How Dolce & Gabbana Lost 98% of Their Chinese Market With One Video

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Dolce & Gabbana is one of the most famous fashion brands in the world. Their clothes have been worn by some of the most recognisable stars on the planet such as Beyoncé, Kylie Minogue, and Madonna.

Firmly established as a top fashion house in the west, their gaze soon turned to lucrative markets in the east, in particular, China. With a population of over one billion, it’s no wonder Dolce & Gabbana were eager to entrench themselves into this market. Especially when it’s reported that 30% of their $1.3 billion earnings in 2017 came from the Asia-Pacific region.

To gain a foothold in foreign markets, companies will usually come up with an ad campaign that introduces them to the local market. One of the most memorable that springs to my mind is when Enterprise rent-a-car entered the UK market.

Their adverts played on the cultural differences between the U.S. and the UK, which helped endear them to the UK public. They were well-thought, funny, and played on stereotypes, but with their tongues firmly in their cheek.

This is a great way to expand your brand into another country, as long as you do it right. Dolce & Gabbana was already well-known in China when they released a series of videos on social media in November 2018.

But what happened next had the opposite effect of Enterprise’s campaign. Instead of bringing the local market on board, they alienated them.

The reason?

Instead of poking lighthearted fun at cultural stereotypes, Dolce & Gabbana overstepped the mark and insulted a whole nation through a poorly conceived ad campaign.

The ad shows a Chinese woman sitting at a table attempting to eat a variety of popular Italian dishes such as pizza and spaghetti. This sounds innocent enough but when you watch the video you can see why it caused an uproar.

The video shows the woman attempting to eat pizza with a pair of chopsticks. She looks confused, prods the pizza to no effect, and then tears a bit of it off and grasps it with the chopsticks.

The second ad is no better, with the woman confronted with a big bowl of spaghetti. Again, she looks at the bowl in a confused manner wondering how to eat it with her trusty chopsticks. Eventually, she twists the chopsticks around the spaghetti and takes a bite.

While the woman is attempting to eat pizza and spaghetti, a narrator speaks in the background. Unfortunately, my Mandarin is limited to two words, so I had to turn to Wikipedia to get a gist of what he was saying.

Yes, this ad campaign is listed on Dolce & Gabbana’s Wikipedia page, that’s how bad it turned out! The narrator is said to speak “with a hubristic and lecturing tone while having sexually suggestive lines.”

Once you’ve watched the video it’s not hard to see why these ads caused such outrage and why it was a marketing disaster. From the Chinese perspective, the videos are patronising and trivialise their culture. After watching it, I felt like it was implying that Chinese people eat everything with chopsticks regardless of how impractical it might be.

From a marketing perspective, I don’t know what Dolce & Gabbana were trying to achieve with these videos. Watching them, you’d have no idea they were a fashion company, you’d assume they were a restaurant or a takeaway company.

I understand what their strategy was. They wanted to show how Chinese and Italian cultures can come together. It was similar to the one that Enterprise employed in the UK. The problem was that Enterprise’s campaign endeared the company to their intended audience, while Dolce & Gabbana alienated it. It also helped Enterprise that British and American culture are a lot closer aligned than Chinese and Italian cultures.

The social media outcry in China was swift, with users accusing Dolce & Gabbana of racism and playing up to stereotypes about Chinese people. To make matters worse, a few days after the company had removed the videos from its social media channels in China, a screen capture of racist comments made by D&G co-founder, Stefano Gabbana, came to light.

In a direct message to an American fashion blog on Instagram, he complained about the removal of the videos and referred to China as the “Ignorant Dirty Smelling Mafia.” He also said China was a “country of shit,” in his ill-thought-out message.

Dolce & Gabbana released a statement claiming that their account and that of their designers had been hacked, but by then it was too late. A string of Chinese celebrities severed their ties with the company and others withdrew from “The Great Show” event, which the ads had been promoting.

Instead of entrenching its brand in China, the campaign did the opposite. A report found that sales for Dolce & Gabbana were down 98% in the country from the same period last year. The figures are shocking, but when you consider Chinese shoppers are the biggest buyers of luxury goods, it becomes clear how big of a mistake their ad campaign was.

China has a powerful online cancel culture and Dolce & Gabbana felt the full wrath of it. Whether the company can reclaim its position in the country remains to be seen. What the debacle does show is the importance of understanding your target market and the necessity of navigating cultural barriers.

Dolce & Gabbana fell flat on their face in this regard. Had they constructed their ad with a bit more tact, they may have succeeded. However, the ad had all the subtlety of a bull in a china shop.

If you want your brand to go global, the message is clear: put out an ad campaign that doesn’t play up to stereotypes and alienate your target market. Otherwise, you could get cancelled, like Dolce & Gabbana.

By Tom Stevenson

Microsoft in plans to purchase TikTok operations

So what exactly is happening at the TikTok headquarters?

TikTok a short video streaming platform has gained a worldwide following since its introduction and is known for its comedic short videos; it has also long been thought to be the successor of another widely used, but now extinct short video streaming platform, Vine.

It features users that range from celebrities, digital creators or teenagers dancing, lip syncing and acting out to audio clips. To summarize, the TikTok experience is fun or downright silly at times but informative to those who utilise it that way.

President Trump

In recent days, U.S. president Donald Trump vowed to ban the video-sharing app. 

On Sunday, Secretary of State Mike Pompeo announced that the president would take action in the coming days against Chinese-owned software that he believes pose a national security risk.

Officials in Washington have become increasingly concerned over time that Americans who use TikTok could risk having their data accessed by the Chinese government due to the app’s Chinese ownership by ByteDance.

TikTok has reportedly denied that any of its operations are being influenced by Beijing.

Microsoft’s involvement 

In a bid to Microsoft said it was looking to purchase the TikTok service in the US, Canada, Australia and New Zealand, and would operate the app in these markets.

“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” the tech firm said.

The tech giant also added that it “may” invite other American investors to participate in the purchase “on a minority bases” but added that the discussions were still in its “preliminary” stage. 

It also added among other measures, that all private data of TikTok’s American users is “transferred and remains in the United States”.

According to a story by the Wall Street Journal, TikTok’s U.S operations to Microsoft has been on hold ever since. The sale was close to an agreement until the warning posted out by the U.S president on Friday.

As on Monday, Microsoft said it will move forward with said plans subject to a complete security review and providing proper economic benefits to the United States after Nadella’s conversation with Trump.

TikTok users respond

“I think that a lot of people didn’t like Trump before, and this has driven people to not like him even more,”

Fearing what could be the end of their TikTok days, viral and mainstream users across the U.S. began livestreaming and posting videos in tribute to their beloved video platform.

Content ranging from heartfelt goodbyes to persuading their current followings to Instagram and YouTube, it was a rollercoaster of a weekend for many who called the platform their entertainment outlet or even workplace.

The information and entertainment hub is also widely used by Gen Zs and politically-minded young people, it also serves as an educational outlet about issues such as climate change, racism and the Black Lives Matter movement.

As reported by the New York Times, Ellie Zeiler, 16, who has 6.3 million followers on TikTok, said that Mr. Trump’s threat to ban the app may even sway more young people to vote against him.

“I think that a lot of people didn’t like Trump before, and this has driven people to not like him even more,” she said.

TikTok responds

Upon release of the news, TikTok released the following statement in regards to the platform coming under fire.

“Our $1 billion creator fund supports US creators who are building livelihoods from our platform. TikTok US user data is stored in the US, with strict controls on employee access. TikTok’s biggest investors come from the US. We are committed to protecting our users’ privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform.”

On TikTok’s official TikTok account, its US General Manager Vanessa Pappas appeared in a video thanking American users for their support.

“We’re not planning on going anywhere,” Papas said. “When it comes to safety and security, we’re building the safest app because we know it’s the right thing to do … We’re here for the long run. Continue to share your voice here and let’s stand for TikTok.”

Could cutting interest rates save our economy?

Interest Rate Definition

The 2019 Coronavirus outbreak, which forced countries to go into lockdown and practice social distancing, has hit economies hard and the Malaysian economy has been unable to withstand it either. Bank Negara Malaysia has started cutting interest rates, up to four times this year and the overnight policy rate down to 1.75 percent, the lowest level since it was implemented as a policy tool in 2004. This level is also lower than the overnight policy rate of 2% during the 2009 international financial crisis.

The authorities hope that this ultra-low loan costs will revive the Malaysian economy. That’s because it will help ease the burden on loaners and reduce debt-relief cases, thereby mitigating the negative impact on the economy. This, if done right, will help to promote economic recovery if the outbreak is under control.

At the same time, low loaning costs will encourage other loaners to borrow aggressively, thereby stimulating economic activity. However, the positive effects will be delayed, as confidence in borrowing will only be restored when the economy is more stable.


Enterprises transition towards digitalization.

However, I believe that businesses that have weathered the crisis will seize the opportunity to invest and expand their businesses, especially those that are transforming their businesses into digital at a time of weak market demand and generally low operating costs.

On the other hand, the low interest rate environment created by the Bank of Negara has its drawbacks, such as the money that people borrow from taking advantage of the low interest rates may not be used to do business and stimulate economic activity, but may push up asset prices as a result of inflows into real estate and the stock market.

At present, as the domestic industrial market is not stable, it is expected that it will take some time to see if people have regained confidence, buy assets and push up asset prices. In any case, I think that the government’s resumption of the HOUSING Scheme (HOC) and the exemption of industrial profits tax will help the industrial market.


Increasing stock market risk.

At the same time, there are signs that low interest rates have improved the Malaysian stock market, as evidenced by the continued sell-off of bursa stocks by foreign investors, but by the surge in local retail investors. There have been stories that revealed that someone had asked his father why he offered his bank term deposit, and the answer was to transfer the money to the stock market. Shocking.

As more and more retail investors offer to invest in the stock market, they are exposed to higher risks. The higher the so-called potential risk, the higher the potential return, the lower the potential risk, and the lower the potential return.

The interest earned on keeping money in the bank is low, but the risk of losing the deposit is low. Investing in the stock market is the opposite, since the stock itself is a riskier investment vehicle, the chances of a return are naturally high.


Relying on interest on deposits.

Indeed, another drawback of low interest rates is the low return on deposits held in banks. This group will bear the brunt, especially those who rely on bank savings to cope with the cost of living. As a result, the Government has decided to sell Muslim bonds to help them get a higher return, but the amount of the bond is small.

Low bank interest rates have also caused many people in the past few years to invest their hard-earned money towards the “money game”, hoping to make quick money from it. However, many people have no return on such “investments”.

I hope you have learned from it, after all, there is no easy way to make money in this world.

Why Investors Are Still Betting on Carnival Cruise Line

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Carnival Cruise Line has a new ship on the way, and it’s a doozy. The Carnival Mardi Gras is a 180,000-ton, 18-deck marvel, accommodating 6,630 passengers, and boasting among other amenities what is billed as the world’s first at-sea roller coaster. Based in Florida’s Port Canaveral, it is intended to sail Caribbean itineraries, and is “packed with brand-new experiences for eating, drinking, and spectacularly getting down to fun,” the company says, including a new Emeril Lagasse restaurant, two bars, and an 800-capacity performance space to enjoy acrobats and musicians.

In all, the Mardi Gras, among the biggest and likely most expensive cruise ships in the history of the world, is truly a jaw-dropping monument to humanity’s determination to create and prize engineered leisure that brazenly defies the logic of nature. And at this moment, it’s like a vessel arriving from some parallel universe — a packed, isolated place where swarms of vacationers somehow frolic unmasked and fewer than six feet apart, carefree.

Carnival has not disclosed its cost, but reports say the most elaborate cruise ships can cost $1 billion — quadruple the price of Boeing 747, that’s in the league of the cost of building an ambitious skyscraper.

It is also, of course, not sailing any time soon. Originally scheduled for November of 2020, the Mardi Gras’ first voyage has been pushed to February of next year, at the earliest. The postponement is blamed on construction delays attributed to the coronavirus pandemic, which continues to rewrite the best-laid plans of the tourism industry in general, and the cruise ship business in particular.

Cruise lines were among the earliest businesses to be walloped by the pandemic. The Carnival-owned Diamond Princess suffered a notorious outbreak that infected hundreds and killed more than a dozen, and became a symbol of nightmarish cruise ship contagion scenarios when it was quarantined for a month. There’s been no relief since. On July 16, the Centers for Disease Control extended a “no sail” order, suspending cruise line operations, until September 30 — and went out of its way to criticize the industry for practices that spread the virus, resulting in an alarming 99 virus outbreaks on 123 cruise ships, involving nearly 3,000 passengers and 34 deaths.

By the company’s own estimate, it will continue to burn $650 million a month while its 100-plus-ship fleet remains largely idle.

As the virus continues to spread in the U.S. and elsewhere, more international travel restrictions are kicking in; the Bahamas, for example, just banned U.S. tourists. Meanwhile, Carnival and its rivals are stuck with the sunk costs and commitments involved in new ships planned in a pre-pandemic world — like the Mardi Gras. Carnival has not disclosed its cost, but reports say the most elaborate cruise ships can cost $1 billion — quadruple the price of Boeing 747, that’s in the league of the cost of building an ambitious skyscraper. And the ships have been getting steadily bigger for years now.

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$1 billion dollar skyscraper Antilla in Mumbai

Given all this, it’s perfectly fair to ponder the future of the Mardi Gras — and Carnival and its cruise-ship peers, and the whole idea of the cruise industry — with skepticism. Carnival and the cruise industry generally are unlikely to get government help (like some airlines, for instance) because they operate under corporate structures involving registration abroad (in Liberia, in Carnival’s case) to minimize tax obligations, making anything resembling a bailout politically toxic. In July, Carnival reported a $4 billion quarterly loss. That’s the largest ever for the company, which was founded in 1972 with a single ship (the original Mardi Gras), and is credited with helping make cruising more broadly affordable. By the company’s own estimate, it will continue to burn $650 million a month while its 100-plus-ship fleet remains largely idle.

Right now, if you were to look at the company’s marketing mock-ups promising thousands of fun-seeking Mardi Gras passengers various forms of close-quarters revelry, you might conclude: That’s never going to happen. You might even wonder, quite rationally, how the cruise industry can continue to exist at all.

Perhaps most strikingly, Carnival and its major rivals have reported that a substantial percentage of cruise customers remain optimistic about setting sail again in the year ahead.

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But it apparently takes more than terrifying statistics and seemingly common-sense hunches to wipe out an industry of this size and scale. It turns out there are, in fact, cruise-business optimists. For starters, cruise line shares have become a darling among investors who (mistakenly) believe a beaten-down stock is always a bargain sure to rebound sharply when the economy bounces back — a point of view that seems particularly widespread among less-experienced traders. Carnival Cruise Line shares have become one of the most popular holdings of users of no-fee stock-trading app Robinhood — notorious for its young, newbie user base; Norwegian Cruise Line and Royal Caribbean, the other two major cruise lines, are also widely held by the Robinhood crowd. While shares in the sector remain drastically off their pre-pandemic highs, there have also been occasional run-ups; Carnival sank from the $50 range to a low of $7.97 in early April, but even after consistent volatility was trading at about twice that on July 16, for reasons that seem more tied to day-trader guesswork than fundamentals.

More substantially, Carnival has demonstrated an ability to raise considerable extra financing — $10 billion worth of loan and credit arrangements, as of a July 10 statement from Carnival CEO Arnold Donald. (The company more recently announced a $1.26 billion bond offering.) This gives it the liquidity to stay afloat while its business remains suspended. Back in April, UBS analyst Robin Farley estimated that Carnival could survive “a zero-revenue scenario” for 12 to 13 months, at a minimum. (The report said Royal Caribbean could go 10 months, and Norwegian at least seven. A Motley Fool analysis argues that Royal Caribbean is actually the most financially shipshape major cruise line — and that Norwegian, the smallest of the big three, is like the “first to buckle” if there’s a shakeout.)

But perhaps most strikingly, Carnival and its major rivals have reported that a substantial percentage of cruise customers remain optimistic about setting sail again in the year ahead. While Carnival (and every other line) has been forced to cancel months of cruises, roughly half of affected customers have actually opted to collect a credit to reschedule at some future date, rather than take a cash refund right now. And more to the point, Carnival reports that it “continues to see demand” for new bookings: According to the company, almost 60% of 2021 bookings made in the first three weeks of June were new (not repurposed credits from canceled voyages). Royal Caribbean has also reported demand for new 2021 bookings. In other words, a substantial chunk of the cruise industry’s target audience remains very optimistic. (Perhaps they’ve heard the virus will “just disappear” at some point?)

The site CruiseCritic.com’s latest reader survey, from the first half of June, found that 76% of more than 3,500 respondents said they planned to book a cruise, and 37% were already looking to do so; just 3% ruled out a future cruise. According to the Wall Street Journal, about 30% of cruise customers are repeaters, sometimes hooked into loyalty programs. UBS research from May found over half of cruise travelers intended to book again in the next 18 months, and 85% said they’d do so at some point. Big picture: The cruise business has grown steadily for years, with an increase of 30% in the five years leading up to the pandemic. While the archetypal cruise customer is the over 60 set, millennial-age customers have been the fastest-growing cohort, both in raw numbers and percentage terms.

Meanwhile, the travel industry is more broadly sending mixed signals about if and when it might experience any kind of recovery. Delta, to cite one recent pessimistic data point, has pared back plans to add new summer flights to its drastically reduced offerings, expecting to wait three years before volume returns to pre-pandemic levels. On the other hand, in a surprising turn from just a couple months ago, Airbnb is said to be thinking about an IPO again. Disney reopened its Florida theme park even as infection numbers reached all-time highs — and people showed up.

Investment banking firm Stifel essentially pitched the idea that the pandemic could end up being a long-term plus for the cruise business.

Counterintuitive as it sounds, it’s likely that when cruise lines are allowed to operate, they will probably have customers. What’s still not clear is how long it might be until they can prove they can operate safely. Analysts say that’s likely to be next year, at best. Even then the expectation is that cruises will return gradually, maybe starting with cruises to private islands, perhaps reducing the number of people passengers will be exposed to, as well as avoiding potential travel restrictions. (Various cruise lines own several islands outright.) One bullish forecast suggests perhaps half of current cruise fleets will be back in service by mid-2021.

Cruise optimists are betting that the business can tread water until then. Carnival CEO Donald has said that “right sizing our shoreside operations” has already helped slash operating costs by over $7 billion a year, and lowered capital expenses by $5 billion over the next 18 months. Carnival also announced it would sell off 13 of its current 104 ships. (These would generally be sold to smaller, more regional cruise lines. But older ships may be sold to scrapping operations, taken apart, and their many valued components resold and recycled, explains Gene Sloan, who covers the cruise industry for ThePointsGuy.com.) Bottom line, according to Donald: “We will emerge a leaner, more efficient company.”

Meet the Black CEO of Carnival Cruises | On the Scene Magazine

This argument was echoed in a recent research note from investment banking firm Stifel, which essentially pitched the idea that the pandemic could end up being a long-term plus for the cruise business. “No, we aren’t crazy or suffering from some sort of home lockdown psychological disorder,” the note clarified. In short, there’s a future in which something like the Mardi Gras actually makes sense again — a future in which, say, a vaccine makes widespread travel and close proximity to other people something that the public is comfortable with again. But it’s going to take time to get there. And on the way to that destination, things are going to get so bad for this industry that Carnival and its rivals will be forced to deal with financial issues (cost structure; aging fleet) that have weighed them down for years.

It’s not such an outlandish argument really. Or at least, it’s no more outlandish than building a floating roller coaster, which Carnival has, for better or worse, already proven that can be done.

Written by Rob Walker

This Is What Could Cause the Stock Market to Collapse

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The health crisis seems to be the common reason people are arguing over whether the stock market will go up or down.

There’s a hidden problem in financial markets that many people can’t see and don’t understand.

I am going to give you a simplistic overview after working in finance for so many years and being determined to make the complex, understandable.


The 2008 financial crisis was caused by CDOs (Collateralized Debt Obligations). Investopedia describes this complex financial product nicely:

A CDO is a box into which monthly payments are made from multiple [home] mortgages. It is usually divided into three tranches, each representing different risk levels.

When the homeowners had issues repaying their mortgages, the CDO product, along with mortgage-backed securities, blew up and caused The Great Recession of 2008. The issue was that the home mortgages were examined by ratings agencies who gave them a rating. They were also incentified to fudge those ratings for a fee.

Investors thought they were investing in mostly AAA quality mortgages when they were in fact investing in toxic loans that were taken out by people who should of never been given them because they didn’t have enough money to pay back the loan.

In 2020, another very similar financial product known as CLOs is making investors nervous, according to Law Professor Frank Partnoy.

Unlike CDOs that are associated with home mortgages, CLOs are tied to business debt. When businesses can’t pay back their debt, the same scenario as 2008 can essentially play out. (In the current environment, do you think businesses would have any issues paying back debt? How about hospitality or travel?) It all comes down, again, to whether the rating agencies rated the quality of the businesses taking on the debt effectively.

What you have to consider is whether the ratings agencies are being properly regulated this time. In 2008, human greed was stronger than regulation.

Will human greed be stronger than regulation this time around?

The challenge with CLOs is you can’t look up how many of them exist. The estimated total value of CLOs is over one trillion dollars, says The Wall Street Journal. CDOs and CLOs are part of the derivative family of financial investments and the challenge with them is they are incredibly complex.

Their complexity makes them risky not only for the investors, but for the financial system and the stock market many of us invest in both voluntarily, and involuntarily through our retirement accounts.

Insiders in the finance world are already leaking information that suggests, perhaps, the same issue as 2008 is about to transpire again. Popular Twitter personality and ex-investment banker Raoul Pal is all over the CLO problem too. The issue this time is we have a global health crisis to contend with, as well as a potential financial crisis due to the risk of CLOs.

Just as easy mortgages fueled economic growth in the 2000s, cheap corporate debt has done so in the past decade, and many companies have binged on it — Frank Partnoy

The challenge is that last time the government stepped in and threw cash at the problem. The idea investors have to contend with is whether the government will take the same action again.

Betting the government will save you is a risky assumption.

Even if you haven’t invested in CLOs, it’s all of our problem. The financial institutions that have invested in CLOs are public companies that are listed on the stock exchange. Those same institutions hold your savings, retirement money, and any stocks you have purchased. This means if they have a problem, then we all have a problem.

Every financial product is tied to each other — if one fails, it can affect another. The similarities between now and the 2008 Stock Market Collapse are uncanny. It feels like a repeat, plus the addition of the health crisis.


What Can You Do About This Problem?

I look at the billionaires. Warren Buffet is sitting on huge piles of cash.

George Soros has sold all of his banking stocks recently. These famous billionaire investors clearly know something that not everybody has come to terms with. The current environment is full of risk.

Too much risk makes you stressed.

When nobody knows what is going to happen because it has been so long since we’ve dealt with a health crisis like this before, cash can make you feel like a king or queen. At the very least, it’s worth furthering your financial education. Learn about the Spanish Flu of 1918 and its effects on the stock market. Delve into the 2000 Tech Bubble and the 2008 Financial Crisis to gain an understanding of what we might be facing.

The worst thing you can do is believe the hype, take what traditional media says is the truth, and continue to place money into the stock market when you don’t understand what is going on.

The stock market is fine until it’s not fine — that’s when financial literacy takes money from those who know nothing and places that money into the hands of those who know the game inside and out, or spent the time to learn it.

By Tim Denning

Are Glove Stocks still a Good Buy? Supermax as a Case Study

When the glove bonanza is too hot to neglect, one will try to understand what is the rationale behind the craze, and to see if the party has just started or it’s already near to the end.

Take SupermaX as an example, now that all the good news like higher ASP every month, own distribution centers, OBM margin, strong demand up to 1.5 years etc, are already all over the place, looks like the prospect is guaranteed which we have no doubt, but would look at the valuation if it still makes sense to join the party?

2020Q3 (Jan-Mar’20) results show 71M in net profit, a good quarter of >100% increase both YoY or QoQ. That was when Covid has already been spreading since late Jan in China.

Let’s assume the subsequent 3 quarters will have 100M in net profit respectively, that makes up the 4 quarters to be 371M. And some people may say this is still way underestimated. Ok. Let’s make it to 400M then.

That translate to the EPS of 0.2941. Let’s round it to 0.3.

Now let’s look at few scenario:

  1. PE 25x => TP = RM7.50 in the next one year

Some people may argue the interest rate environment is so low that such a hot stock deserve higher PE. Ok. Let’s be more optimistic.

2. PE 30x => TP = RM9.00

Come on. This is unprecedented pandermic the mankind is ever experiencing. Plus the low interest environment and government is encouraging spending and investing. Ok.

3. PE 40x => TP = RM12.00

Well since this is an extreme bonanza kind of situation and market filled with liquidity, let’s be even more optimistic.

4. PE 50x => TP = RM15.00

Ok now this starts to sound like a TP?

Some may still opine that the valuation can go up to PE60x which translate to TP of RM18.00, due to whatever reasons.

Investors have to be reminded that this is a forward PE anticipating the earnings of 2021 will increase more than triple from the previous year. And subsequent years have to be at least the same growth to keep the sentiment intact.

Now let’s try to ponder about a few points:

  1. With the superior demand and increasing profit margin, will these attract more new players from different industries to venture into it? Will existing players expanding capacity like no tomorrow to capture the once in a lifetime opportunity? Based on supply and demand law, when supply is over demand, what will happen to the price? Apparently high ASP is just something that last for a period of time and it’s not sustainable. Because high margin will lead to high competition which results in low margin due to price war, before it eliminated the weak players and stabilized to normal margin.
  2. A similar scenario happened to face masks before. Price of the Chinese face masks fabric and production equipment plummeted after plenty of new players rushed into the business, causing excessive supply. Similarly, once the glove makers all over the world start to boost production in full force (though they are mostly concentrated in Malaysia), how long will the glory days last?
  3. Based on Peter Lynch the cocktail party theory
    1. Stage1: At the party, people are not talking about stocks. There is little to no interest to talk to an equity fund manager. The folks are inclined to talk about plague with a dentist than about stocks. The market is likely to head higher.
    2. Stage2: People may talk about stocks but still think it’s risky. They still talk more about plague than stocks. Generally market has up about 15%. A few care.
    3. Stage3: Market has gone up about 30%. People start asking fund manager like Lynch on what stocks to buy. Most has bought a stock or two.
    4. Stage4: Fund manager like Lynch are surrounded by crowd. This time not asking for a recommendation but instead telling him which stocks to buy. Dentist is offering stock tips. This is a good indicator that stock market is near to its top.
  4. Now back to the real life. How many people around us which previously show no interest to stock investing, are talking about stocks recently? How many even made a handsome profits from stocks but know nothing or superficially about the business? Does your barber and colleagues tell you they also bought glove stocks? What’s the frequency of you seeing FB ads like stock investment class promotion, tips groups etc? How many gurus are promoting the use of margin finance? How many articles and research reports are released to justify certain high valuation stocks? Which stage are we in the cocktail party?
  5. Nevertheless, the theory is more like a concept rather than a hard rule. The high valuation may even get higher. No one knows about what is going to happen. In this manner we need to ask ourselves how much of the stock price is built based on firm foundation and how much is built as castle in the air due to buyer sentiment?
  6. All the good factors and good news have already known to the market and mostly priced in to the stock price with super-optimism. When the “super” stocks do not meet market expectation, even the results are very good, or if a vaccine has been successfully developed where glove demand may hit its peak in near future, what do you think the stock price will react? The stock price will probably collapse due to sentiment change which will cause market to think it does not deserve high PE anymore. This will lead to further price drop, because the EPS and PE have multiplying effect, which is known as “Davis double-kill effect”.  The outcome can be devastating.

So do we have an answer as to whether the glove play is still intact?

Ideally we hope everyone is making money from the bonanza. But in reality we know it’s not. The value investors may find nothing attractive in this kind of stocks anymore, while the theme players or trend followers may still think the party is not over yet.

It’s not a matter of right or wrong, but more to one’s value system and what type of investor are you. At the end of the day it’s all about risk management. Currently it’s definitely higher risk and relatively lower return if you enter now. Because all the big sharks have already on board. Still can go in? Ask yourself if you are a small fish or a big shark? Or are you willing to swim along with sharks? You may still make money but, are there better other stocks to invest in the market which you can sleep soundly at night?

“Investment risk comes primarily from too-high prices, and too-high prices often come from excessive optimism and inadequate skepticism and risk aversion.” Howard Mark.

Author: Wisdom for Freedom

Shorting Shot Down

Here's Why Tesla Is Selling Naughty Short-Shorts

Investors breathed a collective sigh of relief as the Securities Comission (SC) and Bursa Malaysia decided to extend the ban on short selling until December 31st this year. The ban came into effect on March 24th and was then extended to April 28th. This is because of the volatility of the stock market caused by the Coronavirus pandemic, coupled with global uncertainty. As such, it is one of the measures introduced to mitigate potential risks.

The ban includes Intraday short-selling (IDSS), Regulated short selling (RSS). However, Permitted short selling (PSS) is not affected because market makers need to use PSS to effectively market related securities, such as index funds, the SC said. In Asia, South Korea (until September) and Indonesia (as of further notice) have also announced bans on short selling, while Thailand, Taiwan and India have tightened rules to limit short selling. But six EU countries – Austria, Belgium, France, Greece, Italy and Spain – began lifting their ban on short selling in March.

Many people have different views on whether the suspension of short selling will actually help improve the stock market.

Interfering in an orderly functioning market

Even if most believe that a ban on short selling can effectively ease excessive market volatility, the World Federation of Exchanges (WFE) noted in a recent academic study, that banning short selling interferes with the orderly functioning of the market.

The ban on short selling leads to reduced liquidity, reduced price efficiency, a crackdown on free market price discovery, and negative spillover effects in other markets. In addition, the association believes that there is evidence that banning short selling during periods of uncertainty is not a deterrent, but would instead increase market volatility.

Doesn’t necessarily exacerbate the decline.

The association points out that short sellers and other traders will act differently during periods of price downturns and increased volatility, with less influence on falling prices than the average long seller.

“Based on the available evidence, WFE advises financial regulators not to ban short selling because academic literature shows that this is not only inefficient, but also affects market quality,” said Nandini Sukumaran, head of WFE. “We urge the authorities that are enforcing the ban to reconsider after reading the evidence. “

Selling pressure comes selling-off

Moreover, according to Ihor Dusanevski, a short-selling observer at S3 Partners, a financial data and analysis firm, the ban on short selling, while psychologically beneficial, does not actually have much impact on market volatility or prices, but may affect liquidity. Commenting on the claim that the March sell-off in the US stock market was attributed to short-sellers, he explained: “Overall, most of the selling activity in the market is a sell-off, not short selling.”

Ironically, Wirecard, a German fintech company that admitted to losing 1.9 billion euros (about 9.16 billion ringgit) in cash, has become a short-selling tool. While news reports have been made by these short sellers, mostly hedge funds, who made $2.6 billion (11.18 billion ringgit) on their books during Wirecard’s recent selling, they have defended their innocence on the grounds that the company has denied corruption, corporate fraud and alleged money laundering through illegal online gambling since 2015. Read more on the $2 billion Wirecard scandal here.

South Korea to push for stronger regulations

According to Pulse News, South Korea’s Financial Services Commission chairman, Eun Sung-soo, said the country would introduce tougher disciplinary measures against illegal short selling before lifting the ban on short selling in September. He points out that the ban on short selling will not be lifted entirely when the six-month deadline is up.

This means that short selling can only be done in a gradual manner, as market regulators have to address problems in the current system and assess the market’s opinion on the timing of the short selling ban. “We have to measure calmly whether the stock market has benefited from the ban on short selling over the past three months or when global markets recover.”

South Korea’s short-selling activity, mostly dominated by institutional investors and foreign investors, accounted for 99.16% of total short selling last year. Foreign investment accounted for 59.09 % of this, and institutional investors accounted for 40.0%. There are fewer reasons for retail investors to short sell, because they have to face a complex process and they often lack an understanding of the process.

According to a June 18 report in the Korea Times, Huang Shiwen, an analyst at South Korea’s capital markets agency, suggested that short selling be gradually reintroduced to curb overheating, starting with the lifting of a ban on large companies with a market capitalisation of more than 30 trillion won (about 107 billion ringgit) and that small and medium-sized companies continue to be protected from short selling.

Hong Kong stock market supervision is sound

In Hong Kong, even though the stock market was volatile in March, short selling was not banned. The Securities and Futures Commission of Hong Kong (SFC) closely monitors derivatives markets and monitor short selling data to ensure that trading activities in these areas do not interfere with financial stability and possess systemic risks.

Hong Kong has a robust short-selling regulatory policy designed to limit all situations in the market that may distort normal price discovery, while recognizing the potential benefits of short selling.

Summary: Looking at market stability

After looking at the situation in South Korea and Hong Kong, we have come to the conclusion that short selling would be a perfect trading strategy if the market is stable. In contrast, short selling in very fragile markets, in very fragile environments, will exacerbate the market downturn.

This is a phrase used repeatedly when the market suspends short selling, although there is no doubt that in the long run it does promote price discovery.

Is Malaysia Going Into Recession?

The spread of Coronavirus disease in 2019 has greatly affected the health and economic prospects of countries around the world, and Malaysia is no exception.

In an effort to stop the disease from continuing, the government issued an Movement Control Order (MCO) on March 18th, ordering temporary closure of all sectors except essential industries.

Although most businesses were allowed to gradually begin re-operating under the new Conditional Movement Control Order (CMCO) orders, which were subsequently announced in May.

But the impact of corporate restrictions and the Coronavirus pandemic are predicted to lead to a longer period of decline in economic activity.

What is a recession?

Recessions are often described as a phenomenon of a significant decline in overall economic activity in a particular region. Julius Heskin, an American economist, proposed that the most common definition of recession, is two consecutive quarters of decline in gross domestic product. Other factors in the recession include declines in incomes, employment, industrial production, along with wholesale and retail sales.

Let’s take a look back at the recessions that have hit our country in the past. Since gaining independence, Malaysia has experienced three major economic crises, each with its own unique reasons, economic impact and recovery policies.

1985-86: Commodities shocks

Malaysia was plunged into its first severe recession since gaining independence in 1985, as the U.S’ high interest rate policies, known as the “Volcker Shock”, triggered a massive collapse in global commodity trade. In 1985, the U.S. economy shrank by 1%, and the unemployment rate rose to 8% the following year. At the time, the Malaysian government’s responses were to implement a contractionary fiscal policy, devalue our local currency, and privatization of sectors in order to reduce state spending.

The recovery was gradual, and the current account finally entered a surplus in 1987. By 1988, Malaysia’s economy had entered its second high-growth period since independence, however, the public debt burden continued into the 1990s.

1997-98: Asian financial crisis

The Asian financial crisis, which began with a currency crisis in Thailand, was the trigger for it. When the Thai baht came under speculative attack in mid-May 1997, the ringgit saw heavy selling pressure too, causing it to plunge to a low of 4.90 against the US dollar in 1997 from 2.40 previously.

Net portfolio investment fell from RM10.3 billion in 1996 to a deficit of RM12.9 billion in 1997, while the GDP contracted by 6.7% in 1998. In January 1998, the ringgit fell to its lowest level against the U.S. dollar.

Malaysia’s response to the crisis was to fix the ringgit against the dollar, impose selective capital controls, and announce a 2 billion ringgit stimulus plan. Although the economy finally grew in the second quarter of 1999, it was not until mid-2000 that the economy returned to pre-crisis GDP levels.

2008-09: Global financial crisis

The global financial crisis was started by the bursting of speculative bubbles in the U.S. housing market in 2008, which had a major impact on Malaysia’s trade and investment.

Malaysia’s share price fell by 20% between 2007 and 2009, with large amounts of short-term capital outflows continuing, while export prices fell by 45% between July 2008 and January 2009. Malaysia’s economy contracted by 1.7% in 2009.

The government announced two fiscal stimulus programmes, worth 67 billion ringgit, and joined arms with Bank Negara Malaysia in issuing an expansionary monetary policy in response, cutting interest rates three times to cut overnight policy rates to 2%. The economy eventually saw sunlight, and Malaysia’s GDP growth finally rebounded to positive levels in the last quarter of 2009.

What are the impacts on people?

Malaysia’s GDP grew by 0.7% in the first quarter of this year, according to the Department of Statistics. Due in part to the impact of MCO, almost every economist predicts that the next quarter’s GDP figures will be one of the worst in the country’s recent history. If so, then our economy is expected to shrink in the next quarter. If and only if, the third quarter also happens to be a contraction, our country would officially be in recession.

Despite the best efforts of our Government to adopt a number of economic stimulus packages, there is still a high probability of a recession in our country this year. In April, Bank Negara Malaysia forecasts the GDP falling between 0.5 and -2% this year, while the Department of Statistics forecasts that it will fall to -1.7% and the World Bank forecast -0.1%. By contrast, Malaysia’s GDP grew by 4.3% in 2019 and 4.8% in 2018.

So, what does this data mean for the daily lives of ordinary people? What will be the impact of the recession?

Unemployment continues to rise

The unemployment rate rose to 3.9% in March, and in April it soared to 5%, the highest level its been since 1990. During a recession, firms tend to reduce their workforce as a result of reduced market demand and output. Companies may take action, perhaps by stopping hiring or even laying off existing workers, both of which could lead to high unemployment in the labour market.

If you’re a recent graduate and want to find your first job during a recession, you’ll have to be prepared for a more difficult time than usual, and those who are already working can see that layoffs or hiring freezes are in place within the company.

Slow wage growth

During a recession, it is generally unlikely that wages will increase significantly in the country. As hiring slows to a halt, employers have little room to offer higher wages or raises as the recession continues.

In a survey conducted in April by the Federation of Malaysian Manufacturers, employers revealed that they are likely to take cost-cutting measures over the next three to six months, including the abolition of unpaid leave, non-contractual allowances and benefits, and a reduction in working hours per day and possibly even a pay cut.

“Thus, apart from the declining labour market prospect, the probability of companies offering competitive wages or additional benefits is not very high.”

The Stock Market Crash of 1929

In the 1920s, many people felt they could make a fortune from the stock market. Disregarding the volatility of the stock market, they invested their entire life savings. Others bought stocks on credit (margin). When the stock market took a dive on Black Tuesday, October 29, 1929, the country was unprepared. The economic devastation caused by the Stock Market Crash of 1929 was a key factor in the start of the Great Depression.

A Time of Optimism

The end of World War I in 1919 heralded a new era in the United States. It was an era of enthusiasm, confidence, and optimism, a time when inventions such as the airplane and the radio made anything seem possible. Morals from the 19th century were set aside. Flappers became the model of the new woman, and Prohibition renewed confidence in the productivity of the common man.

It is in such times of optimism that people take their savings out from under their mattresses and out of banks and invest it. In the 1920s, many invested in the stock market.

The Stock Market Boom

Although the stock market has the reputation of being a risky investment, it did not appear that way in the 1920s. With the country in an exuberant mood, the stock market seemed an infallible investment in the future.

As more people invested in the stock market, stock prices began to rise. This was first noticeable in 1925. Stock prices then bobbed up and down throughout 1925 and 1926, followed by a “bull market,” a strong upward trend, in 1927. The strong bull market enticed even more people to invest. By 1928, a stock market boom had begun.

The stock market boom changed the way investors viewed the stock market. No longer was the stock market only for long-term investment. Rather, in 1928, the stock market had become a place where everyday people truly believed that they could become rich.

Interest in the stock market reached a fevered pitch. Stocks had become the talk of every town. Discussions about stocks could be heard everywhere, from parties to barbershops. As newspapers reported stories of ordinary people, like chauffeurs, maids, and teachers, making millions off the stock market, the fervor to buy stocks grew exponentially.

Buying on Margin

An increasing number of people wanted to buy stocks, but not everyone had the money to do so. When someone did not have the money to pay the full price of stocks, they could buy stocks “on margin.” Buying stocks on margin means that the buyer would put down some of his own money, but the rest he would borrow from a broker. In the 1920s, the buyer only had to put down 10–20% of his own money and thus borrowed 80–90% of the cost of the stock.

Buying on margin could be very risky. If the price of stock fell lower than the loan amount, the broker would likely issue a “margin call,” which means the buyer must come up with the cash to pay back his loan immediately.

In the 1920s, many speculators (people who hoped to make a lot of money on the stock market) bought stocks on margin. Confident in what seemed a never-ending rise in prices, many of these speculators neglected to seriously consider the risk they were taking.

Signs of Trouble

By early 1929, people across the United States were scrambling to get into the stock market. The profits seemed so assured that even many companies placed money in the stock market. Even more problematic, some banks placed customers’ money in the stock market without their knowledge.

With the stock market prices upward bound, everything seemed wonderful. When the great crash hit in October, people were taken by surprise. However, there had been warning signs.

On March 25, 1929, the stock market suffered a mini-crash. It was a prelude of what was to come. As prices began to drop, panic struck across the country as margin calls—demands by the lenders to increase the borrower’s cash input—were issued. When banker Charles Mitchell made an announcement that his New York-based National City Bank (the largest security-issuing entity in the world at the time) would keep lending, his reassurance stopped the panic. Although Mitchell and others tried the tactic of reassurance again in October, it did not stop the big crash.

By the spring of 1929, there were additional signs that the economy might be headed for a serious setback. Steel production went down; house construction slowed, and car sales waned.

At this time, there were also a few reputable people warning of an impending, major crash. However, when months went by without one, those that advised caution were labeled pessimists and widely ignored.

Summer Boom

Both the mini-crash and the naysayers were nearly forgotten when the market surged ahead during the summer of 1929. From June through August, stock market prices reached their highest levels to date.

To many, the continual increase in stocks seemed inevitable. When economist Irving Fisher stated, “Stock prices have reached what looks like a permanently high plateau,” he was stating what many speculators wanted to believe.

On Sept. 3, 1929, the stock market reached its peak with the Dow Jones Industrial Average closing at 381.17. Two days later, the market started dropping. At first, there was no massive drop. Stock prices fluctuated throughout September and into October until the massive drop on Black Thursday.

Black Thursday, October 24, 1929

On the morning of Thursday, Oct. 24, 1929, stock prices plummeted. Vast numbers of people were selling their stocks. Margin calls were sent out. People across the country watched the ticker as the numbers it spit out spelled their doom.

The ticker was so overwhelmed that it could not keep up with the sales. A crowd gathered outside of the New York Stock Exchange on Wall Street, stunned at the downturn. Rumors circulated of people committing suicide.

To the great relief of many, the panic subsided in the afternoon. When a group of bankers pooled their money and invested a large sum back into the stock market, their willingness to invest their own money in the stock market convinced others to stop selling.

The morning had been shocking, but the recovery was amazing. By the end of the day, many people were again buying stocks at what they thought were bargain prices.

On “Black Thursday,” 12.9 million shares were sold, which was double the previous record. Four days later, the stock market fell again.

Black Monday, October 28, 1929

Although the market had closed on an upswing on Black Thursday, the low numbers of the ticker that day shocked many speculators. Hoping to get out of the stock market before they lost everything (as they thought they had on Thursday morning), they decided to sell. This time, as the stock prices plummeted, no one came in to save it.

Black Tuesday, October 29, 1929

Oct. 29, 1929, became famous as the worst day in stock market history and was called, “Black Tuesday.” There were so many orders to sell that the ticker again quickly fell behind. By the end of close, it was 2 1/2 hours behind real-time stock sales.

People were in a panic, and they couldn’t get rid of their stocks fast enough. Since everyone was selling, and since nearly no one was buying, stock prices collapsed.

Rather than the bankers rallying investors by buying more stocks, rumors circulated that they were selling. Panic hit the country. Over 16.4 million shares of stock were sold on Black Tuesday, a new record.

The Drop Continues

Not sure how to stem the panic, the stock market exchanges decided to close on Friday, November 1 for a few days. When they reopened on Monday, November 4 for limited hours, stocks dropped again.

The slump continued until Nov. 23, 1929, when prices seemed to stabilize, but it was only temporary. Over the next two years, the stock market continued to drop. It reached its low point on July 8, 1932, when the Dow Jones Industrial Average closed at 41.22.

Aftermath

To say that the Stock Market Crash of 1929 devastated the economy is an understatement. Although reports of mass suicides in the aftermath of the crash were most likely exaggerations, many people lost their entire savings. Numerous companies were ruined. Faith in banks was destroyed.

The Stock Market Crash of 1929 occurred at the beginning of the Great Depression. Whether it was a symptom of the impending depression or a direct cause of it is still hotly debated.

Historians, economists, and others continue to study the Stock Market Crash of 1929 in the hopes of discovering the secret to what started the boom and what instigated the panic. As of yet, there has been little agreement as to the causes. In the years after the crash, regulations covering buying stocks on margin and the roles of banks have added protections in the hopes that another severe crash could never happen again.

Author: Jennifer Rosenberg

Benjamin Graham“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

What Benjamin Graham Taught Warren Buffett About Investing

Don’t lose money and play the long game

“Every day, do something foolish, something creative, and something generous.” Those are the words of Benjamin Graham and, according to his most famous student — Warren Buffett — “he excelled most at the last.”

Benjamin Graham is the “father” of value investing, a long-term, contrarian approach to managing money. From 1936 to 1956, Graham’s company achieved a stellar 20% annual return for its investors. If you had invested $10,000 with him over those 20 years, you’d have walked out with $383,375.99 — or about $3.6 million in today’s dollars.

Graham is also one of the main reasons why, today, companies pay dividends to their shareholders.

In 1926, companies first had to file public financial reports. Graham analyzed those of Northern Pipeline, an oil company owned by John D. Rockefeller, and found they had $95 per share in extra cash that they weren’t using. Graham rallied shareholders together and, two years later, received a board seat and $70 per share — along with everyone else. Rockefeller supported his motion and pushed other companies to do the same — which they still do today.

When Warren Buffett first approached Graham in 1951, he offered to work him for free — to which Graham said: “You’re overpriced.” Knowing how much work it is to teach someone who can’t contribute much yet, Graham only hired Buffett three years later, but the rest is history.

Maybe because of Buffett, Graham decided to write his knowledge down. To this day, Buffett, once the richest man in the world, calls Graham’s book The Intelligent Investor “the best book about investing ever written.”

Here are 3 lessons from it that’ll help you understand and grow your money.

1. Follow the 3 risk-mitigating principles.

Warren Buffett often shares his “two only rules for investing:”

  1. Never lose money.
  2. Never forget rule #1.

Buffett has those rules because the value investing approach he learned from Graham follows three core, risk-mitigating principles:

  1. Always analyze the long-term evolution and management principles of a company before investing.
  2. Always protect yourself from losses by diversifying.
  3. Always focus on safe and steady returns over crazy profits.

Nobody can predict the next Facebook, but everyone can protect themselves against losses.

Intelligent investors collect evidence of a gap between current price and intrinsic company value. Only when they find that evidence do they strike — and then wait for the value to unlock.

They invest into a few but not too many of those companies in order to not lose everything when one investment fails, and they’re perfectly happy with any return that beats the stock market average of 8%.

2. Don’t trust Mr. Market.

Graham often imagined the entire stock market as a single person. What would that person be like?

He said that if Mr. Market showed up on your doorstep each day quoting you various stock prices, most of the time, you’d probably ignore him as you would any other door-to-door salesman. You’d think prices are suspiciously cheap or way too high — and you would be right.

Mr. Market is not the brightest, totally unpredictable, and suffers from serious mood swings. Don’t trust Mr. Market.

When Elon tweets the right thing, Tesla’s stock goes up. If it’s the wrong thing, it goes down. When a new iPhone comes out, people queue in line, and Apple’s stock goes up. When an influencer finds a flaw in the phone the next day, the stock plummets.

None of this has anything to do with the value of the company as a whole — and yet, these things affect Mr. Market! Humans are too good at finding patterns. We see them even where none exist.

If you want to be an intelligent investor, you must do your own homework.

3. Develop a formula and stick to it.

A common piece of advice among poker pros is this: Leave your emotions at home. Money is a numbers game. It requires logic, not feelings.

To detach himself and cut the emotional stress out of investing, Benjamin Graham worked by a set of strict formulas. Some of them helped him evaluate companies, others manage his money, such as dollar-cost averaging.

Dollar-cost averaging means you set a fixed budget you will invest at fixed intervals. Every week, month, or quarter, you’ll invest more in the stocks you’ve previously determined are valuable, no matter the price.

For example, I’ve set a recurring transfer for 10% of my income to go into my brokerage account each month. Then, I use that to buy new stocks on my list or more of the ones I already own.

This can also be emotionally demanding because you’ll keep investing the same budget regardless of whether stocks look cheap or expensive, but it’s still much easier than constantly fretting about how much to invest when, why, and into what.

Use formulas in your investing. It’s a great way to protect yourself against losses — and both Buffett and Graham thought that’s what it’s all about.

Summary

The Intelligent Investor explains value investing, a long-term money management strategy focused on steady profits, ignoring the daily whims of the market, and picking companies with high intrinsic value.

Remember these three lessons to take advantage of the miracle of compounding interest:

  1. The three principles of value investing are analyzing companies for their long-term evolution, protecting yourself against losses, and going for consistent profits rather than crazy bets.
  2. The market as a whole is biased, irrational, and moody, especially in the short term. Ignore Mr. Market.
  3. Stick to a set of strict formulas by which you make all your investments.

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”

— Benjamin Graham