100k. What would you do with it?

[tomthorne]

Firstly, I'm actually really shocked by comments from people here that 1) they've never had 100,000NTD in their lives, 2) they can't save 100,000NTD/year. Wow! Doesn't this worry the hell out of you guys? What are you going to do in twenty, thirty, etc. years? What are you going to do when you're too old to work, especially given the nature of the EFL industry here (where too old often means 40 onwards and where student numbers are dropping)?

I'm not sure if you've read Ferguson's latest thoughts:

http://www.bbc.co.uk/news/world-18456131

"We blame the politicians whose hard lot it is to bring public finances under control, but we also like to blame bankers and financial markets, as if their reckless lending was to blame for our reckless borrowing.

We bay for tougher regulation, though not of ourselves."

[SillyWilly]

I just ran the numbers again for Nankang (Nangang) Rubber Tire Corp, but this time I used other companies to compare.

The parameters for the calculations are as follows:
Initial purchase of 1000 shares at late 2002 prices (used some discretion to pick realistic entry points).
Cash dividends and stock dividends are included in the total return for each stock.
Cash dividends are not reinvested; stock dividends are not sold, but accumulated.
Stock dividend multiplier used: 1000 shares times (Yahoo Finance Taiwan) stock dividend number for the year divided by 10 plus 1. E.g. of Nankang (Nangang) Rubber, 1000*(2.2/10)+1 = 1220 shares.

2101: 807% total return from late 2002 to current. 90% annual return. (Nankang (Nangang) Rubber)
2105: 515% total return from late 2002 to current. 57% annual return. (Cheng Shin Rubber - another, 6xbigger, but similar company)

2353: 106% total return from late 2002 to current. 12% annual return. (Acer Corp)
2357: 25% total return from late 2002 to current. 3% annual return. (Asustek)

2498: 1353% total return from late 2002 to current. 150% annual return. (HTC) - NOTE: incredible!

2412: 281% total return from late 2002 to current. 31% annual return. (Chungwa Telecom)

2882: 27% total return from late 2002 to current. 3% annual return. (Cathay Financial)
2891: 66% total return from late 2002 to current. 7% annual return. (Chinatrust Financial)

Why the hell rubber / tire companies return this much money to shareholders compared to computer hardware manufacturers and financial services companies, I don't know.

Obviously there is something special about these rubber / tire companies. They must make a shit load of cash to compensate shareholders this handsomely.

@Tony: Thanks for introducing this stock to me. I'm going to wait for a Lehman style event to knock the shit out of this stock (and others) and then I'm going to load up on it for a fraction of the price today to maximize value. It looks like a price sub-NTD15 would be a nice entry point.

BTW, HTC might be a good example of the past not equaling the future, but it made someone very very wealthy.

[GuyInTaiwan]

tom: As usual, Professor Ferguson is right on the money. Also, as usual, he will be completely ignored.

SillyWilly: Again, I think you need to look at the underlying value of the company. Looking at the stock price is a dangerous game. It's purely speculative. In the short term, the stock market is a voting machine; in the long term, it is a weighing machine. Someone famous once said that.

The problem with these stock dilutions is that eventually, investors realise what's going on, and the stock price plummets. If a company's true valuation (assets minus liabilities) equal 100 million NTD, for example, and there are 100 million shares outstanding, for example, then the real value of those shares is 1 NTD each. If the stock price stays the same, and they issue 100 million shares, then the real value of your shares has not doubled. The company is not suddenly worth 200 million NTD. It doesn't suddenly have twice as much money in the bank, or own twice the number of machines or buildings, etc. If issuing more stock increased the value of a company, then why stop at only 100 million new shares? Why not 1 billion new shares, or 10 billion new shares, etc.? Everyone could be making gains of 1 million % p.a., right? Why these pathetic returns of 100% people are currently getting? Because the company still only has 100 million NTD of underlying assets minus liabilities and the rest is simply creative accounting.

The whole way you are looking at this is pieces of paper. The shares themselves are worthless. What is worth something is what they represent. Each share actually represents a small fraction of that company, i.e. its assets minus liabilities. You may be lucky and make a quick profit by speculating on the stock price, but you've already talked about buying and holding. If you buy and hold these shares for the long term, then there will eventually be a price readjustment in line with the total number of outstanding shares, i.e. the more shares that get issued, the more the price of the company's stock should decrease. The people running the company haven't actually given you anything by these stock issuances unless you make a speculative quick profit. They have, in effect, given you something with their left hand (additional shares) that they took with their right hand (the underlying value of each share).

I really think you need to read Benjamin Graham, Warren Buffett, Seth Klarman, etc. on this matter.

Please do the following to really calculate the return on your investment.

1. Calculate the following for the company when you bought it: (assets - liabilities)/number of outstanding shares
2. Calculate the following for the company now: ((assets - liabilities) + (dividends issued))/number of outstanding shares
3. Calculate the total return of return for the company as a percentage: (2. - 1.)/1. x 100/1
4. Calculate the total annual return for the company: Put 3. into a compound interest calculator with the number of years you've held the shares as the time frame. You should then get the annual return rate as a percentage.

Notice that the stock price is completely irrelevant in calculating the true value of the company.

[SillyWilly]

tom: As usual, Professor Ferguson is right on the money. Also, as usual, he will be completely ignored.

SillyWilly: Again, I think you need to look at the underlying value of the company. Looking at the stock price is a dangerous game. It's purely speculative. In the short term, the stock market is a voting machine; in the long term, it is a weighing machine. Someone famous once said that.

The problem with these stock dilutions is that eventually, investors realise what's going on, and the stock price plummets. If a company's true valuation (assets minus liabilities) equal 100 million NTD, for example, and there are 100 million shares outstanding, for example, then the real value of those shares is 1 NTD each. If the stock price stays the same, and they issue 100 million shares, then the real value of your shares has not doubled. The company is not suddenly worth 200 million NTD. It doesn't suddenly have twice as much money in the bank, or own twice the number of machines or buildings, etc. If issuing more stock increased the value of a company, then why stop at only 100 million new shares? Why not 1 billion new shares, or 10 billion new shares, etc.? Everyone could be making gains of 1 million % p.a., right? Why these pathetic returns of 100% people are currently getting? Because the company still only has 100 million NTD of underlying assets minus liabilities and the rest is simply creative accounting.

The whole way you are looking at this is pieces of paper. The shares themselves are worthless. What is worth something is what they represent. Each share actually represents a small fraction of that company, i.e. its assets minus liabilities. You may be lucky and make a quick profit by speculating on the stock price, but you've already talked about buying and holding. If you buy and hold these shares for the long term, then there will eventually be a price readjustment in line with the total number of outstanding shares, i.e. the more shares that get issued, the more the price of the company's stock should decrease. The people running the company haven't actually given you anything by these stock issuances unless you make a speculative quick profit. They have, in effect, given you something with their left hand (additional shares) that they took with their right hand (the underlying value of each share).

I really think you need to read Benjamin Graham, Warren Buffett, Seth Klarman, etc. on this matter.

Please do the following to really calculate the return on your investment.

1. Calculate the following for the company when you bought it: (assets - liabilities)/number of outstanding shares
2. Calculate the following for the company now: ((assets - liabilities) + (dividends issued))/number of outstanding shares
3. Calculate the total return of return for the company as a percentage: (2. - 1.)/1. x 100/1
4. Calculate the total annual return for the company: Put 3. into a compound interest calculator with the number of years you've held the shares as the time frame. You should then get the annual return rate as a percentage.

Notice that the stock price is completely irrelevant in calculating the true value of the company.

Absolutely agree.

@Guy: You're right. But I'm not looking to invest like Ben Graham or Buffett. I've extensively studied the Intelligent Investor and value investment measures. I majored in investment management and finance. I'm more thinking speculative play for this stock. About the stock dividends diluting ownership, I understand that. But 2101 has managed to trade at least within a reasonable band ($30-$60) between 2004-2012, if the financial crisis is excluded. And in terms of risk adjusted returns it has done quite incredibly, especially considering the overall market.

BTW, at current levels I wouldn't dream of buying. That's why I said, I'll put it on my shopping list for when there is blood in the streets.

[trubadour]

BTW, at current levels I wouldn't dream of buying. That's why I said, I'll put it on my shopping list for when there is blood in the streets.

and that's why we hate the speculators - no soul!



I'm going to make the rational capitalist argument: invest capital in businesses you can trust in a market you can trust or leave it idle. The 'get-rich-quick' club are all smoke and mirrors. Maybe they like it that way, maybe they are themselves deceived, maybe they enjoy deception or maybe they think they can profit from it. Maybe they are simply immoral.

Why don't you check out social banking such as Bank to the Future. There you can team up with real investors and people with real ideas. Maybe you can come up with something. Try micro-finance initiatives or setting up a co-operative. These things create money and jobs and actually improve the world, rather than sucking the life out of it like a virus.

The main problem is that there is a global downturn which is in fact a depression so there is hardly any market for anything. It's called a bear market for a reason (for the pun of it, surely!?).

Or just go down to the casino? You might win...

The way I see it is that the market goes up and everyone appears to make money then the bubble bursts and it looks as if everyone has much less money. The only people really making money out of this disaster are those in the financial services because they sell the thing that everyone wants: money debt.

So, if he has no soul, the OP should invest in working for a bank; otherwise he could consider something other than pure profit margins and the ever illusive get-rich-while-doing-nothing. He could think of his soul and how his happiness is ultimately dependent not on his financial wealth alone but on the happiness of those around him.

[SillyWilly]

and that's why we hate the speculators - no soul!

Since when has it been a crime to plan for the future and to buy when everyone else is selling? Sorry, didn't get that memo. It's not like I'm going to cause a financial crisis to profit from. No, that would be the big banks' game.

If you don't have the stomach to take financial risks, leave it to those who do.

[SillyWilly]

BTW, at current levels I wouldn't dream of buying. That's why I said, I'll put it on my shopping list for when there is blood in the streets.

@Trubadour: I realized you may not know the original quote and that it sounds pretty harsh...blood in the streets.

The original quote is credited to Baron Rothchild and is the heart of contrarian investment strategy: "Buy when there's blood in the streets, even if the blood is your own."

It was just his way of saying buy when everyone else is selling, even if your own investments are in the red.

[trubadour]

and that's why we hate the speculators - no soul!

I suppose that that would be "MWAH HA HAH HA HAAAA!"


Since when has it been a crime to plan for the future and to buy when everyone else is selling? Sorry, didn't get that memo. It's not like I'm going to cause a financial crisis to profit from. No, that would be the big banks' game.

If you don't have the stomach to take financial risks, leave it to those who do.[/quote]

I love how you make it all macho like, "you don't have the guts for makin' a killin' boy???"

Speculating is cambling on the price of commodities that are often essential to the well being of real people who stuggle to buy the things they need when the price gets inflated beyond their means.

Put that in yo' pipe, boyyee...

Yeah - profiting from poor people is manly

And the 'blood in the streets' thing! Bet you regret writing that now~!

ha. ha. ha.

[trubadour]

SillyW: you got your retraction contextualisation thing in before my reply. Yet I think the analogy is apt. Your stated intention (and that of Rothchild) are the same - to profit from the misfortune of others. I think the quote reminds us that this is real people and real people's lives that we gamble with when we 'play' the stock market. We do a lot to dehumanise it but at the end of the day that is what it is - dehumanising and destructive. It is real blood on real streets. You think the 1930's depression was just a game? Not at all - we are talking the real blood of real men here. Remember it took WWII to get us out of it.

I guess it looks like you are the one not man enough to accept the consequences and face the real risks of your actions. So for you, not me, it's time to man up.

[SillyWilly]

FYI, we were talking about a stock listed on the Taiwan stock exchange and not commodities. Unless people started munching on stock certificates, speculating in company stock effects no real commodities (wheat, sugar, soybeans) Read the posts next time before making outrageous accusations.

I realized that you would have no idea what the reference to "blood in the streets" meant so I tried to educate you a little.