Many people asked me these 2 million Ringgit questions because they are vitally important. You cannot make money if you do not know the answers to these 2 questions. All successful investors should know when to buy and when to sell.
All professional analysts use technical and fundamental analysis to buy and sell shares as they consider technical analysis is more important than fundamental analysis.
In this short article, I cannot tell you the details of technical and fundamental analysis. However, it is important to know the followings:
1 Down trend:
Never buy a down trending stock because it is most likely the price will continue to drop in the near future. Never try to catch a falling knife.
2 Uptrend: When to buy?
Always buy an up-trending stock because it is most likely the price will go higher in the near future.
If you have attended Mr Ooi Teik Bee’s course, you will know how to draw and read a price chart. In any case, I will tell you my simple way to draw and interpret a price chart as show on the price chart for Dayang below. I draw a red line along the slope. As you can see the price has been trading above or higher than the red line in last 2 weeks which is indicating that Dayang is on an uptrend. The price will continue to go higher and higher in the near future.
Temporary price corrections:
As I said before, no stock can go up or drop continuously for whatever reason. After going up for some time, many shareholders who have bought it at cheaper prices would want to cash out to take profit. You must not follow to sell. After these weak holders have completed their sales and serious long-term investors continue to buy more aggressively at higher prices, the price will continue to go higher and higher.
When to sell?
As you all know, the price plunged when the company reported a small loss in its 1st quarter, largely due to the inclement monsoon weather. Based on Dayang’s larger contract value in hand as compare with previous year and more employment of all Perdana’s vessels, the company should report better profit for the next 2 quarters.
I will not sell until I see the results of the next 2 quarters. I will only sell when I see the company reports a reduced profit, bearing in mind of the monsoon season.