Monday, January 30, 2012

Liquidity and value investing???

I did not realize that I did not post for almost a week. Writing ideas almost dried up. Thankfully a reader ask me this question.



To answer your question honestly. I don't know the answer especially from technical stand point.

I do understand the concern of the question especially those investing based on value investing principle. Patience is a virtual but sometimes it will cost an investor too much. Let me give you an example on a stock that I wrote earlier about Shangri-La.



Shang has been moving in a trading zone for the longest time after the dot com bust sold down! Six years, your money trapped for six years if you bought after the dot com bust!

If you apply on criteria of earnings quality, brand name, management, etc.......you will have every box checked. But why the hell the price moving sideway just like that?????

The stock is also owned by reputable institutional investors. See this?



Suddenly the stock would just shot up from 2006 to 2008 with increased volume? It was also breaking out from the trading zone?

Two simple explainations:

(i) general or overall market is approaching euphoria thus all boats got lifted up.

(ii) general economy booms -- earnings will keep beating expectations thus, higher and higher valuations tagged.

If you are looking for something actionable. Here is another one. TDM is a value stock that made a new all time high. The trading volume is pretty good. Plus this stock has what I called Mr. Koon's premium.



Caveat: internal momentum of KLCI is weakening. If you want to punt on TDM, please don't curse me when you lose money because you refuse to cut loss when you are wrong.

THIS IS THE SINGLE MOST IMPORTANT KEY SUCCESS FACTOR OF A MOMENTUM PLAYER. IF YOU ARE THE TYPE THAN CANNOT CUT LOSS.

CUT LOSS!

CUT LOSS!

CUT LOSS!

I REPEAT. IF YOU CANNOT CUT LOSS. DON'T TRY THIS METHOD.

I earned my readers trust and loyalty because I made calls when the stocks are depressed and not when they are hot.

This is my simple view of this issue. We all can argue all we want about catalysts but the loudest of all is breaking a new all time high with good volume. Hope this helps.

P.S. I invite readers to post questions to help me a bit. But you should also know that the answer you see may not to your liking but I will assure you a candid answer. Thanks. :)

1 comment:

tangling lee said...

Hi, may I know where to get the top 30 shareholders list?

Thanks.