Since last week after meeting my uncle for breakfast, he warned me that many stocks going are to crash, now looking back it seems to be happening, many stocks limit up ends up limit down, thank god I escaped from such crash. I took the opportunity to invite him for lunch, at a Thailand restaurant.
Anyway for those who missed my previous article can read below :
https://klse.i3investor.com/blogs/learnmyuncle/2020-08-09-story-h1511614182-A_Breakfast_With_My_Uncle_Retired_Fund_Manager.jsp
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So we meet up in a Thailand restaurant, and below are some of our conversation:
Me: Uncle ! You saved me again ! If not I might had followed jump in those crazy limit up stock !
Him: Well done, don't follow to become the sheep.
Me: By the way, how do you look at the current market? So many stocks have gone down so much, the rally has ended?
Him: Put it this way, things that go up fast, will come down fast. However, everything remains back to the basic, the company’s earning and prospect. Those that can deliver, do not have to worry, those that have given fake promises,we must know how to recognize.
Me: How about glove stock? Especially SUPERMX has come down a lot after recent good result.
Him: Yes, can start to monitor already. It's an opportunity again.
Me: Really? Many have been panic selling last Friday due to the contra trading ban issue. I am a bit worry if this happen, will it cause further collapse?
Him: Haha, you forget what I mention during June. Why is it always when company releases good result its price starts to fall?
Me: Oh, I remember already, you told me that fund houses actually start buying, and come out with many bad news. Seems to be similar again, bad news like contra ban, vaccine news, causing people to panic sell again.
Him: You are right, ignore all such news, and focus on the company’s prospect. Remember that glove companies are going to enjoy stable profit for the next one year, this is very simple. What company can guarantee strong earning for the following year? And pay 30% dividend?
Me: SUPERMX surely, my first darling stock. Seems to be good time to enter some again.
Him: Yes ignore all the noise. Do look at it this way, SUPERMX is a nett cash company, and they going to gain 1 billion net profit in the following year. This will easily double up their cash position. With that huge cash pile, they can provide good dividend, take over or do new business to grow the company further, they already have the network, they are already doing mask manufacturing in CANADA and our country.
Me: This is such a great point, I never thought of it. Many people just look at the current price movement and short term prospect, never think from the company’s point of view but if price continues to go down, I worry retailer will continue to panic sell down, because from the chart I see it has already hit important support area so if it goes down more it can be so worrying.
Him: Yes, that's what fund house and banker want retailer to fall into. They can sell in the morning and cause price fall, once retailer panic sell causing price to fall further, then they can buy back at low. Another thing to take note of is that institutional and retail participation in bursa market are already about the same, 2-3 billion a day.
Me: So you mean that retailer also contribute big portion in the market already right?
Him: Yes, the market is no longer conquered by institutional. As long as retailer stop panic sales, retailer actually can influence the market already.
Me: Hmmm, seems like I must have strong heart moving forward and tell my friends to not panic sell if the company is still good. Just like EDGENTA, I am still holding & thinking to buy more now.
Him: Smart boy, this is how we should do it. If you are confident with the company, be happy when the price comes down, it gives opportunity to buy cheaper. Let profit run when price goes up, don't chase high.
Me: What a meaningful lunch Uncle ! Lets taste our TomYum soup, real tasty !
After this lunch session with my Uncle, I got new insight about the market again. Hopefully in the coming week market will turn stable and start to rebound up.
https://klse.i3investor.com/blogs/learnmyuncle/2020-08-16-story-h1512362983-GLOVE_STOCKS_A_Lunch_With_My_Uncle_Retired_Fund_Manager.jsp
