Any good stocks in 2nd Board?

[julez.lim]

The edge papers last Sunday, did show some interesting figures...
65% of the companies in 2nd Board have net profit lesser than 4million!
For those who don't know, one of the entry requirement for listing in 2nd Board is the net profit of the most recent year prior to listing is RM4 million!
So, for the 65% of the companies in 2nd Board, their earnings have dropped since they got listed!

Any good stocks that you know off in 2nd Board? I never went for 2nd Board b4... With this figure showing, I am even more worried investing in 2nd Board

[24601]

i read some stock recommendations in the past 2 weeks from two sources and out of the 10-15 shares that they recommended, none were in the 2nd board. if i remember right the sources is personal money and avenue. i don't think second board is good for the moment...

[julez.lim]

In 2004, it was blue-chips year according to analysts.
At the beginning of 2005, they were questioning will 2005 be the 2nd board year? Well, now we know it did not happen.

[Smart Investor]

I recommend Hexagon as recommended in this blog
<link removed>

[jeybon]

I recommend Hexagon as recommended in this blog
<link removed>

Free marketing again?

[earwax]

I wonder how those blogs that make 'stock recommendations' fared...

If you do a bit of checking on them you'll see that many of them have only 2 or 3 posts... If those stocks don't do well, they just abandon the blog and start a new one.

Just some warning to those who seek opinions from blogs, please make sure you choose one with a good history...

[Maxforce]

2nd Board? Normally I dont touch.
If really forced to pick one - I choose Tanamas.
Why? Laggard of plantation that has some goreng element every now and then.
Stock is trending upwards but compared to other plantation stock, this is considered a laggard.
However, the reason why it is a laggard could also be due to the fact it is in 2nd Board 

[yunhui98]

Why many people are scare about 2nd board counter?

[booffett]

hiaptek!
LBS (wait for retracement)
equine (wait for retracement)
engtex (wait for retracement)

[Maxforce]

Why many people are scare about 2nd board counter?

Because today we have Mesdaq

hiaptek!
LBS (wait for retracement)
equine (wait for retracement)
engtex (wait for retracement)

Cheh, all wait for retracement one 
OKlah, Hiaptek look good - I missed as 2nd Board

[grahamsmun]

Tips
I think u can find alot of gem in the 2nd board as there are alot of good undervalue stocks for picking.
If u look at USA the small cap perform better for a few years.
Be more adventurous u will berewarded.

[Maxforce]

Yeap, just a small problem though, many stay undervalued. 

[grahamsmun]

One good investment philosophy is to protect your downside !
The upside will take care of itself.

Suggestion for 2nd board:
Look for a share trading not more than PE 10.
Trading at less than 70% to NTA.
Generating cashflow with a yield of 10%.
Gearing not more than 0.2 times.

[earwax]

What's NTA?

[booffett]

One good investment philosophy is to protect your downside !
The upside will take care of itself.

Suggestion for 2nd board:
Look for a share trading not more than PE 10.
Trading at less than 70% to NTA.
Generating cashflow with a yield of 10%.
Gearing not more than 0.2 times.

dear benjamin graham, the dean of wall street...

welcome...
any results to share on these fundamental stock?

if got, please share out.... (we will be interested in normalized earning, probably best if u can adjust these accounting figure to accommodate the fluctuation in business cycle as well, these adjusted figure is very hard to find it free on web...)

[Maxforce]

What's NTA?

Net Tangible Asset

[grahamsmun]

Hi Warren Buffet,
Enclosed herewith is the list of cash rich and profitable 2nd board
1a) Toyochem Rm 2.70-I call it bluechip of 2nd board cash per share Rm 1.30
b)NTA around Rm 3.70, Eps Rm around Rm 0.28, net operating cashflow at more than Rm 0.30 per share.
c) Good corporate governance run by large jap co, dividend Rm o.11 per share.
d) Market leader in ink industry and some export market.

2) Seni Jaya at Rm 0.58 cheap penny stock,cash backing Rm Rm 0.30,Eps Rm 0.07,Dividend Rm 0.02 and NTA more than Rm 1.00.Own good properties in tmn Tun a no brainer investment.

3) UMS at Rm 0.80, NTA at Rm 1.80, dividend Rm 0.05 and EPS more than Rm 0.11.

I think this 3 solid companies should qualify for long term safe investment with sufficient margin of safety

[booffett]

hi, graham..

thanks for ur analysis...
however, as a mutated warren buffet, i dun really like bargain stock...cheap, becoz they are cheap for a reason...

some more, during my last time attending ur class, i thought u ask us to buy at deep discount... which is CA more than CL + LT Liab...

so, here goes the key question in the stock selection, what is happen if the stock never adjust back to fair value? then my capital would be tight and killed slowly by the high inflation in Malaysia..

and also, here is Malaysia, we talk about "dream, kebanggaan bangsa and negara, wawasan 2020, biadap, and keris", but not efficiency...The view that market will be almost efficient and will adjust back to the fair value in 3 years time never apply in Malaysia... until YTL get angry and want to go listing abroad...

so, i would really like to understand more on how the market will adjust to fair value... (unless u r big institutional that already buy it and later keep promoting the stock to tell everyone to help u push it up).

Thanks

[grahamsmun]

Hi W. Buffet,
Actually i m a value investor and i buy stock as a business, and i will only use Ta on sale only as FA is the best way to make an entry to the market.The other benefit is that can use for all market even bear.
Q1.Stock may not adjust fair value over time.
As warren buffet says time is a friend of investor and enemy of speculator-this mean when i invest i m prepare hold it as long as it takes-thats the reason why we need to select good undervalue stocks.Those counter i mentioned will give u 3% to 6% yield on dividend but earnings yield u getting about 12% to 18%.On top of this u are buying the business at 30% to 60% discount on NTA something u only get in carnival sales! Not taking into account u will get rebate about 30% to 50% (based on net cash position).
In addition u need can diversify say at least 10 stocks based on the above quality i have mentioned (this is like a lottery formula-positive formula) where u will had higher odds of winning-Graham suggestion
Q2.Efficient Market.
Buffet has jokingly say he will be a beggar ,instead if the stock really market is efficient as per professor say!
Overall depends on bull or bear condition normally u will find that the mkt is 34% efficient, 33% overvalue and 33% undervalue this means value investor still had a picking time on about 300 counters in bursa.Of course this will shrink when mkt advances.
Buy hold strategy supported by technical sale strategy provide u a good consistent return
 

[earwax]

One good investment philosophy is to protect your downside !
The upside will take care of itself.

Suggestion for 2nd board:
Look for a share trading not more than PE 10.
Trading at less than 70% to NTA.
Generating cashflow with a yield of 10%.
Gearing not more than 0.2 times.

Grahamsmum,

This is considered quite conservative right? Any stocks you've found that meet this criteria?

[grahamsmun]

Hi Max,
NTA is the book value of the company and normally u need to adjust for impairment to get to fair value but there are time get nice surprise and get more.I feel this is a reasonable app value.

Buffet,
Is YTL really undervalue at Rm 7.25 ? PE 17 times, NTA Rm 4.50 with net borrowing of Rm 9 billion or Rm 5.50 per share compare it to the 3 relative unknown company i have mentioned earlier there is a wide gap.
Of course the company has a good brand name and in the utility industries

Earwx,
This approach is conservative please refer to the 3 companies i have just highlighted earlier. You still can get another 50-100 companies in these categories from Bursa.

[Maxforce]

Hi Max,
NTA is the book value of the company and normally u need to adjust for impairment to get to fair value but there are time get nice surprise and get more.I feel this is a reasonable app value.

Of course, NTA is only based on Tangibles.
Fair Value (FV) will include intangibles too.
Furthermore, there is depreciation which may not reflect actual Net Realisable Value
However, FV is really subjective - e.g. Brandname, Good management, License.
In these cases, there are no open market to quote the above - what value do we put?
Prudence concept would suggest NIL  although we know there is a value but nil because we could not reliably estimate the value of it 

[booffett]

ah, NTA and intangible, dun argue on these accounting figure lah, later end up non stop arguing...

accounting figure is too twisted...

to be truly investor, we ultimately have to walk into the company...
participate in the operation and management...
else, accounting figure, soon lead u to Holland (particularly in Malaysia)

[rougetrader]

Seems LCL is on the up.... 

One thing is true, sentiments here are more determinent on the local news and media - case in point being after some ministers go open a public toilet, ceramic toilet manufacturers started reaping a bounty for no reason... go figure...

[grahamsmun]

 Hi Max,
On ur issue on NTA to include intangible assets this is perfect in fact we want to be closed as possible to the through possible value.However no harm using more conservative nta only.

As for valuation of intangible such as brand one classic case is how do u value BAT at Rm 47.00 whereas NTA less than Rm 2.00 . One area is to look into the cashflow generated by the Business bcos of the brand however it will be tedious work.

i will just chose dividend yield or EPS as a basis of valuation for BAT with dividend yield of 7% based on current share price its value is still reasonble(no need to use EPS as quite close to dividend) in this case we can ignore NTA bcos negligible.

However how do u truly value Oriental,Keck Seng ,Selangor Prop and Batu Kawan which has hidden asset value for example ?
It will be based on breakout value, from experience it will take along time for the mkt to truly reflect the value and be prepare to wait about 6 to 10 years  and the catalyst the owner feel it is undervalue and start to do something.

[Maxforce]

Hi Max,
On ur issue on NTA to include intangible assets this is perfect in fact we want to be closed as possible to the through possible value.However no harm using more conservative nta only.

As for valuation of intangible such as brand one classic case is how do u value BAT at Rm 47.00 whereas NTA less than Rm 2.00 . One area is to look into the cashflow generated by the Business bcos of the brand however it will be tedious work.

i will just chose dividend yield or EPS as a basis of valuation for BAT with dividend yield of 7% based on current share price its value is still reasonble(no need to use EPS as quite close to dividend) in this case we can ignore NTA bcos negligible.

However how do u truly value Oriental,Keck Seng ,Selangor Prop and Batu Kawan which has hidden asset value for example ?
It will be based on breakout value, from experience it will take along time for the mkt to truly reflect the value and be prepare to wait about 6 to 10 years  and the catalyst the owner feel it is undervalue and start to do something.

Exactly the point. Simply close to impossible to value the intangibles.
And even if one could, it would be purely guesswork as there is no open quoted market.
And it is also questionable on the value of such work as you ve mentioned - it will take a long time for the market to truly reflect the value. Maybe never in our lifetime too.
I find EPS, Dividend Model, FCF does not reflect the true value too.

[grahamsmun]

Hi Max,
U just hit on the core area of investment.If market is so efficient and predictable like chemistry then how could we make money?
In addition if it is so easy to calculate or forecast, then all accountants and technical analyst is a millionaire.
If u run investment like a business i find 3 essential area we need to master depending on individual competence as for me i will say the degree of importance are as follows;

1) Understanding the Fundamamental value of investment      -       60%
2)Understanding the behavioural and psychology of investment      - 25%
3) Understanding the Technical behavior of mkt-                           15%

Notice for me i place less importance on TA as my strength is not in this area i normally use as a sale mechanism to maximise gain.

[Maxforce]

Well, if you re a FA user, you ll believe market is always wrong. Hence, you ll never believe in Efficient Market Theory.(EMT)
If you re a TA user, you ll believe market is always correct, but you ll believe that trend is your friend, etc etc, so not EMT either.

When I mentioned valuation, I merely state that our existing method of valuation via models per se is insufficient for us to do a proper valuation.

My take on running investment (trading) like a business:
1) Trading system that yields more than 50% accuracy                     -   30%
2) Emotional Control                                                                    -   30%
3) Discipline and Money Management (MM)                                      -    40%

I place importance on trading system as 30% - this could be either FA based or TA based, though normally it is TA based, there are FA based trading systems. TA/FA are merely methods. Both works - but in different manners as I ve personally experienced it.
Emotional control is not unlike what is preached by Ben Graham and many others.
Discipline and MM will remain the core and take 40% of the credit. It will ensure the business as a going concern

[grahamsmun]

Hi max,
Efficient market wll also make Ta useless as well as FA ! as market has reflected all known information hence both of us cannot cari makan !

I also believe in an investment system and this a financial investment system based on Benjamin Graham methods.'Quote the market are there to serve u and not to guide u ,as per Mr Market Theory' this means every share has a intrinsic value and the market price just fluctuate around it, based on demand and supply situation.
Warren Buffet also quoted ' in short run market is a voting machine but in long run it is a weighing machine' hence for value investor need to be patient just like u plant a fruit tree it need time for it to mature and bear fruit.

I also believe in TA when the share price move above fundamental and this is the time to take advantage of the foolishness of those optimistic buyer to maximise sale value .

Generally what I find, if we just make use of Ta with no back up of Fa, we are not resting on solid foundations, an investment basing on the market that a greater fool will buy it from us.

Therefore it is best we adopt a combination of Fa and Ta of course we may lose some daily trading excitement of trying to out guess the mkt.But this is can be compensated when share price move from the extreme of Fa(undevaluation) to Ta value(overvaluation) then we still can practise maxising the sale value.

[booffett]

Regarding TA and FA, dun need to quarrel...

both have its own point, just the perspective and learning experience background different...
in fact, the term "efficient" has both own definition from grahamum and maxforce...
i believe both of u interpret the efficient as different meaning...

both are correct...

in efficient market itself... also not necessary all time market value is wrong or right, there are always gray area... so, value investor will exploit those that are very far in wrong value. those priced correctly, of coz FA dun care about them lah...

if efficient, TA is useless, as according to the strong form, semi-strong and weak form suggested. That i understand that graham is referring to the result of statistical testing by academician. That is absolutely correct. No doubt. However, maxforce say efficient only TA works is also correct (somehow, all info is priced into the price), also true. the difference is graham refer to testing of TA by academician which are too simple, such as up-up-up-down-down-down (by fama and french particularly), and etc. However, maxforce refer to the TA which include volume, price, shape, pattern, and many combined indicators, which is impossible to be tested effectively. I read Fama testing and agree that the result is true... however, i read combined TA as well, and found it is quite accurate as well. so both also correct.

for the rest of the argument, actually both also talking from different perspective... so...
ah, u all continue argue lah, i lazy typing...

[Maxforce]

No one going to continue arguing
Memang correct - if EMT is true, then all FA and TA fellas no nasi to makan.
We better plant our own paddy

FA will tell us WHY we need to buy the stock. E.g. Quality management, Potential future prospect, Dividend Policy. etc.
TA will tell us WHEN to buy the stock E.g. When should we buy so that our holding period is minimal while our gain is maximum.

Regarding excitement, well, after a while, excitement will no longer be there as that is not what trading or investment is about.
If we can combine TA and FA successfully, then truly, the sky is the limit.

[grahamsmun]

Max,
The key issue facing u is that u want a minimal holding period this should not be the case ! You are creating an artificial unnecessary constraint.What u should be concern is whether the return can cover your holding cost.

 we should have a portfolio of quality undervalue investment using FA, which  should give u a reasonable return in term of dividend yield and profit assurance, while we wait for market for rerating or the continous profitability will outgrow the mkt, even if it does not happen we would have enough income and margin of safety to cover(bcos we buy cheap), and we are prepare take as long as it takes to achieve the true potential(patient). B.Graham also recommend we diversify to say about 30 counters based on the above careful selection criteria to ensure higher risk reward advantages.

Use FA to tell u when to buy, bcos this is a logical thing to do as investment is based on sound decision..
Use TA tell u when to sell bcos, we had achieved  our fundamental return and TA to takeover to try maximise it and protect the profit .
This should be call a fusion approach!!

However looking into your method, our approach is almost the same making use of the available technique but we are operating on reverse.
Anyway all roads can still leads to Rome! 

[Maxforce]

Yes agree - it will then be a truly fusion approach when TA combine with FA.

But I would disagree if FA is solely used to buy.
E.g. When FA good, but market is punishing the stock, sending it further down. I would rather not catch the falling dagger.
Personal experience, very painful to see it dropping everyday eventhough you know it is fundamentally sound company.
Better approach, would be combining TA to "pick bottom" - could not be exact, but would be safer in that sense.
Also this is to protect factors unknown to FA. Insiders may start selling - news not yet announced, but may see signs on chart.

ALso, using TA only to sell may not be good.
E.g. If fundamentally sound company become unsound, but market still have not realise, may be time to start unloading - scaling out.

Why do I want to create a minimal holding period?
Because I do not have sufficient capital.
With a small capital, I am left with no choice.
I intend to trade to riches, not invest for retirement fund.
When Buffett started with his fund, he kept his holding period to a minimum as well.
I call it trade, you may want to call it invest. But lets disregard the term.
E.g. His venture into Arbitrage - both risk arbitrage and merger arbitrage. This enable his fund to grow more rapidly as it is more nimble.
Even his venture into Amex, he sold for double or so in 2 1/2 yrs. But if he kept for 5 yrs, it would have tripled what he could have earned when he disposed. However, it would be doubtful that a man like Buffett didnt know that Amex was still not fully valued during the time he sold. But his decision to sell, which is at already a good profit, I believe, is rather due to cashflow.
If not, he would not have grown the fund at such tremendous rate compared to a buy-and-hold strategy.
 
That said, I m not a scalper though I have the ability to scalp the derivatives market. I m not so much of a daytrader nor a contra player either. I m more of a position trader - holding period 1-2 weeks is the best but I do keep some to ride the longer trend - turtle style.

[booffett]

TA applied to undervalued stock sound great...

however, TA is still best applied to growth stock...

[grahamsmun]

Max,
FA is the safest way of picking stick bcos use already seen the cards through detail financial analysis, if mkt selldown buy more, the cheaper the merrier and the bigger your margin -this is classic Mr Market formula which give patient consistent return

TA no doubt can make some fast money but this is a short term sprint.

FA is the fundamental core of stock of stock market existence-Can u imagine a company IPO without info on financial statement and basing on unimagineable solely on Technical basis ? If this is possible it would have been implemented bcos the stock market history is more than 500 years.

My view is that the the most important area for a stock market player need to master and understand financial value and business and whatever other techniques will be supplementary to the central core of FA.

Anyway the adoption of FA and Ta upto invidual preference, but Financial Value should always be a very important area of stock investment. Perhaps TA may be in a different field say it is applicable to stock trading.
We may disagree bcos we may be talking of different perspective but both of us have a common objective to make money and to minimize risk.

Fa minimize risk through margin of safety.
Ta minimize risk through timing mkt and cutting loss.

[Maxforce]

Fa minimize risk through margin of safety.
Ta minimize risk through timing mkt and cutting loss.

Exactly! You hit the mark!
Mr Market theory is good and logical but that would depend on how much cash one has.
Imagine Maybank - fundamentally strong company but in 97, shed until 3.00 region, if I m not mistaken.
How much cash does one has?

TA applied to undervalued stock sound great...

however, TA is still best applied to growth stock...

Yeap growth stock can apply TA.
But FA apply to growth stock even better!

[verntye83]

To all the sifu,

I believe TA and FA both together because FA tell u the stock is worth to invest or not but as u know account can be manupulate easily. Ta tell u the behaviour of stock trader(investors). Maybe if one undervalued stock will good FA but no TA sign, we may need to wait dunno how many years to adjust back to their value. If during the period of waiting the company performance dropping i may be another risk for us................... Anyway is just my one cent opinion.......

[Maxforce]

To all the sifu,

I believe TA and FA both together because FA tell u the stock is worth to invest or not but as u know account can be manupulate easily. Ta tell u the behaviour of stock trader(investors). Maybe if one undervalued stock will good FA but no TA sign, we may need to wait dunno how many years to adjust back to their value. If during the period of waiting the company performance dropping i may be another risk for us................... Anyway is just my one cent opinion.......

Your one cent is my one cent too
Well said.

[grahamsmun]

U have highlighted the risk of FA of share not moving but there is already a technique highlighted earlier to manage this risk.
As for TA there is also risk your trade being manipulated even our famous Jesse livermore encounter this problem and make big losses what is the risk for an average TA people.
Bcos u are buying on the premise that u can unload to the next buyer who also think can unload to someone at even higher price, u will also encounter problem when the music stops, further the investment is not based on solid foundation of value and real cashflow of returns from business.Hence TA has higher risk thats is the reason why u have cut loss mechanism but cut loss does not mean u can fix the loss sometimes it may meant u can square at 20% down depends on mkt and sometime u may get false start end up u cut position and mkt start moving up.
For those beginner i will advise u start from FA build ur solid foundations as FA is easy to master just basic arithmetics.

[Maxforce]

U have highlighted the risk of FA of share not moving but there is already a technique highlighted earlier to manage this risk.

Graham,
I may have missed the point. Care to highlight?

[grahamsmun]

Max,
I have already highlighted earlier but lets repeat,
1) Buying right -stock undervalue with dividend,low pe or strong earnings, strong balance sheet and big discount please look at the basis of stock selection i have highlighted on the 3 companies earlier.
2) Diversify at least 30 stocks with the same stringent standard.
3) Monitor if there is a major permanent change in business and operations dynamics which affect its permanent competitiveness or poor corporate governance, then may take action to sell earlier. (If its doing well as business do nothing just ride on it)
4) Review regularly and critically the value every 3 months decide whether need further adjustment on portfolio.
5) Where price move above intrinsic value or target, prepare to sell but can use Ta to maximise.
6) Set a 3 year target holding period after going thru test on condition 1 to 5 as recommended by Graham at the same time review critically whether need to adjust portfolio again.
7) Notice u are investing into a business and u will ride on dividend as an income, profits and cashflow as a business growth source and the discount on balance sheet is your margin of safety.U actually have 3 business valuation protection insurance!
Unlike private company ,U have a right of earlier redemption if the earlier investment criteria does not turn up right.

Max,
On the risk of TA u have not address the issue i have highlighted.

[Maxforce]

Thanks for repeating Graham.
I m slightly dyslexic so, I really appreciate it.

Anyway, on the risk issue, we have to go back to the basics.
Indulge me a little and let me bring you through the whole path.

Value. What is value?
Is it financial value? Because the company has NTA 1.20/share so the share price should (note: should) be Rm1.20/share?
But then what if the NRV is less than RM1.20/share? if NRV is only RM1.00/share, should the share price be RM1.00?
Or should it still be RM1.20?
What if the management of the company is switched either taken over or a corporate reshuffling?
What would the value be?
Let us leave these subjectiveness for a while and indulge me in another story.

Picasso's art - the one where the eyes, nose and mouth are all displaced.
How much is that worth?
Can you and I draw a better piece of art? At least something that resembles human?
I am sure we both draw and paint better than Picasso. But the collectors may contend that both you and I dont know true art.
Hence, both yours and my paintings have no value. Nobody wants them despite the fact that it look more human.
This is one extreme but lets go back to stock market and TA.

In my post about Technical Analysis in my blog - http://fusiontrader.blogspot.com/2007/03/technical-analysis.html,
I mentioned the following:

Well said. Basically the main key points are:
1. Stock market is ultimately about supply and demand. Technical Analysis (TA) is used to measure this supply and demand theory.
2. Tech analysis (TA) is a method to MEASURE the PYSCHOLOGY of the market. Purely from SUPPLY and DEMAND point of view.
3. Its main assumption is that HISTORY REPEATS ITSELF

What FA is doing is identifying value -
1) which is subjective to an extent - hence we needed diversification.
2) which is a self fullfilling prophecy - ie some other people needs to see the same value that you do - this is also identified by Graham - one day others will see the value of the company - hence the long holding period which is suggested - could be lifetime if no one sees the value.

TA measures value in a different manner - it measures value in terms of supply and demand.
Like the "priceless" Picasso art, it is because the collectors are willing to pay for it.
Our paintings? Despite there could be "value" in it, it may take our lifetime before anyone recognises it.

Why the stop loss? Does FA practise no stop loss?
Is TA all powerful or FA all powerful?
Are stop losses for whimps?

Personally I believe that stop loss is a part of Money Management.
And frankly, I m not sure when it actually began.
And MM is more than just a simple stop loss.

TA and stop loss works well - why? Not just because that there could be a switch in trend etc etc, stop loss is about guarding our money from ourselves! Yes, from ourselves. We are our own worst enemy! Traders could not afford to have huge ego. The more we try to fight the market, the higher chance we will lose. In any case, TA will show that trend has change, we need to brush our ego aside to recognise it.

And the same time, FA and stop loss. During 97 and 2000, a lot of companies went bust. Some later went into PN4, PN17 and whatever number they could come out with. Some went into restructuring with rights issue etc etc but did not recover till today. Prior to the downfall, some of these companies were strong fundamentally, or so we were led to believe.
But when 97 hit us followed by 2000 as well, suddenly our beliefs were proven wrong. Suddenly there doesnt seem to be any fundamental in many of these companies.
What about the really strong companies? Well, if you have purchased right before 97, how long till you breakeven? In the meantime, you could need the cash. Its recession. You cannot have too much cash.

But what if one recognised that it was recession and stop loss irregardless of how strong the Fundamentals of the company?
One could reenter and purchase additional lots compared to a mere buy and hold, wouldnt you agree?

My point is stop loss is not exactly TA. Its more towards MM.
And the thing is, both TA and FA could benefit from MM.

[grahamsmun]

Max,
1)When NTA is different from NRV then the Net realiseable value to be adopted bcos this is closer to the intrinsic value.
Picasso is one only unique product but stock is a commodities.
2) I do not agree with your universal claim TA is a measure Psychology of mkt in fact TA is a measure of supply and demand mkt action.Although I agree that it may help u to recognise some investment psychology is not all encompassess is like u use your private car to transport commercial goods that suppose to be transported by lorry.
3) Stock market is not only demand and supply, it's also a genuine avenue for investors to buy fundamental share at bargain for income/dividend and long term capital gain or return(Gain bcos the co make money-growth stock)
4)History repeat itself i totally agree but its applicable to FA in fact it is more applicable ie quote Buffet- in short run Stock price is a voting machine(demand/supply) in long run it's a weighing machine, hence it will go back to its fundamental value or business value.
5)Even TA we should not purchase stock as collector item like Picaso if this the case Ta is dead in fact TA is actually a trading business u buy bcos there is a demand in near future and u want to sell at a profit.
6) In regards to overvalue stocks in 97 and then recession in fact this the best area the FA can handle, if u follow my model i have mentioned we would have weed out alot of our over value stocks and we may have sold some of them and the over valuation situation we will have problem buying bcos cannot justify our investment criteria. Even Warren practise close shop during over valuations.
7)FA is opearating like a business n we are buying a share of business at undervalue price but unlike private business we have a choice, in situation recession or financial shock, we can ride through( if the business justify), we can dispose either we need cash or for MM purpose we can even buy more bcos this is better to invest as there is the most bargains imagine u can get Genting for Rm 5.00 and Maybank for Rm 3.00! 
I agree stop loss is MM but then u still have not cover the weaknesses n risk of TA 'That it purchase stock on premise that he thinks can unlock to someone at higher price n that someone think he can unload to another one at even higher price...... until the music stops)
In summary i would say TA has its weaknesses and so is FA, but to rundown FA as weak investment methods as compare to TA is not the right way.In fact FA is a good method for risk adverse investors. The preference for which method also depend on your interest as well as your skill.Just like Judo and Karate .If u are Judo(TA) expert, psy u will say it's the best but karate(FA) can be actually be as good.
Max our argument can be settle if u open up not like the Judo expert analogy, but I respect and acknowledge ur ability in the TA but there is always an alternative system .
There are many way to skin the cat!

[Maxforce]

Erm Graham,
I hope I have not unknowningly given the impression that TA is all powerful and accurate.
This would not be my intention and it would not represent TA as its true form.
In TA itself, we have terms like bull and bear traps, false breakouts.
These are itself - limitations of TA. You need not look further for TA limitations, studying TA itself would reveal its limitations.

1)When NTA is different from NRV then the Net realiseable value to be adopted bcos this is closer to the intrinsic value.

What happens when share price is lower than NRV? Does it necessarily mean that it is a good purchase?
Graham and Buffett did cover this - I cannot remember who though.
It could be that in certain cases, the company would be running out of cash in the near future.
If one could merely buy a portion of the business (ie minority shares) then it would be deemed very risky.
Things would be different if control is awarded - which then one could take decision on how to dispose its assets.
This is one of the area of Graham and Buffett's expertise.

Picasso is one only unique product but stock is a commodities

Is that so? Would you agree that every businesses are unique?
How would one define commodities anyway? As in common?
Why would art be unique and businesses common?
  Not exactly related but just something to exercise the mind. Plato style

3) Stock market is not only demand and supply, it's also a genuine avenue for investors to buy fundamental share at bargain for income/dividend and long term capital gain or return(Gain bcos the co make money-growth stock)

My friend, would it be a paradox?
Reasons of buying is irrelevant to economics. Its Demand.
Reasons of selling is also irrelevant to economics. Its Supply.
This is also why we have a market - different people buying and selling with different reasons. - hence economic theory of supply and demand.

)History repeat itself i totally agree but its applicable to FA in fact it is more applicable ie quote Buffet- in short run Stock price is a voting machine(demand/supply) in long run it's a weighing machine, hence it will go back to its fundamental value or business value.

Agree with the Buffett's quote. But not necessarily the timeframe.
I would be covering Buffett on my blog soon.
You may not like what I would be putting up there but you re invited to question my view and give your valuable comments.

Even TA we should not purchase stock as collector item like Picaso if this the case Ta is dead in fact TA is actually a trading business u buy bcos there is a demand in near future and u want to sell at a profit.

TA is a tool.
Trading is an activity.
Trading could use TA or even FA.
TA to invest? Sure - imagine using TA to pick the bottom during 97. Say Maybank. Or if you like, any other stock that passes TA test and its timing ability as well. Do use the MM of stop losses too if TA changes (this would not be unlike applying FA if FA change)

6) In regards to overvalue stocks in 97 and then recession in fact this the best area the FA can handle, if u follow my model i have mentioned we would have weed out alot of our over value stocks and we may have sold some of them and the over valuation situation we will have problem buying bcos cannot justify our investment criteria. Even Warren practise close shop during over valuations.
)FA is opearating like a business n we are buying a share of business at undervalue price but unlike private business we have a choice, in situation recession or financial shock, we can ride through( if the business justify), we can dispose either we need cash or for MM purpose we can even buy more bcos this is better to invest as there is the most bargains imagine u can get Genting for Rm 5.00 and Maybank for Rm 3.00!

During recession era, even the most fundamental stock were affected.
And when valuation were not overvalued, we would still be catching a falling knife.
Everyone just overreacted. Supply exceeded Demand.
Nobody wants to keep any stocks. Every single day the Index keeps dropping. Shares too.
Fundamental or not, it was not spared.
This is actually where TA could assist as well.
Say, we knew some fundamentally strong companies. And we knew its now undervalued.
Question - timing of entry - when?

Until the music stops - this would also be best supported by TA - and you would be looking at Turtle Trading method by Richard Dennis.

And on final part Graham, I apologize if I mislead you - of course TA and FA has its weaknesses and strengths alike. If there is one method that works 100%, we wouldnt be arguing or discussing, we ll just be enjoying our unimaginable riches beyond our wildest dreams and disregard any comments made 

Anyway, like what previously mentioned, I believe a combination of TA and FA would yield a better result than TA or FA used alone.

The reason I think why this discussion is carried on, is due to our different views of where to apply TA or FA should one choose to combine TA and FA. While I ve just mentioned combination of TA and FA is better, it would only if one combines them properly. Otherwise, instead of having the best of both worlds, we could be having the worst of both worlds 

[grahamsmun]

Max,
Some of the points u have mentioned i do not agree n we will drag to long to argue over it!
Anyway lets look into the area of making money!
One of the stock I have mentioned (Toyochem 2nd board) at current Rm 2.78 which pass stringent FA selection criteria, at the moment based on  my TA assessment is showing sign of moving up.
As u know my TA ability is not as good as u and i seldom use Ta as an entry or buying point,
Can u take a look based on your TA expertise whether this is the right time to enter? 

[Maxforce]

Longer term should be okay.
May need to consolidate as near its previous high 2.82.
Should TA and FA combine, then a simple MA crossovers would have trigger save entry on Apr 9.
Safe entry as in FA test pass, and TA entry pass
 
Another approach in TA would have given an earlier signal - Apr 2.
However, I personally would not like this approach as the volume on that day was a mere 123

[booffett]

Longer term should be okay.
May need to consolidate as near its previous high 2.82.
Should TA and FA combine, then a simple MA crossovers would have trigger save entry on Apr 9.
Safe entry as in FA test pass, and TA entry pass
 
Another approach in TA would have given an earlier signal - Apr 2.
However, I personally would not like this approach as the volume on that day was a mere 123

oh, this kind of graph also can play with moving average...

oh, then now is buy or sell...
next week can go until wat price?

i dun wan to listen to techniques or whatever lah, i just want to listen to tomorrow prediction...

[Maxforce]

If you want to know what will likely to happen tomorrow, would you still use MA? 

You know better than that booffett, usage of TA should fit with trading style.
Graham is looking at longer term. Perhaps even Turtle System would be too fast.
MA crossover would work with least whipsaws.
Any better suggestion?

[AndrewChia]

oh, this kind of graph also can play with moving average...

oh, then now is buy or sell...
next week can go until wat price?

i dun wan to listen to techniques or whatever lah, i just want to listen to tomorrow prediction...

Tomorrow chances are 4 to 1, our KLCI go up by at least 10 points 

[verntye83]

bingo, u are right.almost 10 points here.
Geng Geng Geng............
I love Dow jones keep climb to new high. Will it be another time bomb?