Broad sell off masks different companies' earnings impact.

paulren's picture
Category: 
Introduction

Many viable SET companies have dropped considerably in mkt. price with little discrimination, despite there much should be! 

The SET is now in an oversold position... obviously nobody knows if it will turn down once again and flirt around 1000 (on the SET index) where it has rock solid support. Its not a question of if, but when, the upward turn comes.  I have my new "bottom fishing new model portfolio" thought out in my head already more or less, just trying to decide when is likely the ideal time to post it here, for contributing members.  

There will be some whom believe to just buy-in some ETF's or a bank offered stock mutual funds, but I claim with vigor this is not ideal.  For one, the economic recovery, post V19, will be uneven with some sectors suffered far more then others.  As pointed out in a previous post here: not all are created equal even while most all have sold off dearly.  Some companies will never catch up revenues/profits lost in the recent past, others will see some pent-up demand where once some kind of normalcy is returned, there these will flourish for a while.  Call it the catch up on pent demand list.   ETF's will by definition favor the largest by mkt capitalization stocks, while neglecting high dividend choices which are often secondary smaller or mid sized cap.s.

Because of the ever decreasing level of interest rates (a trend which I long here predicted to persist) high dividend stocks should now even more dominate in a rational investor oriented stock portfolio.  The reasons are obvious:  get paid while you wait, get paid if the market takes longer to recover, get paid well while near 0% returns in bank saving account balances.  Last not least, a company with a likely high divided will have an "invisible hand"  holding it up better if another set back occurs.

Of course dividend pay-outs are always up to the companies' board of directors -and so never guaranteed.  If some companies' sees even a temporary fall off in net profits, so will likely its dividend.  But when things get back to some form or normalcy (say 1-3 quarters) dividends should quickly bounce back!  Point being, that unless fundamental something changes for the long run, high dividend stocks in resilient sectors should hold up well, especially going forward now. 

Consider the following reasoning: Say you got an investment opportunity which promises a likely 7-8% annual dividend return, but say not for the next 3 months until the doors open for biz. again.  Would you think such an opportunity is worth considerably less then an other investment which say pays 3-4%, starting immediately.  This is where the mkt. irrationality sets in: many viable SET companies have dropped considerably in value with no discrimination even while there should be!  Hence now is not a good time to consider ETF's, as they will not discern values and high dividends and likely pent up demand vs. more longer term pain.  Fundamentals now matter more then ever and a portfolio of select companies, say 7-8, can in these dire times benefit from experienced "cherry picking".

For less experiences investors you will over the next several weeks see an XD sign posted, after a stock symbol. This means the date has passed to receive the dividend for this just past period. On the XD date, the stock will open lower by the dividend amount per share.  Of course from then on, market forces takes over.  Realize some have already posted XD with the payment date to follow soon.  I notice, many payment dates shown to be on April 30, which happens to be the 23rd anniversary of Thaistocks.com.   XD date and the payment date, are not the same.  I have found 2 companies which state a dividend payment of 10-11% despite having little or an even positive impact on the current V19 malaise. Learn about them when I post my new model, very soonest.

I predict we will likely see a scenario where many go XD only to see their stock prices climb higher despite.  Well, because the SET market is oversold and undervalued as I and other long term pro's would agree.  I welcome here all already renewed Thaistocks.com contributing members -and remind the rest to renew by April 2 to be on board of what is very likely to be an exciting entry point.   If not on board here yet, write me an email without delay at  paularen@gmail.com

Best Regards,

Paul A. Renaud.
www.thaistocks.com