Speculating on overvalued stocks is the "kiss of death", in a bear market.

PaulRen's picture

A paramount reason for the SET and its industry failing is not just languished Thai economic growth but their behavior, in my view.  As here warned/outlined for some time over the past years. To no avail.

Over many years in the now past I often encouraged brokers & management here to not induce inept retail investors into trading which is a form of speculating,  As soo many studies have shown: these will loose money in/over time and then defunct never come back -or worse, like bad mouth SET stock investing.  When in fact it was the practice, often sanctioned by the brokers, which mostly failed. Trading/speculating is not the same as investing!  Just as taking a pill for the wrong ailment, or abuse, can be very bad and worse for one's health.  A hammer can build homes or kill people, depending on its used.  A car can bring you to your location -or into a ditch and worse, depending how you drive etc..

None seemed to listen.  Instead directly, often indirectly, kept promoted trading/speculating on often way-overvalued stocks, like for example DELTA of late which has lost some 50% since its hay days last year when it regularly traded as the most active stock here -and so likely devastated many retail investors which were sucked into it. Thai brokers here mostly did not adhere to proper industry practices....I know from having been a US broker for many years: there are very subtle ways to induce novice people to trade out good stocks for small profits while holding on to one's laggards which then in time often show huge losses.  It’s the same old story told again and again, “if you trade out your winners for small profits while holding on to your losers you will in time, have a portfolio of losers.”.  If one trades overvalued stocks, often with no automatic stop losse orders in place, it in time will generate (huge) losses. 

This to me, along with the lethargic SET overall bear market for a decade or longer,  is the paramount reason for the SET failing as is outlined but not addressed by a Tisco executive in today’s BKK Post article  See “Analyst lament SET has lost its appeal”, page B2.  Here its CEO points out how retail investors have all but abandoned SET investing which on average returned only 1% per year, over the past 10.  Well, too many did not invest but speculated on often way overvalued bad choices, which is the "kiss of death" in a bear market.  Yet, not at all addressing the often-inept local broker habits, irresponsibly commingling trading & speculating with investing, instead of responsible investing in undervalued companies, yes with attractive high dividends. 

For some time my final-last prime pick here has been TOG (11.9), a company growing while mostly exporting all around the globe, all the while paying 5-6% in cash dividends and valued at barely a p/e of 13!   Yet, despite being a great investor choice for smaller retail investors, nobody talks about TOG here, except me.  TOG stock price double in the past 3 years, while its earnings tripled during this same time, all while the SET languished.

Instead, again as just one example and there are many, relentlessly speculating on DELTA (67.5) which often is the most active traded stock, despite its 50% price drop of late: still trading at a p/e of 46 with a dividend barely 0.66%!  Or consider the Thai IPO market so often overpricing only due to being speculated on the first few days, after which "they are all but forgotten" as one CEO of a brokerage firm once told me last year, “well, after which the first few days nobody cares anymore”.   Now, almost as the final nail to long residing expats here:  the SET sanctioning companies here to forfeit NVDR holders their right to get newly issued free warrants. As here I reported of late, post letters published in the BKK Post and multiple mails complaining to the SET.  All to no avail it seems.

No wonder Thai and expat retail investors have increasingly abandoned the SET as a saving mechanism in recent years. Now, for a while already, its participation are at record lows!  When I first started here retail participation SET volume was around 65 to 70% of total vs. lately barely 28%. Terrible.  I here have given up trying to help/better this industry by acclaiming again and again to them in the past “change your ways or see your exchange languish”.  A year ago and before nearly screaming out: “bad money will chase out good”.  All to no avail.  Now its in a “fine mess”.  Sad.

The gnomes in the industry keep-on blaming mostly the same old factors over and over again, "oh it’s the bad economy, oh it’s the wars in Ukraine/Middle East, oh it’s the foreign factors or high interest rates"  etc…But rarely do some inward looking/thinking! These same used to say oh it’s the big foreign mkts. weakness/sell off, not so -as the US mkt. has been rocking up for years, even Japan setting new highs of late.  Times always change but not always for the better, and so must we, as individuals or we can only blame ourselves.  Unlike the saying, its not "the strongest which survive", its the ones most adaptable to change!  I am adapting by walking away in the sunset.


Offering Thaistocks.com URL name/content for sale.

By the end of April 2024, at the Thaistocks.com 27th anniversary, I will call it quits here and walk away offering this web site for sale, while not holding my breath.   Leaving members with my long bullish call on TOG (11.90), gong-ho (yes, as an investment), AUCT secondarily and my mid February '24 determined call on Chinese stocks  -viewed as likely bottomed. Identifying for us Chinese/HongKong ETF’s there -which one can buy directly on the SET (see my artice on this in early-mid Feb).  These moved up some 6-8% since.....my view is to keep "dollar cost averaging into Chinese/HongKong ETFs" during this year 2024. China is too big, too smart and too old to ignore now!  Presently at these very sold down stock valuations Chinese stocks overall are some 50-60% cheaper then Thai stocks!  So consider that my diversification theme going forward.  I have here also over many years always advocating slowly accumulating gold.

As a side, last but not least, The US market looks increasingly like a bubble to many/me -while the neocons in Washington flirt with disaster on their out-of-vogue hegemony US Empire decoupled from reality, morality. War mongering.   As a good summary, I mostly agree,  take a look here:    https://www.globaltimes.cn/page/202402/1307778.shtml

Best Regards,

Paul A. Renaud.

PS.  For old times sake, while I no longer follow PPS (0.39) for some time walked away, having viewed to bail-out just before Covit.  I do not believe they have a problem with this latest fiasco on Yamu/beach/ by this Swiss arrogant man assaulting a Thai Dr. Lady.  As is amply reported in the news.  PPS's  Phuket Yamu land looks well removed from this.  See below, PPS land is circled in blue, well removed from the troubled issue now in the news.  I note PPS CEO has recently been buying again PPS stock, just last being 200,000 at 0.41 in mid Feb. '24.  Just as a final follow up.