Do your Maths !

I would like my readers and myself to ponder on these questions.

Q1) What achievement should we get annually to be worth while to be in the market ?
Q2) At what annual return are you achieving in these 5 years ? Are we still far off ?
Q3) Are you persistent enough to learn/discipline to improve to achieve your target level ?

To answer these questions,
I recently realised that about 20% of Public Mutual Funds are achieving a compounding annual return of 10~15% in the last 5 years. The best Fund (Public SmallCap) is achieving 14.4% compounding annual return which means 100% return in last 5 years.

So, to be in market , one must at least Profiting 10% return annually CONSISTENTLY out of your total allocated portfolio. Someone may boost they are profiting 30% or even 100% from the price they bought. Say one bought supermx at RM3 and sold at RM6, yeah !!! a 100% return. But but but, do you use all your allocated fund to buy just one stock. Too risky right ? you may end up buying a stock that that 20 years to achieve 100% return.

See my title above, " Do you maths" !!! If one has allocated RM100k for trading/investing, meaning his portfolio must reach RM200k in 5 years time in order to achieve similar results as the best fund in Public Mutual. If not the best, he/she must at least win the good one at 10% annually.

Some may think is easy, say easier than to done, let target a 15% compounding annually return (which will make your portfolio of RM100k becomes RM201k.
Example
2009 = 30% return (impressive, you are wondering, wow I'm getting rich sooner but is a bull run...lah)
2010 = 10% return (tougher time as there is a slump for few months but you still think I making 10% what)
2011 = losing 15% (shit! due to this EU problem dragging whole world down),
2012 =forecast to achieve 15% (okay, lets do it and get back to track)
But in the 5th year (2013), oooops, you need to achieve a whopping 44% to achieve the compounding annual return of 15%. Shit ! how to achieve a 44%, I need a super bull run.....

Can't get it ? see below
1st year RM100K becomes  RM130K (30% profit)
2nd year RM130K becomes RM143K (10% profit)
3rd year RM143K end up with RM121.5K (15% lost)
4th year RM121.5 becomes RM139.7K (15% profit)
5th year RM139.7 becomes RM201.1K (NEED 44% profit)

So, knowledge & persistent is important. Losing 1 year will de-rail the whole compounding plan.
In trading/Investment, as Alexander Elder said, we need to master the 3M,  " MIND, METHOD & MONEY MANAGEMENT ". Studying is one thing, EXPERIENCE with knowledge is the utmost important.

Value Invest- HSL

On 25/Dec/2011,http://reiccs.blogspot.com/2011/12/momentum-play-latexx.html  this is what I wrote then ,
............... under my Value Invest list, Coastal is also in the list. The other company worth mentioning is HSL (Hock Seng Lee), I keep to write her up till later as the Technical show some signal.

12/Jan/12

HSL is purely a Value Invest stock for me when I got into position. Even though I suggested my sister's friend to get some around last week, I've totally forgotten to wrote about her until I realised today she have move up quite a fair amount, Well today gap up after breakout with a good volume yesterday. I waiting to clear her around 1.51 or 1.62 a better option (greed comes into play, hee hee ). Most of the investment analyst did give a fair value around 1.6. RHB has listed her as a DEEP VALUE PICK with a fair value at 1.59 when I attended the Market Chat in Dec2011

 Technically, she is forming a W reversal pattern. If broke, 1.51, then 1.62 or 1.74 would be possible.

Momentum play-Latexx followup

Sunday, I mentioned that I'm stalking Latexx for a breakout, and she did a high volume (6.31 million) and close at 2.01 (above 1.98).

So, a long position is initiated and first P=2.10, a break above this will complete the triangle projection at 2.27. Lets see she will give me a good 14.6% profit or not.