Koon Yew Yin 30 Sept 2020
The Covid 19 pandemic has been affecting everybody’s movement, businesses and listed and non-listed companies with the exception of glove stocks and other medical productions for the virus prevention. Since the pandemic is still not over, the demand for gloves will continue to exceed supply and all the glove manufacturers have been increasing their selling prices to make more and more profits which are being reflected on their share prices.
Moreover, the additional selling price is pure profit because it does not involve production cost. That is why all the glove stocks have shot up a few hundred percent in the last 6 months. Unfortunately, all the share prices cannot go up continuously without price corrections. They fluctuate up and down quite frequently and rapidly which can be worrisome to some investors. But experienced investors can take advantage of this buying opportunity to make more profit.
As I often said, no stock can go up or drop continuously for whatever reason. After sometime, it will reverse its trend. Unfortunately, most investors get so worried when they see their holdings dropping in price.
In any case, they must realise that they have already made the fastest profit within such a short time.
How to use margin finance to make more profit?
As I said earlier the Covid 19 pandemic is affecting all the listed companies with the exception of glove stocks. Investors should sell all their other holdings and use up all the sale proceeds together with their own capital to buy glove stocks. Investors should also use margin finance to buy more glove stocks when the price drops to an unreasonable level.
For example, currently all the glove stocks have been dropping in the last few days and even expert chartists advise you to sell because the charts are showing down trend. You should not be afraid to use margin finance to buy more glove stocks so that you can sell those stocks which you bought with margin finance to make more money when the prices go up higher again.
What should ordinary investors do?
Currently US has 7.41 million Covid 19 cases and 211,000 deaths. Although US has about 5% of the world population it has 25% of the total Covid 19 cases in the world. The above chart shows the number of Covid 19 cases in the USA and the number of cases and deaths are still increasing. Fortunately, or unfortunately, US is our biggest market for our gloves.
As I said earlier, until the pandemic is completely over, the demand for glove will continue to exceed supply and all the glove makers are increasing their selling prices to make more and more profit which are being reflected on their share prices. Unless you have the necessary skill, you should not buy and sell. You should just buy glove stocks and wait patiently to maximise your profit until the pandemic is completely under control. Many scientists predicted that the pandemic will take at least 1 or more years to be fully under controlled even with the discovery of the vaccines.