High growth and dividends, low p/e ratios and financial leverage.
Investors world wide just got a long and expensive wake up call. And the call is that hiding in 7-8% suprime or home mortgage bonds is not -and has never been- the answer to long term investing. The party there is clearly over.
Hence individual investors will once again have to get back to the real job of finding equity investment vehicles. That is if they want to get beyond the commodity bubble just now brewing/overflowing.
The richest man in the world now, Mr. W. Buffet, made his money solely on the value investing theme. Post US mortgage bonds meltdown, more and more investors will want to allocate capital to responsible long term investing, in values, not fancy products invented by banks. No more.
In Thailand, value investing is not domestically in vogue because the existing broker structure is nurtured to day trading. But more and more investors (Thai and foreigners) are catching on that for many years already value investing in high dividend paying growth stocks here has been nothing short of a "wealth creating" experience.
Realize that smaller market cap. growth stocks in USA most often trade at a premium p/e to the market multiple averages -and pay no or nearly no dividends. Here on the SET/MAI exchange its just the opposite, where Thai smaller mkt. cap. growth companies trade at a discount to the market p/e -and many pay nearly twice the mkt. average yield in cash dividends.
Its a local market distortion which has produced huge returns over the years. And this is very likely to continue.
When you subscribe to this service as a member, you will see some of our long success here...and some independent research which shows returns for many years by market cap. , not by sector. Where overall smaller mkt. cap far exceeds returns of large market cap.s .
--The local brokers shy this sort of thing because they believe their motto must be trade, trade, trade, large cap.s.
--The large institutional investors shy this sort of thing because they manage hundreds of millions of US$ and so have serious liquidity constraints/demands.
But their limitations/ignorance/constraints/handicaps..must not be yours! Investing with a focus on Thai growth, values, and high dividends, not liquidity, is an investor theme which should (has for many years) produce far above average returns. The key is:
1) you have to know how to pick them and avoid the various "wall flowers", and then have updates.
2) you have to have added value unbiased research well beyond the brokers', as these don't focus on values, they focus on trades. You have to understand that its very unlikely you will get such ideas from reading the local press, as these do not by any means focus on that.
Since 1989 I have concentrated my investment style on value shares in Thailand, not trading big cap.s. I have long understood that if you get beyond the "liquidity monsters", above average growth trend in earnings can be owned at a reasonable stock price. This is the true Thai stock market success story here, yet still mostly unknown.
The just past shows it yet again, where the SET benchmark index is no higher today then at its previous peak in early 2004. Yet many secondary picks have soared in value since.
Best Regards,
Paul A. Renaud.
