Tuesday, June 3, 2008

Why I bought Parkson?

At last I bought Parkson, after waiting for 2.5 months. I made the first entry about Parkson by examined the macro picture in March 15. The next day, I wrote a brief entry about Parkson. I was a bit unlucky because Parkson went on sales around $ 5.40 - $ 6.00 but having insufficient funds. I told myself between discipline and making money, I prefer to preserve discipline. Parkson continue to deliver earnings at high growth rate bring down valuations quickly.

Learned something new, when a stock has presence in many countries, volatility will jump cause by good news or bad news. If something were to happen in China, Hong Kong, Vietnam or Malaysia, news may move price, could be very wild too.

Two negative catalysts had brought down the price so far (i) disappointments by Hong Kong investors (ii) Vietnam stock market turbulence. Will there be a third negative catalyst to bring the stock down another 10%? It may well could happen but I don't know.

You may notice that I don't use that much of technical analysis. I derive my entry price largely by valuation and observe general pessimisms. I'm happy being approximately right - if the price goes down more than 15%, I know I bought too early.

When I saw Parkson opened around $6.10 this morning, I figured out with 5% intra-day volatility could bring the price down to $ 5.80. So just ordered 500 shares at $5.80 and went on to work. Just a very simple mechanism to time my purchase - neither too technical nor too scientific.

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