A restatement of confidence during dire times.
A restatement of confidence during dire times.
Investors whom got Thai bearish by mid summer ‘08 were perceptive in hindsight as since mid July the Thai market, along with our value shares, have only gone one way which was down. Never mind the generally good 1Q. and 2 Q profit reports since. In hindsight it would have been good back then to walk away and take a holiday.
But then again many of those very bears were dead wrong anyway, on the other side. This about gold and silver, which have combined lost 30% of their value during this same time. Oil has tanked over 40% since this same period and the US dollar rallied. Most bearish views of a few months ago were echoed with very bullish views on commodities, especially Gold and Oil. As members know I here advocated all along Oil would tumble and I made little comments on the level of the Dollar as it’s not part of Thai stocks nor do I believe one can predict currency movements. Except to view positively on companies like MBAX (and lately TUF), which should benefit nicely from a resurgent dollar. The bears also got the short Dollar position wrong which we all know rallied considerably of late.
The key, and the one I am firmly sticking to, is to find good growth companies which are not, or least associated with the US and EU downturn and besides have high cash dividends & very low p/e ratios...like 3-6. In Thailand I find exactly such companies which on top, have low debt levels. Only caveat is you can't be a huge investor as liquidity in these jewels is limited. You know my favored picks and I don’t’ want to ever expand on more, as it will only dilute my core favored picks. I am sticking with my list and so want to say here once again.
“In 30 years in this business, I do not know anybody who has done it successfully and consistently, nor anybody who knows anybody who has done it successfully and consistently.” John Bogle Chairman of the Vanguard Group of Investments.
Mr. Bogle is talking about market timing, meaning investors whom get out of markets at times only to get back in when they perceive things are getting better. The facts suggest that successful market timing is extraordinarily difficult to achieve, and many studies support this conclusion. One reason is that gains during bull markets far outweigh the losses in bear markets. There have been many studies in the US which support this view and I don’t think Thailand is much different. Investors whom decided to get out in time usually don’t get back in, in time, and so miss the next move up…only to chase the turnaround rally and then miss-out tremendous bargains. Remember market timers have to be right twice, once when to sell out and again when to get back in.
The main reason why I did not turn cautious is because the fundamentals in Thailand remain fairly solid (in the region second best after China), even as of today -and the stock valuations are about 1/3 the level, as compared to China. The dividend levels, the low debt levels and the disassociation with the broad US mortgage crisis are the other compelling reasons to just stick with it, in my view. The other reason of course is that I failed to see the heated political turmoil in the making here, as my view was that when Thaskin was gone things should get better, not worse. Sorry I was wrong about that and now we have a case of too late to sell. New investors should view this now as a rare opportunity to buy low, established investors should take some comfort that market timing usually does not work while sticking to values and collecting dividends, over time.
Sale of Ratcha Ploen stake is almost closed.
Regardless, I remain very bullish (among others) on TRC (4) where there is lots of good news in the coming! Lower oil and steel prices is positive sentiment for TRC -and their real estate project Ratcha Ploen, is very likely to show a huge windfall profit in the 3 Q.
Best Regards from Rainy Phuket,
Paul A. Renaud.
