March 19th 2014
Some investor notes know how and helping to a better understanding. A new quality idea/choice I like. Here is member article which I also today open to all registered users.
Many SET bulls and bears got to be surprised at the speed of the recovery only weeks after the Thai political deluge which is still not over, more likely always ongoing.
While the SET index is up only around 6-7% from its nadir in January, many stocks have fared much better. Some stated favorites like DEMCO, SITHAI and CRANE rising some combined 40 % since the start of this year. Overall my combined favored choices performing very well year to date. This shows gain how it’s a market of stocks here, far more than a stock market!
An novice investor doctor lady told me just this morning how she is “going to wait for the politics and economy to be more stable before investing”, not realizing that in the meantime some successful companies’ are doing already very well. This again shows how different people have different understandings, attitudes and per-disposition/temper etc..and how we are all so different with different views.
By the time things are more stable political and economy wise, it may already be time to nail down some profits. There are so many different styles to good returns, not just right or wrong. But as it looks as of now, staying out this year was not one of them.
Some investors look for momentum where a boring stock is just that, best left alone. They get excited to buy when a stock price is moving as then "its alive". Others think you can’t chase stocks upwards as you may well get stuck, or at least loose the edge. Look at CRANE a few weeks/months ago, it was the bore with no volume and not alive. Yet, those here whom accumulated it during the just past months as I viewed here to building up a nice position before it woke up, are looking good. Some investors think its wise to only buy woken up stocks. I agree at times this is true. Like gold is likely a better buy at 1400 then now, as by then it may well be on the way up again.
Understand the accumulate buy/sell concept
Many investors don’t understand the accumulate buy/sell concept because we are so used as consumers to just buy something, never part of something. Last week a new IPO debuted from Bualuang Securities, a very high quality car parts company named P.C.S Machine Group , or PCSGH (8.75). It IPO’d at 8.60 Baht, rose to 9.10 minutes into trading, only to yawn and close uninspiring. Some reports said this company should growth this year 10-15% other reports said mgt. feels there may not be much growth at all, due to the Thai economic slowdown. Yet with a p/e of around 9 and a good dividend of say above 4% it strikes me as a leading company at a reasonable good investor level in a desirable industry -and nice yield. It will go XD on March 25th for 0.15 Baht dividend per share and the company states it pays 50% of profit in dividends to shareholders.
PCSGH is a successful exporter and a top leader in what it does and its been around for decades. The kind of good choice/pick, evenwhile we don’t know when its stock price will start to rise. Hence I would view it an accumulate buy. This is the idea to just nibble along a bit every week, rather then just “slam dunk” put your whole dedicated capital into it at once. Call it averaging in over time with the objective that at some point in a year or so, it should be higher. Such accumulate-buy choices are difficult/impossible to handle in my 6 month model portfolio’s -as it does not account for such slow buying action, even while this is my view on PCSGH! Of course as always I could be wrong and its a good investor buy just now, or not. This is the other point, you don't have to be right all the time in stocks; to make money over time you will make plenty of mistakes along the way...and that is OK.
Similar if you sell a stock by taking profits. At first you let the profit run and do nothing fully realizing it may settle back down, or just start its ascent. Nobody knows. Then, on the second run you watch or alert your broker you may want to nibble-sell a bit. Should the stock do little, so do you. Should the stock rock up at some point more on a frenzy you start sell out, but only some. You should keep up this accumulate-sell program as the stock moves up more, but ideally only sell on price furies.
To the early birds, as I advocated, I would view PPM and CRANE a bit like this now, but not DEMCO as here we have much conviction and good information it will likely rise perhaps much more in a year’s time. Even PPM and CRANE are difficult to call as either or both may still have much more to go.
Its impossible to make short term predictions even while we all want to. Its impossible to predict market bottoms and so most bears miss it! Investors whom got out of the SET late in year 2012, a year later padded themselves on the back in early 2014; only to "hold the bag" as they don’t know what to next now.
Even as value investors, its not always wise to only chose stocks based on low p/e’s as I have just demonstrated again with CRANE which did best in the model since the start of the year (+45%) so far as of today, even while it back then held the highest p/e’s of all my choices.
As stated before high growth stocks in attractive industries can be superb choices as they move up fast, have the growth sexy story which catches on like fire when the the market heats up. Or, getting the story right at some risk being wrong, before the investor masses. This can allow to pick a stock at rock bottom levels, despite not looking good on traditional valuation levels. Yes, all hard work with regular mistakes made along the way. Too many investors don’t want to indulge in such endeavor because they feel the don’t have the edge, or are outright lazy. They spend time at the gym, jogging or golfing or socializing, or reading the macro news etc..and too little on individual stock picking with various information sources, including from Thaistocks.com :)
The "SET Opportunity Day" regular company presentations gives such good insights…and yet as just one example, how many of you took the time to tune in and listen to PPM’s, given just last Wednesday. Do we all have to listen to it to get the gist? Today, this morning March 19th, CHO is giving its SET oppt. day presentation. CHO is another higher p/e stock which has done ok year to date.
All and any contributing members here can share in our member lounge their insights as some do, so together we are smarter then any one of us alone.
Yes, I know its so much easier to just go down the proverbial list of cheap’ p/e’s which then however so often yield less then stellar performance overall and over time. Realize low p/e's will also include the many of the proverbial wall flowers here. These are companies which are cheap and stay so, called value traps.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
