MECHCalvin Fund Report Sept, 2015 - The 8th Wonder: Compound interest 世界第八奇蹟: 複利

Latest fund price: $1.7698 (-0.0001, 0.01%)
Total Market Value: $1,567,891.46
Total units: 885,935.9229 units

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” - Albert Einstein

Dear Investors,

I am not sure Albert Einstein really said that, I am even unsure how one of the greatest scientists handled his personal finance; never the less this has become one of the most quoted line in finance.

After 5 consecutive months of falling, the market is stabilizing this month, it still fell but not as much as before, the stock dividend I received this month have made the loss even.

From the start of this fund (since June, 2009), I have already received 40k dividend from Stock and 40k interest from loan, all these “free cash” have provided less significant, but pretty sweet performance in my fund, however if you let time do its job, the reinvested interest will keep the snowball rolling, and the result might surprise you, this is what the compound interest is all about.

If the power of the compound interest can be shown in the following graph, say if you invested $1000 at year one.

Year	5%	10%	15%
1	1,000.00	1,000.00	1,000.00
5	1,215.51	1,464.10	1,749.01
10	1,551.33	2,357.95	3,517.88
15	1,979.93	3,797.50	7,075.71
20	2,526.95	6,115.91	14,231.77
25	3,225.10	9,849.73	28,625.18
30	4,116.14	15,863.09	57,575.45
35	5,253.35	25,547.67	115,804.80
40	6,704.75	41,144.78	232,924.82
45	8,557.15	66,264.08	468,495.02
50	10,921.33	106,718.96	942,310.82

The longer it took; the return for different compound interest will be very significant. This is why if you have met Warren Buffett in 1964 and bet $1000 on him, it will become $11million today, for he has achieved an average 22.3% per year! But nowadays in financial world, I constantly heard people say they can teach you to earn 100% in a year, even within a week! Well, I will let you be the judge.

I will be happy with 10% each year, but firstly, I need to achieve such target, secondly you must wait for a long time, anyone who want get rich by short term investment, he might succeed or fail in short term, but definitely will fail in long term.

Regards,

Calvin

「複利是世界第八大奇蹟。有誰理解它，賺到它...有誰不理解的...付給它。」 - 愛因斯坦

親愛的投資人,

我不知道愛因斯坦是否真正說過這句話，我甚至不確定最偉大的科學家之一如何處理他的個人財務;但這句已經成為金業被引用最多的話。

連續五個月下跌，市場終於在本月穩定下來，雖然它仍然下跌，但不會像之前那樣多，我今個月收到的股票利息抵償了下跌的損失。

從這個基金的起始（自2009年6月），我收到已經4萬的股票利息和4萬的貸款利息，所有這些「免費現金」在我的基金提供了不太顯著，但相當甜蜜的表現，但是如果你讓時間工作，其再投資利息將保持這個雪球滾動，而結果可能會讓你大吃一驚，這就是複利。

如果在複利的威力可以在下面的圖顯示, 如果你在第一年投資了$1000。

年份	5%	10%	15%
1	1,000.00	1,000.00	1,000.00
5	1,215.51	1,464.10	1,749.01
10	1,551.33	2,357.95	3,517.88
15	1,979.93	3,797.50	7,075.71
20	2,526.95	6,115.91	14,231.77
25	3,225.10	9,849.73	28,625.18
30	4,116.14	15,863.09	57,575.45
35	5,253.35	25,547.67	115,804.80
40	6,704.75	41,144.78	232,924.82
45	8,557.15	66,264.08	468,495.02
50	10,921.33	106,718.96	942,310.82

時間越長, 不同的複利會令回報率差距非常顯著. 這就是為甚麼如果你在1964年見到巴菲特而下注$1000在他身上，今天就會變成1千100萬，因為他每年平均實現了22.3％！但在現今的金融世界裡，我不斷地聽到有人說，他們可以教你如何在1年，甚至一個星期內賺取100％！我讓你自行判斷。

如我做到每年10％已經很高興，但首先，我需要實現這個目標，其次，你必須等待一段很長時間，誰想要靠短期投資致富，他短期內可能會成功或失敗，但長期必定會失敗。

MECHCalvin Fund Report Aug, 2015 – Holding Power and Purchasing Power持貨能力及購買力

Latest fund price: $1.7699 (-0.0773, 4.18%)

Total Market Value: $1,568,039.12

Total units: 885,935.9229 units

Dear Investors,

Hong Kong and China market plunged even further this month, it not just cancelled the rise in May, the index has reached new low this year, what a surprise! My wife and I have a joke between us, whenever she travelled with me, the stock market must fall, so she were not entirely happy I paid too much attention to the stock market when we were travelling, and I always make fun of her for the fact that she always bring bad luck to me (not just in investment, I tend to lose more in computer games when she is next to me, haha). So I have become smarter this time, in order for us to enjoy the honeymoon, I have sold most of my shares beforehand, seeing how the stock market behave in July and Aug is quite hilarious to me.

Yet it doesn’t mean I can prevent all the paper loses, my long term mutual fund holdings dropped quite dramatically, also I was too eager to re-enter the market result in buying too early (still not mature enough after 7 years!), never the less my fund still fall significant less than the market.

However I have more experience now to understand how important holding and purchasing power is, since no one can predict the market (although many have tried and still trying), when the shares is showing negative, it is essential to remain a holding power, meaning you can afford to take the temporary paper loss, the difference between rich and normal people is that rich people have all the time they need to wait for short loss to rebound, while normal people might sell and realized the loss either due to panic or actual needs of the money.

While purchasing power meaning rich people have money to buy more stocks at lower price, while others can only look at all the cheap stocks but can do nothing about it because they have ran out of cash, in the future I am hoping to expand both holding power and purchasing power in my fund management.

In 2014 I have realized a 100k profit, this year I have realized a 200k profit, I am expecting next year I should be realized 400k-500k of profit and I am confident and feel comfortable with the stocks I have chosen.

After some rest, I have start looking for more investors that fit my requirements again, 

1. Think long term

2. Have basic understand of my investment philosophy

3. Comfortable with volatility

My expectation is that my fund can grow to at least 5 million by 2020.

Regards,

Calvin

親愛的投資者，

香港和中國市場在本月進一步暴跌，它不只是取消了上漲的五月份，該指數甚至已經達到了今年以來的新低，真是意外！我的妻子和我之間有個玩笑，每當她和我一起旅行時，股市一定下跌，所以她並不十分滿意我在跟她旅行時太關注股市，我總是取笑她總是給我帶來壞運氣（不只是投資，就是我玩電腦遊戲時，只要她是我的旁邊就經常輸，哈哈）。因此，我這一次變得更聰明，為了讓我們好好享受蜜月，在出發前我已經賣走了大部分股票，眼看著股市在七月和八月的行​​為是有點滑稽。

然而，這並不意味著我可以阻止所有的賬面損失，我長期持有的共同基金跌幅相當顯著，同時我太急於重新進入市場令我購買得太早（7年後還不夠成熟！） ，但我的基金下跌仍然比市場顯著少。

不過現在我擁有更多的經驗，明白持貨能力及購買力是多麼重要，因為沒有人能夠預測市場（雖然很多人已經嘗試, 而且仍在嘗試），當股價呈現負數，保持持貨能力是十分重要的，意思是你可以受得起暫時的賬面損失，富人和普通人之間的區別是，富人們有能力及時間等待短期的損失反彈，而普通人可能由於恐慌或實際錢的需要, 賣出手上的股票而導致實際損失.

購買力意味著富人有錢以更低的價格購買更多的股票，而其他人只能看著所有便宜的股票，但甚麼也做不到因為他們已經花光了錢，在將來我希望在我的基金管理上, 可以同時擴大持貨能力和購買力。

在2014年我實現了10萬的利潤，今年我已經實現了20萬的利潤，我期待明年我應該可以實現到30萬到40萬的利潤，我對自己選擇了的股票有信心感到安心。

經過一番休息，我又已經重新尋找更多附合我要求的投資者，

1. 思想長遠

2. 對我的投資理念有基本理解

3. 接受波幅

我期望我的基金能在2020年增長到至少500萬。

regards,

Calvin

MECHCalvin Fund Report July, 2015 – So called “New Normal” 所謂的「新常態」

Latest fund price: $1.8472 (-0.0493, 2.6%)

Total Market Value: $1,666,469.43

Total units: 902,177.0315 units

Dear Investors,

This month nothing much happen in my fund, I only had two trades (one buy and one sell), however the market is turning up side down, both China and Hong Kong have been slumped roughly 40% and 20%, meaning all the sky rocking in May have been canceled out. My fund merely dropped 2.6% because a lot of my stocks are defensive in nature (most of them are real estates), while few aggressive stocks, I only hold a little bit.

So this month I would like to talk about the topic most people care (but I don’t really care), the China & Hong Kong market. A-shares in China have been stay low for 7 years, when the financial world start to lost hope, it started to surge 100% within 6 months in the beginning of 2015, it is difficult for a single stock to rise 100% in 6 months, let alone a 9.7 trillion market! Even with the recent 40% drop, China market still has rose 64% since 2015.

The prime minister of China Xi Jinping called this is the “new normal” *LOLS*, to me new normal is still abnormal (something abnormal will not become normal only because it has a new name), there are rules in a free market (obviously China is a closed market), when the government want to control the financial world, rather let the “invisible hand” take control, they can achieve certain goals in short term, but harm the economy of the whole country in long run. I think Russia and many communist countries have proven why Karl Marx’s communism does not work in real world, yet China say: “Hey, let’s give it another try, with 1.4 billion people this time!”

“Socialism vs capitalism” is a big topic, however fundamentally it is “planned economy vs free market”. Planned economy meaning government control the supply and demand (stock market is only a tip of the iceberg), if the government decide this year we need to manufacture 2 billion jeans, even the people do not feel like wearing jeans, 2 billion jeans will be made, if it turns out no one want to buy any jeans, then the government launch a campaign to promote all citizen to wear jeans, they will tell you how wearing jeans is good for your health, or why you should wear jeans if you are a true patriot, it may sounds ridiculous, but this is exactly what is happening in China. 

The government set a goal (with details planning), and they ask the local government to achieve the goals no matter what, eventually they will have to fake the numbers, they claim their economic growth must remain 7% annually, let’s face it, who can guarantee an economic growth? No one, but what if the government insist? Then we have to make stuffs up. The China market is overvalued, even after the huge drop, so don’t be delusional, eventually the market must return to her “true normal”.

親愛的投資者，

這個月我的基金沒有甚麼大改變，我只做了兩筆交易（一買一賣），但市場已經反轉了，中國和香港股市已經分別下跌了約40％和20％，這意味著5月的大升已經被取消了。我的基金僅僅下跌了2.6％，因為我的很多股票都是防禦性質的（其中大部分是房地產），而一些高風險的股票，我只買了一點點。

所以，這個月我想談最多人關心（而我不關心）的話題，就是中國及香港市場。 A股在中國一直保持在低位連續7年，當金融世界開始對她失去希望時，它開始於2015年年初6個月內激增100％，在6個月內上升100％, 在單股已經是很困難的，更不用說一個9.7萬億的市場！即使在近期下跌40％，中國市場自2015年仍然上漲64％。

中國習近平首相稱這是「新常態」 * 大笑*，對我來說新常態仍是非常態(不正常的東西不會因為改了新名稱就變成正常)，自由市場有其規則（顯然中國是封閉市場），當政府想控制財政，而不讓“無形之手”掌握控制權，他們可以在短期內實現某些目標，但在長遠損害了整個國家的經濟。我認為俄羅斯和許多共產主義國家已經證明，為甚麼馬克思的共產主義在現實世界行不通，但中國仍說：「嘿，讓我們再試試看，這一次十四億人一起試!」

「社會主義VS資本主義」是一個很大的話題，但是從根本上是「計劃經濟 vs 自由市場」。計劃經濟意味著政府控制供應和需求（股市是只是冰山一角），如果政府說今年我們需要加工製作廿億條的牛仔褲，就是人民不怎樣喜歡穿牛仔褲，都會有廿億條牛仔褲會做出來，如果事實證明沒有人想要買任何牛仔褲，那麼政府將推動全民著牛仔褲的運動, 他們會告訴你牛仔褲對你的健康有多好，或如果你是一個真正的愛國者, 為甚麼你一定要穿牛仔褲, 聽起來是如此荒謬, 但這樣的事正在中國發生。

政府設定目標（詳細規劃），他們要求當地政府不管如何都要實現目標，結果他們最終將不得不製作假數，他們聲稱經濟增長必須每年保持7％，但誰可以保證經濟增長？沒有人，但如果政府堅持一定要發生？然後我們就必須要做數了。中國市場在巨大的下跌後仍然被高估，所以不要被她騙到, 最終市場都必須回歸到她的「真常態」.

regards,

Calvin

MECHCalvin Fund Report June, 2015 - When Left Wing Rises

Latest fund price: $1.8910 (-0.0889, 4.49%)

Total Market Value: $1,706,029.2

Total units: 902,177.0315 units

Dear Investors,

This month's report came in quite late because I intend to do so, I was waiting for the result of the Greece's bailout referendum, and i expected no matter how it turned out, they still have to cooperate with the European commission (because they have to), and now we all know people who own other's money have to return it one way or another (otherwise the whole financial system just won't work anymore).

I have paid a lot of attention the Greece's debt problem long time ago, it rated more importantly than the recently market correction (some say crash) happened in Hong Kong and China, but wait Calvin, shouldn't you be more aware of the HK market than Greece since most of your investments are in HK? No no no, it is not important what is happening here in Hong Kong, in a bull market, correction are normal, also necessary, people who got panic have no clue (or no experience) in the real financial world, I don't panic even it dropped 60%, let alone 20-30%, get over it please.

When I was at Istanbul during my honeymoon in May, I met a girl from Greece (I have to emphasize I met her with my wife together :P ) on a city boat touring trip, I took the chance and asked her view on the Greece's problem, she said she has always felt EU is taking advantage on this matter, that's why she voted Alexis Tsipras and hope for a change, Alexis Tsipras is considered to be an extreme left in politics, it occurs to me left wing never got much chance in a capitalism system unless some really bad things happened, traditionally socialist is not so good with the money, but they appear to care about the people more, while capitalist give people impression that they only care about money and is the cause of the suffering of the poor.

So when left wing rise, most likely they will use "will of the people", "social justice", "equality" to attract voters, wile when right wing rise, they will use "economic growth", "good economic data", "wealth increase", "better living quality" to attract people to vote for them. Yet in situation like Greece where majority of the people with a care free attitude, get used to borrowing money and have enjoyed long term benefits more than they have inputted, they can't go back to a tough life (which to most of the people consider as normal).

Frankly I don't want to get too rough on them, but sometimes I just cannot bear the fact that after borrowing, they can justify not returning the money because of corrupted politician, as the result turns out now, even the extreme left have to face the inevitable truth, going into default (not keeping a promise) is the no.1 taboo in finance. yet to be fair, I do not see Greece will turn out to be great unless they have a real solid reform, it means changing the lay back attitude, produce more than they can spend, and this is just my prediction, eventually they will be kicked out of the EU zone.

regards

Calvin

MECHCalvin Fund Report May, 2015 - 6th Anniversary

Latest fund price: $1.9801 (+0.1003, 5.34%)

Total Market Value: $1,786,428.43

Total units: 902,177.0315 units

Dear Investors,

Sorry for the late fund report this month, I am travelling on a long hours train to Sweden from Copenhagen (Denmark), which finally gives me time to write, it will be the last part of my 3 weeks honeymoon before I go back to Hong Kong. The trip has been absolutely fantastic, apart from the transportation are quite expensive in Europe, we are enjoying it very much.

My fund is doing not bad too while I am away, It goes further 5% up, we are getting very close to 100% return, bear in mind I started my fund on 4/6/2009, this month is the 6th anniversary, I would say performance wise it is doing OK, but I am not going to rush it.

For the surprising good return single stock, remember it topped at $2.96 (+220%) last month, then I said if you think this is crazy, you have seen nothing yet? Guess what happened this month? it kept going from $2.5 to highest $8! This is like 750% return in 2 months! I originally owned 120k shares purchased at an average price of $0.935, last month I have sold

1. 40k shares @ $1.45

2. 40k shares @$2.5

This month I have sold further

3. 20k more shares @$4.4

4. 8k shares @$5.7

5. 4k shares @$7.2

I have already realized $210k profit on this stock while still holding 8k shares worth around $60k, this is absolutely fantastic! My cash reserve is at all time high and by the end of this year, I am expecting to collect another $240k of loan, which will make my fund flood with cash, I will need to start looking for other investment opportunity, and the investment amount will getting bigger and bigger for sure, this “baby” have started becoming a “boy” :)

Lastly attracted few pictures I took during the honeymoon, the views are stunning, getting further from home help me detach from the market, which is actually a good thing.

Regards,

Calvin

Blog: http://mechcalvinfund.blogspot.hk/

MECHCalvin Fund [Correction & Special Announcements]

Dear Investors,

A. Correction

I made a small mistake and left out a stock holding in my calculation which affected the performance, the INCORRECT figure for April, 2015 were shown

Latest fund price: $1.8567 (+0.2349, 14.48%)
Total Market Value: $1,665,188.06
Total units: 896,857.2372 units

the CORRECT figure for April, 2015 should be as following
Latest fund price: $1.8798 (+0.258, 15.91%)
Total Market Value: $1,685,888.06
Total units: 896,857.2372 units

B. Special Announcement 1

I will be in Europe for honeymoon from 22/5 to 14/6, in order for me to enjoy the vacation, I have cashed out many highly volatile holdings, for the big winner i mentioned in my last fund report (1246:HK), I have sold 80% of the holding and realized $150k profit! yet it seems like it still haven't lost its steam and keep drive up to 480%! The remaining holding I have still worth another extra $80k, so I expect the fund price will still have a small jump to around ~$1.9 per unit by the end of May (this fund soon will be doubled!)

C. Special Announcement 2

My wife have quit her job (apparently she had enough after 10 years of work!), she will be staying in Sweden for another month after our 3 weeks honeymoon, after she is back, she will help me taking care of the admin work of my business (both insurance and MECHCalvin fund), this is good news, because this kind of careless mistake will be hugely reduced, guarantee!

That's all! Anyway, I will be writing my next fund report from England, see you then!

MECHCalvin Fund Report April, 2015 - You think it’s crazy? You have seen nothing yet :)

Latest fund price: $1.8567 (+0.2349, 14.48%)

*new high, previous high on Feb, 2015 at $1.6357

Total Market Value: $1,665,188.06

Total units: 896,857.2372 units

Dear Investors,

The market is making a lot of people happy in the previous month, both China and HK stocks have risen somewhere between 18-20% in a single month, small stocks gain 50%-80% are quite common in such bullish time.

How can I have missed that? Most of my stocks have raised anywhere between 3-10%, yet one stand out particular.

1246:HK is in construction business, I have already paid attention a year ago, after many research, I decided to bet big and brought 120k shares at an average cost of $0.935 per shares.

However it doesn't do anything for a whole year, I was very disappointed and heavily doubt my decision, at the worst time I had a paper lost as much as -$21000, but after repeating research and confirming my understanding, I believe this company is heavily undervalue, although feeling difficult, but I didn't sell any shares, finally it has surged a massive 238% in a single month!

When it started its momentum from $0.9 to $1.2 on 13/4/2015, I knew I was right all along, then it burst up to $1.5, I immediately sold one third (40k shares) at $1.45, taken a profit of $20,000 but I regret about it immediately, because it sky rocking to $1.66 per shares the next day and never go back to $1.5, then it rally up to $2.8 in the next few days, I sold another 40k shares at $2.5, taken second profit of $62,000, it finally topped at $2.96!

I have cash out $140k (realized $82k profit), while still owning 40k shares that worth $100k, so I have earned $240k while my initial investment was only $112k (+114%), that’s the biggest win by far!

As for my fund as small as ~$1.4 million, for every 14k profit will boast this fund up 1%, my fund raised 14.48% last month, this single investment have already contribute 10% of the gain. 

I am very happy not because I make money, but because my research have paid off, the long year mental struggle didn't make me give up, and my effort have finally paid off! As I said, for you to invest successfully, you will go through many small winners and small losses, but one major winner can turn the table around completely. I expect this is only the beginning of a bigger bull market in the next 2 years, so if you think it’s crazy? You have seen nothing yet :)

The following chart is to show you how long I have waited!

Blog: http://mechcalvinfund.blogspot.hk/