^V^
B4 I show u guys how "good" is kill toyo seng 's timing on "when to buy ?" , let read what he wrote in his blog as below :- * Grin *
By kill toyo seng :
There is often too much vested interest to emphasise "what to buy" than "when to buy".
To me, the WHEN is far more important than the What, although both are important. We have all seen the "anomalies" that:
- One can buy a good fundamental stock at the wrong time and lose money.
- One can buy a lousy crappy stock at the right time (usually, for a short time) and make an insane amount of money.
- And then, there is the trader who only trades one stock and lose money, and another trader who trades the same stock and made money.
***
Ha ha.. d above is like telling us ah cow's mom is a female *grin* , who doesnt know buy low sell high ? who doesnt know his mom is female ?
When to buy is more important than what to buy ? oh yah ? well..let take a look at stocks that bought by seng , u can see how good seng was in his so called " when to buy ? "
Seng called to buy Parkson @ 6.50 on 12 July 08 :-
Currently, one of the attractions of Parkson is that maybe, the Parkson HK price is supported at say HKD50, which is a strong horizontal support. There is another higher support at HKD59. If price is an indicator of companies health and smart monies understanding of company’s health, then, one could say that Parkson’s business may still be healthy if the price does not fall below HKD59 or below HKD50. In other words, one possible strategy is to cut loss when Parkson HK price falls below HKD50 say.
In other words, when Parkson HK price is “healthy”, then, any local Parkson price dips is seen as opportunity to accumulate but when Parkson HK price crashes, one cut loss.
Let say the risk of loss when this happen is preset to 2% capital. Let say for simplicity, capital is $1 million. In other words, in the worst case scenario, you cut loss and the maximum loss is $20,000.
The question now is at what price should one enter, and how much?
Now, at HKD 50, Parkson is equivalent to $5.88. So, the current price appears to be a bargain in this respect. So, can we design a buy in schedule so that at progressively lower price than $5.88, we would buy increasing amount, but below the stop loss price, we would sell out completely so that the total loss is only $20,000?
On the local charts we see Parkson have a support of $5. The 22 day moving average of the True Range for Parkson is around 27 sen. Let’s set the stop loss at say $4.7. Let’s assume for simplicity commissions is 0.5% per trade. Let’s say we want to progressively buy in more as the price falls, in 10 sen steps, from $6 to $4.8. And at $4.7, we will cut our loss and sell out and lose $20,000. The question then is how much to buy at each price? Let say at each price we risk $20,000 / 13 = $1,538. 13 because we note that there are 13 possible buy ins, from 6, 5.9, 5.8, 5.7, 5.6, … all the way to 4.8.
So, how much to buy in? Here is the full schedule:
Do try to study this schedule carefully since it's the heart of this article. This schedule needs interpretation. What it says is that at each price from $6 to $5.7, you buy 1,000 Parkson shares only. At $5.6 down to $5.3, you buy 2,000 shares. And at price 5.2 and 5.1, buy $3,000 shares. At $5, buy another 4000 shares. At 4.9, buy 6000 shares. At 4.8 buy 10,000 shares.
In other words, you scale your entry in. Buying much larger amounts as prices fall.
There are advantages and disadvantages with this approach. Start with advantages first.
1. As price falls, you buy more and at an increasing rate as price gets lower without exhausting capital.
- In fact, at 4.8, the buy is 10,000 shares, much larger than all previous buys.
- If local Parkson price falls to $4.8, then, you should own 38,000 shares in total at a cost of $196,277, or 19.6% capital.
- The average price paid is $5.17 after commissions, which is near the low. (do appreciate this difference, since the average price between 4.8 and 6 is 5.4, which is higher than 5.17)
- And if Parkson price recovers to $6, then, the gain is 16%, or $31.7k, or 3.2% capital.
2. Chances are (no guarantees) - you shouldn’t need to execute your stop loss at $4.7 if Parkson HK remains above HKD50. Of course, do use a different figure and recalculate all this so that syndicates to run your stop. Consider setting the stop higher, so that if they do run it down to $4.7, then, you can buy it back cheaper. Or alternatively, set the stop lower than $4.7 so that they won’t think of running the price down to $4. Basically keep them guessing.
3. Even if you need to execute your stop at $4.7, you have preset the maximum loss to $20k. In fact, it turns out that it is $18.6k, or just 1.86% capital.
4. The Reward to Risk potential is good – a respectable 1.7 times and this is already net of commissions. If the loss is not executed, and price recovers, the trade is profitable, with low risk of loss.
5. The small buys starting from $6 is designed to keep your "itch" to buy in check. Basically, you don't buy big at high prices, but small at high prices, and it scratches the strong itch to buy.
Can some tell me how much is parkson now ? * Grin *
Another one , US stocks bought by seng :-
18 Nov 08, 11:46
Seng: My US stocks will be bargain hunting ... and lock into freezer for 5 years .. I have no interest to stay up during midnight and in the mornings to trade, so, this one is pure investment portfolio.
18 Nov 08, 11:45
Seng: And I'm queueing to buy at $8.50 for Citibank ... this one will be my first buy into Citi ... big risk, but at this price, cannot resist.
18 Nov 08, 11:45
Seng: And I'm queuing at lower prices for a few stocks like Conoco Phillips which Buffett recently bought too ...
18 Nov 08, 11:43
jasonred79: anyhow, i will definitely agree that goldman are better than the others
22 Nov 08, 13:02
Seng: jason, not quite true. (I'm playingwith my kids right now). Buffett's $5 Billion purchase in GS Preference Shares (he gave $5 billion in exchange for $500 million p.a.) represents slightly less than 10% of Berkshire's cash pool at the time. In contrast, my exposure in GS (despite buying at $116 ) represents approximately 2% of my capital ... I could theoretically go in with another 3% at much lower prices, but I'm debating whether to do so because I might have too much exposure in correlated financial stocks.
22 Nov 08, 12:56
jasonred79: i gtg too
****
Woww..seng bought in GS @ USD 116 n citigroup @ 8.50 for long term hold !?? can someone tell me how much is Citigroup now ? how about GS n Parkson ? * Grin *
Is buying GS @ USD 116 n Citigroup @ 8.50 last Nov a "when to buy " ? seng ? * Grin *
Talk is easier than do, who doesnt know buy low sell high ? who doesnt know his mom is female ? d question here is " Prove it " ! can u Mr kill toyo seng ?
Really pity those who followed seng to buy parkson @ 6.50 on 12 July 08 , how much u lose after yr averaging buy from 6.00 to 4.70 ? how much ?
What a " when to buy " by kill toyo seng ^_^
Let touch a little bit about Gpacket , there is one thing i really dun understand , if u ask any of d TA bugger , hey dude..i hv a brand new 2.4 honda accord here..come..i sell it 2 u @ RM200K , interested ? I am very sure they will shoot me down by saying " u bodoh ar ? y shld i pay RM200K when d mkt is only selling 160K ? bukan ?
See? they r not stupid ! they know how 2 value thing when come to purchase but then horrr.. i really dun understand y they still jump all d way down 2 gpacket despite knowing gpacket is running @ huge losses ? y ?
Buying gpacket is like buying kenari @ RM 150K ! she worth that much ?
Making profit company like IOI also cant escape from downgrading from buy to sell ? what make u think that gpacket can rally up to 1.80 ? bcos of TA ? look at its latest eps , Wowww from negative 3.2 cts jumped to negative 11 cts ! dont u think it is very serious ?
Come on come on ! only fool will push her up 4 u to make money ! where is yr sense ?
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