Should I cut loss on Parkson? Part III

In my part II, I expressed the need to let subconscious minds to surface to understand our irrationality. I'm prepared to lose money if the company fundamental deteriorates, so eat the humble pie and move on. I'll continue to hold on to a stock unless I can confirm my investment thesis is wrong. Hold? Yes. Scoop up with two hands? wait for the right timing.

I'm still very bullish about Parkson group because they are targeting middle to upper middle end of consumers. They are carrying a lot of branded quality products. This should provide pretty strong earning growth, however, one thing we as passive investors must be aware, there are things beyond our control -- management can screw up things no matter how careful we are with our stock selection.

A company fundamentals deteriorates at the wrong time can be expensive. If a company fundamental deteriorates in a falling market, the stock price can fall pretty hard. Growth stock will typically do better in a bull market but it will also fall pretty hard during bear market due to losing price momentum. This is an excellence investment opportunity but catching the right timing is extremely important.

One of the things worrying me is high crude oil price. There is no doubt that China is still pretty resilient in their consumer spending, however with the continuous petrol price hike, it may hit consumers' pocket at some point of time.

My last worry: meltdown of China stock market. Parkson seems to fall in tandem with Shanghai Composite Index. Ports which is another high end market operator seems to find its footing and moving in tandem with Hang Seng Index. If Shanghai Composite Index were to correct to 2,000 points, it's a potential of 25% drop. I'm not implying Parkson Retail Group will fall that much but the risk of falling further is there. We may be rational, others may not!