Thai stock Graphs leave much to be desired.
Most SET brokers have their own in house web pages and a few are even rather well done besides informative. We regularly spend time and make the rounds to some of the better ones. Many investors the world over, look at these various new internet based investment and trading tools. One such popular one being the electronic graphing of any SET stock price, as shown over a selected period of time.
But just viewing stock graphs can give a person, more often then not, the wrong impression that one can predict a stock's near future price movement. It is always easier to look at something then to think about it. As it is always tempting to self-declare so called "price break-outs" or, as is perceived, violating a "price support line".
I for one often remain skeptical of such dire predictions without any additional knowledge and understanding of the company's basic business operations and expected growth rate, as is compared to the current stock price valuation.
"This stock has just now broken out of it's trading range", a trader often proclaims. If the stock then fails to increase further in market price, it is then called, "a false break-out". The stock will move up in price unless it does not. Such rhetorical non-sense is ill advised for rational long term investors. Buying stocks just based on past price movements is at best a tool for speculators, no matter how good the graph looks!
While a well crafted stock graph can serve a useful by-purpose, it is only portraying what has already transpired in the market place. Much lacking here is that all five sites I recently visited -were lacking in stock graph completeness and what is lacking is not even mentioned in fine print to the unsuspecting amateur trader/speculator.
Consider the largest stock in the Agri sector called Charon Pokphand Foods, (CPF). If you look at its past two year stock graph it depicts a relative boring picture by all 5 stock services I recently reviewed. Yet, in the past 18 months CPF had two separate 10% stock dividends, a 12 Baht cash dividend, a rights issue where you got to buy some additional shares at a steep discount to current market prices. Besides all this, one got some free warrants -which recently traded at 4 Baht. Yet none of these real shareholder benefits are shown on any of these stock graphs I sampled.
The fact is, CPF has been one of the top performing stocks on the SET during the past difficult 2 years, but do not count on local stock graphs to show you this. CPF was one of our "top 30" value share selection, as published at our web site on January 2 '99.
The same is true with a large "SET 50’stock we like, called Banpu. In early August Banpu was trading around 18.50 to 19.50 Baht per share. Currently the price has been around 18.25 Hence, a local graph shows this stock has lost some 2-3% in value. Not so, Banpu paid a tax favored 1 Baht dividend in late October. No stock graph we saw stated nor adjusted for this.
In USA just about all stock graphs I have seen are fully adjusted for such important share holder benefits and if for some reason this is not so, it is clearly stated.
Yet, none of the crisp graph services we reviewed here included adjustments for dividends or rights offerings and /or stock splits. Not just the brokers we reviewed leave this out but a few independent services as well. We think investors should beware of fancy stock charts -as they may be dangerous to your financial understanding on what exactly has been working on the SET, that is investment wise.
Paul A. Renaud & Team.
November 14th 2000