Tag Archives: stock investments.

If we missed the best stock upsides

Today marks a little more than one month after Donald Trump won the US election. When he first won the election, the market at first reacted negatively, followed by a strong rally and then tapered off in the last two days. The banking stocks, in particular, were the biggest beneficiaries of this rally. DBS has advanced from about $15.20 to a high of $18.32 and then settled at $17.83, an increase of $2.63 or about 17.3%. Similarly Overseas Chinese Banking Corporation (OCBC) had also advanced $0.73 or 8.6% from $8.53 to $9.26. United Overseas Bank (UOB) also showed a significant increase of $2.31 or about 12.4% from $18.59 to $20.90. Of course, if one holds the bank stocks, the return for this month alone is extremely significant.

Despite the rally, many people still asked the same question just a few days ago– DBS bank, can still buy now? Does it mean that these people missed boarding a stationary wagon and is now chasing a moving one? Actually, if we look at the bank stocks, in particular DBS, it has been parking below $16 for many months, right from the beginning of the year or even before. Why do we need to wait for it to move up to chase it? Why can’t we buy it at our own pace and wait for the rising tide to raise our boat?  It appeared logical right now in hindsight, but seemed to be an irrational decision when the share price was oscillating between $15 and $16 per share for a long time. Very often, when a stock or the market rallies, the onset is often the sharpest and this is when the smaller players start to take note. By the time when one start to confirm, double confirm, triple confirm, a significant part of the upside has already been priced in the stock. So by the time retail investors start to buy into the market, perhaps there is only the last 20-30% upside. We always come across a statement to the effect that if we missed the best 10 trading days, our stock performance would just appear ordinary. Worse still, it could even be negative performance despite that the STI moved up significantly. To me, stock market has a place for both big and small players. Big players cannot play like a small player and a small player cannot afford to play like a big player. Big players buy into the market to cause the market rally, but the advantage of small players is to be able to buy into stocks without causing big ripples in the stock market. That’s where we should play to our advantage. Remember that our wealth is not just measured by the amount of money we have in the bank. Our wealth is measure by the sum of our cash, stocks, properties and whatever assets that we possess.  So, there is no need to be in cash all the time. It is important to engage the stock market all the time than to wake up only when the rally has already been well underway.

Happy investing!

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Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

现金不是净利,净利也不是现金

说到盈利,许多人总是会把公司现金流动及净利扯在一起,以为在账目上的净利就是相等于公司那年所取得的现金。不仅是刚出道的投资者,甚至一些已经在股市混了一阵子的股友也有这错误概念。其实净利及现金流动是两回事。当然在定义上它们具有一定的关系,但在操作或分析时,我们必须把它们扯开。在一些行业,现金及净利数据可能非常接近,但另一些企业这两个数据却是天差地远。就用我们对面的煮炒摊位打个比方:除非摊主必须付出一些特异开支,我有十全的把握奠定其企业每天所收取的现金总是会高于其营业净利。

于同样说法,一家公司可能每年都取得正数净利,但是现金一直没有流入,那家公司如果还没倒闭就可能已经摔入一段非常艰难的日子。 以下是我教育中心给一家在新加坡交易所上市公司所整合的数字。通常我们在年度报表只能取得两年贯的数据,所能看到的信息非常浅薄,所以本中心特意为上课的学生设置合计版才能够更深厚了解公司的动向。图案的一览表数据正是我从合计版所取出的讯息。

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为了避免读者能够寻出讯息背后的公司,本人特地把真实的股价乘上了一个定数。这样,读者才能够于非常中立的目光探讨所呈上的讯息。如果我们只是单靠每年所发出的两年贯报表买入股票,我们所采取的买卖策略有大可能非常不理想: 一卖就跌,再买又跌,逢买逢跌。因为近几年来公司股价一落千丈,从2011 年每股$3.00 的高峰掉到2014年的$0.60,跌幅百分之八十。公司最近的股价更显著低迷,已经跌破了每股 $0.35 的大关。

 

所以说,如果我们一直把重点集中在许多媒体所重视的净利数据上,那我们就疏忽了一些其他同等重要讯息而买进了已经正在腐烂的股票。

但我也必须预先警告:现金流入也并非是好事。在一些特殊情况下,公司钱库增加可能意味公司的领导人没办法有效的把现金流动发挥效应。更糟糕的情况,可能导致公司以后营业状况显著疲弱,甚至翻不起身。

祝大家股市行好运!

Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

If we want to be in the stock market, we have to accept the volatility

 

I saw this interesting short passage in a forum asking for stock recommendations. Let us call him Mr A. Needless to say, Mr A is hoping to get some easy resturns. He claimed to be a retiree, and was ‘concern of the volatility except for blue-chips’.  Frankly, if we want to be in the stock market, be prepared for volatility. It does not matter whether they are blue chips, mid-caps or penny stocks. As claim that blue-chips are not volatile, I don’t think so. They are just as volatile. Even extremely high-price stocks like Jardine C&C can move 80c to $1 on certain days. The banks can move between 40c to 60c in a single day. Aren’t they very volatile as well?  Mr Market has no eyes. He does not know whether you are a young rookie or a veteran player. What Mr Market knows is that he has to move every single day. Stocks move up and down depending on company performance, sector plays, economic outlook and general sentiments. In fact, at the point of writing, the super-penny stocks are starting to move. These super-penny stocks, generally, plagued by high debts and low profitability, seemed to be moving up! I am quite sure if the super-penny stocks are moving for a while, Mr A would forget what he says in the forum and start to follow the market, right?

Generally, a player who asks for a recommendation do not have a proper investing strategy nor discipline to trade properly. In other words, he does not do his due diligence. He simply moves from stocks to stocks. By the time he catched on the news, monitored for a while and finally moved in what was considered a ‘perfect timing’, he might be in to hold the last baton. Just by reading that short passage, I can tell that Mr A has some limiting beliefs sub-consciously, eg. penny stocks are volatile, blue chips are expensive and perhaps time-frames are too long. If Mr A gets into a stock, he expects the stock to move up wthin a week. Otherwise, the one who recommended him is considered to be ‘buay zhun (不准)’  In fact, there are never short of stocks recommendations out there. Whether in investingnote, in Facebook or any social media, we can see many stocks being mentioned. He could have easily follow one of these recommendations to do his trade. But, do be careful, these trades do not come with responsibility. After all, you do not pay ‘the expert’ when you gain, so why do you blame him when he makes a wrong call. Remember this, even if the recommendations were accurate, they may be suitable for the expert in terms of cost, time-frame and trade frequencies, but it does not mean that it is also suitable for Mr A.  In fact, the very good ones may be the ones who were quietly doing their trades and laughing on the way to the bank, who knows?

Instead of looking around for recommendations to gain quick money, it may be important for Mr A to know himself better. (知彼知己、百战仍不殆) In fact nobody knows better than he himself in terms of how deep is his own pocket, his investing holding period, expected return, the extent of the volatility he can stomach etc. Mr A probably can do better by focusing on a watchlist of say 10-15 stocks, and be ‘expert’ in those stocks. Day-in and day-out work on those stocks. Perhaps, he can gain signifintly from there.

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(Brennen Pak has been a stock investor for more than 25 years. He is the Pricipal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”)