Thursday, May 1, 2008

Is subscribing iCapital worth your money?

iCapital started with publishing stock market newsletter and managing money for discretionary accounts and later ventured into fund management. The CEO is Tan Teng Boo, he attracted many fans and subscribers. He became even more popular after his closed-end fund managed to double its net asset value since its inception in 2005. AGM usually will be packed and most of the 2000 plus shareholders will turn up to listen to his market outlook. When he conducts seminars, he claimed that the seats will always sold out.

Of late, some of his subscribers have been voicing out their discontents toward iCapital of being too rude, too cocky and humiliating others to drive home a point that he predicts no US recessions of which against all other famous investors and gurus. Hard feelings and emotions aside, let's ask a realistic question: is subscribing to iCapital worth your money? How accurate is his market calls? I sampled randomly from 2003(the oldest on-line archived that was accessible), I know this is not a very scientific approach but randomness of sampling can help to eliminate some biasness.

iCapital was bearish from 1998 to mid 2003. In that sense he did not take a contrarian stand for the sake of against the grain.

By mid of 2003, iCapital called for maximum bullish for KLCI. The KLCI did continue to perform according to his call. By early of 2004, KLCI went into corrections, he maintained his bullish call. He said in 2-3 year KLCI will surpass 1200 when the market were around 800+ points. 50% increase was a bold call. That call turned out OK, KLSE did surpass 1200 in early 2007.

I picked up one of his calls randomly in 2005, he called for range bound between 880-940 for next 8-9 months, of which was quite OK too: the market was half dead.

In early 2007, he still called KLCI to break 1200 in the next 2-3 years, he was dead wrong, the market surpassed his target right after his announcement. By mid of 2007, he called for 1500 to happen in next 8-9 months and revised to a new target: 2000 point for KLCI in the next 2-3 years. The market did break 1500.

He continued to make bullish call in early of 2008 right after the market topped out in October 2007 due to credit implosion. He was still expecting for 1600 to happen in next 8 - 9 months. He was of course wrong, you could lose 20% of your money bought at 1400 level and sold at 1150.

Just last week, 24/4/08, iCapital still think it will hit 1450 in next few weeks and breaking 2000 points in the next 2-3 years with a qualifier if Malaysia can show some sort of political stability.

Well as a whole, you have a chance of 33% of losing money and 67% chance of making money by listening to him. So far, he made his bottom call quite accurately. He made the right call in 2003 was the bottom but his March 2008 bottomed-out call will remain to be seen especially there were some bad calls recently. My advice is don't take my advice, you be the jury - think and decide whether you need to subscribe to his stock market newsletter.

Happy Labor Day!


AC said...

Turtle, you still have money to subscribe to this? Then why you can only spare RM888 a month? With what you got, it's a waste of money! Further, you only bought 1 time these few months.

Turtleinvestor said...

AC, Please understand this is a virtual game to accumulate RM 350,000 with seed money of $3,000 and $ 888/month saving. Please read my first entry. This game will be over in 15 years. As I blog on this journey, I will make real decisions on buying and selling just like real life investing. Hopefully I my readers will draw some inspirations and learn the investing processes.

I purposely set such a tight budget to let smaller investors to see: it is possible to accumulate wealth. Those with bigger budget, they can just scale up their purchases. Take MUI for an example, if they concur with me it is undervalued, they can buy at 30,000 or 40,000 shares. But the truth will remain: I really make very little transactions/trades. During bull run, 12-15 transactions/year. Bear market, 3-4 times/year.

AC said...

That's funny. Bullbear, there should be more buys when the market is bearish & less when it's bullish. Since you're saying that buy & hold for long term, you are not going to do more selling transactions, will you?

Turtleinvestor said...

AC, no contradiction here. During bull run, chances of price running ahead of fundamental are much higher, thus sell is warranted and reinvest in more undervalued stocks or wait for bear to arrive. Turnover will really depend how crazy is the market, if every stock you buy goes beyond reasonable valuation level, you will have no choice but to sell. If all stocks are are really overvalued, then most likely we have to do what Buffet did in early 70s, sell-off all the holdings.

The stocks that are up for sales are those accumulated during weakness(bear market) not necessary buy at high price hoping to sell higher, though it is still possible. It is not necessary all the stocks are up for sales but there are some that you really want to keep it forever.

During bear market, it is a slow torture, prices will take a lot longer to deteriorate, thus one must have the patience to wait.

Long-term investment does not mean ZERO portfolio turnover, even Buffet will not be able to do that. It takes time and experience to strike a balance.

You will see what I mean as this blog go through the bull and bear market.

Lunch break is over, catch up later.

Anonymous said...

I have been advising investors from buying ICAP at a premium in my blog.There are a lot of investors out there who do not know what is going on behind the scene.

My friend works in ICAP and I really encourage investors to diversify their portfolio.Don't put all in ICAP.