It is the investment perspective based on the business that is used in evaluating the value of different businesses, resulting in the Jitta Line that everyone uses (based on the notion that if we invested in this businesses, we need to break even within 10 years).
One of his strategies is to invest in other companies, both domestic and overseas (they have been doing this for quite some time now). K. Thiraphong has said that in investing in other businesses, one must have an investment discipline, and that there is no reason to invest if the return is less than 10%, because we invest to earn returns, not because we simply just want it.
Of course, the reason that I bring this up is to emphasize again that investing in stocks is not that different from business. Every time we invest, we should feel confident that our returns would exceed 10% per year.
Anyone who has studied Jitta 101 would know that I really emphasize on this matter, and have explained the reasoning and thinking behind the fact that one must gain at least a 10% return per year.
It is the investment perspective based on the business that is used in evaluating the value of different businesses, resulting in the Jitta Line that everyone uses (based on the notion that if we invested in this businesses, we need to break even within 10 years). Therefore, I am confident that Jitta can effectively evaluate businesses’ quality based on a business perspective, free from the confusion and speculations of the stock market.
(Of course, Warren Buffett himself invests under this very principle. For those of you who haven’t read “Investing in Stocks is like Investing in Real Estate”, please do so if you have time).
Here are what investors should do when they feel that the market is way more expensive than what it should be.
Predicting rain doesn’t count; building arks does – Warren Buffett
This saying of Warren Buffet is based on the Genesis story of Noah and his ark. In story, Noah did not know when it was going to rain, and when there would be an obliterative flood. He just knew that it could possibly happen, and therefore, prepared for it. So when the floodwaters came, he and his family, plus all the pairs of animals were saved from being wiped off the face of earth.
Buffet has indirectly compared this with investing somewhat; by predicting when the market will fall, how much it will fall, how much oil prices will fall, or how will the global economy perform next year… they don’t really help us improve our investment all that much, because predicting things is an imprecise and difficult task.
The things that we do know is that stock market has its own cycle -if the market has risen way above its true value, then one day, it must fall.
Therefore, the important thing to do is not to try and predict when the market will fall, or how much will it fall, but to be ready in situations where there are risks of something bad happening. To be prepare combatting strategies, and know what measures to take.
When we are mindful and ready for these situations, we will be able to make logical decisions -not get swayed by Mr. Market, and instead look for opportunities from him.
Here are what investors should do when they feel that the market is way more expensive than what it should be:
Lower their use of margin in investing
Make their portfolio stronger by trying to hold only stocks that they can positively predict whose revenue and profit will not decrease in 3-5 years. These companies should also have a healthy cash flow and low debt levels (even better if they are able to pay dividends every year).
Sell stocks of companies that have weak businesses or stocks whose prices are much higher than their actual values.
After having sold stocks, if there aren’t any good stocks with suitable prices, then we can also hold on to the cash first. However, if there are good stocks available (as mentioned in #2), then we can invest in them. Because these stocks can weather bad times, and when the storm passes, their prices will bounce back even higher than before.
Study and research thoroughly. Prepare a list of good stocks we would like to own for the rest of our lives, so that one day when their prices fall below their suitable value, we can immediately invest in them.
To put it simply, try to hold on to stocks that make you feel comfortable, even if the stock market closes down in the next five years. And prepare some cash for future investing opportunities. That’s all you need to invest happily.
As for anyone who wants to evaluate the strength of their own portfolio, you can do so using the Jitta Portfolio, and see the Jitta Score / Jitta Line of the port, in addition to Asset Allocations on the bottom. I believe that these tools will give you a clearer vision of your portfolio and help you prepare strategies for different situations more effectively.
Jitta has been discussing closely with top notch Value Investors to get the feedbacks. Meanwhile, our team has been working hard to improve Jitta Score and Jitta Line to be the best and more efficient. There are two areas that we do to improve our Jitta Score and Jitta Line.
1. Discard Unusual Income from Financial Statement
We discard Unusual Income from Financial Statement to prevent and protect loss of investors in the unlikely cases that that unusual income may be delusive to the investors. By doing this, Jitta from now on will genuinely reflect the actual operation and performance of the companies through Jitta Score and Jitta Line.
2. Improving Jitta Line of High-Quality Growth Stock.
In the past, Jitta Line has been calculated in the most conservative way to prevent and protect risk of investors. Somehow, investors might not be able to invest in High-Quality Growth Stock because the price was always higher than Jitta Line. Therefore, we adjust Jitta Line of those companies to align with the opportunity so that Jitta Line can present the genuine value of the companies during the growth period.
We have done the backtesting based on the enhanced version, it slightly affects Jitta Ranking. You can check more detail of Jitta Ranking Return at library.jitta.com/ranking
These changes will be effective from March 18, 2016, onward.
Jitta aims to help investors create better returns through simple investment methods. We will keep on improving our technology to make Jitta Score and Jitta Line to become the best investment standard for all investors around the world.
Thank you for all your love and support. Please write us at email@example.com for comments and feedback.
2. การปรับ Jitta Line ของบริษัทที่ดี และกำลังเติบโตให้มีมูลค่ามากขึ้น
โดยปรกติ Jitta Line จะถูกคำนวณแบบอนุรักษ์นิยมมาตลอด เพื่อปกป้องความเสี่ยงของนักลงทุน ทำให้บางครั้งนักลงทุนไม่สามารถที่จะลงทุนในหุ้นที่ดีๆที่มีการเติบโตสูงได้ เพราะราคาหุ้นจะอยู่สูงกว่า Jitta Line มากเกือบตลอดเวลา