The Efficient Market Hypothesis (EMH) and Capital Asset Pricing Model
(CAPM) postulate that in an efficient capital market, current market
price reflects all available information about a security and the
expected return based upon this price is consistent with its risk. As a
result, it is impossible for an investor to consistently beat the market
and profit from it.
Let us look at another Bursa portfolio by a blogger, felicity here:
http://www.intellecpoint.com/
His fund was set up about two and a half years ago. He invests based on fundamental analysis searching for good business model and willing to pay reasonable prices for them.
The total return of his fund now is 229% since then, beating the KLCI by 8 times a year. Are his spicks risky and hence the high return? I don't think so.
Let us look at another Bursa portfolio by a blogger, felicity here:
http://www.intellecpoint.com/
His fund was set up about two and a half years ago. He invests based on fundamental analysis searching for good business model and willing to pay reasonable prices for them.
The total return of his fund now is 229% since then, beating the KLCI by 8 times a year. Are his spicks risky and hence the high return? I don't think so.
Posted by kcchongnz at Dec 4, 2013 12:44 PM
Still not satisfied? Here is another portfolio with reference date on 18/1/2013. As I can see, this is another portfolio selected based on fundamental analysis.
Public Watchlist: The Edge 2013: 10 offbeat dividend-paying stocks
http://klse.i3investor.com/
The average return of the stocks is 39.5% in less than a year, against KLSE of 8.7% of the same period. The alpha of this portfolio is 30.9%.
Reference date 18/01/2013 4/12/2013
Stock Name Ref Price Price now Change %change
Pantech 0.78 0.97 0.190 24.4%
Mediac 1.16 0.91 -0.250 -21.6%
Ireka 0.64 1.02 0.385 60.6%
Apollo 3.29 5.37 2.080 63.2%
NHFatt 2.35 2.93 0.580 24.7%
Deleum 1.98 4.23 2.250 113.6%
Oldtown 2.26 2.45 0.190 8.4%
Takaful 5.8 10.42 4.620 79.7%
LafMsia 9.7 9.83 0.130 1.3%
Gasmsia 2.66 3.75 1.090 41.0%
Average return xxxx xxxx xxxx 39.5%
KLSE 1676 1821 145 8.7%
Alpha xxxx xxxx xxxx 30.9%
Posted by kcchongnz at Dec 4, 2013 05:09 PM
Is Bursa efficient? Experience of a top regional equity fund manager, Nomura International.
Posted by houseofordos > Dec 4, 2013 01:27 PM | Report Abuse
kc, my opinion is that some markets are more efficient than others. I suppose in US market is more mature and there is information readily available everywhere market becomes more efficient. However I agree with you that in general there is always some inefficiency which we retailers could benefit from. The inefficiency I m talking about will mainly exist in the smaller cap stocks which go unnoticed by the fund managers due to restrictions for them to invest in such low cap stocks.
Let us look at a portfolio of Malaysian stocks picked by Nomura for 2013 on 18/12/2012 here:
http://klse.i3investor.com/
The stocks are the favorite of most fund managers. They are mostly the big capitalized stocks in Bursa. Most funds own them. All stocks are closely followed by many analysts and investment bankers. Tons of research papers. Closely followed by equity trackers etc. And what is the return of the portfolio to date?
The average return of the stocks in the portfolio is just 7.7% as shown in the table appended. Assuming the prices do not include any dividend, the total return is about 10%. That is exactly the return of KLSE from the same period.
If you don't do something different from the crowd, it is impossible for you to earn extraordinary return. Of course you must be right.
Reference date 18/12/2012 4/12/2013
Stock Name Ref Price Price now Change %change
DIGI 5.04 4.86 -0.180 -3.6%
TM 5.85 5.3 -0.550 -9.4%
Axiata 6.58 6.72 0.140 2.1%
PBB 16.00 18.38 2.380 14.9%
Maybank 9.04 9.88 0.840 9.3%
Sime 9.13 9.5 0.370 4.1%
AirAsia 2.61 2.45 -0.160 -6.1%
WCT 2.35 2.29 -0.060 -2.6%
SKPetro 2.97 4.39 1.420 47.8%
CIMB 7.6 7.67 0.070 0.9%
Genm 3.54 4.15 0.610 17.2%
Media 2.230 2.65 0.420 18.8%
MMCorp 2.650 2.82 0.170 6.4%
Average return xxxx xxxx xxxx 7.7%
dividend xxxx xxxx xxxx 2.3%
Total xxxx xxxx xxxx 10.0%
KLSE 1659 1822 163 9.8%
Posted by houseofordos > Dec 4, 2013 01:27 PM | Report Abuse
kc, my opinion is that some markets are more efficient than others. I suppose in US market is more mature and there is information readily available everywhere market becomes more efficient. However I agree with you that in general there is always some inefficiency which we retailers could benefit from. The inefficiency I m talking about will mainly exist in the smaller cap stocks which go unnoticed by the fund managers due to restrictions for them to invest in such low cap stocks.
Let us look at a portfolio of Malaysian stocks picked by Nomura for 2013 on 18/12/2012 here:
http://klse.i3investor.com/
The stocks are the favorite of most fund managers. They are mostly the big capitalized stocks in Bursa. Most funds own them. All stocks are closely followed by many analysts and investment bankers. Tons of research papers. Closely followed by equity trackers etc. And what is the return of the portfolio to date?
The average return of the stocks in the portfolio is just 7.7% as shown in the table appended. Assuming the prices do not include any dividend, the total return is about 10%. That is exactly the return of KLSE from the same period.
If you don't do something different from the crowd, it is impossible for you to earn extraordinary return. Of course you must be right.
Reference date 18/12/2012 4/12/2013
Stock Name Ref Price Price now Change %change
DIGI 5.04 4.86 -0.180 -3.6%
TM 5.85 5.3 -0.550 -9.4%
Axiata 6.58 6.72 0.140 2.1%
PBB 16.00 18.38 2.380 14.9%
Maybank 9.04 9.88 0.840 9.3%
Sime 9.13 9.5 0.370 4.1%
AirAsia 2.61 2.45 -0.160 -6.1%
WCT 2.35 2.29 -0.060 -2.6%
SKPetro 2.97 4.39 1.420 47.8%
CIMB 7.6 7.67 0.070 0.9%
Genm 3.54 4.15 0.610 17.2%
Media 2.230 2.65 0.420 18.8%
MMCorp 2.650 2.82 0.170 6.4%
Average return xxxx xxxx xxxx 7.7%
dividend xxxx xxxx xxxx 2.3%
Total xxxx xxxx xxxx 10.0%
KLSE 1659 1822 163 9.8%
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