To sell or not to sell glove stocks

Koon Yew Yin 15 July 2020

The title of this article reminds me of my school days when I studied Shakespeare Hamlet who asked this famous question:  

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‘To Be Or Not To Be’ is the question 

Hamlet is thinking about life and death, pondering a state of being versus a state of not being – being alive and being dead. ‘To be or not to be’ is followed by ‘that is the question.’ Life is a lack of power, at the mercy of fortune. Death is empowering, allowing the defeat of fortune. To die though, action in life is needed, making the proposition circular and hopeless. And life after death is an unknown, possibly worse than life itself. It is the great question that Hamlet is asking about human existence in general and his own existence in particular – a reflection on whether it’s better to be alive or to be dead.

Since Mr Ooi Teik Bee told all his hundreds of subscribers that he sold all his Supermax shares, many investors have asked me whether they should also sell their holdingsor not. My quick answer is “it depends on your trading skill”. 

The 3 price charts show that all the 3 glove stocks have shot up about 500% in the last few months and all of them did not go up in a straight line. No stock can go up continuously for whatever reason. After sometime they must pause and drop. However, due to Covid 19, the demand for medical gloves far exceeds supply. As a result, glove price will continue to go up until the pandemic is under control. All the glove manufacturers are making more and more profit which are being reflected on their share prices. 

Currently the number of new Covid 19 cases is still spiking with more than 200,000 new cases every day. Many scientists have predicted that the pandemic will not be under control for at least 1 or more years.  

My quick answerYou can sell if you are a smart trader to be able to buy back at cheaper prices during price correction. To be able to make some profit, investors must buy before the price rebounds. Most investors want to wait for the price to drop lower so that they can buy back at cheaper prices. What are they going to do if it rebounds up sharply? 

To buy back at higher prices or not to buy back is the question.

Statistics shows there are more losers than winners in the stock market and most short-term traders cannot make much money due to transaction cost.  

Best strategy: 

My advice is not to sell because you don’t know when it will rebound. As I said earlier, all glove stocks will continue to go higher and higher until the pandemic is under control. The best strategy is to buy and hold for many more months until you can see some indication that the pandemic is under control and the demand for gloves is reducing. 

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