Random thoughts: Can we really buy at near bottom?

I am not sure if you have such a question/ remark when you do your company prospecting/ research.

After doing your due diligence, both qualitatively and quantitatively,  you like what you saw, and the only problem you have is, you would rather it be at a slightly lower price, or you felt you should have gotten in earlier.

So the next remark I usually have in my mind in: I will put it in my radar screen and will get it when it is cheaper.

The problem is, when it is indeed cheaper, it is cheaper for a reason, so do we invest?

I saw from CW post that he bought OSIM recently.

Truth to be told, I was watching OSIM too, maybe not in great details, but I do think that TWG brand hold great promise and with a good balance sheet (abeit due to fund raising), and with a more respectable yield of close to 4% now than just a few months ago, it did look rather "cheap" overall.

But I didn't. I want to keep ammo dry, and I wonder how long will TWG capex expansion bear fruits, and how long the retail weakness in general will last.

My own example- Sembcorp Industries.

I sold 1 lot away much earlier at a higher price, and I thought $4 might be a attractive re-entry price.

It did make a bid at $3.8 but I didn't get it. But what the heck is the difference between 3.8 and 3.85 when I am only buying an additional lot. Truth to be told again, I lack the balls and conviction.

Sembmarine's drill ships problems with Petrobas and competition of utilities and lower rate at home, etc.

It was just months ago when many were screaming "cheap" at $4.40, so it is $3.9, why is it not cheaper?

The question is not why it fallen from $4.4 to $3.9, just google it and you will plenty of answers. The real question is, it is possible to get Sembcorp at $3.9 WITHOUT the bad news that you see now.

I think if you want to get a company cheap, you can, provided you are looking at

1) Small caps with minimum coverage.

Otherwise, we really need to look beyond the bad news and challenges and ask ourselves what is next and what is the longer term earning powers.

But how do we calculate DCF and earning powers conservatively? Earnings can fall by a lot during bad times and you will start questioning your calculations and assumptions. Of course we can have really conservative input in our calculations, but that would most probably mean we have to wait till sentiments is really bad to get our valuation, and do you still have the balls with you then?

I am looking at companies that have people questioning its moat. For example, Sembcorp industries and SIA engineering.

SIA engineering face the problem of new engines requiring less maintenance, and rightly, we should be worried especially since they have already cut dividends, a signal that management themselves wish to conserve cash.

So how do you keep your convictions that a company can "turn", it is still some valuation calculations or was it some qualitative analysis (Perhaps from the angle of insider) that gave you the confidence?

Or you simply do asset re balancing and know the bigger picture will sort itself out?

Maybe you can share with me? Will appreciate that generosity.