holding

4) Holding Power

– emotional management of Fear and Greed is needed

How to find more stocks like Jardine which may have tremendous growth potential in stock prices? What are the potential of Jardine component stocks such as Dairy Farm, Jardine Cycle and Carriage, Hong Kong Land, Mandarin Oriental, etc? It will be interesting to understand these investing opportunities, from Level 1 (individual stocks), Level 2 (sector / industry), Level 3 (country / region) to Level 4 (world).

 

 

 

 

 

Buy a Stock is a Business Partnership

Ein55 Newsletter No 020 - image - Biz Partner

 

 

 

 

 

Throughout our lives, we have to make several critical decisions, eg. choosing our own profession and life partner.  We may not understand that buying a stock is actually same as finding a business partner, an important decision in life, especially if we want to grow our wealth.

Why some people become richer over the years?  This is because they get to know good business partners.  When we buy a stock, it actually means we are in partnership with someone doing business together, could be short term or long term partnership.  If our business partners could make money, we would also profit from them because the company earning could be shared with us in the form of capital gain (higher share price) and passive income (dividend).  If we make friends with partners who are losing money quarterly and yearly in business, this is as if burning money, we will lose out in the long run with these junk stocks.

Therefore, it is important to learn how to choose the right business partners who could make us richer over the time.  One could perform fundamental analysis to analyze the company performance through studies of 3 financial reports: income statement, balance sheet and cashflow statements.  However, choosing the right partner (stock) also requires the right timing.  We have to pay different prices to make friends with them, depending on how many friends they have now.  When there are many “likes”, usually the friendship is very costly, one has to pay a high price to buy a desired stock in bullish market.  On the other hand, when a good business is emerging or when the investment market is bearish, they will have less friends, it will be easier for you to make friends with these giants stocks or business partners at low cost because you pay relatively lower share price.

After we choose our career or life partner, it is hard for us to switch.  However,  we could have many choices for business partners because we could choose what stocks to buy.  A wise investor would review the investment portfolio regularly, ensure the business partners are strong, occasionally could be replaced with new blood to strengthen the future performance. When you like any good fund or business in the world, as long as they are listed in stock market, you could make friend with them easily by buying their stocks, just wait for the right timing.

Both traders and investors should learn the unique Optimism Strategies developed by Dr Tee to choose strong global stocks as the right business partners will help you to grow your wealth.

Ein55 Charity Course for Both Graduates and Needy People

Dr Tee is not profit driven for his investment education programs, aiming to setup a low-cost, high-quality and sustainable platform for the general public to learn the right way of trading and investing, from free public workshops, low-cost 5-day course to long term coaching program for the graduates.  Dr Tee is supported by a team of graduate mentors (Chye Tin, Andrew, William, James, Victor and Kee Min), who are senior traders or experienced investors. These graduate mentors integrate their own trading and investing systems with Optimism Strategies learned from Dr Tee several years ago. After they become successful, they also have decided to contribute back as volunteers, helping Dr Tee to provide close guidance to Ein55 graduates through various graduate mentor courses.

On 29 Nov 2015, Dr Tee and graduate mentor Chye Tin, together organized the first Charity Course on REITS and Business Trusts for the graduates.  It is a huge success, the course was sold out within 12hr, because the graduates understand they are contributing to charity while learning useful investment knowledge.  The net income of the course with top up of personal donation, total amount of S$10,000 is donated by Ein55 Graduates to Tzu Chi (慈济) Foundation, accepted by the Deputy CEO of Tzu Chi Singapore, Mr Khoo on the same day.  The charity course has inspired more graduates, including Mr TG Ng, a successful business man, who matched the same amount of final donation of $10,000 by Ein55 graduates, total of $20,000 now is available to help more needy people through Tzu Chi Foundation (Singapore).

Below is a group photo of Dr Tee (red shirt), together with 6 graduate mentors and Mr TG Ng.

Chye Tin who is Ein55 Graduate Mentor, has committed to develop more charity courses for Ein55 graduates (about 1200 as of now, after graduating from 5-day course by Dr Tee) in future, ranging from investing for income (REITS/Business Trust and High Yield Portfolio) to investing for capital growth (Discounted Asset Strategy and Earning/Cashflow Strategy).  These are valuable strategies from his decades of personal experience, sharing without financial return to Ein55 graduates, net income will be donated to Tzu Chi.  These high quality courses are bonus for Ein55 graduates, integrating well with Optimism Strategies learned from earlier 5-day course by Dr Tee.

Here are valuable feedback from some Ein55 graduates who have benefited from the last Charity Course on REITS/BT taught by Chye Tin:

1) Mach Goh“Chye Tin is a meticulous mentor and give 100% effort in sharing his knowledge.on REIT & BT. His detailed analysis of the REIT & BT far exceeded my expectation. Thumb up 10/10!!!”

2) JS Tan“Personally i can feel that Chye Tin is a good mentor with kind heart and deep knowledge. My aim is to be successful of myself, and i will help more peoples by donating my knowledge or my wealth back to the society.”

3) PT Kok“It’s very well integrated with Ein55 styles – benefited many including myself.  I would recommend the instructor or his team members to conduct more sessions for the benefit of majority who missed it as soon as possible – dun miss the next market cycle to enter.”

4) KS Lai“This course has helped me to have deeper understanding of factors affecting the performance/total return of Reits when combine with Optimism method.”

5) GL Lee“Chye Tin is very meticulous and generous in sharing very detailed case studies as well as useful templates with all students attending the course. It covers both theory and practical in a very logical and progressive manner. I am sure it will benefit all students who have the diligence and patience to put them into practice. At the same time, I highly commend Chai Tin and Dr Tee for making this course a charity event.”

6) SB Tay“The instructor presented very well. The course notes were well prepared. The instructor must have done thorough research on the subject before the presentation and was very confident during the presentation. The Optimism Level was applied throughout the presentation.”

7) Vincent Seow: “Chye Tin is a very knowledgeable and experienced investor; he holds no barred in sharing his investing experience with the class.”

8) Albert Tay: “这個輔導課兼提醒学生通过義務服务或樂捐幫助社会的弱势群体。我深信每位学生或多或少,当他们投资有良好的成绩時更不会忘記需要幫助的弱势群体。今天這課,能够幫助我更明白REIT 及BUSINESE TRUST 的概念,如何分析REIT 及 如何用乐观指数分析投资海外股票市场中的REIT以降低風險。所講的概念与所分析三個公司的案例都能系统化的輔導有心学習的人。”

Ein 55 股票高利润秘诀将是我在投资道路上的指南針。這個課程教学生具有宏覌与微观的相関分析相关概念来分析投资,加上技术分析上的活用与投资心理調整的配合,特别是乐观指数(Optimism)的概念,是外面学不到的。”

 

Mr Lee Kuan Yew – Life Investor of a Nation: Singapore

Transforming Singapore from a Penny Stock to a Blue Chip in 50 years

Ein55 Newsletter No 014 - image - Singapore While Singapore is celebrating 50 years of independence, now is a sad moment for the entire nation for the leaving of Mr Lee Kuan Yew.  Although he has left the physical world, his wealth of wisdom is a valuable legacy for us.  As a tribute to him, I would like to relate his styles of governing the nation with the investment world, many similarities which we could learn from him to be a successful investor and contribute to the nation in a positive way.

Most people would agree that Warren Buffett is the most successful investor in the world.  However, in my opinion, Mr Lee is the Ultimate Investor because Warren Buffett is only good in choosing good stocks or businesses, benefiting a small group of rich shareholders, but Mr Lee could transform a poor nation without much natural resources (as if a penny stock) into a developed country (as if a blue chip) in the last 50 years.  More importantly, Mr Lee’s dedication to his only life investment, Singapore, not only benefiting 5 millions people living now, but also for many generations to come.

Let’s analyze the key management styles of Mr Lee, relating to the following Ein55 styles of investment (more details can be learned in www.ein55.com):

Optimism = FA + TA + PA

where FA = Fundamental Analysis, TA = Technical Analysis, PA = Personal Analysis

 

1) Fundamental Analysis (FA):  National Leader <=> Company Management

The little red dot, Singapore, is a nation having the size of a city. Mr Lee has fully utilized its strength, most of the policies could be enforced effectively in a short time.  If Singapore is a miniaturization of a company, the President is as if the Chairman, the Prime Minister is as if the CEO, ministers are as if the Department Heads, while the people are as if the hardworking staffs.

We know that a good company is like a good nation, both needs strong leadership.   This is the first step for the success of a nation or a company.  When we invest in a company or a stock, we need to consider the leader.  Eg, a powerful leader such as Steve Jobs could bring new life the Apple Inc.  Detection of a strong leadership is easy: within a period of 5 years (a typical market cycle) or longer, the company business is moving in a positive direction, eg. increasing earning and net asset value.  A company business could seldom do well when the leadership quality is poor.

From a nation perspective, the measurement of performance could be also every 5 years, the term given by the voters in each general election.  Mr Lee has a very different management styles, he may not need to “please” the voters with short term benefits to gain their votes, which may slow down the future national progress.  Instead, he made decisions which he believes would be beneficial in a longer term, the people may not gain much immediately, but they would enjoy the bigger fruit eventually. 5 years is long enough for a company, also for a nation to show whether the past policies are truly working.  Mr Lee is like a value investor who implemented the investing strategies consistently, different from a trader who may change positions from time to time depending on the situations.  This is how he received the support again and again every 5 years when he showed the report card to the people.

Although we are not as good as Mr Lee who could build up a little giant of nation, we still could learn to select companies which are giants, having patience for their growth, naturally we will enjoy the reward of investment.  This is different from some weak stocks which the businesses are poor, the management may still decide to give lots of dividend to retain the shareholders.  This is also true for a nation, if the national reserve is not properly managed, the wealth of nation may only be enjoyed for one generation, then many generations to come would have to pay for the prices.

 

2) Personal Analysis (PA):  Government System <=> Company SOP

Mr Lee himself could not build up the nation alone.  He needs a strong team which requires a strong and transparent system.  Mr Lee is a lawyer by his profession, fully integrating this legal belief to enforce a high integrity management system (eg. corruption free), selection of talented people regardless of races based on their capabilities (meritocracy), focusing in end results (eg.  economy).  Although Mr Lee was not directly involved in the daily government decisions for many years, the well-established system is like an automated program, executing on behalf of him.  He has duplicated many “mini” Lee Kuan Yew through this system, an important asset for Singapore to last for many generations to come.

Early years of Singapore was like a growing penny stock, now maturing to be a blue chip. Similarly from a company perspective, a blue chip company usually has a well-established system, although the growth could be limited by the lack of creativity due to following the system, the upward trend could be gradual but stable.  A good company SOP could help to improve productivity and also minimize major financial loopholes which are common in certain companies which went bankrupt suddenly.  

 

3) Technical Analysis (TA): Global Trends <=> Stock Prices

TA is critical for both traders and investors to ride the upward trends, saving the waiting time which is an opportunity cost.  Similarly, Mr Lee has world vision, he knows who and how to make friends and form alliance with other bigger nations while maintaining the integrity of a small nation.  With the rise of China in the past few decades, Singapore has benefited greatly, not just depending on western worlds in the early years.  Mr Lee was GIC founding Chairman, his understanding of Political Economy helps him in making critical investment decisions for the nation, speeding up the growth of Singapore economy.  Working hard is not enough, one also needs to work smart.  This is true for investing, a combination of FA + TA + PA will help us to look for the best investing opportunity with the lowest cost within our capabilities.  We look for investment giants not when they are at the peak of their strength, but we wait for them to fall down due to the crisis, helping them at the right time to climb up again, the giants will reward us after they have recovered.  

 

4) Optimism: Up & Down of a Nation <=> Company

A company, regardless good or bad, is susceptible to market cycling, doing well during bullish market, suffering during bearish market. Main difference is a good company will survive through the global financial crisis but a bad one may go bankrupt half way.  Singapore is like a strong company, the national reserve is like net asset value (NAV) of a company, an anchor to the nation during the difficult time.

The optimism level of Singapore may not be high all the time, there is always up and down due to various reasons. Like a valued stock, Singapore will overcome the market cycling, having a positive CAGR (Compound Annual Growth Rate), moving upward in the long run, as long as the Singapore people (as if the investors of the nation) continue to have the faith and confidence, contributing their best to the nation.
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Many people may be wondering why Mr Lee could be so successful in his whole life, almost every major decision made becomes positive eventually.  In my opinion, regardless of Mr Lee’s final choices, Singapore will still become successful (may be a different perspective or definition of success) eventually because as long as a government cares for the people with practical considerations, each of the policy could have a positive outcome eventually.  This explains why in a post Mr Lee era, Singapore will continue to grow, as long as the basic principles or pillars remain intact.  It is like a value investor with consideration of FA, regardless of final stocks chosen in the investment portfolio, the outcome will be positive eventually.

Lives are made up of decisions and choices, sometimes there is no right or wrong choice, as long as we have clear mindset of our beliefs, both personal and national levels, we shall move in the positive directions eventually.  All roads lead to Rome!

Mr Lee has contributed his whole life “investing” in Singapore without personal benefit (if any, will be just self-satisfaction to see the growth of the tree planted with lots of ripe fruits to share with others).  The entire nation should view his leaving positively as this is a natural life cycle. More importantly he has taught us many lessons with observation of the success of his life and Singapore as a nation.  He is a true timeless giant and hope we could share his wisdom to benefit more people to grow the nation together…