Equity Valuation - 01

Introduction of Equity Valuation

The fundamental value (= intrinsic or fair value) of each investment is the present value of its expected, future cash flows discounted at an appropriate risk-adjusted rate. 

Virtually every sophisticated equity valuation model used by leading investment banks today is based on discounted cash flows (DCF). The structure and the names of the models might differ, but the underlying idea is always the same. They are all rooted in the present value framework for equity valuation pioneered by Merton Miller and Franco Modigliani in the early 1960s.

Economists use models to simplify the complexity of the real world. A good valuation model is simple and helps investors to make informed decisions. 

Many financial analysts today forget that a good model is simple, not complex!

Financial economists subjectively make simplifying assumptions to focus on specific valuation aspects while neglecting other aspects. As a result, a plethora of “different” discounted cash flow approaches exists today, each with its own acronym: dividend discount models (DDM), free cash flow to the firm (FCFF) and Economic Value Added (EVA), to name just the most popular models discussed in academic literature.

Financial analysts at leading investment banks have added proprietary discounted cash flow models and new acronyms. The most sophisticated DCF models used by financial analysts today are, in our opinion, 

• Credit Suisse’s Cash Flow Return on Investment (CFROI) model
• Morgan Stanley’s ModelWare
• UBS’s Value Creation Analysis Model (VCAM). 

潇洒晚年靠投资

将退休年龄，由55岁提高到60岁，已势在必行。提高退休年龄，是世界潮流，经济上轨道的国家早已实行，大马现在才跟上，实际上已嫌略迟。

紧跟着退休年龄的提高，提取全部公积金的年龄亦相应提高到60岁。工薪阶级的薪金，通常在55岁时已到顶薪，公积金的缴交额达到最高，加上累积公积金所赚的利息也最大，故由55至60岁的5年，公积金可增加20%，使上班族的黄金岁月过得较宽裕。

但只是“较宽裕”而已，还是不足以保障晚年生活。调查显示，公积金会员在55岁时提完公积金，有72%在3年内花光。其馀28%不是不花光，只是在3年后才花光而已。现代医药发达，除非患上绝症，要活到80岁并不难。

退休人士钱不够用

由55岁到80岁的25年，属黄金岁月。而最少有72%的乐龄人，要在钱不够用的窘境中，度过他们人生最后的22年。这是多么残酷的事实，多么痛苦的人生。大部分退休人士还是要靠儿女，或别人的资助，才能度过晚年。

换句话说，大部分退休人士，都无法做到财务自主，都面对钱不够用的窘境。没有财务自主的晚年，不可能是潇洒的晚年。黄金岁月也不可能是金光闪闪的岁月。有财务自主潇洒晚年，才有可能好梦成真。

退休后财务自主，潇洒地度晚年应成为每一个上班族终身奋斗的目标。从众多工薪阶级退休后，都得依靠亲人过活，说明了单靠薪金，无论如何节衣缩食，都无法达到财务自主。要财务自主须学投资

要达到财务自主，必须学习投资。投资就是以钱生钱，就是让别人为你赚钱。作为受薪人士，你已经把你的时间卖给雇主，你再也无权支配你的时间，所以你不能兼职。你只能靠“不劳而获”赚钱，那就是“投资”。

投资是让时间替你挣钱，或让别人为你赚钱，你在将“资金”“投”出去之后，什么都不必做，财富却与日俱增，使你在退休时财务自主，潇潇洒洒的度过你的黄金岁月。

工薪阶级最适合买产业

买产业是工薪阶级的最佳选择，除非买错地点、买错价格，投资产业失败者少之又少。交20%的头期，买一间屋子，只要涨价20%，就取得100%的回酬。借贷越高，回酬越高，一间50万令吉的屋子，如果头期只需5万令吉 (10%)，20年供完，如果每月租金足够摊还每月供款的话，20年后即使产业没有涨价，你也有了50万的财产了。所以，买屋应成为职场新鲜人的第一项投资。

股票简单易行须有智慧

股票是最简单易行的投资，但必须要有智慧。买股票就是参股做生意，你的成败决定于生意的成败，不是决定于股市的起落。只要你参股的公司，钱越赚越多，你的股票就一定会增值，又何必担心股价不起呢？

整天盯住股价，不理公司业务是否有进展，是舍本逐末。舍本逐末，使你的投资走向末日。所以，股票投资要成功，首先是要具备正确的投资概念－－投资于业务。有前途的企业，其股份（票）才有可能增值。投资者最常犯的错误，是以为“价值”可以无中生有，殊不知被吹胀的泡沫，破灭只是时间问题而已。

企业必须脚踏实地去经营，才能创造价值。股票要有价值，才能增值。惟有投资于能增值的股份，才能致富。能致富，才能财务自主，有财务自主晚年才能过得潇洒。投资增值，需要时间，所以投资越早开始越好。现在就开始投资吧！

投资赚钱靠“增值”。投资赚钱靠“增值”，增值需要时间。投资回酬与风险往往成正比，通常时间越长，风险越低，时间越短，风险越高。股票投资，每天抢进杀出，长期结算，赚钱的少之又少，非累积财富之道。

一个小心挑选的股票投资组合，持握10年，没有人会亏本。因此靠投资累积财富，长期是最佳途径。要长期，必须要有耐性。耐性是纪律的表现。许多人投资失败，是因为不守纪律，不守纪律是因为你的“情商”(EQ) 高过你的“智商”(IQ)－受情绪控制，而不是受理智控制。受情绪控制，你就无法克制你把金钱化在消费品上的冲动。

消费品只会贬值，不会增值。把钱化在只会贬值的消费品上，你就很难储蓄。而储蓄是累积资本的原始手段。没有储蓄就不会有资本，没有资本，就无法投资。无法投资就无法达到财务自主。

长期投资减低风险

投资必须长期的，一个最重要理由，除了减低风险，就是按照“复利”理论，较后期的回酬率比初期的回酬率高不知多少倍。后期3年所赚，可能高过前期的10年。故短期套利，是牺牲了后期庞大的回酬。

致富靠后期的庞大回酬，并非靠初期的低微回酬。投资一定要有先苦后甜的精神，“先苦”而不半途而废，靠耐性，耐性靠纪律，纪律靠控制情绪，控制情绪靠你自己的意志力。自救多福，此之谓也。投资的途径很多，买产业和股票是最普通，最易行的途径。最普通、最易行，却不保证所有人都成功。

成功靠增值。定期存款之所以不是好投资，是因为母金不会增值。增值是投资成功之钥。

有纪律储蓄才能增值

千里之行，起于跬步，财务自主是马拉松，要达到财务自主的终点，需由本身做起。第一步是克制你的消费欲，有纪律地储蓄－－每个月领到薪金后，先抽出20%，存入银行，其余的才花用。不要等到月尾才储蓄，因为不是每一个人都有守纪律的精神，花到月尾时可能已所剩无几，甚至出现负数。

你的公积金数目可观，是因为强迫缴纳。你如果要储蓄成功，最好的方法是强迫自己储蓄。先存后花就是强迫储蓄。

勿把钱留银行太久

强迫储蓄可以培养纪律，纪律可养成耐性，有耐性，投资才能长期坚持，长期坚持才能增值，增值是达到财务自主之钥。

不要把钱留在银行中太久，因为银行给你3.5%的利息，而通货膨胀率为6%，你每存一年，就亏了2.5%， 存得越久，亏得越多。

投资致富的人，多不胜数，却从来没见过靠利息收入而发达的人。你的金钱必须为你赚取高过通胀率的回酬，就好像投资回酬必须高过投资成本（借钱投资，利息就是成本）一样。

Commentary On Chapter 1

All of human unhappiness comes from one single thing: not knowing how to remain at rest in a room.   —Blaise Pascal

Graham’s definition of investing could not be clearer: “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.” Note that investing, according to Graham, consists equally of three elements:

• you must thoroughly analyze a company, and the soundness of its underlying businesses, before you buy its stock;

• you must deliberately protect yourself against serious losses;

• you must aspire to “adequate,” not extraordinary, performance.

An investor calculates what a stock is worth, based on the value of its businesses. A speculator gambles that a stock will go up in price because somebody else will pay even more for it. 

As Graham once put it, investors judge “the market price by established standards of value,” while speculators “base [their] standards of value upon the market price.” For a speculator, the incessant stream of stock quotes is like oxygen; cut it off and he dies. For an investor, what Graham called “quotational” values matter much less. Graham urges you to invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.

Like casino gambling or betting on the horses, speculating in the market can be exciting or even rewarding (if you happen to get lucky). But it’s the worst imaginable way to build your wealth. That’s because Wall Street, like Las Vegas or the racetrack, has calibrated the odds so that the house always prevails, in the end, against everyone who tries to beat the house at its own speculative game. On the other hand, investing is a unique kind of casino—one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor. People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.

People began believing that the test of an investment technique was simply whether it “worked.” If they beat the market over any period, no matter how dangerous or dumb their tactics, people boasted that they were “right.” But the intelligent investor has no interest in being temporarily right. To reach your long-term financial goals, you must be sustainably and reliably right. 

To see why temporarily high returns don’t prove anything, imagine that two places are 130 miles apart. If I observe the 65-mph speed limit, I can drive that distance in two hours. But if I drive 130 mph, I can get there in one hour. If I try this and survive, am I “right”? Should you be tempted to try it, too, because you hear me bragging that it “worked”? Flashy gimmicks for beating the market are much the same: In short streaks, so long as your luck holds out, they work. Over time, they will get you killed.

Commentary On the Introduction

If you have built castles in the air, your work need not be lost; that is where they should be. 

Now put the foundations under them.      —Henry David Thoreau, Walden

Notice that Graham announces from the start that this book will not tell you how to beat the market. No truthful book can. Instead, this book will teach you three powerful lessons:

• how you can minimize the odds of suffering irreversible losses;

• how you can maximize the chances of achieving sustainable gains;

• how you can control the self-defeating behavior that keeps most investors from reaching their full potential.

But no matter how careful you are, the price of your investments will go down from time to time. While no one can eliminate that risk, Graham will show you how to manage it—and how to get your fears under control.

ARE YOU INTELLIGENT INVESTOR? 

Now let’s answer a vitally important question. What exactly does Graham mean by an “intelligent” investor?  

Graham defines the term—and he makes it clear that this kind of intelligence has nothing to do with IQ or SAT scores. It simply means being patient, disciplined, and eager to learn; you must also be able to harness your emotions and think for yourself. This kind of intelligence, explains Graham, “is a trait more of the character than of the brain“.

In short, if you’ve failed at investing so far, it’s not because you’re stupid. It’s because, like Sir Isaac Newton, you haven’t developed the emotional discipline that successful investing requires. In Chapter 8, Graham describes how to enhance your intelligence by harnessing your emotions and refusing to stoop to the market’s level of irrationality. There you can master his lesson that being an intelligent investor is more a matter of “character” than “brain.”

As Graham shows so brilliantly in Chapter 8, this is exactly backwards. The intelligent investor realizes that stocks become more risky, not less, as their prices rise—and less risky, not more, as their prices fall. The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale. 

So take heart: The death of the bull market is not the bad news everyone believes it to be. 

Thanks to the decline in stock prices, now is a considerably safer—and saner—time to be building wealth. Read on, and let Graham show you how.

PEOPLE ARE FUNNY

Sometimes, I have to hide a smile when I look at the antics of some people. Certain things they do or say, well, do not quite add up. Check out the following examples:

Some people say, “My life has changed 360 degrees” – to imply that they have undergone a total transformation and are totally different person now. Actually, a 360 degrees change in direction will bring them right back to their starting place.What they should have said is, “My life has changed 180 degrees”.

Some people say, “Aim for the moon. If you miss, you may still wind up in the stars.” I don’t know where they learnt their astronomy but aren’t the stars a lot further away than the moon? So, even if you missed the moon, there is no way you’ll wind up in the stars. You’re more likely to wind up back on earth!

Some people believe that an investment adviser is an expert in investments. They think he knows all there is to know about investments, and then some. They believe the investment adviser has their best interests at heart. Actually, the reason they are called “investment adviser” is that “speculation advisers” do not sell as many products!

Some people believe that a successful formula will bring in excellent results forever. They repeat the formula over and over again because it has been making money. So, even though the world and regulations have changed, they will continue to use the same formula. This partly explains why some people become ex-millionaires! They are stuck in a rut.

Some people rush to buys properties because the CEO of the housing developer told them that prices will soon rise. Don’t they realise that it is the CEO’s job to say that? After all, he is hired to sell as many properties as he can.

Some people think they can make money from options and futures and currencies when they already have a hard time making money from properties, which is actually the easiest, simplest and time-tested way to make money in Malaysia. Isn’t that a little like trying to beat a grandmaster at chess when you cannot even win at checkers?

Some people spend much time, effort and money to research a particular investment. The good news is all that research tells them, yes, the time is right for the investment. Unfortunately, for a variety of reasons, instead of investing ameaningful amount into the investment, they put in just a small amount of money – RM10,000, RM5,000 or perhaps even less. The problem with this is thatthe money is too little to be of any significance. For example, if they managed to get a 100% return on investment, which is superb and out-of-this-world return, their RM5,000 becomes RM10,000. While it is certainly a newsworthy performance, the extra RM5,000 will hardly change their financial situation. Had they invested RM100,000 or, even better, RM500,000, in return would have made a huge difference to their situation. This explains why some people never get rich even though they chose the right investment – their investment is too little.
Some people want to become rich but do not want to do anything different. Instead, they want to continue doing what they are currently doing, even though it is not bringing them the desired results. That’s like wanting to see the sunset but heading east to catch it! It just cannot happen!

Ten Value Drivers That Increase Sale Price of a Business

Business Value -- What Drives It?

A valuation is not about determining what a company is worth in the current owner's hands, it is about the company's transferable value. The purpose of this article is to help you evaluate your company through the eyes of a buyer. From that perspective we will ask you to focus on ten value drivers. Each driver is a characteristic of a business that either reduces the risk associated with owning the business or enhances the prospect that the business will grow significantly in the future. Simply put, the better your performance in these areas, the greater the selling price of your business. The likely result is that you will sell at the higher range of the multiples normally associated with your industry.

Value Driver #1: Stable and Predictable Cash Flow

Think of revenue and the bottom line cash flow of your business as the first introduction to a buyer. Revenue and cash flow is the number one attraction. A business with an established pattern of growth will bring a premium price when it is sold. The value associated with acquiring the available cash flow is directly related to risk. The lower the risk of losing that cash flow in a transfer of ownership, the higher the price will be to acquire it. If recurring revenues comprise a material portion of a company’s overall revenues, the recurring revenue stream can be valued at a higher level than the non-recurring revenues. Examples of recurring revenues are maintenance contracts, monthly support agreements, annual license agreements, warranties, subscriptions, or other revenue streams that are contractual and repeating in nature. Buyers are willing to pay the highest amount when their perception is that cash flow is predictable and will increase into the future.

Value Driver #2: Reliable Financial Information

Reliable financial records are not only a critical element of business management but also support the claim that a company is consistently profitable. In the purchase of a business, the buyer will perform some level of financial due diligence. If the buyer is not comfortable when reviewing the company’s past financial performance, there is no deal, or at best a reduced value for the company. If a buyer faces a seller of a business who asserts that the company has been making $1 million per year for the past three years and is projected to make at least that much in the future, the seller will be required to prove it. If the seller then produces past financial statements that are incorrect, insupportable, or incomplete, the buyer would most likely be gone. The lack of financial integrity is one of the most common hurdles encountered during the sale process.

Value Driver #3: Customer Diversity

A broad customer base in which no single client accounts for more than 5 to 10 percent of total sales helps to insulate a company from the loss of any single customer. It reduces the risk of serious cash flow issues if one or more customers do not stay under new ownership.

Value Driver #4: Human Capital / Quality of Workforce

Keep your talent, they are your business. Buyers look for situations where management and / or key employees want to stay for the long term. The quality of the workforce, including experience, expertise and depth of knowledge, is also considered. An in-place team that can provide continuity and assist in the growth of the business under new ownership is a valuable asset. If a company’s success is reliant on capable, well-trained employees – not the owner – it means the business will not be negatively impacted under new ownership. This reduction of risk will pay off with increased purchase price.

Value Driver #5: Growth Potential

When an owner can describe realistic opportunities for growth that specifically illustrate the reasons why cash flow and the business itself will grow after it is acquired, a higher value can be achieved. A documented growth plan demonstrates the viability of the company’s future and may identify opportunities that a buyer had not considered. Some areas to consider in developing a growth plan:

• Is your business in a growth industry?
• Are there additional markets that a new owner should pursue?
• What additional products could be delivered to existing customers?
• Where are the best profit margins realized and can they be expanded?
• Can your technology be licensed?
• Will demand for your product or service increase as population grows?
• How will enhanced marketing campaigns and sales efforts affect growth?
• Are there opportunities to grow through acquisition?
• Can growth be achieved by expanding territory or manufacturing capacity?

Value Driver #6: Operating Systems and Procedures

The establishment and documentation of standard business procedures and systems demonstrate that the business can be maintained profitably after the sale. Business systems include the computerized and manual procedures used in the business to generate its revenue and control expenses, as well as the methods used to track how customers are identified and how products or services are delivered. The following are examples of business systems that enhance business value.

• Personnel recruitment, training and retention
• Human resource management (an employee manual)
• New customer identification, solicitation, and acquisition
• Product or service development and improvement
• Inventory and fixed asset control
• Product or service quality control
• Customer, vendor and employee communication
• Selection and maintenance of vendor relationships
• Business performance reports for management

Value Driver #7: Facility and Equipment Condition

The business facilities and equipment should be well maintained to realize maximum value. A buyer will not pay a premium, and may very well discount an offer, for a disorganized warehouse, office or other building. Seeing disorganized or poorly maintained facilities and equipment may cause the buyer to perceive that other aspects or the business may be similarly disorganized (employee records, financial records, compliance records, etc.). Owners should ensure that facilities and equipment are organized and maintained in peak condition before beginning the sale process. Buyers will appreciate that their investment will not include major repairs and that all equipment and inventory will be easy to locate and identify. Lastly, are the facilities large enough and machinery sufficient to accommodate some level of modest sales growth? A buyer does not want to have to look for additional space or immediately invest in new equipment shortly after closing.

Value Driver #8: Goodwill

This value driver involves stability and consistency. Name recognition, customer awareness, history, ongoing operations, and reputation are all part of business goodwill and influence value. Even if the company does not have many hard assets, relationships are key. The fact that customers have been with the company for a period of time does matter. Brand recognition, service or product reliability, and high customer satisfaction are distinguishing factors that add value. This driver of goodwill should not be overlooked in a valuation because it is helps mitigate perceived risk.

Value Driver #9: Barriers to Competitive Entry

Features that give a business an advantage over its competitors, strengthen its strategic position, or that can be leveraged for future gain boost value and lessen perceived risk. Buyers will pay a premium for a niche that has barriers to competitive entry. One way to describe this Barrier Value Driver is to use Warren Buffet's term, "Business Moat." Buffet compares a castle's moat to the protection that a business needs to encroaching competitors. For instance, the wider the moat, the more easily a castle could be defended. A narrow moat did not offer much protection and allowed the castle to be breached. To Buffett, the castle is the business and the moat is the barrier that protects the business' competitive edge. The following are example barriers that widen the moat and hinder competitors from breaching the company’s castle.

• Copyrights
• Trademarks
• Patents
• Trade Secrets
• Developed Processes
• Proprietary Designs
• Proprietary Know-How
• Brand or Trade Names
• Engineering Drawings
• Customized Software Programs
• Step-by-Step Training Systems
• Customized or Proprietary Databases
• Published Articles or Industry Press
• Hard-to-get licenses, zoning, permits, or regulatory approvals
• Contracts with difficult-to-penetrate entities (government, for example)

Value Driver #10: Product Diversity

A narrow product set increases risk and drives down value. Diversity of revenue sources lowers the inherent risk of the business. Therefore, businesses with a healthy product mix, good gross profit diversification, or with products or services sold into multiple industries, receive a higher perceived value from prospective buyers.

Key Characteristics of Successful Business Owners

Some people are just born with it!

These are traits that successful business owners commonly share. Above all, however, business owners need to have strategic thinking skills, time management skills, and know the job.

No one can embody all these traits if they are part of the human species, but varying degrees of these characteristics is the stuff that success is made of.

• Decisiveness (ability to make decisions)
• Open-Mindedness / Flexible (willingness to change with the market as technology advances)
• Multitasking Ability
• Negotiation Skills
• Ability to Delegate
• Leadership Skills
• Innovative Abilities
• Problem Solving
• Energy
• Judgement
• Courage (risk taking)
• Vision
• Creativity Skills

Additional signature traits of successful business owners:

• Interpersonal motivation as well as self-motivation
• A pioneering spirit
• Self confidence
• Team-building abilities

How Much Is This Business Worth?

Q: I am looking into trying to buy an existing teashop. The owner said to make him on offer, but I'm not sure of the best way to determine the worth of the business. Do I ask to see his books or do I value it based on the existing clientele? What kind of time frames do I need to have to make this a reality? Once I have an offer and it is accepted, where do I go from there?


A: There are a lot of ways to value a business. There's no "right" way, though you could probably come up with several wrong ones. Ultimately, the business is worth whatever you think it's worth, based on the criteria you set forth. But you can make your estimation by using several different ways to value the business and then choosing the mix that reflects your final value estimate.


You can start by looking at the value of the business's assets. What does the business own? What equipment? What inventory? After all, you'd have to buy all the same stuff if you were starting a teashop from scratch, so the business is worth at least the replacement cost. The balance sheet can give you a good indication of the value of the company's assets. If the company doesn't have a good set of books, think twice about buying it. You can get badly burned if the current owners don't even know accurately whether or not the business is profitable.


The other valuation approaches all think of a business as a stream of cash. They value a business by trying to come up with a value for that stream of cash.


Revenue is the crudest approximation of a business's worth. If the business sells $100,000 per year, you can think of it as a $100,000 revenue stream. Often, businesses are valued at a multiple of their revenue. The multiple depends on the industry. For instance, a business might typically sell for "two times sales" or "one times sales." If you have a good stockbroker, he or she may be able to help you research typical sales multiples for your industry. A good business broker can also help you if he or she has done valuations in the industry you're investigating.

But alas, revenue doesn't mean profit. If you're in doubt, just look at Amazon.com: It had 2002 sales of almost $4 billion, but no profit. In fact, it hasn't made one cent of profit since the day it was founded. How much would you pay for an ongoing $4 billion per year that you have to pump an additional $380 million per year into just to keep it afloat?

That's why earnings matter and why multiples of earnings may be a better way to think about valuation. If a company had a profit of $10,000, that cash can be used for growth or dividends to you, the shareholder. Estimate the earnings for the next few years and ask how much that income stream is worth to you. Be careful, though. Don't just assume earnings will be stable. Competition, supplier price changes and a declining industry can affect earnings. Make sure to reflect that in your projections.

Warren Buffett uses what's called a discounted cash-flow analysis. He looks at how much cash the business generates each year, projects it into the future and then calculates the worth of that cash flow stream "discounted" using the long-term Treasury bill interest rate. There's no room to explain the theory or calculation here, but you can do it in Excel using the NPV "net present value" function.

One quick and dirty technique is to divide the current yearly earnings by the long-term Treasury bill rate. For example, if the shop earns $10,000/year and T-bills are returning 3 percent interest, the business is equivalent to $333,333 worth of T-bills ($10,000/3 percent=$333,333, so $333,333 invested in T-Bills would return the same $10,000 income). So if you had $333,333, you could earn your $10,000/year by investing in T-bills with a lot less effort than running the shop. This technique puts an upper limit on your valuation. After all, why would you spend more than $333,333 on a store when you could earn more by spending the same money in T-bills? Of course, using this quick-and-dirty technique assumes that the teashop will have the same earnings year after year, and assumes that only monetary return matters.

These techniques-asset valuation, sales multiple, earnings multiple and cash-flow analysis-value the financial side of the business. Nonfinancial considerations also come into play. You might pay more for a teashop if it's next to a restaurant you own, since the combined business may be worth more. Or maybe you've just always dreamed of owning a teashop. Be careful with letting your dreams influence your valuation too much, however. My friend Vinnie always wanted to own an occult supply store. He got his wish, but not a good valuation. It cost him years and much heartache to dig his way out of the situation.

I hope these ideas give you a head start in valuing the business. I'd also recommend you get your banker involved in the valuation. Since your banker will be helping finance the business, he or she will have a good sense of how to do a good valuation for shops in your area.

白首方悔投资迟

●冷眼

新年期间，参加了几个聚餐会。

老友记，老同学难得聚首，见面后，自然有谈不完的话题，其中之一就是投资。

提到投资，就有人感叹年轻时只知道在职业上拼搏，以争取加薪升职，没有花一点时间去思考投资问题。

要不然，当年以低到离谱的价格，买进地点优良的房子或是优质股票，收藏至今，价值增加数十倍，甚至数百倍。

如今晚年，达到财务自主，就不必靠儿女的“孝敬”过日子，手头更松爽，生活更有保障，就可以从心所欲，使黄金岁月过得更舒心，更逍遥自在。

这个话题，在叹息声中打住了，因为苏州过了没船搭，如今后悔，已於事无补，徒添惆怅而已。

现在的年轻人，如果不提高警惕，数十年之后，白发苍苍时，也可能会像现在的乐龄人那样，白首方悔投资迟！

人生好比是旅途，原本是向东走的，后来决定改变方向，向南走去，这个方向的转变，往往只是一念之差，但前面的风景，就截然不同了。人生亦如此，你所选择的方向，将决定你一生的荣辱。

越早投资风险越低

就以投资来说，你在年轻时有没有投资的意愿，作出怎样的投资，都对你的家庭和你的晚年，在生活素质和保障上，有立竿见影的影响。

投资的风险，跟投资时间的长短，息息相关。通常越早开始投资，时间越长，风险越低。

投资需要资本，原始资本来自储蓄，储蓄需要长时间，才有可能累积到可观的数目。

时间充裕，你可以按步就班，以从容不迫的步伐储蓄，生活才不会因过度节俭而太苦－我一向反对勒紧腰带式的储蓄，现在生活过得太苦，将来即使再富裕也是得不偿失，因为你的半生苦不堪言，人生几何，将来的财富又有何意义？

单靠储蓄无法致富

我提倡的是有纪律，定时定量储蓄，以不影响生活素质为原则，不要“先苦后甜”，因为将来充满变数！我们应该准备将来，但享受现在。

单靠储蓄，无法致富，我在报馆工作时，眼见一些同事在年终领了花红之后，马上存入银行作定期存款，一年后才去领取利息。

我当时对此种作法作出思考，所得的结论是这样做的同事，无法改善将来的生活。到退休时，这些同事生活果然清苦。

理由很简单：没有人靠利息致富，因为定存利率太低，资金无法发挥复利的效力，故无助於创富，你不可能靠定存利息，累积财富致财务自主的水平。

要致富，需投资，投资是绝对可以学习的。每一个有决心的人都学得懂。

更重要的是投资靠经验，经验只能从实践中挹取，别人无法代劳，就好像游泳需在水中学，在陆上是学不会的一样。

财富必须建立在价值的基础上才可以持久，没有价值作基础的财富，有如建在沙堆上的塔，叫作“泡沫”，随时可以倒塌。

创造财富需要时间

创造财富需要时间，不可能一蹴即成。

时间不但可以创富，而且可以减低为财富拼搏的压力。我读“徐霞客记”，发现他游山玩水，总是在雄鸡报晓时出发，出门早，使他有更充足的时间，悠哉闲哉地欣赏美景，而旅途一点也不会疲倦。

提早投资亦如此，时间在不知不觉中为你创富，不必因为过於拼搏，透支精力而损害健康。

通货膨胀是个劫贫济富的坏家伙。穷者因通胀而愈穷，富者却因通胀而愈富，因为富者拥有的有形资产－屋子、土地、股票（代表资产）、园丘、古董、名家字画，因通胀价值翻了数倍，甚至数十倍数百倍，身家不断膨胀。在通胀肆虐的经济中，有形资产是价值的护城河。

投资将通胀的“祸害”转为“有利”。

所有富豪，都是靠复利增长而致富的。复利者，利上加利也，可以创造财富奇迹，但复利的威力，需要时间才能发挥出来。

当机立断抓住良机

时间越久，复利创富越快，后期的所得比前期高数倍，如果半途而废，等于前功尽弃，好比掘井，掘井百尺，还有一尺就到水源了，竟然在此时停止挖掘，叫功亏一篑，岂不可惜？

听说跌断手骨腿骨者，复原时间跟年龄成正比。20岁青年，只要20天就可复原，70岁的乐龄人可能要70天，甚至更长。所以年轻人跌伤无大碍，乐龄人跌倒可是件大事。

投资亦如此，年轻时投资，或因经验不足，认识不够而马失前蹄，要东山再起，指日可待。

所以，不妨冒计算中的风险，以博取厚利，增加累积财富的速度，若年轻时过於保守，船头怕贼，船尾怕鬼，凡事畏首畏尾，犹疑不决，许多可以改变你一生命运的机会，可能就与你擦身而过，你如果当机立断，抓住投资良机，在累积财富这码子上，就可以做到事半功倍。

如果一味硬拼、蛮干，不会抓住机会，用力虽多，结果却是事倍功半。

优柔寡断投资大忌

在2007年8月的世界金融海啸中，股市跌至令人难以置信的低水平，正是千载难逢的投资良机，大部份人却因不敢冒计算中的风险而错过了，失去了一个赚钱的黄金机会，委实可惜！

投资要有胆识，优柔寡断，是投资的大忌。但胆识必须建立在知识的基础上，平常一定要勤做功课，作好准备，以等待机会的出现，世界没有免费的午餐，在追求财富上，一分耕耘才有一分收获。

耐力决定胜负

要怎样进行投资呢？以下是我的一些经验，愿与大家分享：

第一，不可投资於你没有信心或信心不足的资产或事业，无论是产业或股票均如此。信心不足，就容易半途而废，错过赚取巨利的机会。

第二，只投资於有成长或增值潜能的资产或事业。

珍藏优质股

第三，最好选择投资於稀有的资产，地点优越的地产和优质股票都有这个特点。优质股都被投资家珍藏，不轻易脱售，股市中股票数量有减无增，在供不应求的情况下，股价乃能长期站稳在高水平。物以稀为贵，此之谓也。

第四，投资致富，是马拉松长跑，并非一百公尺短跑。

耐力决定胜负，好股价格不动，不可轻言放弃。否则的话，功亏一篑，惟有“暗搥”，能忍，才能获巨利。

投资，要立志赚大钱，切不可立志赚快钱。在投资上，欲速则不达。快速致富的念头，害人不浅，需从脑海中彻底消灭。

时间是铁面无私的判官。许多人年轻时同时由同一个起跑点出发，30年后谁遥遥领先，谁被抛在后头，在时间面前，无所遁形。

但有一点是肯定的，惟有望着目标，单人匹马，以稳健脚步，一步一脚印向前奔跑的人，才有希望到达“财富”的终点。

那些由别人搀扶着前进，或是拉着别人“衫尾”向前走，或是在途中左看右望，心猿意马，或是患上脚软症的人，是没有希望抵达“财富”终站的。

你是哪类股票投资者？

大马股票交易所负责为股票投资者保管股票的机构，叫中央存票处（CDS），从中央存票处的户头数目，就可以窥见大马股票投资者的人数。

根据马来西亚股票交易所有限公司2011年年报，在2011年杪时，中央存票处共有420万个户头。

但是，其中可能有重复（一个人拥有超过一个户头），所以，真正在股市中直接买卖股票者（不包括通过购买单位信托间接参与股票投资的人），相信少过420万人。

我们不知道重复户头的数目，假设有四分之三的投资者只拥有一个户头，那么，直接参与股市的人就有300万人。

假如你将这300万股市中人加以分类的话，你会发现大概可以分为三类。

第一类：游击型 打了就走不理盈亏

“游击型”投资者一听到消息就冲进去购买，赚了一点或是亏了一点，都马上脱售，绝不恋栈。

通常我们称这类“打了就走”的人为投机者，英文叫Day Traders的，就是指此类当天搞定的股票投资者。

此类投资者的特征是：

⑴视股票为货物，通过不断买进卖出赚钱。

⑵既然是货物，则“货如轮转利路通”，所采取的是薄利多销的策略，每次所赚不多，但胜在交易频仍，累积起来，利润亦极可观。

⑶既然是货物，则重要的是有利可图，货物的素质反而不那么重要了。所以，这类型投资者对股票的基本面，是否有价值，也不屑一顾。

也不想知道所持的是好股还是坏股，对他们来说，会起的就是好股；不会起的就是坏股。好坏并不重要，重要的是会不会起。

没有人知道在300万股市大军中，“游击队员”占多少，但可以肯定的是占绝大多数，也许高达八、九十巴仙！

第二类：尴尬型 随波逐流不亏不盈

他们不是投机者，因为他们也重视基本面，但自己不做功课，只靠从“耳语”中所得到的资料作出投资决定。也没有主见，只以别人的意见为依归，他们是典型的“追随者”(followers)，随波逐流，跟在群众后面走。

庄子中有一个这样的故事，东海有一种鸟，叫“意怠”，在飞行时，总是跟在别的鸟的后面，休息时总是挨着别的鸟，不敢独处。吃东西时，总是吃别的鸟留下的残食，不敢跟别的鸟抢食。靠着“进不敢为前，退不敢为后，食不敢先尝，必取其绪”(“绪”就是剩余的东西)，所以才能做到“是故其行列不斥，而外人卒不得害，是以免于患”(庄子“山木篇”)。

这类投资者在别人买了以后才敢买，别人卖了以后才甘愿卖。在时间上，他们往往是中、长期投资者，他们有一种错误的想法，以为只要有钱，长期收藏，买股票一定能赚钱，他们忘记了，如果所收藏的是垃圾股的话，收得越久，亏得反而越多，如果公司破产，他们的股票可能一文不值。这类投资者的投资成绩也很尴尬。

在股市中投资十年、八年，结算一下，可能只得个不盈不亏。

但跟十赌九输的第一类投资者相比，“尴尬型”投资者已属赢家。

第三类：严肃型 做足功课长线投资

严肃的价值投资者，是基本面的忠实信徒。他们的特征是：

⑴做很多功课，深入研究企业的基本面，定力非凡，绝不买没有基本面支撑的烂股，他们的哲学是不打没有把握的仗，投机者赚到钱，他为他们高兴，绝不妒嫉，因为他知道这种钱不是他赚的；他知道自己没有赚这种钱的本领，所以，当别人投机“仙股”赚个盘满钵满时，他完全不动心。

买股票如合股做生意

⑵他们念念不忘他买的是公司的股份，买股份就是跟别人合股做生意，他的投资成败，决定于公司的成败，不是决定于股价。如果他所投资的公司，盈利年年增加，他的股份价值会与日俱增，他最终一定赚钱；如果他所投资的公司，年年亏蚀的话，他的股份价值必然每下愈况，最后可能化为乌有。所以，他很关心公司的业绩，不大理会股价的起落。

⑶这类投资者多数是反向思维者，在熊市中买进；在牛市中脱售。别人极端恐惧时，就好像2009年初次贷金融海啸时那样，他大量买进。他敢于买进，是因为他是以“价值”为准绳，不是以股价为准绳。

勇敢趁低买进回酬丰

他了解股票的价值，他知道要创办一家成功的企业，并非易事。

假如要创办一家这么成功的公司需要投资30亿令吉，还要花上20年的时间才能做到，现在由于金融海啸引发的恐惧，人们不计成本，胡乱抛售其股票，使整家公司的市值(股价×股数=市值)，跌到10亿令吉以下，他在股市买进有关公司的股票，等于以三分之一的价格买进有关公司的股份，同时可以节省20年的时间，为什么他不要买？为什么不敢买？他于是独排众议，在股市中购买有关公司的股票，长期持有，取得丰厚的回酬。

不要忘记，他的丰厚回酬是在什么也没有做的情况下取得的。

⑷这类投资者多数是长期投资者，他知道做生意赚钱，需要时间，没有捷径可抄，也不可能一蹴即成。生意是要脚踏实地，按部就班，循序渐进地经营，才有可能赚到钱。一项建屋计划，由买地到新屋保证期结束，需要5年；种油棕要3年才开始结果，即使开一间药剂店，也要守上三、两年，顾客群建立起来了，才有钱赚。今天投资，明天就赚钱，不是没有，只是少之又少。即使有，也不长久。他选择长期投资，其实就是给时间，让企业按部就班的经营，为他赚取利润。

须贴身跟踪企业进展

⑸他贴身跟踪企业进展，他知道，商场如战场，商战激烈，经营过程中面对许多的挑战，如果掌舵人无法应对环境的考验，企业也可能失败。

作为股东，他必须关注企业的一举一动，一旦发现企业走向失败，即使亏蚀，他也退股(把股票卖掉)，绝不恋栈。如果他继续投资下去，他会亏得更多。但是，如果企业盈利年年上升，又派发可观的股息(高过定期存款利息)，他也可能永远不卖，除非是股价被高估的离谱，不值得投资下去。

只有第三类型投资赚钱

至于以上三类投资者，那一类投资方式较好，是争论性的课题。我们与其去作无谓的争论，倒不如多花点时间去思考，那一种方式较有把握赚钱，更加实际。

并没有确实的统计数字，证明那一种方式有更高的把握赚钱，但我向股票经纪所作的抽样调查，以及现实的例子，显示第一类投资者的方式，长期操作，能赚钱的少之又少，也许不到三分之一。

第二类“尴尬型”投资者的投资成绩，参差不一。但很少有超越大势表现。

把握“做生意”机会

真正在股市赚钱，而且可以赚到很多钱的，绝对是第三类投资者。

其实这一类投资者，与其说他们是“投资者”，倒不如说他们是生意人，他们其实是在做生意，只是把生意交给专业人士去经营，他们并不参与管理而已。

他们的投资，成功或失败，决定于他拥有股份的公司的成败，并不是决定于股市或股价的起落。

许多打工仔投诉没有做生意的机会，这是很大的错误。在大马股票交易所上市的公司多达940家，所经营的生意，行行都有，你每天都有机会买进他们的股份，参股做生意的机会每天都存在，怎能说“没有机会”？

股市没免费午餐

尽管940家公司良莠不齐，但不可能筛选不出十家八家值得你投资，而股价又合理的公司，让你参股。

如果你找不到，是因为你根本不肯花时间去做功课而已。

股市没有免费的午餐，机会只会找上肯用功研究的人。

如果你进入股市，胸无大志，只想赚一点快钱的话，用那一种方式都无所谓。

如果你想通过股票投资，累积财富，使你有能力送儿女进最好的大学，是退休后财务自主，度有尊严的晚年，那么，除了第三种方式之外，别无他途。

我在股市投资40年，以上是我的经验谈，也是肺腑之言。

How to beat the market and become a super investor

This is a guest post by Mr. Koon Yew Yin.

Risks in doing business:

It is important to stress that all businesses involve risk; hence the selection of shares is also a risky business. This is not the same order of risk as may be involved in going to the casino or betting on the four digits which in 90-99 % or even more of the cases, results in the patron losing his money, if not his pants.

Picking winning stocks means that we pick the companies that can meet the constant challenges of competition, supply and demand, change of fashion and style design, obsolete stocks write off, etc. There are also unforeseen factors such as variation in interest rates, import and export restriction, foreign exchange variation, change in Government regulations, etc. Inclement weather such as flooding affects production as we have seen in Bangkok so that even the most well run of companies such as Toyata and Honda cannot escape it.

Best form of investment

In my view, stocks are the best form of investment. They are tax free, have no management problem, and you can reduce or liquidate all your holdings at any time. There is a classical saying in the market – “You can buy the winning horse after the race”. This means that you can still buy a good share after the company has announced its profit. This does not mean that stocks are entirely risk-free.

Fundamentals of Stock Selection

The basic fundamentals for share selection are P/E ratio, NTA, Revenue, cash flow etc. How important are these factors?

The most important criterion is profit growth prospect. Never buy any share if the company cannot make increasing profits. You must buy shares that Fund managers are interested. They are the movers and shakers. Do not buy too much of illiquid shares because it is cheap. It is cheap for some reasons which may keep it at basement prices.

The main reasons why share prices go up include the following:
a. Exceptionally good profit growth prospect
b. Fund managers must be interested, liquidity, publicity etc.
c. Dividends are an important catalyst for moving share prices up
d. Unexpected good news of profit, bonus issues etc. will push up share prices.

When to Sell

When to sell? Do not worry about the daily share price fluctuation if you have a target price. Quite often the share you hold can move up rapidly and continues to go up. You must remember that no share can go up indefinitely for whatever reason. Sell when you are not willing to buy at the price or the reason to buy is no longer valid. Remember you must sell so that you can have funds to buy back during correction. If the fundamentals have not changed, the share price will go up again.

What to Buy

After having seen so many unexpected surprises in the stock market, I consider the safest shares to invest are undervalued oil palm shares. The reasons are:-

a. The production cost for CPO is about Rm 1,300 per ton and the average selling price has been more than double the production cost in the last 10 years or more. The average CPO price for 2011 is more than Rm 3,000 per ton. Which business can offer such big profit margins?

b. The demand and profit are sustainable due to population increase. Moreover, both China and India who are our buyers have been improving their economy. The financial problem in Eurozone and US has little or no effect on our palm oil market.

c. A palm tree will start fruiting after 3 years. It will continue to bear more fruits until it is about 16 years old after that age it will begin to bear less fruits. Only after about 22 years a palm tree needs replanting.

d. The land always appreciates in value.

e. There is good profit growth prospect and sustainable profit

I am obliged to tell you that plantation shares form the major part of my investment portfolio. If you decide to buy, I am not responsible for your profit or your loss.

How to become a super investor?

I started serious investing in public listed shares when I retired from executive work at 50 years old. I was not an accountant nor have I a MBA degree. I was just a civil engineer and I hardly knew how to read a balance sheet at that time.

I started by reading to understand the basic fundamental principles of share selection as practiced by Warren Buffet, Peter Lynch and other great investment gurus. These are the key traits to being a super investor that I picked up.

Trait 1: Be a contrarian investor, that is, the ability to buy stocks while others are panicking and sell stocks while others are euphoric. In 1983 when China declared that they wanted to take back Hong Kong, the people were selling as if there was no tomorrow because the Communists were coming. The Hang Seng Index plunged to about 700. Currently it is around 18,500.
In such a situation at that time, would you buy Hong Kong shares? I did.

Trait 2: Obsession in playing the game and wanting to win. Winning investors don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching. They are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk.
They are obsessed in enhancing the value of their holdings. I am that way.

Trait 3: The willingness to learn from past mistakes. Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.? But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career.

Trait 4: An inherent sense of risk based on common sense. Most people believe analysts’ reports which are often ‘a buy’ recommendation. It is very seldom they recommend ‘a sell’ because they would lose the business from the company he has recommended ‘a sell’. You must always take any analyst report with a pinch of salt.
I believe the greatest risk control is common sense which is not so common sometimes.

Trait 5: Confidence: Great investors must have confidence in their own convictions and stick with them, even when facing criticism. Buffett never got into the dot-com mania though he was being criticized publicly for ignoring technology stocks. He stuck to his guns when everyone else was abandoning the value investing ship. He was proven right when the dot com bubble bust.

Trait 6: Clear thinking. When considering a share, you must try to understand the nature of the company’s business and its inherent difficulties so that you can evaluate your risk exposure. There are a lot of people who have genius IQs who cannot think clearly, though they can figure out bond or option pricing in their heads.

Trait 7: And finally the most important, and rarest, trait of all is the ability to live through volatility without changing your investment thought process. This is almost impossible for most people to do. When the market makes a severe correction, most people dare not buy more shares to average down or to put any money into stocks at all when the market is plunging. They would begin to doubt their own judgement.

Wishing you a season of happy and profitable investing!