The Painful Problem Andrew Feels on investing in Malaysia stock market
CF Lieu: So what actually triggered you? Made you interested in this advisory? What actually triggers you? I'm just curious to see.
Andrew: The first thing is, I wanted to invest in US, mainly to protect the Ringgit depreciation. I'm not sure whether it will depreciate further, but I think opportunities in Malaysia is ... Sorry. I think, in my opinion, it's not so rosy any more.
CF Lieu: Okay. Got you.
Andrew: Mainly because I am seeing some of the MNCs are leaving Malaysia. A lot of politics, and we are stuck in nowhere. We didn't move forward in terms of technology after Mahathir resigned. We also cannot compete as a low-cost country any more.
CF Lieu: Yeah, that's right.
Andrew: Fundamentaly, I think we all know what is wrong in Malaysia.
CF Lieu: True.
Andrew: I'm not saying US has no issue, but the thing is US, because it managed to capture a lot bigger audience, so a lot more people investing in US, and if we were to do charting, I think it does sort of obey the charting rules la. I don't have time to go and research about stock company and do value investing, because I am already working and I have two young kids.
CF Lieu: Yeah, I understand.
Andrew: But things like when you said, maybe it's like index funds, like Dow, if you go back to Dow Jones Index, or you buy the S&P Index, I think that is a lot easier.
CF Lieu: Yeah.
Andrew: That's what caught me la.
CF Lieu: Yeah, glad to know.
Why Andrew about Value Investing is not for him (his answers will surprise you)
CF Lieu: Warren Buffett and a lot of very legendary investor at that point of time they are way ahead of the time. When people know nothing about value investing they already doing it. But, now...in KL, you know la every week also got value investing classes...
Andrew: Okay. [laughs]
CF Lieu: Everyone knows!!! (about value investing)
Andrew: I mean knowing is one thing but they are selling...whether credible or not it's also another thing...
CF Lieu: I think it's still good business, it's what people needs. I think what I discover which I'm going to share with you in this advisory, I think what I want to.... by the end of it you will feel that you will be ahead of time, of your time, of our time.
Andrew: Mm-hmm (affirmative)-
CF Lieu: Okay? You also have the feeling like hey so many courses ah... everyone also knows, and they charge a few thousands, right?
CF Lieu: Did you attend any?
Andrew: I attended one. I attended Adam Khoo's one so it's not really a value investing course. It's mix of value investing with-
CF Lieu: -charting right?
Andrew: Yeah. he told me it's a momentum investing.
CF Lieu: Yeah.
Andrew: I kind of like his method.
CF Lieu: There's a lot of work to do?
Andrew: No. If you're going on a short term then it's less work to do.
CF Lieu: Okay.
Andrew: A lot of my colleagues went for the value investing and have you heard of this [censored]?
CF Lieu: Yeah. [censored] and yeah. Of course.
Andrew: [inaudible 00:01:37].
CF Lieu: No I didn't attend but I know. In this field we know who's the big players
Andrew: His one, a bit how do you say, okay they teach you value investing and then after that they ask you you know if you have hundred thousand and you join the millionaire club, the two years you're going to pay subscription do you know how many thousand, it will make the money back...
Then when I read more and more about them, it's like they try to do [left pocket right pocket] so they invest on the company and then they collect their members fees to go and buy out the company share you know? First [censored] will buy the share of this listed company then before they go listed then after they go listed then they sell it to-
CF Lieu: To the members huh? So called IPO right? So called IPO right?
Andrew: It's all very a bit susah to percaya la [hard to believe]
CF Lieu: Okay. They've got their own fan base of course. If you think deeper then yeah.
Andrew: But no doubt some of my colleagues are making a lot of money for doing their principals. They analyze and they say oh this stock is low it's under value. To me Malaysia actually it really depends whether the market makers want to go 'goreng' the shares or the counter or not la, you know...
CF Lieu: Exactly.
Andrew: Sometimes people release fake information in a blog, for example [censored] has as lot of followers, you know?
CF Lieu: yes.
Andrew: Whether he's genuine or not sometimes he's very skeptical you know. How can he say when he sell the shares, I don't remember how many shares I have so I forgot to tell Bursa, you know?
CF Lieu: Yeah, it came out in the paper right?
CF Lieu: It come out in the paper.
Andrew: Come on la, you are not the first day play shares no. No you are like legendary investor in Malaysia, you know? When you write and you go and do all these very scary la! That's why I said, better focus on U.S. you know?
CF Lieu: At least you know the market's big. It's not so easily manipulable. [Manu 00:04:14] can be easy manipulated by any one single party. Do you agree?
Andrew: Yes. Exactly.
CF Lieu: How you want to manipulate Google shares?, they have a few billions market cap right?
Andrew: Exactly. You know that's why Malaysia one very strange one. UMW they dump dump dump dump dump from RM 10 until RM 4.60. Then suddenly poof six. You know?
CF Lieu: Yeah.
Andrew: It's very manipulative la and so then there's all these value investing, yeah sometimes they have good business they can but Malaysia I don't know maybe I'm biased so I'm very pessimistic on Malaysia a lot. Maybe that's also a bit unfair, so better don't look at Malaysia market.
CF Lieu: Yeah. You can see my screen still right? This article shows that what happened recently is that Jack Ma come to Malaysia then he announced about setting a e-commerce hub right?
CF Lieu: Then there are some companies that is you know they think that will benefit from this setting of e-commerce hub. This news piece is about that. Some counters - very penny stock they rise by 70% in one day just because Jack Ma said something and nothing confirmed yet so people are go and goreng la.
CF Lieu: Yeah so that is what happened in Malaysia.
Andrew: Now it's hot you know. Last two three years you don't see like that you know.
CF Lieu: Yeah.
Andrew: Right? Suddenly now all these penny stock very hot now. Then this WhatsApp groupla all that go wow.
CF Lieu: Yeah.
Andrew: So many people were just like looking at chart. The best part is when they show you the chart in the history, all historically it works no. You try to apply it, you don't see the future!
CF Lieu: So you realized that, huh? Okay. It's what we call, Andrew, you heard of this term right? Pump and dump?
CF Lieu: Pump and dump happens, so if unfortunately you are in that kind of situation then you really kena hit hard la
Here I explain in detail why chasing after Extraordinary Returns in Stocks Investing is not Worth your Time
CF: 'At Black Rock, Machines Are Rising Over Managers to Pick Stocks', meaning that even at the largest fund management company in the world, around the world, they are actually replacing human when it comes to stock picking, with machines. Because you see, machines can do a more efficient job. When you say that you study value investing, and then go and I pick stocks, actually, machine can do that more efficient than any human you see.
Andrew: Yeh, haha.
CF: Okay, so is another article I want to share with you is someone that is sold about $400,000 Berkshire Hathaway Shares.
CF: This is actually an author. He's called the millionaire teacher, not sure if you heard him before, Andrew Hallam.
CF: Now just go to this article. I only want to highlight this very good words. Now you see. The legendary investor learned that you could beat the market by picking small stock with increasing momentum. So the so called "momentum" that one is okay. Yes, it's correct but today most active fund manager knows that. The market has changed. Professional investor, even retail investor also know value investing right? With all the tools and system
Andrew: Uh huh.
CF: It only gets more sophisticated.
CF: Okay? So even Warren Buffet would have a tougher time to beat the market.
CF: ...this book which you can buy through Kindle or Amazon, this is the book - the Incredible Shrinking Alpha. Alpha means out-performance, eh?
Andrew: Ah, okay.
CF: If the index perform 10% and today your stock fall 15%, so you're Alpha is 5%.
CF: Okay, so this book saying that why it's getting harder and harder to actually outperform the market now.
CF: Because you put in a lot of time but you just out perform the market by 2%, it's not worth your time la.
CF: That is the gist of the story yeh.
Andrew: Ah, okay.
CF: Okay if I spend a lot of time to do something- if my result is double then I think worth it. But if my result only 2% after, no need la. You better bring your family, go [kai kai] go shopping Midvalley and all that, you see?
CF: Ah. So.
Andrew: Is a new thing you have discovered, huh?
CF: Yeh, yeh, yeh. I mean, I'll find, you see this right? This Alpha, means out performance here but it doesn't mean it's easy to find or even worth pursuing because the amount of work you do in value investing... you do the research, analysis, even that you have time now, you realize that you do so hard but you actually outperform just by a margin compared to you investing in an index you see?
Andrew: Yeh, so there's 2 things here okay. I never knew about index investing until I attended the AdamKhoo course, the first thing he said, if you are lazy, then just invest in the index because he shows a bit on a chart and find a replacement level and just enter in, you know. Which is quite interesting, it was easy but because he has proven, show the chart, that in the long run, no matter what happened, the index just go higher and higher.
CF: The trend, right? The big trend.
Andrew: After a crash, especially after crash it rebound back, it's always higher than the previous high, no?
Andrew: If you're lazy, just buy the index and do nothing and just close your eyes.
CF: Yeh, but which index to buy, you see? That is the one. What I shared with you over the past hour is seems very easy because for myself personally, there are clients that are quite demanding you see. So, and they have no time you know, similar profile like yours so you have to find them something that really, you know give them advice on something that can really, not only easy but, it is better than perhaps 99% of the index out there. Because there's a lot of rubbish index also out there.
Andrew: Oh yes ah?