Friday, 29 August 2014
Salesman A : I am going this rural town to explore new business opportunity.
Salesman B : I will be going there to assess the market too.
After their trip to the rural town, both salesmen reported back to their respective company on the viability of setting up the shoe business over there.
Salesman A : Boss, cannot do ! I spent the entire day and noticed that almost all the people do not wear shoe ! If we set up our shoe business there, surely there will be no business. We should only go to places where people wears shoe.
Salesman B : Boss, wonderful ! I spent the whole day and noticed that nobody wears shoe and thus it is a huge market opportunity. Give them the awareness to wear shoe to protect their feet. If we set up our shoe business there, it will surely flourish. It is a new business frontier.
This is a story I think many might have heard before. It is about 2 salesmen have different opinion on how they view business opportunity on a particular same situation.
I see the above story is quite relevant to our stock investment. Essentially, stock investment is like putting our money into a business which we think it will flourish over time. The business model must not only sustainable but must have plenty of opportunities to expand. It is not good enough just maintaining the current rate of doing business. Revenue must increase over time. Profit will catch up as the company will improvise to reduce cost as the company understands more deeper and have more knowledge about the business over time. With revenue increasing and cost reducing over time, the only thing that sure will go up is profit.
Back to the relevancy of the above story. A good businessman or salesperson will see great opportunity ahead in an uncharted territory while other will take the easy path of following the established market. Of course it will be safer to join the established market but competition is higher as you will be the newcomer up against the big guys. Investing in stock market is the same. A good investor or value investor will see great opportunity ahead at time when the company is moving into uncharted business territory. Average investor will normally shun this type of company until they show good results. Granted. But by the time the company shows good results, the average investor like you and me will not be fast enough to see it. By the time we see it, the big guys are already in it and the average investor will have to fight it out with them or with everyone i.e. chasing after stock and end up buying at higher price which by then there is lesser room to go up further. Sadly, this is what most average investors do, that is, only take investment action when price started to move up, but not based on company's business fundamental. Company's business fundamental has been relegated to second priority. Even though it is nothing wrong with this, but it is not wise strategy. You will end up just another story of Johnny comes late. Surprisingly, many an average investor is contented with such situation.
Currently, stock market is full of pessimistic sentiment. Have you heard of this quote - "Maximum pessimistic is the best time to buy and maximum optimistic is the best time to sell". The problem is when maximum pessimistic has set in, we already short of money to buy because we already fully invested at the time of maximum optimistic. Whilst I don't fully subscribe to this quote but certainly there is one or two things to learn from this quote. I would advise investor to set out their investment goal first. Once you have set your investment goal, any situation of the stock market is time to buy or sell. I have set my investment goal for OCK since June last year. Here. You see, there were so many strong ups as well as many terrible downs since then until now but I have been patiently stood my ground because I have set my investment goal for this company right from the start. If I have sell or sell-then-buy-back which is the most favourite strategy among retail players, I think I would not have make that kind of profits as it is now. From what I gathered, the next four months will be interesting months for OCK. Yes. I can't wait for the New Year to come. The company has announced their quarterly results. Good or bad, you judge yourself or wait for analyst's report (this will be another Johnny-comes-late case again). But I am certain this will set a new tone for a better results for the coming quarters.
As for Hovid, the company has announced their full year results. Revenue improved and profit dropped slightly. I am satisfied with the results. As expected, not much of excitement. The company announces a dividend of 0.5 cents and this is good for any long term investment.
Its price (Hovid) closed at RM0.41 on 28.08.2014.
Its price (OCK) closed at RM1.40 on 28.08.2014.
Thursday, 28 August 2014
Admittedly, this month is not a good month for Presbhd. As usual, many analysts have come out to caution about the company's missed earning target. If one were to go by purely on the analyst's call, one would be very busy buying and selling stock. Is this not will make us a short term player? In fact analyst will give out recommendation every 3 months or so which is coincide with the quarterly reporting session. It means that if one is to strictly follow this routine, one will end up buying or selling every 3 months or so. And this of course will make your broker very happy. Imagine if you only make investment action to buy or sell once every year, your broker will be out of business very soon. Of course, there is nothing wrong for these analysts to chunk out report after report. After all, it is their job to do so. But think about this. Have you ever wonder why analysts or research houses are so generous to publish their reports for the public to read for free? Ain't these reports are meant for their private investors or clients only? Or are they truly doing it for free public service so that everyone can make money together? If everyone makes money, who loses money then?
Yes. Presbhd stock price takes a beating recently particularly the last two days. This mainly because the quarterly earning results is not so good, so the analyst said. Let's take a deep breath and relook at the profit numbers for the last 4 quarters : 14Q2 (7.0mil), 14Q1 (6.4mil), 13Q4 (10.7mil) and 13Q3 (12.3mil). I concluded that the numbers are decent. And don't forget, the dividend keeps flowing in.
In conclusion. What I am saying is that the decision to buy or sell or hold is entirely yours which must be based on your investment goal. Certainly investment goal is not and must not depends purely on analyst's report alone. What happen if one analyst says buy and another analyst says hold and analyst says sell. I, for one, will never sell just because one quarter results did not meet the target (who decides the this target anyway). As long as the business structure of the company does not changed, there is no reason for me to follow the analyst's report. Be patient. It is not end of the world.
Its price closed at RM1.90 on 28.08.2014.
Monday, 25 August 2014
With KLSE market is kind of unexcited recently, it is good to take a back seat and relax and take a look at outside world, particularly the US market.
I always have a strong interest in Google and Apple stocks. Not only because I have some very small interest in Google stock but also because these 2 companies are so prominent in our life. I think no one can deny that almost everyone in this planet knows what Apple is famous for as well as what Google is famous for. Of course there are other brands too that we are so used to like Coca-Cola, Samsung, Microsoft, Facebook etc. Most Malaysians can easily connect to these brands one way or another. Even the young kids know who they are. Coming to think about it - do Malaysia has any product that have prominent presence at world stage? Perhaps AirAsia, SP Setia, Petronas .... how about Tongkat Ali? I don't know.
Apple Inc. split its share for 7-for-1, converting a share that closed at $645.57 to seven shares valued at $92.22 on the morning on 09.06.2014. Currently AAPL is at $100.30 a share which is nearing the company's intraday high, and Google Inc. split its share for 2-for-1 on 03.04.2014, although in a different fashion. In the stock price increase war since the events, Apple has won handily. The anticipation for the iPhone 6 has overwhelmed Google’s growth dominance in Internet advertising, both on PCs and mobile devices.
In the past three months, Google’s shares have risen 8%, which is less that the 10% advance in the Nasdaq. Apple’s have spiked 16% over the same period.
The two tech giants are among the three most valuable, based on market cap, of any company traded on U.S. exchanges. Exxon Mobil Corp. (NYSE: XOM) rounds out that group. Apple’s market cap is $439 billion, Exxon’s $403 billion and Google’s $257 billion. For comparison, the entire market cap for KLSE is $556 billion which consist of one thousand over listed companies.
|Its price was hovering around $640 a share before the share split. With its price closed at recent high above $100 a share or equivalent to $700 a share, this reminiscent of the good old days|