About 80 people responded to my article “Recommend stocks to me”. I appreciate your effort in recommending stocks for me to buy. I have received a total of about 60 stocks. In the last few days I have been looking at each of them carefully. First, I looked at each company’s website to know the kind of business it is doing. Then I have to find out the profit for the last 2 quarters to see whether it has profit growth. Can you imagine how long to do all that?
My intention is to find good shares to buy so that I can spread my risk in my investment. Currently my portfolio consists of 80% Dayang, 10% Carimin and 10% Uzma. Fortunately, all my selected shares are performing very well.
The following are your recommendations:
RBGT, RGBT, Armada, PPHB, INTA, ARBB, DRB Hi Com, Evint, Inta Bina, FP Group, Pestech, GFW, Eduspec, MJ Perak, MK Land, Masteel, Opcom, Careplus, ASB, Chun Huat, MATG, Solid, Vitrox, Greatec, Unisem, VS Industry, Redtone, Dadang, CYPAK, Solarvest, Greatech, Lii Hen, Latitude, Jaks and Poh Haut.
My reasons for not buying any of your recommended shares are as follows:
1, Some of the recommended stocks do not comply with my share selection golden rule which is the company must report increasing profit for 2 consecutive quarters and its projected PE must be less than 10.
2, Some of them are too small, for example Eduspec and RGBT.
3, Some of their businesses have no profit growth prospect.
4, Never buy down trending stock because it is cheap. It will continue to drop and it will become even cheaper.
5, Some are property developers. Currently, there is an oversupply of unsold properties in every town and city in Malaysia. This problem will drag on for many years. That is why so many property counters are selling below NTA.
6, Some are good companies but their shares are thinly traded. For example, Poh Huat complies with my share selection golden rule. When you want to buy, you can easily buy as many shares as you want but when you want to sell, you will find difficulty in selling.
I did not know this peculiarity. A few weeks ago, I bought 300,000 Poh Huat shares within 2 hours because many shareholders are waiting for buyers. It took me 5 trading days to sell them at lower prices than my cost. You may like to test this for yourself.
My advice to all those who have recommended unacceptable stocks is as follows:
1, They must examine their track record to see why they have not been making money. They must change their mindset and method of selecting shares.
2, They must learn the basic stock selection fundamentals. Among all the stock selection criteria such as NTA, Cash in fix deposit, among of debt, cash flow, the most powerful catalyst to move share price is profit growth prospect.
3, Almost all of their recommendations are cheap penny stocks. They must not simply buy them because they are cheap.
4, They must not sell their best performing stocks to buy some of their recommended stocks. English idiom “separate the wheat from the chaff”. For example, I will not sell Dayang my best performing stock to buy any of your recommendations.
5, Our Government just announced our budget. Tax incentives will also be introduced to companies implementing solar leasing activities with income tax exemption of 70% for up to 10 years. When you see this announcement, you might be tempted to buy Cypark, Solarvest and Greatech. As I said earlier, all of them have not reported increasing profit for 2 consecutive quarters. Never buy any stock in anticipation of its future profit because it may take many more years to be able to make profit.
6, I suggest you all should attend Mr Ooi Teik Bee’s training course to learn about technical and financial analysis. I am very sure you all did not attend Mr Ooi’s training course before. If you did, you would not have recommended such hopeless stocks.
Many of you might feel insulted because I do not want to buy your recommended stocks. I have no intention to insult you. Believe me, my object in writing is honorable.
I hope you will read this article carefully so that you can improve and make more money. Once again, I thank you for your effort.
Please do not write to me any more because I am so tired and I need a long rest.