Tag Archives: STI

SPH – At its lowest for now?

When a spring is hammered very hard, the spring back tends to be very sharp. This is probably the best description for SPH this week.

In the last few days, most of the news or discussions related to this stock appeared to be bad, or at best, neutral. Being a by-stander watching from the sideline, it appeared to me that nobody seemed to have anything good to say about this stock. Indeed, it was hammered very hard for the first 3 days of the week hitting a low of $2.54 per share on Tuesday and Wednesday. In the last two days, however, it seemed to have rebounded quite strongly to close at $2.68 by Friday, though it is still lower than the last week’s close at $2.74. Perhaps, these were some opportunistic purchases made by contrarians. After all, it SPH has never experienced this low except during the global financial crisis in 2008/2009.

 

For the last 5 quarters or so, most of the news related to the stock were generally not positive. Pessimism over this stock grew in every release of quarterly results. Perhaps, the sell down this week was in anticipation of the poor results for the coming quarter as well. So if the quarterly result is not as bad as expected, then maybe we can expect a small price re-bound. (I say small because SPH’s economic moat is not strong at this moment for a significant turnaround) Of course, the other way also holds true. If the result is worse than expected, then perhaps we should expect a further sell down.

    

(This was the abstract taken from a Facebook post in April 2016 for past students. At the time of writing the Facebook post, things were still not as bad. So the expectation was that it probably should stabilize at around $3.70. News turned out to be very bad for the next 5 quarters. Yesterday, the share price closed at $2.68.)

Here is the dilemma. It has been a happy situation to have unloaded all my SPH stocks in anticipation that SPH would face hard times ahead. It has been too heavily dependent on the print business. Since then, I was on a stand-by mode, waiting to buy them back at a lower price. It should not just centres itself around the print business. It has to lay out a sustaining business proposal on the table before the share price can turn up convincingly. Now, with the bad news already significantly discounted in the share price, it may be the time to re-consider buying some back as ‘insurance’ in case it really made a turnaround or at least stabilized after more than a year of battering. Hopefully, it is at least a breather for now. It had lost one-third its value from an average price of about $4. For all we know, the share price always lead the actual company performance. So buying back may be a good idea if we believe that something magical can happen in the future. Let us see what happens in the next few weeks.

 

Brennen has been investing in the stock market for 27 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.

 

 

Remember that money is made when we buy during pessimism

In the last few months, the stocks markets in many regions were reeling down from their highs around April. Several months have passed and many investors seemed to have distanced themselves from the stock market. Some even vowed not to come back again. Just a few days ago, the STI hit below 2800. it had fallen more than 20% from its recent high, putting it in a bear regime. But, then the question is why so downbeat when these may be  opportunities that we can buy back stocks that we had sold off during the highs. If the stock prices did not drop and remains high, it would be impossible to pick up the stocks again. Yes psychologically, we tend to be more pessimistic when the market goes down and less optimistic when the market goes up. But isn’t it that we have often been told and be reminded that stocks can go up and down. It’s only that we accept that there is volatility and willing to embrace this volatility that we will become more emotionally detached when dealing with stocks. Frankly, it’s not easy in the beginning of my investing journey, but over the many years of investing, after going through many cycles of ups and downs, I start to detach emotionally from the stock market volatility as I know I have no control over it. I just continue to focus on my long-term goals irrespective of the market conditions. Instead of crying over the losses, we should focus our attention on things that we can control, such as doing our day jobs, completing our projects and working on something productive and enlightening. That’s essentially why I am never in trading and, very embarrassingly, I have never had the first-hand news of the stock market. And, very certainly, I admit that I can never be a good trader.

To me, stock investing should not be a standalone activity. It should be  part of personal finance that also embraces money management. We should ensure that we have sufficient liquidity such that we are not be put into a forced-sale situation or be missing buying opportunities simply because we do not have sufficient funds. Just 2 day ago, it was reported on The Straits Times that $40b have been pulled out fom the emerging market. Certainly Singapore is one of the discarded victims as well. As mentioned in my earlier post, due to the relatively small size of our stock market (and in fact regionally), just taking away a few billions dollars off the stock market could bring down our stock index drastically. Yes, there is going to be a technical recesson ahead. Yes, the China economy is not performing well. Yes, the currencies of our neighbours are hitting historical lows, Yes, the writing is on the wall that US is going to hike the interest rate. But then, aren’t these yesterday’s news that have already been priced in the stock index. So while some funds might have left us, opportunities may present themselves such that by the time when funds do come back again, we can ride on the rising tide. Of course, I have to qualify that I do not mean that we should buy aggressively starting today. What I mean is that after all these brawls, isn’t it time to open up our eyes to look at the stock market again? Frankly, I am not expecting that the stock market is going to turn sharply in the next 3 months or so, or perhaps not even two years down the road, given so many issues that we have no control of. Neither do I dare say that this is the lowest point and that the stock market cannot go further down. What I am saying is that to make significant money, we have to buy during times when there is extensive pessimism when everybody is looking away from the stock market, and sell during euphoria when even those who have never been in the stock market are in it by herds and droves, not the other round. Perhaps, look back into your stock portfolio now and try to recall when you had bought and sold those stocks that you had made big money (at least percentage wise). Very likely, those that you had made big money were bought during bad times and sold during euphoria, unless you are a big-time speculator trading $100k each time without a blink of your eyes.

Also read:

  1. Market psychology – Are we at the market bottom? – 19 Aug 2015
  2. STI – Is it better to be on selling mode now? – 9 June 2015

(Brennen Pak has been a stock investor for more than 26 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.

 

 

It’s likely to be 3rd quarter window dressing

The stock market ended at 2787.9, a drop of about 4 points from yesterday’s close at 2791. Today’s trading range was drastic. At its lowest point, it was 2740.36 against the highest point of the day at 2790.60. The day’s range was a whopping 50 points difference. The climb started drastically only in the afternoon. But why did it made such a recovery after having dropped 50 points from yesterday’s close?

Chart

It likely to be an end of quarter window dressing. the climb is not likely to be sustainable. Perhaps, the STI may drop again once we go into the new quarter. Hold tight, guys.

(Brennen Pak has been a stock investor for more than 26 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.

STI – Is it better to be on selling mode now?

The STI reached a high of 3549.85 on 16 April, only second to the all time high of 3899.29 made on 10 Oct 2007. This means that the recent high was about 350 points or 10% below its all-time high. Unfortunately, the STI seemed to be going downhill from 16 April reaching at 3295.13 the end of today’s trading day, a difference of about 255 points from its recent high. This means that between 16 April till today, the STI had dropped quite significantly by about 7.0-7.5%.

STI_6mths

Given the drastic drop, many people seemed to be looking into buying or bottom-fishing as some may call. In investing psychology, we call this anchoring because we tend to anchor or fixate the recent high of 3549.85 as an anchor point as if the STI will hit it anytime soon. However, in reality, is STI going to go up anytime soon? Personally, I am of the opinion that it may not. In fact, it may continue to languish for a while given the uncertainty in the US interest rate hike. Economy-wise, I do not think Singapore did well to enable the local stock market to roar. Currently, we are also facing structural and labour issues that will take time to resolve. Regionally, China is also not doing well economically, and the regional currencies are also getting weaker. Hence, it is unthinkable how the STI can tun-around anytime soon. In fact, may be weakening gradually or hovering around this level at best.

Taking history as a guide, in the worst-case, the STI was at about 2370.3 on 12 May 1996 when the government slammed the brakes by increasing property downpayment from 10% to 20%. It was just shy of the all time high then of 2493.7 made on 7 Feb 1996. After 12 May 1996, the STI started to tank accelerated by the Asian financial crisis. In the following two and the half years or so, the STI tanked all the way to 805.14 on 7 September 1998. In total, the STI sunk 66% within that period.

(Brennen Pak has been a stock investor for more than 25 years. He is the Principal Trainer of BP Wealth Learning Centre LLP. He is the author of the book “Building Wealth Together Through Stocks.”) – The ebook version may be purchased via www.investingnote.com.