Lo Kheng Hong, a prominent investor, suggests that everyone, including those with only elementary school education, can become wealthy from stock investment profits. This possibility and opportunity can be achieved by understanding the secrets of stock investment.
"Becoming a successful stock investor can be achieved even by someone with only an elementary school education," he said at the Indonesia Stock Exchange (BEI) building in Jakarta, as quoted on Sunday (10/3/24).
Lo Kheng Hong reveals that becoming a reliable stock investor only requires paying attention to several factors. For example, paying attention to low price-to-book value (PBV) and price-to-earnings ratio (PER).
"You don't need to know how to calculate a stock's price with EBITDA. People who calculate cash flow and EBITDA don't buy stocks," he explained.
Lo Kheng Hong often uses the analogy of buying a Mercedes-Benz at the price of a Toyota Avanza when discussing investments. But is the stock really a hidden gem or is it cheap because no one wants it?
There will always be reasons and considerations why investors are willing to buy stocks that are currently losing money for investment. Of course, this may contradict your thinking as an investor.
At a glance, value investing is considered low risk because the stocks we buy are already cheap. However, investment risks will always exist.
"We don't buy because there's a cheerleader; that makes us impatient. A true investor is patient and reads financial reports correctly," said Lo Kheng Hong.
He has said that many investors are impatient when buying stocks. As a result, they are like buying a cat in a sack.
In essence, the key to successful investment is understanding and being aware of what we are buying. All of this can be found in a company's financial reports.