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How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009
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How To Assure Your Return In Equity Will Be Better Than FD - 3rd Jan 2009

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  • 1. How to assure your return in Equity fund will be better than FD
  • 2. Case Study: Public Index Fund (PIX)
    • A representative of an Equity Fund, because at least 80% in Equities at all times.
    • More than 15 years history (The fund was launched in 2 nd March 1992).
    • The fund invest mainly in Blue Chips (the biggest companies in Malaysia).
  • 3. Yearly Return of PIX
  • 4. Yearly Return Analysis of PIX           23.5% 4 No of Negative Periods 76.5% 13 No of Positive Periods   17 Total Periods             -39.2% Worst Total Return   63.4% Best Total Return   10.8%   Average Total Return
  • 5. Yearly Return of PIX (Overlap by months)
  • 6. Yearly Return Analysis of PIX           28.8% 55 No of Negative Periods 71.2% 136 No of Positive Periods   191 Total Periods             -39.2% Worst Total Return   100.3% Best Total Return   12.5%   Average Total Return
  • 7. Rule No. 1:
    • Invest for
    • Medium to Long Term
    • (3 years or more)
  • 8. 3 Years Return of PIX (Overlap by months)
  • 9. 3 Years Return Analysis of PIX 23.4% 39 No of Negative Periods 76.6% 128 No of Positive Periods   167 Total Periods         -12.5% Worst Annualised Return   34.7% Best Annualised Return     9.0% Average Annualised Return             -33.0% Worst Total Return   144.6% Best Total Return   29.3%   Average Total Return
  • 10. 5 Years Return of PIX (Overlap by months)
  • 11. 5 Years Return Analysis of PIX 18.9% 27 No of Negative Periods 81.1% 116 No of Positive Periods   143 Total Periods         -5.0% Worst Annualised Return   26.8% Best Annualised Return     7.5% Average Annualised Return             -22.6% Worst Total Return   202.3% Best Total Return   42.1%   Average Total Return
  • 12. Chance of Losing Money (based on previous slides of PIX)
    • 1 Year Holding Period = 28.8%
    • 3 Years Holding Period = 23.4%
    • 5 Years Holding Period = 18.9%
  • 13. Rule No. 2:
    • Don’t Overpay
    • ( P/E above 18)
    • (when you Invest)
  • 14. 3 Years Return of PIX + Don’t Overpay (Overlap by months)
  • 15. 3 Years Return Analysis of PIX + Don’t Overpay 5.2% 4 No of Negative Periods 94.8% 73 No of Positive Periods   77 Total Periods         -1.3% Worst Annualised Return   31.2% Best Annualised Return     12.1% Average Annualised Return             -3.9% Worst Total Return   125.6% Best Total Return   40.9%   Average Total Return
  • 16. 5 Years Return of PIX + Don’t Overpay (Overlap by months)
  • 17. 5 Years Return Analysis of PIX + Don’t Overpay 0.0% 0 No of Negative Periods 100.0% 53 No of Positive Periods   53 Total Periods         4.0% Worst Annualised Return   21.1% Best Annualised Return     12.4% Average Annualised Return             21.7% Worst Total Return   147.0% Best Total Return   75.5%   Average Total Return
  • 18. Chance of Losing Money (based on previous slides of PIX) + Don’t Overpay
    • 3 Years Holding Period = 5.2%
    • 5 Years Holding Period = 0.0%
  • 19. Rule No. 3:
    • Don’t Undersell
    • ( P/E below 16)
    • (when you Sell)
  • 20. 3 Years Return of PIX + Don’t Undersell (Overlap by months)
  • 21. 3 Years Return Analysis of PIX + Don’t Undersell 28.0% 26 No of Negative Periods 72.0% 67 No of Positive Periods   93 Total Periods         -11.5% Worst Annualised Return   34.7% Best Annualised Return     10.5% Average Annualised Return             -30.8% Worst Total Return   144.6% Best Total Return   35.0%   Average Total Return
  • 22. 5 Years Return of PIX + Don’t Undersell (Overlap by months)
  • 23. 5 Years Return Analysis of PIX + Don’t Undersell 14.5% 10 No of Negative Periods 85.5% 59 No of Positive Periods   69 Total Periods         -5.0% Worst Annualised Return   26.8% Best Annualised Return     9.4% Average Annualised Return             -22.6% Worst Total Return   202.3% Best Total Return   55.1%   Average Total Return
  • 24. Chance of Losing Money (based on previous slides of PIX) + Don’t Undersell
    • 3 Years Holding Period = 28.0%
    • 5 Years Holding Period = 14.5%
  • 25. All In All
    • Rule 1: Invest at least 3 years
    • Rule 2: Don’t overpay (anything above 18)
    • Rule 3: Don’t undersell (anything below 16)
  • 26. 3 Years Return of PIX + Don’t Overpay + Don’t Undersell (Overlap by months)
  • 27. 3 Years Return Analysis of PIX +Don’t Overpay + Don’t Undersell 0.0% 0 No of Negative Periods 100.0% 28 No of Positive Periods   28 Total Periods         5.7% Worst Annualised Return   31.2% Best Annualised Return     16.6% Average Annualised Return             17.9% Worst Total Return   125.6% Best Total Return   58.4%   Average Total Return
  • 28. 5 Years Return of PIX + Don’t Overpay + Don’t Undersell (Overlap by months)
  • 29. 5 Years Return Analysis of PIX +Don’t Overpay + Don’t Undersell 0.0% 0 No of Negative Periods 100.0% 24 No of Positive Periods   24 Total Periods         4.8% Worst Annualised Return   21.1% Best Annualised Return     14.4% Average Annualised Return             26.2% Worst Total Return   147.0% Best Total Return   90.9%   Average Total Return
  • 30. Chance of Losing Money (based on previous slides of PIX) + Don’t Overpay + Don’t Undersell
    • 3 Years Holding Period = 0.0%
    • 5 Years Holding Period = 0.0%
  • 31. All In All
    • Rule 1: Invest at least 3 years
    • Rule 2: Don’t overpay (anything above 18)
    • Rule 3: Don’t undersell (anything below 16)
  • 32. Quotes by Warren Buffett
    • "If you think about it [i.e., the markets], you get these huge swings in valuations. It's the ideal business arrangement, as long as you don't go crazy. The 1970s were unbelievable. The world wasn't going to end, but businesses were being given away. Human nature has not changed. People will always behave in a manic-depressive way over time. They will offer great values to you."
  • 33. Quotes by Warren Buffett
    • “ A market downturn, doesn't bother us. For us and our long term investors,  it is an opportunity to increase our ownership of great companies with great management at good prices. Only for short term investors and market timers is a correction not an opportunity." 
  • 34. Quotes by Warren Buffett
    • Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.
  • 35. Quotes by Warren Buffett
    • Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.
    • (Source: 1974 Letter to Shareholders )
  • 36. Quotes by Warren Buffett
    • The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
    • (Source: 1990 Letter to Shareholders )
  • 37. Quotes by Warren Buffett
    • You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right—and that's the only thing that makes you right. And if your facts and reasoning are right, you don't have to worry about anybody else.
  • 38. Quotes by Warren Buffett
    • The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.
  • 39. Quotes by Warren Buffett
    • I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.
  • 40. Conclusion
    • Current P/E is at 10.8 , a BARGAIN buy!
    • At current price, the risk of losing money over the next 3 to 5 years is Negligible.
    • P/S: This can only be applied to a well diversified Equity Fund. Worse applied to individual companies!
  • 41. FAQ 1: How long have to wait to sell at a favorable price (P/E above 16) ?

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