Liquidity is relative.

Liquidity is relative. If some SET share were more liquid they would never be so cheap.

Dear Thaistocks.com, I am really amazed to see how you can draw serious and reliable conclusions from your 'Top 30 selection' survey and would like to submit to you a few figures and remarks for your consideration :

1. Figures -volume (daily number of shares traded in your sample)2.882.243 on January 2nd 19993.764.149 on March 31st 2001 -daily turnover of less than 1 million baht (number of shares in your sample)22 on January 2nd 1999 21 on March 31st 2001 -daily turnover of more than 1 million baht (number of shares in your sample) 8 on January 2nd 1999 9 on March 31st 2001 -average "per cent’since inception of the 20 most illiquid shares of the sample 97,1 % -average "per cent’since inception of the 10 less illiquid shares of the sample 16,7 %

2.Remarks-your sample represents less than 1 % of the total number of shares traded on the stock market. -the best returns (per cent since inception) are achieved by the most illiquid shares which sometimes cannot be bought or sold (at least in sufficient numbers) at the indicated prices. Therefor the average of 70,3 % is biased. -the more liquid the shares in the sample become the more their returns behave in line with the general performance of the market

3.ConclusionWithout indicating in your survey the volume and the turnover of the individual shares of the sample, I believe a casual visitor of your website can only be mislead in believing in the results and the conclusions of your survey which "theoretically" are correct but in practice are highly hypothetical as your survey concerns less than 1% of the number of shares traded on the SET and as there is no real and/or representative market in most (20 shares) of the top 30 selection.

yours sincerely,

P. P.

Dear Khun P.P.,

Thank you for your observations. While we do not agree with all your quoted numbers, yes we are keenly aware of your points raised, in fact it comes up often. While I might think even more about how to answer you consider the below my initial quick response to such I dare say, narrow view.

First, I note you do not mention the fact the these "top 30" where 2 1/4 years ago, market capitalized at over 1 Billion US $. Hence to say or hint that they are small or insignificant is not fair when viewed from an individual investor stand point.

Second and most important, my point with this model portfolio is not to say that "one could have made 70%". (Although I know some subscribers whom did). My main and in fact only point is that on the SET, these are the kind of shares which have "worked" well for individual investors, and not the remaining 98%, performance laggers! As remember during this same time, the SET dropped 25%.

Let's face it, most individual investors allocate a few hundred thousand baht per stock, at most. Most want to save for long term, where liquidity is a secondary consideration, regardless what the broker thinks/or pushes or is brainwashed by.

Regular dividend income and "deep values", is what these investors want first and foremost. Let us never forget, not all have these/your heavy "institutional restraints".

Third, a number of the shares mentioned in the "top 30" and elsewhere in our work, have woken up with a vengeance after some rational investors discovered them during the time. Like, CPF, CIT or TUF....or most recently OGC. (This last stock was dormant at 8-11 but now trades almost a million shares a day). Ask yourself why it was so inactive 50% ago.

Fourth, double digit yearly cash dividend income along with raising earnings per share besides ridiculous low stock valuations are to some far more important then liquidity, which in any event is *never* endlessly priced. Most of your mentioned 98% simply do not have any of these real investor benefits.

Fifth, the main reason why many of these shares are so illiquid is because they are so cheap. It goes hand together. They are bargains which go begging! So to us, it is a privilege to get a few thousand shares here and there.... because "accumulate buy" and "accumulate sell", are to often forgotten execution strategies around here.

I for one think that this liquidity driven monster obsession you elude or even are married to, has died when the Asian Crisis started 3-4 years ago.

After all, with real estate or a condo, one is even more illiquid and besides you can't just sell a small amount at the time. So does that make real estate even less worth?

The real question is: why have not more Thai (and Foreigners) pointed out where the true stock "jewels" are the be found on the long lagging SET.

I guess, it is still the best kept secret around here.

Best Regards,

Paul A. Renaud.

www.thaistocks.com