Sunday, 1 December 2013

Datasonic - the unparalleled stock

It has been quite a storm created lately because of its meteoric rise from a relatively unheard of stock into a much like celebrity stock. Much fear has been created not because of its strong stock price performance but because of fear to miss the boat should the price keeps on shooting the roof.

I had made few comments in i3forum for the past few months. From what I observed is that most people are more willing to bet for a short term gains rather than aiming for a long term gains which could multiple the gains of an unimaginable proportions.

My years of experience in stock market and observing people's behaviour over the past decades, one profound observation is that most people that tend to have irrational investing behaviour and is probably due to lack of investment strategy. It was the same then and it is the same now.  One has to have deep understanding of the real meaning of  Investment Strategy. It has very broad and deep meaning. Take for example, if your bought a stock at RM1.50. When the price reached RM2.50 and you sell and pocketed the profit. Good and fine, only and only if one did not enter again should the price move up higher. If one did, one is technically pouring back whatever gains one had made earlier plus top-up new money because the stock price is now much higher. Say, the stock price keeps on going up and hit RM4.00. What would normally the same investor do? Stay side way? Probably. If it went up further to RM6.00, what would the same investor do now? Stay side way? Chances are he or she will re-enter again because he or she is unwilling to miss the boat again. Isn't this is a vicious cycle? Take this further for discussion sake. The stock price went up further to RM7.00 and at that time, there will be many comments offered that there are more room to go because of its strong financial results and whatnot. If he or she decided to sell, then it is fine and good again. Say he or she did not. Later, the share plunged to RM5.00 level. I am quite certain he or she will sell because of the worry that the stock price will fall further. After all, previous gains made earlier on can more or less cover this losses. Sound familiar? No worry. You are not alone. Are you wrong if you have been in such situation? You are not wrong either. You did make money during the first round and because of your luck is not on your side during the second round, that is why you lose money.

If your are a strong and disciplined TA practitioners, the above scenario may not be you. That's why I always have great respect for TA people. Having said that, there are times TA could miss some very good opportunities. Let's look at Datasonic case. If TA is anything to go by, you would have take the money from the table somewhere mid way during the rise. Safe and sound now because a strong TA practitioner will unlikely to re-enter unless there is a plunge in stock price.

What I am trying to drive at from the above discussions is does it matters what comes on next Monday if you have bought the stock at RM3, 4, 5 or even 9 earlier IF you truly believed this is the stock for future?

Look at the numbers in the newly released Q3 report and also look at the accompanying statement with the report, if you can decipher one key point in that statement.

So much for the tactical aspect. Let's talk about another aspect. I must admit I do get some special information sometime. I sounded the alarm back in early September and I did briefly mentioned about the stock to some of my associates. As usual, I was probably talking to myself at that time because the stock is unheard of, even most analysts are not into it just yet. My team had taken huge position back then. Yes, my team. I was unmoved when the stock seemed to have started to reverse trend on 20.11.2013 and not prepare to call for intervention mode. All these because of having an Investment Strategy in placed. As I said, does it matters me what comes on next Monday even if the stock price plunged? Not at all. On the other hand, does it matters me what comes on next Monday even if the stock price keep rising? Not at all too. This is because I truly believed this is the stock for future.

Little beef to share perhaps. I have no longer pay much attention on how the stock price moves at the moment. My team has taken a step further and is working on the scenario 2 months down the road when everyone seems to be pre-occupied with what comes after share split. What we are doing is creating permutation of scenarios to mimic the situation 2 months later. In fact, there are so much data involved that my team had to bring in more computer brain power to get things going smoothly.

On the another note, the individual transactions were quite small over the past few weeks. We are gathering information as to who was buying or selling. If you don't understand what I meant, try compare with Maybank's individual transactions throughout the trading day.

Investing is meant to make you happy and rich. Invest wisely. Good luck.

Its price closed at all-time high RM9.40 on 29.11.2013.


  1. UncleZ,
    Can you tell us what key point you ve found in 3Q report?
    Thanks a lot.

  2. "Group is expected to continue to perform BETTER in the remaining period of the financial year ending 31 December 2013..."

    The current quarter is considered to be very good by most standards. What will the next quarter going to look like if the board is of the opinion that the next quarter will even BETTER? The choice of word is very significant here. I am glad they decided to use that word instead of using a more standard word like "satisfactory", "remain positive", or "optimistic". It shows they are being fair to the general investing public.