Some useful tips for investors

Koon Yew Yin 14 Aug 2020

After I have seen the comments from i3investors and also from my chat group, I thought writing this article would be useful. 

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The Covid 19 pandemic is affecting everybody and all the listed companies with the exception of medical gloves and medical products to prevent the virus. Practically all the listed share prices are dropping with the exception of medical gloves. Investors should sell their all their holdings except glove stocks.  

Due to the Covid 19 pandemic the demand for medical gloves far exceeds supply. All the glove makers can easily increase their selling prices to make more and more money which are being reflected on their share prices. That is why each of them has shot up a few hundred percent in the last few months. They will continue to go up higher and higher until the pandemic is under control. Many scientists predicted that the pandemic will take at least 1 or more years to control in spite of the fact a few vaccines are under phase 3 testing. Even if the vaccines are proven to be effective, it will take a long time to vaccinate everybody in the whole world to prevent the virus from spreading.   

Investors should know that no stock can go up or drop continuously for whatever reason. After sometime it will change its trend. The one which was going up will drop and the one which dropping will go up. As a result, many investors are in a dilemma to sell or to buy some more at cheaper prices. There are many reasons for this phenomenon.

One common reason is that short term investors or day traders frequently buy or sell to make a bit of money. They take advantage of the price fluctuation to make money. Studies has shown that short term investors cannot make much money due to transaction cost. Serious long-term investors always make more money. 

Some investors sold because they thought the reason for them to buy the stock is no longer valid. For example, Russian President Putin recently announced that his daughter was inoculated with an unproven   Covid 19 vaccine. This has created a lot of confusion and many investors rushed to sell their glove stocks to depress the share prices. Supermax and Top Glove each dropped about 10%. They rebounded yesterday because the Russian doctor who vaccinated Putin’s daughter with his unproven vaccine resigned after he was told that all vaccines have to undergo phase 3 testing. Putin’s daughter may soon die???   

In the stock market every investor has his own reason to buy or to sell. In fact, one very well-educated man in my chat group said that the Russian Covid 19 vaccine will reduce the demand for glove and soon Supermax will be Rm 1.00. This ridiculous remark has misled many investors to sell. 

Check your track record:

All investors must honestly examine their track record to see how they have been performing. If you find that you have not been successful, you should change your mindset and learn from your mistakes. You must read this article carefully and change your way of buying and selling shares.      

When will I sell my glove stocks? 

As I said earlier, glove stocks will continue to go up higher and higher until the pandemic is under control which will take at least 1 more year. Even if the vaccine is proven to work, it will take a long time to produce enough of vaccine to vaccinate everybody in the whole world. Even if all the people in the whole world are vaccinated, the demand for glove will not be reduced so quickly to affect the share prices. 

In fact, yesterday I took advantage of the depressed share prices to buy more Supermax and Top Glove.  

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