AhYap’s Blog

[Since AhYap.com is a weird blog, I choose to write about electricity while everyone is writing about petrol, haha.]

When I look at Tenaga Nasional Berhad (TNB) business model, I think it is a joke. However, many people including all those ‘experts’ in newspaper think that Tenaga Nasional is a very good stock because it has a monopoly on the electricity supply of Malaysia. All houses and businesses in Malaysia must pay TNB to get their electric, to watch Astro, refrigerate their watermelon and surf porn online. They also say it is a very good business because TNB income is very ’stable’ and so you can also expect to receive ’stable’ dividends.

But listen carefully, a monopoly business doesn’t mean it is a great business. And ’stable’ income doesn’t equal to ’stable’ dividends.

The biggest problem with TNB is that they simply control the price of their goods (electricity)! Even if their cost jump up a lot, they still can’t adjust their tariff (until yesterday). What is the meaning of monopoly when you can’t even control the price of your product! When you can’t control the selling price of your product but at the same time the cost of your product keep increasing, you will make less money or even lose money!

At this case, the monopoly end up hurting itself. What is benefit of your monopoly when you have to sell something fixed at RM100 while you produce it at RM150! And because you monopoly, you become compulsory to lose that RM50 no matter what. And the more customers you have, the more money you are compulsory to lose!

Do you think it is funny if your business look like that? Do you want to own such businesses? How do you expect to receive ’stable’ dividends when you have ’stable’ loses! Businesses can’t pay you good dividends when they are actually burning money, instead of generating money.

[The above examples are over-exaggerated by AhYap for Drama Effect, TNB is still able to cover their cost and make some money, but not a lot of money. They are also paying dividends, but not a lot of dividends. And with such business model, I don't think they can make good money and pay good dividends in the future even after the rate hike.]

It becomes more ridiculous when you realized that TNB runs on a business model that punish big customers! I don’t know what other businesses would do that and I really can’t accept that as an investor and a consumer. When you use less electricity, you pay lower tariff. The more you use, the higher the tariff would go! That would means if you buy 1 burger from McDonald, they charge you RM3, if you buy 2, they have to charge you RM10! WTF.

Businesses are meant to make money. Businesses like TNB is a ridiculous business because it didn’t reward their customers that use more! And end up investors don’t make much money from owning this stupid business.

It is almost guaranteed that if you spend more in a shop or buy more of a same products, the shop will happily give you discounts! That’s the correct way to do business, to motivate their customer to spend more so they can make more money. The customer is happy to get the discount and the business owner (and the investor) is happy to make more money. It is a win-win situation.

If you buy a box of Durex with 12 condoms in it, you expect each unit to cost less than the 3 condom pack! They motivate you to buy more (and fuck more), so you get more discount and enjoyment while they make more money. Same applies to Head and Shoulder shampoos, Whisper pads, Jack n Jill potato chips, Scottex toilet paper, Renoma underwear and almost everything else. The bigger pack you buy, the cheaper the averaged cost per unit.

If you go to popular restaurants like McDonald, KFC, PizzaHut, Starbucks, etc. All add ons are always cheaper than your initial purchase. McDonald sells 1 banana pie for RM2 and 2 pies for RM3! Starbucks large coffee is double the size of the small but cost only RM 2 extra! PizzaHut lets you add-on a salad bowl for only RM1 (normal price RM6) when you already order main course. [Damn it, suddenly I realized I eat a lot of junk food.]

Usually if you buy cloths over certain amount, say RM200, you will automatically get say 10% discounts. They are motivating you to spend more so they can make more money. Some shops will give you free gifts (actually sample/trial packs as bait to fish you for buying more in the future). Even if they don’t give you discount, they might give you a cool paper bag to wrap your goods instead of plastic bag so you look more cool when walking around the shopping complex.

Credit card companies motivate you to spend more by giving your bonus points to redeem for gifts! And they even motivate you to owe more money by offering you lower interest rate the more you owe them. So they can make more interest income from you. Even lousy companies like Malaysia Airlines (MAS) offer Enrich Miles to let their customers earn free flights. The more your fly, the more free flights you can redeem. And you got more Enrich Miles if you fly first class or business class (so they can charge you more on those seats). We also have Bonus Link card, Real Rewards card, Jusco Card and even Sen Heng card! The more you spend, the more gift/discounts you get.

Service industries motivate you to buy more by offering you bulk packages. Your averaged cost of signing up a 12 sessions slimming treatment at Terimee is cheaper than you sign up for 3. Your averaged cost of signing up a life time membership with California Fitness is cheaper than a 1 year membership. Even the QQ Express Cut at Mid Valley gives me a stamping cut that gives me 1 free cut for every 6 cut, so you earn an extra idiot look hair cut after they make you look like a sohai for 6 times! Many food restaurants like Coffee Bean are giving away loyalty cards that earn 1 stamp for each visit. And you can redeem free drinks/food after certain amount of visits.

It is very clear that businesses should always reward customers that spend more and customers that are loyal. But what does TNB do? They punish them! The more electric you use, the more expensive you need to pay. This is stupid.

I understand the reason behind this ‘ridiculous’ tariff structure is because the government wants us to spend less on electricity to save on energy. If that is the case, TNB can be considered as a good government entity or an environment friendly company BUT DEFINITELY not a good business/investment.

As a consumer, I want cheaper goods if I spend more. As an investor, I want a company that will motivate their customers to spend more so it can make more money for me. Thus, as a consumer and an investor, I think TNB-sucks-damn-a-lot.

There are many perspectives to look at businesses and this is one of the very rare one. I don’t expect you to read it in newspaper. I end my post with our new electricity tariff for you to enjoy.

After reading 20+ books on stock investing, I still don’t know how to analyst a company! And to finish reading those books, it took me a whole year. So many books, so much time, yet so little gained.

Everything that I have learned can be summarized into 1 sentence, “Buy wonderful businesses at discounted price.” That’s the whole strategy of value investing. That’s what those books trying to tell me.

The biggest gain from reading those books is actually to realize that it is impossible to do it myself. It is impossible for me to read 10 years annual reports for just a single company to find out if it is a wonderful business. It is very boring for me to dig deep into the income statements and balance sheets to calculate the intrinsic value of the company so I can figure out if it is selling at a discount.

The problem is not that we don’t spend enough time and effort on it! The problem is that investing is an art and not an exact science. The sentence, “Buy wonderful businesses at discounted price” make a lot of sense, but implementing it is a very very tough job. It is like you also know your should not get angry easily but you rant all the time when are you inside your car and press your car horn just because the car in front didn’t move after 0.01 second after the light goes green. You know it, but it is hard to be done. You also know that you should exercise more to get healthy but when it is time to go exercise, you say “tomorrow lar, today very tired”. You know it, but it is hard to be done.

What are wonderful businesses? What price is undervalue and what price is overvalue?

I don’t mind spending time reading 10 annual reports for a company if after that I can figure out if it is a wonderful business. I also don’t mind spending 10 hours reading all income statements and balance sheet if I can figure out its intrinsic value.

But it didn’t work like that! After reading 10 annual reports doesn’t mean you will know if it is wonderful. Spending 10 hours to get an ‘intrinsic value’ doesn’t mean it is an accurate one and you can make money from it! There is no guarantee that the effort and time you put in will give you the results you want, because deciding whether a company is wonderful and finding its intrinsic value is an ART and not a SCIENCE!

10 different guys reading the same 10 annual reports can come out with 10 totally different conclusions on whether it is a good company or a bad company. 100 different guys trying to calculate its intrinsic value and they can get 100 different answers. There is no exact answer! You will only know who is right and wrong after years has passed and the future performance of the company and its stock price becomes history.

The best you can do about the future is to predict it. Prediction is an art!

I love money. But I am not really passionate about stocks. I just love its compounding power, but I feel boring reading annual reports and income statements. It is simply not my cup of tea! I have a lot of other interests, passions and hobbies. I am interested in learning and doing a lot of things but I really don’t want to be an investing guru (or a politician)! I am passionate about heath, I am passionate about my spiritual practice, I am passionate on talking cock, but I am not really passionate on picking stocks!

If you look at all investor gurus, there are very passionate in investing. They spend their entire life in investing, although they say they are long term investor and they can buy a stock and hold it for 10 years without looking at it, they NEVER DO THAT! They still look at the stock market everyday, they just don’t buy and sell everyday, but they still look and still do a lot buy and sell within a year! Because it is their passion, their life. They can’t live without looking at stocks. Also, it is their job and career because they make money by investing for others.

But it is definitely not my passion. It is also not my job and my career. I feel stressed with stock. The less I look at it, the more happy I am. So, why spend so much time on it? But I realized that the best way to compound my money is to use stocks! So what should I do?

“To be happy, you need to find someone who loves to do what you hate to do, and can do it a lot better than you.”

This is the key concept of this post, and the key strategy of how I compound my money, how I do my stock investing.

Instead of going to research and pick my own stocks, I actually went to research and pick my own fund managers! I want to find someone that is good at doing what I hate to do!

4 of my favorite investors are Warren Buffet, Mohnish Pabrai, Peter Lynch and Tan Teng Boo. Every value investor loves Warren Buffet. He is the richest man in the world now after compounding for 50 years!

I like Mohnish Pabrai because he has proved that low risk high return value investing works! He started his investing business in 1999 which is quickly followed by the dot com bubble. And yet, not only that he is not affected by the market downfall but he actually deliver an outstanding performance where he manage to obtain 28% compounded return until today! If you study him and look at his strategy, he is so conservative with his investment, making his invertors able to sleep soundly at night.

The chart below shows the severity of the dot com bubble where the NASDAQ Stock Market has plunged sharply from the peak of 5,000 points in the end of 1999 to only 1,100 points in the end of 2002! That means if you have $5,000 at the peak, you are left with $1,100 after ‘negative compounding’ for 3 years. And yet, Mohnish Pabrai, a strict value investor, made 28% compounded return from 1999 until today!

Peter Lynch is the best mutual fund manager in the world. Yep, I condemn mutual fund a lot but Peter Lynch is actually one of the very rare distinct fund manager out there. While owning lots of stocks in his mutual fund, he achieved an outstanding 29.2% compounded return for 13 years! What he did is simple, “Buying wonderful businesses at discounted price”. But different than other gurus, he made it by buying hundreds of wonderful businesses. For comparison, Warren Buffet, the richest investor and richest man in the world, only owns around 60 stocks.

You should have heard of Tan Teng Boo if you have read about my ICAP post. He is one of the best brains in Malaysia which luckily our lousy government haven’t exported to Singapore. I have seen him spoke a few times. The first time is already 4 years ago when I attended a seminar organized by him. When it comes to money, you won’t be confidence with a person by just someone ‘recommend’ him to you, like what I am doing right now. You must listen to him speak yourself. Listen to how he answers the questions throw to him. There are many videos of his interview in his website here. Watch yourself.

I decided not to invest with Warren Buffet’s Berkshire Harthaway because I know it is very hard to invest billions of cash and get spectacular returns. Warren Buffets has been compounding his money for 50 years until he becomes the richest man in the world, how big more can he be?

I like Mohnish Pabrai. But to invest with him you need $2 million USD. “*_* So you know why I didn’t invest with him.

I like Peter Lynch. But he is retired now.

There are just too many reasons why Tan Teng Boo is the best person for me to outsource my investing. The man that loves what I hate to do and can even do it better than me! I found my ’slave’! [I think investing is painful so doing investing job everyday look like a salve to me, but he enjoys it, so let him be. keke]

1. He is so near. A Malaysian who just live in KL. A real person that you can touch (hand & shoulder only, not butt). A real person that you can see with your own eyes (not TV or picture only). Someone who also know who is Adbullah Badawi and Hishammuddin.

2. He has a newsletter published weekly so you know what he thinks every week. And his newsletter has several paper portfolio where you can mimic his buy and sells!

3. He is the fund manager of the only closed-end fund listed in KLSE! You can let him invest for you as low as RM2.17 per share right now! [not USD 2 million]

So why do it yourself when someone can do it better for you?

I prefer to have more time myself doing things I like.

I buy my first batch of ICAP in February 2007 at RM1.54. At that time I have only read a few books on investing (not 20 yet), confidence on value investing is still very very weak. And I am also doubtful to Tan Teng Boo. Within 2 weeks, the whole market suddenly crashed when the Shanghai market fell 9% in 1 day. Being one of the panic chicken, I sold it for RM1.48 and lost money! I started scolding Tan Teng Boo as a cibai. Look at the ICAP chart below, you will see a sharp fall end of February 2007.

I can say all value investing books will have this quote by Warren Buffet.

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Somehow, I remembered that later. And I actually started to buy back ICAP after the crash. I buy gradually for the next few months. In June, I become very confident and sold all my mutual funds and convert all proceeds to ICAP. The highest price I ever pay for ICAP is RM1.70. My averaged purchase price is RM1.55. I hold just 1 single stock and nothing else for a long time. No mutual funds, no blue chips, no Amanah Saham Wawasan 2020.

Lets look at 2 of the mutual funds I sold in June (I also sold my ASW2020 to my father, haha).

ING Global Real Estate Fund - Bought this in September 2006 after I failed to buy any ASW2020 after queuing for 2 hours at Maybank. So I immediately walk to Hong Leong bank to buy this fund. Bought price is RM0.5103. Today’s price RM0.3999. Investment return based on NAV if I hold it until today is -22%! But because it does pay dividends all the time, the return will be slightly better but I take note that I need to pay around 5% commission when I buy. So does buy and hold really works? Do mutual funds work?

Public Global Select Fund - Bought this on its launching period in September 2006 too. Commission is 6% with 1% free units, so net commission is 5%. Look at the chart below, it is -8% since inception and if I am still holding it until today for 18 months, my return will be -13% (8% + 5% commission). They even perform poorer that the market (red line)! What is the need to pay 6% commission and 1.5% annual management fee to the fund companies when they can’t even do better than the overall market?

They even perform worse than Fixed Deposits and ASW2020!

Luckily I didn’t hold any mutual funds anymore. Because another important thing that I have learned from reading those investment books is -

Continue Reading »

For me, the reason that Life-Is-Good is because there are always new things for me to learn. I don’t have much talent that is born with me (other than things related to computer, and maybe talking cock) and I am very proud because I learn most things after I was born. And that is the fun part, if you have skills that you are born with, for example, incredible mathematic skill or drawing skill when you are 3 years old, you can’t teach people how to do that! But on the other hand, if you sucks at something at first and master it later in your life, you can teach people how to do that because you have gone through it yourself. And that explain why my classmates always scold me, "Like this also don’t know meh." Because he is born smart and he just don’t understand why other people can’t understand it.

[And that also explain why I can't teach people computing and how to talk cock]

Today, I am going to teach you a trick that I use ALL THE TIME to trick people on doing what you want them to do. Wahahahah. Bad! Bad! Bad AhYap! Even if you don’t want to use it, knowing it help you to figure out why you always get tricked by somebody else to do things that you don’t want to do! And the next time your insurance agent and MLM friends do that to you, you will know, and smile, and give him your middle finger, and tell him, ‘Don’t use that trick one me, mother fucker!’ :p

Let’s begin.

Hypnosis is playing with the brain. You first understand how the brain works and then you play with it (trick it/manipulate it).

Read this sentence 3 times - ‘Output’ of our brain must be logically linked to the ‘Input’. I am sure if you read it 300 times you also don’t know what does it mean. Examples will help.

Example #1

If I ask you in English, "What is your name Sir?" (the input), your answer will most likely be, "I am Mr Yap". (the output)

But if I ask you in Malay, "Siapa nama encik?" (the input), your brain will need to logically answer in Malay, "Nama saya Encik Yap". (the output)

So if I ask you in Chinese, "先生贵姓？" [What is your sur name] You will logically answer "姓叶。" [Yap]

It is not logical to answer somebody who asked you in English, "What is your name Sir?" and you answer in Malay, "Nama saya Adbullah Badawi".

Example #2

Chinese has their original Chinese name but because of the influence from the west, we have ‘English’ names too like David, Steven, Patrick, Sohai, etc.

If someone come to me and introduce to me, "I am Mr Wong." Then my brain will logically answer, "I am Mr Yap."

If he come to me and introduce to me, "I am David Wong." Then my brain will logically answer, "I am Sohai Yap" [Given that if I have an English name and it is 'Sohai' in this example]

Example #3

If somebody ask you, "What is your name." You can’t answer, "I like to eat KFC." because the output didn’t linked logically to the output!

If somebody ask you, "How to spell Hishammuddin?" You can’t answer, "Streamyx Sucks!". They don’t link.

The 3 examples above show that ‘Output’ of our brain must be logically linked to the ‘Input’. And our game starts from here.

How To Trick People To Do What You Want Them To Do By Giving Them ‘Choices’

Have you ever wonder why your insurance agent and network marketing friends can always ask you to meet up, even though you really don’t want to go because you know he is going to sell you something?

Because they don’t ask you, "Are you free for supper tonight?" If they do so, your answer can be either - "Yeah, I am free tonight for supper so you can steal my money from my wallet" or 99% of the chance, you will answer, "Oh, I am not free… [I have to wake up early tomorrow] [I have assignments/reports to do] [I have to buy durian for my mother-in-law] [I have period pain] [My gold fish is sick]  …" Most people (including you) are very talented liar.

Power salesman don’t ask you "When are you free for supper"! Power salesman ask, "Are we having supper tonight or tomorrow night?"

—Ka-Chiinnngggg—

Now your brain has to answer logically to the question, unless you are really not free tonight or tomorrow night, your brain will just be figuring out if you are free tonight or tomorrow night. Most of the time, you will just choose the ‘better’ choice out of the 2 given choices, tomorrow night. After answering unwillingly, "I think tomorrow night lar." and hang up. You still wondering why you want to see this guy, whose objective is to take money from you.

The trick here is, if you want someone to do something that you want them to do, give them 2 choices where either one is also what you want!

-Examples-

Your mother may say to you, "Do you want to help sweep the floor or you want to clear the rubbish?" Ka-Chinghhhh, either one is what your mother want you to do. Pick anyone and you fall into her trick.

The Osim salesman who want to sell you uZap asks, "Do you want to pay with credit cards or cash?" or "Do you want the white one or the black one?" [real life examples used by soufulow 10 years ago when he is a poor Osim salesman]

Your discipline teacher looking at your Beatles hair, "Do you want me to cut it for you or you want to cut it yourself?"

The ‘choices’ that you give to the victim is very important. In our previous examples, we give them 2 choices where both are what we want. They pick either one, they fall into our trap.

Instead of giving them A or B where both are what you want, you can give them A or B where A is what you want them to choose while B is an extremely ridiculous and awkward choice that doesn’t make any sense to be chosen, or B as a choice that simply look more terrible and worst than A.

-Examples-

You scare that your son will ask you for RM100 ang pow in the coming Chinese New Year, but you only want to give RM20 so you can save the money for Casino De Genting. You can ask, "Son, do you want RM20 for your ang pow this year or you want RM2?" Kekekeke. RM2 look worst that RM20, or course he will choose RM20!

You go to eat fried mee and the guy ask you, "Do you want 1 egg or 2 eggs?" Then your brain think, "Wow, one egg enough lar, where got people eat 2 one." Then you say one. But you fall into his trap already because what he want is to make sure you include egg to your fried mee so he can charge you 50 cents more. If he has asked you, "Do you want egg?", you may have said no and he will not be able to charge you 50 cents more. This is a ridiculous choice example.

Let’s say a coffin seller want to sell a coffin at a certain price, he will show the buyer 3 coffins. The 1st coffin will be the coffin that the seller want the buyer to buy. The 2nd coffin is same price as the 1st coffin but it looks extremely terrible (made with recycle newspaper by Proton Malaysia). The 3rd coffin is a very expensive coffin but look just the same as the 1st one (Made by Louis Vuitton). The coffin buyer will pick the 1st one because the Proton made coffin is terrible in quality while the Louis Vuitton coffin is scary at price. Both choices look worst then the 1st coffin and don’t make sense to be chosen.

-More Examples-

- Your boss, "Can you finish this for me today or tomorrow?"
(actually you can request to finish by next week)

- Your wife, "Are you going to buy me LV or Prada?"
(actually you can request to buy a cheaper Guess bag or a pasar malam pirated LV)

- Your husband, "Do you want to do it on the sofa or the kitchen?"
(actually you can choose not to do it, or do it in the car)

Continue Reading »

3 hours more to go for 2008! Remember that the Barisan Nasional government has promised us that petrol price will not be increased anymore this year. They kept their promise! But please me reminded that tomorrow will be next year! They didn’t promise us anything in 2008.

Happy 2008 with higher petrol price!

—

p/s Why it is boring to read newspaper and listen to what politicians have to say? Today they say, "People, don’t speculate on the petrol price as we will not increase it anytime soon". Tomorrow they will say, "Petrol price increases 40 cents per litre …" That’s newspaper. That’s politician. That’s Najib.

Hmmm, but I still don’t think they are brave enough to increase the petrol price before election. But why everyone is queuing up at the petrol stations right now? Hmm, Hmmmm, Hmmmmmmm …. confused…

I am writing about myself. But I want you to see if you can link it to yourself and other people, so you can learn. I hope reading this is better than reading newspaper!

Soufulow described that I have 2 characteristics, which interesting enough, contradict with each other! But both are true at the same time!

#1 - Stubborn! Never Listen and Always Think That I Am Right!

He said that I am stubborn and never listen and that I think I am the smartest people on earth. That I think I am always right, always instruct and teach people what to do and never listen to other people.

#2 - Keep On Changing! Today Say This, Tomorrow Say Another Thing!

Haha. This is fun. First I am said to be stubborn, now I am always changing. Soufulow say today I ask him to invest in real estate, tomorrow I ask him to do options trading, and the next day I ask him to invest in the stock market.

I find this very interesting too, so which is the correct description for me?! The stubborn and never listen one? Or the keep on changing one? Both sounds right and both sounds wrong! I am confused!

After thinking and thinking and thinking, I finally get my answer.

We can ONLY think the BEST we can think using all the KNOWLEDGE and EXPERIENCE we have at THAT MOMENT of time.

• You can’t ask a Standard 3 kids to do calculus because at that moment of time, his knowledge and experience only allow him to do basic math.
• You can’t ask Soufulow to describe how does sex feel when he is Standard 6 because his knowledge and experience of sex at that moment of time was just some porn video and magazine (龙虎豹). Of course, he has no problem teaching you how to da fei kei (masturbate) at that time.
• If you have never been to a place that is freaking cold (something like negative 40 Celsius) and the coldest weather you have experience is just the kindergarden-level-cold of Genting Highland, you may never be able to describe or even imagine how to live in negative 40 celcius. You may wonder will your pee become ice immediately when it come out? Will you dick freeze when you pee?

So, I figure out how my brain works.

In my life, especially the pass 5 years, I have been constantly learning, reading over 200 books, accumulated a lot of knowledge and life experience.

At one previous moment of my time, I think I should put all my money in real estate to generate rental income for me. At that moment, I think real estate is the best investment. (keyword - At That Moment) Because at that moment, my knowledge and experience are limited only to real estate. And I have experience from my parents that the stock market is very risky and buying stocks is nothing but gambling.

So at that moment of time if I am blogging, I will tell you how good real estate investing is and why you should put all your money in it.

And if someone come and tell me, at that moment of time, that real estate is not the best and I should invest in the stock market, you will see me in mode #1 - Stubborn and Never Listen. I will probably responded with, “Don’t be Sohai lar, stock market where can play one!”

At that moment of time, my knowledge and experience only allow me to think real estate is the best. Everything else that come contracting with my believe will be rejected.

Fortunately, I am really not that stubborn. I have another important characteristic called OPEN MINDED and a gifted skill known as THE ABILITY TO INVESTIGATE.

If you tell me me the stock market is good, and after scolding you as a sohai, I will actually get curious about the stock market. I am curious because I am open minded. If I am really a stubborn ass hole, I will shut my brain off and reject everything in fully automated mode (you will see lots of people like this).

When I get curious, I will start to investigate and think, “Why the heck he say stock market is good?”, “Why my mum and dad burn their fingers (actually the hands, legs and hairs) in the stock market and he can still say it is good?”

The guy who told me the stock market is good planted a seed into my brain. Then there might be a few more guys come to tell me the same thing! They are watering the seed and it grows in my brain. I became more and more curious and I started to investigate more and more.

I usually learn by reading. So I started to read, 1 book, 2 books, 3 books …. 20+ books!

AT THAT MOMENT OF TIME, after reading 20 books, my knowledge and experience are totally different than that moment that I tell the whole world real estate is the best!

After my investigation on the matter, I change my believe and dump the “real estate is the best” believe and replace it with “stock market is the best”. That’s why what I am blogging now is about stock market and not real estate.

So am I stubborn or constantly changing? You can’t fit me into either one because I am both!

If I encounter new things and after investigation, I think my old believe is better, then I will stick with the old believe and reject the new knowledge. Not only that it never becomes part of me but it also helps strengthened what I am believing right now!

On the other hand, if after investigation, I think the new knowledge is actually better than my existing one, I will not hesitate to dump my old believe and replace it with the new one!

I am ready to change any second if I find something better to replace my old believe. And I will be stubborn enough to reject everything that after my investigation, didn’t sounds better than what I have already known.

This is the correct description of me. My ability to investigate determine whether I should be stubborn or changing.

If you come to me today and tell me value investing sucks and I should trade like playing in BursaPursuit because the #1 winner grow his RM250,000 to RM1 million in less than 2 months (400%!) and I sucks because I can only compound my money 20% per year, do you think I will be stubborn or changing?

People Who Doesn’t Have The Ability To Investigate and Change Frequently

If you look at most aunties, you will notice that they change very frequently. Today she listen to this aunty says tomato is good, tonight she cook all-tomato-dinner for her husband and children - tomato rice, tomato soup, tomato dessert, tomato juice … yucks …

They are too open minded! They don’t investigate much before they accept new things. And these group of people will easily fall into SCAM and the hand of the marketing guys.

• He believes that Maxis is really giving him 500 free SMS is he forwards the message to 10 of his friends!
• He believes that Friendster and Hotmail is really too crowded and will delete his account if he didn’t forward that message to 15 of his friends!
• He believes that someone really want to borrow his bank account to transfer 5 million US Dollar and in return give him 5% commission!

While you may be laughing on these and tell me that only sohai will fall for these and you are not one of them, what about these -

• Do you believe that drinking milk will give you more calcium? Do you believe on what Anlene says, “2 cups of Anlene will give you the calcium you need a day”? (两杯Anlene给你一天所需要的钙质) What if I tell you that the more milk you drink, the more calcium you will lose! Wow!
• Do you believe that cancer is a disease that kill? What if I tell you cancer is a CURE that heal instead of kill and cancer patients should thank God that thay have cancer? Wow!
• Do you think eating fruits after your dinner is good for your digestion? What if I tell you eating fruits after your FOOD is actually bad for your digestion? Wow!

Are you open minded enough? Do you have the ability to investigate? At this moment of time, your knowledge and experience may be telling you that drinking milk will give you more calcium (so you drink more), cancer is something that kill (so you should hate it), fruit is good for digestion (so you should eat more papayas after your dinner).

At this moment of time, you may think milk is the best source of calcium, so you drink it yourself. You also force your innocent child to drink it and you force your old mum to drink it! You are not wrong, because at this moment of time, your knowledge and experience tell you that it is right and that’s the best.

In the next few posts, when I start to plant a seed on your brain and tell you the other way, you will have more knowledge to allows you to think differently. And that, will depends on whether you are open minded and have the ability to investigate, and the conclusion of your investigations.

People Who Is Not Open Minded

If the first group of people is the people who don’t have the ability to investigate and thus keep on changing (and keep on being conned and fall into marketing gimmicks), who is the second group?

The second group are those who are stubborn ass hole who are not willing to change and always think that they are right. They don’t need to investigate because they don’t even open up their mind! Instead of accepting everything, they accept nothing. They think they already know everything they need to know. They are very ego-type. They probably think they are the God or the Prophet. They always want to teach people what to do and how to do and will never listen. Terrorist is the extreme example, they kill with the name of God.

Worst! Sometimes even when everything prove that they are wrong, they still refuse to admit it and still want to say that they are right and others are wrong! Politicians do that all the time! Hishammuddin and Nazri do that all the time! Most of the time they realized that what they have said should not have been said, but because they have said it, they will need to stubbornly keep their old stand.

Referring back to the phase “We can ONLY think the BEST we can think using all the KNOWLEDGE and EXPERIENCE we have at THAT MOMENT of time”, if one is not open minded, his thinking will always be limited to his limited knowledge and experience at that time. Since he never learn new things, he never growth. That moment of time will be a long moment of time because he is almost the same all the time.

• A smoker will smoke until maybe he has lung cancer. His knowledge and experience tell him smoking is OK for decades. But when he got lung cancer, his experience change dramatically and so he can change almost immediately now. If he is open minded and start investigating at the good and bad about smoking, he may have more chances to quit smoking earlier. (Smoking not only burn holes in your lung but also burn holes in your wallet and make Barisan Nasional rich!)
• Do you think homosexual is a sin and bad? This is what his knowledge and experience at that moment of time tell him so. (Religion? School education?) If he is really open minded and investigate into the matter, he may find out that homosexual is not even a choice! If you are a guy and you feel ’something’ when you look at a sexy woman, it is not a choice! it is your body reaction because of your genetics and hormones. Whether you want to do something (sex, rape …) is a choice but the initial feeling is not a choice! For a gay man, he don’t feel that ’something’ when he see a sexy woman BUT he feel that ’something’ when he see a sexy man! It is not a choice! He can choose not to engage in homosexual acts BUT he can never choose to feel ’something’ when he see a woman instead of a man. He is born like that.
• Do you think prostitution should be banned? Read my post on Prostitution. Read the comments as well for examples of people that is not open minded enough and want to kick my ass without any supporting facts other than some bible clause or telling me ‘Malaysia is a Muslim country’.

Understand the phase “We can ONLY think the BEST we can think using all the KNOWLEDGE and EXPERIENCE we have at THAT MOMENT of time” can gives us 2 different ways to look at the differences of religions.

#1. A religion fanatic (someone crazy with his own religion) may grow up his whole life knowing and practicing only 1 religion. All his knowledge and experience are limited to 1 religion and he might not be open minded enough to learn about other religions. Not only that he think his religion is the best but he also think that his religion is the ONLY ONE that is right. Other religions are just wrong, wrong, wrong. With this kind of thinking, how much room can he gives to other religion?

#2. If he knows that everyone can only think the best they can think with all the knowledge and experience they have at that moment of time, EVEN if his religion is REALLY the best and the true one in the world, he should be able to understand and accept that someone else might also think that their religion is the best and not his. Because for that man, his knowledge and experience limited him to think that his religion is the best and not yours! You are able to pick the right religion because your knowledge and experience are better than him. You will be more open minded and can accepts other religions to co-exist with yours.

If you are not open minded, you will not even want to investigate on things, which means you will never grow and never learn new things. Finance, health, relationship, spirituality … we all have our best at any moment of time with all our accumulated knowledge and experience and we can only do our best using what we know at that moment of time.

As we are still living, we will be constantly growing and we will encounter more knowledge everyday and gain new experience everyday. And you, have to decide if you want to be like the aunties who keep on changing frequently without investigating, or the politicians who are stubborn and never listen, or you want to be an open minded person who has the ability to investigate on new knowledge and decide whether you want to keep your old believes or replace it with the better one.

You should also be able to understand why some other people are so different than you because that’s what the best they can do, with their knowledge and experience at that moment of time.

Disclaimer

Today when I look at myself yesterday, I laugh at myself as being so stupid yesterday. I can’t believe I can be so stupid thinking that way just a day before. And tomorrow, I will laugh at myself being so stupid today!

I am constantly learning and growing everyday. Today what I write is the best I can think of Today (using my limited knowledge and experience accumulated up to today), tomorrow I will have new knowledge and experience that I will decide which one to take in as part of me and which one to reject stubbornly. So funny enough, my blog should have a disclaimer!

Take your own RISK if you read AhYap’s blog because he changes so fast that he may not think the same tomorrow! You understand that you might run the RISK of Brain Damage if you read on this blog. Read at your own RISK! Be open minded and investigate all the information yourself before you accept anything AND please don’t kick my ass just because I write something that contradict with your religion, because I am still not as smart as you leh!

After finding out that AhYapSucksDamnALot, my buddy Soufulow has quickly designed an Ah Yap Sucks T-Shirt for me! Wahahaha.

You are just an ignorant bugger who prefers to criticize your country than to do something about it. If you are so smart, go and work in TM! But I don’t think that you are one. Stop comparing your country with Singapore, for goodness sake! It is a small country, and it is much easier to handle! and maybe i will try to start a ‘AhYapSucksADamnLot” t-shirt business. Sucker.

I receive this kind of comments a lot. AhYap.com has a lot of fans and at the same time a lot of haters! As I have said before, I have my own stand on things and that’s why people either like me or hate me a lot.

But for this guy, I find his comment very interesting. If TM sucks and I need to work at TM, then I also need to work at Proton, MAS and also the PRIME MINISTER office and Sammy Vellu office! I also need to work at the traffic department, the flood department, the police department … … since I need to fix all the things that sucks in Malaysia.

Singapore is better because it is smaller? Then why the heck USA that has 300 million people is also better than our tiny 24 million population country? And TM, MAS and Proton (the company) should be a lot smaller than Singapore (the country) and why TM cannot do better than the overall Singapore? Blaming the size is lame. In Chinese we say, “Blaming the floor is too hard when your can’t shit”.

And lastly, starting AhYapSucksADamnLot T-Shirt business show that your don’t have the common sense and economic sense. How much money can you make from that? You can’t even cover your printing cost on it! Someone print the Streamyx Sucks T-Shirt elsewhere and have over 30 preorders even before he print the T-Shirt. And that make sense.

What Malaysian do most of the time is to avoid the truth, the painful truth, the fucking truth!

“It’s OK if Singapore is better than us because they are smaller. And we are better than Nigeria!”

“We can’t fixed the flood and traffic jam, let’s fixed AirAsia sexy uniform.”

“Let’s blame Anwar Ibrahim for everything.”

The truth is, big or small, you have to improve your country! The truth is, easy or hard, you have to work on the flood and traffic jam issues! The truth is, Anwar Ibrahim is not God, he is just an ordinary man.

ICAP is listed in the KLSE as a company under the Closed End Fund section. All companies listed in the KLSE will belongs to a section, i.e. plantations, hotels, properties, financial, etc.

It used to have only 2 stocks listed under the closed-end fund section - ICAP and AMANMFB. But funny enough, AMANMFB has closed shop a few weeks ago. AMANMFB performance sucks from day 1 and they looked even uglier when ICAP is launched 2 years ago. So instead of keep hiding their head under the table, the fund manager decided to terminate the fund.

Most people are not familiar will a closed end fund because most funds that we buy are open-ended funds. Please read the article "Closed End Fund vs. Unit Trust Fund" to learn more about them in details.

To make a quick explanation, an open-ended fund doesn’t have a fixed amount of units. Today it can have 13 million units and tomorrow it can have 10 million units, depending on how many people have bought or sold the funds. The price that you buy or sell an open-ended fund is based on the NAV of the fund, which is calculated daily by the fund companies and is published daily on the newspaper. [NAV = Net Asset Value = how much the fund is worth = the exact price of the fund]

As opposed to an open-ended fund, a closed-end fund has a fixed amount of units. For example, ICAP has a fixed 140 million units available. Tomorrow, it will still be 140 million units no matter how many people sell or buy it. The bid and ask price do not depend on the NAV but actually depends on supply and demand.

When you buy a Public Mutual fund, you are buying from Public Mutual directly at the NAV + entry fee (6.5%). If you sell, you are selling to Public Mutual directly at the NAV. You don’t need to worry whether there are buyers or sellers available, Public Mutual will always buy or sell to you.

Since ICAP only has a fixed 140 million of units, you can only buy from an existing ICAP holders who wants to sell to you (sorry, AhYap is not selling his to you). And so the price is determined by supply and demand.

The above image shows that there are 152 lots available for sale at RM2.40. If you are already holding ICAP and want to sell them, you can sell 148 lots at RM2.39 right now. A lot means 100 units/shares.

Where do you buy and sell ICAP? You do that exactly the same way you buy or sell other stocks such as GENTING or DIGI. That’s either through a reminsier or do-it-yourself via a discount broker such as HLeBroking.com. You need to pay brokerage fee, stamp duty & clearing fees when you buy or sell ICAP just like your buy or sell other stocks in KLSE.

Since ICAP is also a fund, it also has its own NAV. But instead of being calculated and published daily like other mutual funds. ICAP NAV is calculated on every Wednesday and will be published end of Thursday on icapital.biz and klse.com.my (’Listed Companies’ Menu -> Company Announcement -> Announcements -> Current -> ‘By Company’ Tab -> ‘I’ Button -> ICAPITAL.BIZ BERHAD).

From website iCapital.biz, it will look like this

Latest NAV - RM2.10
(as at 14/11/2007)

From klse.com.my, the announcement will read like this

On behalf of the Board of icapital.biz, we wish to announce that the NAV per share of icapital.biz as at 14 November 2007 was RM2.10.

If you are smart enough, you will notice that ICAP is actually selling at RM2.40 right now while the NAV is only RM2.10! What does that means? Demand is so strong that there are actually idiots trying to buy it at RM2.40 (Yes, I mean Idiots).

Logically, ICAP should be bought or sold around the NAV. So if the NAV is RM2.10, buy and sell should be around that amount. As a buyer, you want to buy it as low as possible. If you are a seller, you want to sell it as high as possible. If the NAV is RM2.10 and you pay RM2.20 to buy it, you are actually paying a premium to buy it. It is OK to pay a premium to buy a good fund. When you buy a mutual fund, you need to pay 6% to 7% entry fee as well which is also a premium. However, paying 19% of premium to buy a fund is ridiculous to me.

The reason why idiots bid it so high right now is due to the lack of understanding to ICAP and the ignorance of a bunch of traders. A lot of trading software (including IntegraStocks promoted heavily by Bursa Pursuit) are giving buy signals to ICAP because it keep on breaking new high. So these traders, who know nothing about ICAP other than its s-p-e-l-l-i-n-g thought that this stock is the next stock that will go up 500% in the next few weeks. They will be proven wrong and burned hard.

ICAP is a registered company but it doesn’t has its own ‘business’. It’s ‘business’, is to own other businesses that is listed in the KLSE (they buy stocks!). ICAP is owning around 15 stocks right now, including PARKSON, PETDAG, UMW, PIE, BSTEAD, etc.

ICAP doesn’t has a single employee! Everything is outsourced. The decisions on what stocks to buy and sell are outsourced to Capital Dynamics Sdn Bhd, which is run and operated by Tan Teng Boo (the fund manager). The annual management fee paid to Capital Dynamics yearly is 1.5% of the NAV. Almost all mutual funds that you buy will will have such management fee paid to the fund manager ranging from 1% to 2%, 1.5% is most commonly used.

Tan Teng Boo publish an investment newletter weekly since 1988. And everyone can subscribe to this newsletter (of course you need to pay lah). The gem of this newsletter is that is contains a paper portfolio where he will tell you exactly what stock to buy and sell. He called this portfolio "Section C". The performance of this portfolio is amazing, it has averaged a 21.73% compounded return since it is started in 1991! Remember that a 20% compound rate will grow your money 6 times in 10 years. Click here for the complete track record details with yearly breakdown and chart. Since this portfolio is make public to all subscribers since 1991, everything can be traced back to 1991 and thus the track record cannot be faked.

What makes ICAP so interesting when compared to other mutual funds in Malaysia?

The core philosophy of typical mutual funds is diversification. A typical fund will own a lot of stocks, probably hundreds or even thousands of them! What they do is buy a little bit of this and a little bit of that. Their reasoning behind this is that the risk can be reduced by ’spreading’ it over a lot of counters. What they are thinking is, if the fund own 300 stocks and 1 of them go down 100% to 0, the fund overall net loss is only 0.33%. This is known as "Don’t put all your eggs in one basket".

Unfortunately, sword has a double edge. If your fund buy 300 stocks, 1 of them go up 100%, the effect of the superior performance of this stock only net to 0.33% to the overall fund performance! So there is nothing to be proud of when one of the stock go up 100%!

Warren Buffett, the world’s most successful investor (the #2 richest man in the world) who runs Berkhshire Harthaway that is worth over USD 200 billion ($200,000,000,000) owns only 39 stocks! So for a typical mutual fund that is worth RM100 million to diversify as much as 300 stocks is meaningless.

When mutual funds owns too many stocks, their performance will be much or less same as the overall market! So if you read the headline and the stock market tumbled 3%, most probably your fund will also tumbled 3%. This is because the fund owns so many stocks that it is actually the stock market itself! If KLSE has only 1,500 stocks and your fund owns 500 of them, it is very logical that your fund price will drop when the overall market drop.

Look at Public Growth Fund (red) vs the KLSE Composite Index (blue). Look how close they mimic each other. This is because they own too many stocks. So they will have a high correlation to each other.

As ICAP owns only 15 stocks, its performance will not rely too much on what the overall market is doing. So it has lower correlation when compared to typical mutual funds. This can be seen clearly on the ICAP performance beginning at April 2007. While the market is going flatline, ICAP is able to appreciate continuously.

Performance of a value investor doesn’t depends on the market but the earning performance of the underlying companies. The companies that ICAP owns keep making good earnings on that period and thus the price is reflecting that. Note that I am using the NAV of ICAP and not the stock price of ICAP because NAV is the real value of the fund and not the price (which is insane right now).

* A mutual fund that holds too many stocks will not be able to outperform the market in a large margin for the long run. But an intelligently value investing portfolio that focus only on a few well researched stocks can easily outperform the market by a large margin in the long run. *

Before I continue, I will now write my responds to Boyboycute’s comment. He takes a great effort on researching more about ICAP which I salute (a lot of people either listen and forget, or listen blindly).

Icaptal.biz was listed 2 years ago on 19 Oct 2005. Whatever ICAP is doing, it will be under scrutinized by Bursa starting from that date only. Before the listing, ICAP self-claimed in http://www.icapital.biz/english/trackrec_1.asp about the performance of Capital Dynamics without any supporting documents or evidence. No one can certify the performance of Capital Dynamics before the listing of ICAP. Since ICAP has two years of track record only, I cannot make any good judgement about the fund. By the way, did you read the disclaimer in the website? Past performance is not an indication for future performance. See it here: http://www.icapital.biz/english/disclaimer.asp

Continue Reading »

Someone named tokbi is attacking me on my Post on Prostitution. If you haven’t read the post before, please read it because it is one of my best posts in my blog.

Here is his comment

fuck off!!!

i couldn’t read it all because it is so bullshit!!! it is so wrong and just a piece of shit…!!! hey ah yap, please go to other country before i kick your ass!!! maybe you are the one with an extreme sex desire..a.k.a. sex maniac… malaysia is an islamic country la idiot!! islam is the official religion…negaraku is the official song, bunga raya is the official flower…islam forbid prostitution because it never benefits anybody or anyone except sex maniac like you..what the fuck you said?? prostitute in singapore has 3 monthly medical check up??? you are so stupid, you know..if they contract any STD, HIV or hepatitis germs they can transfer it to other people immediately…3 months ago clean report is very useless…as useless as you…

I am showing you his comment because this is a very good example of what I am trying to tell you in my post “Why The World Can Never Be Perfect!“. Tokbi’s perfect world is a world without prostitution and from his words, you know he wants a world that practices Muslim laws. And he goes to the extend that if you don’t agree with his perfect definition he will fuck you, chase you out of ‘his country’, kick your ass, remind you that Malaysia is an ‘Islamic country’, accuse you as a sex maniac, tell you that you are an idiot, useless and stupid.

He is still consider a nice guy because he didn’t come and bomb my house or kidnap my mother. There are people in this world that if you don’t agree with their prefect world definition, they will come and cut your head in front of the camera and upload it to YouTube! Don’t play play ar!

I’ve seen other Malay bloggers mentioning my post in their blogs and they find that my post is funny. And yet, how come the very same post can make some other Muslims so angry? As I’ve answered in the same ‘Perfect World‘ post, there are people who knows how to respect and accept things especially those that they don’t agree or dislike themselves. While there are also people who will never tolerate a single thing that doesn’t fit his ‘perfect definition’.

This is the world. This is Malaysia. What will Malaysia look like 50 years from now? Will Malaysians learn how to respect and accept each other? Or we are just going to selfishly demand more for our own, our races and our religion, pushing others to the cliff?

scwong: The math that we studies before, 90% of it is not useful in everyday life. I speak for those who are not engineers or accountants or architects, etc.

True! We try to figure out things like Train A start from Ipoh at 8.00am at the speed of 80km/h and Train B start from Johor Bahru at 9.00a.m. at the speed of 100km/h, at what time and where will both the train meet each other? Zzzzzzzzzz.

ahbi: ah yap a….y no add me in msn le…i gave u my email last time mer

My ex-coursemate Donald (The #1 cibai according to Google) has answered it for me nicely. “You guys don’t need to check him on messenger coz i can’t even get him on email!” Yes, CibaiYap really don’t play messenger and reply to emails. He also off his handphone most of the time. Even when it is on, he can let the phone ring and ring and ring without picking it up, making the caller on the other side jump like a monkey. That’s AhYap, or better be called CibaiYap because of this.

taikor: I only knew how to save RM100k in 5 years even before I graduate. For those working in Singapore, that’s a lot easier. Just bring back around S$950 every month and you’ll be able to save Rm100k in 5 years.

Those making SGD should aim for SGD $100,000 to become a SGD millionaire! But if you are making Rupiah, don’t save only 100,000 Rupiah lar. 100,000 Rupiah is only RM39.10!!!

april: i also bought ICAP. but damn miserable .. bought at 1.74 and only 200 units coz super and extremely poor. :’( Plan to sell at 2.15 and wait for it to drop and the buy alot alot in the future. Currently bought under my auntie’s account so have to sell asap or else next year all the minimum rate will increase to RM40. But sibeh good ah the share!!!!

I am very happy, so you are now the #4 people who listen to me. Did you buy 200 or 2,000? If one buy 200 units of ICAP at 1.74, his total cost would be RM361.14 including commissions and fees, making the averaged bought price 1.8057. In order to just break even, one need to sell it at 1.88! It needs to increase at least 8% before you can make any money.

The amount of units you bought affect your break-even point (the price where you sell and you don’t make or lose any money). If you buy ICAP at RM1.74 here are the break even points for different amount of units you buy.

100 - RM2.01
200 - RM1.88
300 - RM1.83
400 - RM1.81
500 - RM1.80
600 - RM1.79
700 - RM1.79
800 - RM1.78
900 - RM1.79
1,000 and above - RM1.77 (total investment around RM1,800)

When we buy or sell a stock, we need to pay the brokerage fee, stamp duty & clearing Fee. It’s the stamp duty and clearing fee that affect our break-even point because when you buy too little, stamp duty and clearing fee will account for a large percentage of your total invested amount.

Lesson 1: Every time you buy or sell, make sure the transacted amount is at least RM1,800 to maximize your return.

Online brokerage like HLeBroking and Maybank2u charge only 0.42% brokerage fee. If you are buying through a reminsier, you will need to pay 0.7%! If you know you can negotiate (most people don’t know), they will give you 0.6%. But that’s still more expensive than the 0.42%.

Lesson 2: Use an online brokerage house to save on brokerage fee.

yangsquare: I’m very prospective about this- but how do you manage to get 20% compound interest?? even 12% would be difficult to find, wont it?

It is very easy, if you know how. It is very hard, if you don’t know how. If you know how to swim, swimming is very easy. If you don’t know how to swim, swimming is very hard (and you can even get drown!). So is swimming easy or hard? Of course, I will share more and blog more later about how to get the 20%. Akan Datang.

yangsquare: Also remember there is also a negative force behind all positive forces; that is what we call INFLATION. inflation rate is currently around 2% for the whole country and 6% in big cities like KL. That means your money will diminish if you keep it in time.. meaning your 20% compound would only be like 18% after subtracting the inflation rate.

Brilliant. The answer is in the statement itself. Because inflation is unavoidable, that’s exactly the reason why we need to aim for a higher compound interest rate (and not the Amanah Saham’s 8%!). If you have live long enough, you should have witnessed the destruction-power of inflation. How much does 2 pop-piah cost 20 years ago? 80 cents. How much today? 2 Ringgit and 80 cents.

yangsquare: btw, how do i start a trading account? any minimum age for that?

18 is the minimum age. Open it online at HLeBroking.com. But you still need to print out the final application form and go to any Hong Leong bank to have your signature witnessed and IC certified. Then you can ask them to mail it for you to Hong Leong securities. To trade, you can bank in money to your brokerage account via Maybank or Hong Leong bank.

Huiying: I agree with the compounding theory too.. it really requires a lot of discipline to reject all kinds of temptations to make that type of saving. Meaning, if you are earning around 3k, while you are still young, no outings, no trips and no fun. Really tough. And so, I think balance is really important. A balance of lifestyle and having saving at the same time.

This is a very open topic like politics and religion. Always can’t get a right or wrong from it. If you are honest with yourself and look at all the people around you, do you think there is more rich people or poor people? Is there more healthy people or unhealthy people? Is there more successful people or fucked-up people? If you do what most people do, you will get what most people get - poor, unhealthy and fucked-up. But this arrangement is good and nothing need to be changed. If not, who is going to sweep the street? Who is going to tar the road? Who is going to be police (haha)?

But what different now is that most people don’t know they have a choice. You know you have a choice now. So you want to be like most people or you want to join the less-people club? But as I said earlier, it is okay to be like most people. If everyone has money, who is going to work at the bank’s counter? Who is going to be our accountant? Who is going to be a brilliant engineer to design better stuffs for our livings? Who’s going to repair our car when it is broken?

Huiying: Just wondering, when you purchased ICAP, you are using the rule#1 method?

No, I don’t. You don’t evaluate ICAP using Rule #1 method because ICAP is a fund and not an ordinary business. ICAP is currently holding 15 stocks. You can happily evaluate it’s holdings using rule #1. ICAP strategy is value investing, and rule #1 is one kind of value investing which is more ‘aggressive’. There are many ways to implement value investing and ICAP is using a more conservative value investing approach than rule #1, making you sleep easier at night. I will discuss what I mean by aggressive and conservative in some other posts.