Koon Yew Yin 28 April 2020
As shown on the price chart below, Comfort has gone up from 80 sen to close at Rm 1.34 yesterday, an increase of about 70% in 3 weeks. The daily traded volume has been more than 50 million shares in the last few days. The price has gone up so rapidly which tempted many short-sighted shareholders to sell their holdings and hope to buy back at cheaper prices. They will be disappointed.
Due to Covid 19, the demand for gloves far exceeds supply. As a result, the price for gloves continues to go higher and higher and Comfort and other glove makers are making unprecedented profit.
In my previous article namely “Can you be trained to be a Super Investor”, I have touched on selling. Now I wish to elaborate on this question more in details because unless investors know how and when to sell, they cannot make much money.
No stock can go up continuously for whatever reasons. After sometime, the price will correct due to day traders’ selling. Good share, like Comfort which has very good profit growth prospect, will continue to go up higher and higher. Never sell if the company can continue to report increasing profit every quarter.
The reasons to sell Comfort shares are as follows:
1 When Covid 19 is under control and the demand for gloves is reduced.
2 When the company has no more good profit growth prospect.
3 When the company starts to report reduced profit in one quarter.
My aim for writing this piece is to help investors and I am not encouraging readers to buy or sell.