TA is more important than FA

Koon Yew Yin 3 March 2021

The chart shows that Supermax started to climb from 80 sen when the Covid 29 pandemic began in early last year to peak at Rm 11.89 on 6 August. It shot up about 1,500 % in 8 months. But it has been dropping continuously to close at Rm 4.11 in the last 7 months. 

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I am ashamed to admit that I learned my most expensive lesson which is TA is more important than FA. 

As an alert investor, I started to buy Supermax when the demand for medical gloves exceeded supply due to Covid 19 pandemic. But I was wrong in believing that   Supermax’s excellent profit growth rate will prevail eventually. When is eventually? 

If I believed in price chart, I would have sold as soon as the price started to drop and made a lot more money. 

Fortunate, I sold all my Supermax about 3 weeks ago instead of buying more at cheaper prices to average down. 

WHO predicted that the Covid 19 pandemic will be under control next year due to massive vaccination, wide spread testing, wearing face masks, practice social distancing and washing hands.  

Based on the announcement by WHO, investors will continue to sell their glove stocks and their share prices will continue to drop. 

Readers must ignore all my previous buy recommendations for Supermax. 

Recently I received many buy recommendations especially tech stocks. The first thing I do is to look at their price charts. If they are down trending, I do not want to look at their profit growth at all. I do not want to waste my time. 

All the sellers of glove stocks are using all their sale proceeds to buy tech stocks aggressively. That is why almost all of the them are selling at exceptionally high PE. This situation reminds me of 2000 when the tech stock bubble burst. Most people delayed in buying computers because they were afraid the in 2000 all the old computers would not function. So, in 2000 the sale of computers and computer chips exploded. All the tech stocks shot through the roof. 

Investors must be careful.      

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