Question : Are you the slstock or a misused ID ?
I very well understand the question after the last fiasco. After you read the below you can decided whether I am the real slstock or not Cool
Why did you take a few days to write after your first post here?
Please read the below. You maybe able to guess how long it takes to write something like this.
Why was I silent for long time?
After spending 3 years and writing 6000+ posts as social service ( with the intention to educate new comers , promote ethical investment and make Sri Lanka a better place to live) with 100s of extra hours added for administering purposes for no physical benefit ( along with my team) I needed time to reassess what I did and recuperate. Though I had requests, and other offers coming , I decided to take sometime off for myself to "recover" and attend to my personal work which I neglected due to my prolonged volunteer service.
As I mentioned in the first post, am mainly here in respect to those good/genuine people who got displaced due to a sad event we know of. I won;t be able to be active like in the past.
Now for a discussion
Recap from 2009-11
We had a war until 2009. Before 2009, even though companies were performing alright and their intrinsic share values should be much higher, the dull sentiments and fear psychosis made the share market prices ridiculously / unbelievably cheap. Then the War ended. Euphoria set in . Market started to gain to make up for 4-5 years of lost ground. Intelligent people got in early in 2009. Others saw shares prices doubling, tripling, 10 bagging and thought oh I want a piece of that. Greed , lack of education and discipline set in. They sold their houses, their gold, FDs , their Ati kukulas, Vahi Lihiniyas, and Sudu nayas , Gung kabarayas and got into market late in 2010. People who entered on or before 2009 had already gained massively . Some had enough to buy Maruti's , some Benzes , some maybe Colombo 7 land and maybe even Julianna's. But others just got in .
The first signs of a bubble ( overblown market beyond its value) happened in late 2010. What over inflates have to deflate. Then the market made a final run in early 2011. People got more excited. Only few managed to identify the peak. ( I sensed too but could not call the top 100% also. )
As with other things in the world this world works on a balance whether we like it or not. There needs to be more Suckers born for the few intelligent/cunning to get richer. This happened during 2010/2011 with many gambler being born ( wanting to be rich overnight ) and were taken for pump and dump by the "cunning" who wanted to exit. Market PE was 28 . Book values were 3-4 .When market was over blown , it started dropping ( there will be always climbs and descents in life) . The late bloomers and gamblers who entered or bought more shares in 2011 were caught in the inevitable market drop unguarded. Those short term/gamblers panicked and exited in reaction with losses. Large un-monitored broker credit given to buy crap shares made things worse with margin calls. It then became a chain reaction . Good shares along with the bad also dropped to unbelievable prices . This mostly happened in 2012/2013. The higher FD/T'Bill interest regime in 2011/2013 also drew many market player away and interest in shares were less. Foreigners also sold.
Like it went up crazy it then went down crazy. This is Sri Lanka land like no other. 2012 was actually a "crash" and it over corrected the market. TJL was Rs 7 , LGL.X was Rs 11-12 , NDB Rs 100 etc etc etc
When market drop happened, some lost 50% , some 90% , some 99.8% ( ex : GREG warrant buyers at peak) . I am sure there are many who lost nerve ( no holding power for even fundamental shares) and sold out in 2012/2013 thinking I will never enter this crazy market again . They began spreading negativity . Some portfolio info and messages I received during 2012/2013 were quiet sad and irrevocable.
Realized loss and unrelaized loss / Solid companies vs gambling shares
As some of you know , there is something called a realized loss and an unrealized loss. Ex : If you bought GREG warrants at Rs 150 and sold at Rs 0.5 then the realized loss is 99+%. If you bought DFCC at Rs 190 and then saw it drop to Rs 100 ( but did not sell) then the unrealized loss was around 45%. But now it is at Rs 160 again. This good people is the the greatest example to highlight the difference between a holding a solid company/fundamental share vs chasing gambling share for greed.
Some of us tried to highlight this many times and promote good investment skills. Few only listened. Some blamed us longer term INVESTORS said only way is to go short term and become traders. Okay I admit that trick may have worked for 2012/2013 period.
During the 2012/2013 period every time there was a market run, many people who were inexperienced ( and were burnt before ) got suspicious and wanted to sell. So runs were short term. Holding shares was unheard of. Those who told to hold ( if you are long term ) were abused. Market was full of short term traders and gamblers who made the market see saw and unstable . The market could not sustain a rise. Even if certain company shares were trading at real bargains, they dropped even lower with ASI drops making bargains more bargains. Few only noticed this and seized on opportunities.
In the other forum I wrote long posts when ASI was 4800 to hint it was time to pick shares.
All in all
2009/2011 : Alpha Bull on steroids
2011 May to 2012 June : Grizzly bear.
2012 to 2013 : Polar bear with baby bull being born.
2014 and 2015 ? Lets discuss.
World Markets in 2013/14:
World economy specially the US and European seems to be shaping for a recovery. With them recovering export businesses in SL will see better times. Demand for our products will go up. China the emerging world largest economy , is yet to make a major impact but is recovering from May 2014. In anticipation of good times, most stock markets throughout the world turned positive with returns of 5-10% so far this year . Note that stock market react before the event ( in expectation).
Our neighbors markets
India : up 20%
Pakistan: up 18%
Indonesia and Phllipines : up about 15%
Greece, Spain and Italy all up between 12-17%
Argentina nearly 50%
Relationship with India :
With Namo ( Narendra Modi) becoming PM and his actions so far, it appears that that our political relationships/conversations with the Big Brother can improve without economic penalties as before.
CSE and future this year :
This is the big question. When ASI was around 5900 at the beginning of this year I said I am hopeful that ASI should go upto 7000 this year. I gave reasons and facts. Now, ASI 6330. To be frank if the bull cuts loose and index heavy stocks recover , 7000 may be in pieces ( I recently saw one stock broker predicting 9000 !!. More broker reports will come after certain buses pass by as usual)
So far CSE has only gone up around 6-7& this yea while our neighbors as above did much better ( But note 6% is still better than bank rates these days ) Interest rates in SL have plunged to lowest levels for multi years. To be frank I don;t think they can go down much more as CB needs to look at Senior citizens income situation. Another 25-50 point cut might be on the cards though but should go much lower. People are running out of investment option . Only ones remaining are debentures.
With SL growth rates for next few years between 7-8%, world environment shaping, IMF rather positive , low interest rates and market sentiments slowly improving , foreginer buying , I think there is only one way for CSE to go : UP.
Second half of the year should be more fun. Having said this, I am discounting any negativism on Elections, Human right issue and anything unpredictable/natural cause. ( so don;t blame me please for giving opinion under present situation)
For company earning to pick up further,lending to businesses have to improve and lending rates still need to come down more. Credit to industry was not as expected by Govn though CB cut rates. I think there is still a mismatch between lending and borrowing rates.
Mental Shift needed now
Since there are so many who entered the market in 2011-2013 and got bruised they maybe thinking short term trading is the only way to go. They are still skeptical whether this run is real or not. They worry at every little opportunity market corrects whether they should sell shares to buy back cheaper later.
As I explained in detail that theory may have been effective in a bear/sideway market as in 2011-2013. When the true bull comes the only real way is to hold shares until it gets close to their intrinsic value. For example let say X share is trading at rs 100 with PE of 5 and book value of 0.6. When it goes to Rs 120 you gained 20% . Previously selling and going short term was the option. 20% profit is yipee. Let wait till it comes to Rs 100 again right?
But in a bull market what will happen is it will got to Rs 120. Selling will undoubtedly happen maybe for few days to few weeks. But it will start picking up again . Then it maybe go to Rs 140-150 ( maybe within 6 -12 months). If you are not monitoring everyday you maybe taken by surprise and won;t have time or money to buy back shares. I stress and highlight that a mental shift is needed in a bull market ( but at your own risk, pl don't blame me if you don;t have a longer term mind set)
Forget the past. Pick undervalued solid companies trading at bargain to sector and market. Identify it true value. Develop skills to atleast value a company using PE basis. Then hold till your target is met and sell . Don't worry about short term fluctuations or listen to promoters/demoters who are there to take you for rides.
But if you have a panic stricken character, no holding power, constantly worry about market fluctuations you are short term by nature. Then you can try trading that may suit you. But remember what I said above as you might miss out on the bigger cumulative gains. How many of you saw banks shares goign up after dividend, price dropping after dividend BUT recovering to previous price or higher. Signs of a bull.
Understand Investing takes effort to identity, time , discipline , patience but and rewards can be higher in you look at the bigger picture
Generally on individual shares
If anyone has interest and bias to any of the shares I am hint below , I am using them only as example. Now don't get you panties in a bunch to jump on me . I am not demoting anything. When bull sets in it can increase any share further. Please understand what I am saying.
I see several people chasing shares that have already increased by 100% from last year. Don;t mistake, I am not saying they won't go up more. If bull sets in ALL SHARES WILL GO UP at different times but at different rates. But some will go up more than others. If you keep holding the wrong ones , and their earnings dropped for some reason , what happened in 2011-2013 will happen again to those individual shares during a correction. So just be careful what you buy to hold for long term even in bull market.
Btw, I think it is okay to hold 10-15% speculative shares but 85-90% should be solid companies now. Also 70-80% should be medium to long term shares while 20% on trading would be my plan.
1) There is a time for groups of shares. I think the time for another 50-100% increase in quick time for CTC, NEST is gone. They need to catch up with earning till their next Big run. They can increase with market , but we should identify other shares that will gain much more than them % wise.
2) I noted there is a massive promotion now on XXX, YYYY , ZZZZ which have already gone up over 100% within the last year or so. I recall YYYY and ZZZZ were shares some people spat on in 2012-2013. Some would have called YYYY a dead share and never to touch . Times changed . These solid companies turned around. Now everyone want a piece of it after they ran a lot. Don;t confuse. All the above companies are good ones. But what I am saying is if you want to go long term now, it is smarter to watch for next quarter or so 2 before you invest big in them as they already run a lot compared to their BV and PE. Certain companies are in businesses that can change within short time. Be careful. Just don;t calculate price targets using PE only. Understand and know the risk of the businesses they are in before you invest for long term
3) JKH the king : This is special share. People worry about order books, short term stagnation and predict price drop by 10% etc. Look ! Has anyone really studied what is happening with this share within the last 1 month or so? Hint forget technicals for a minute
1) Don't chase shares that ran a lot and is presently overvalued on BV or PE compared to sector and market. If you must, watch them each quarter for their performance. If they change direction, it is time to sell.
2) Better to identify the neglected and solid companies. Some share may run 50-100% if ASI runs to 7000 and beyond ( when ever, but it will happen)
3) Unlike those days, market index may move slowly even without index heavy share moving at the same time. In a healthy market there will be share to take the baton to cover up when big shot stay calm until their next move Wink
Side note : Revealing a weakness in me
Even during bear, I was 90% successful identifying a stock before it increases in price. ( couldn't say when as it beyond my knowledge to know when the players can come. Only manipulators and insiders will know such details) .
But my weakness was not selling completely at the right time . Ex : I did not sell my ALLI at Rs 1100 with 30-40% profit. Now it is Rs 730 and hold some shares . Btw ALLI is seriously over corrected and undervalued with PE of 6 and PBV of .75. .
This mistake during the bear ( holding for too long) had costed me another 10-20% overall portfolio gains. I admit. But golding certain other shares like CFVF gave me cumulative profit.
On the positive side, I know /hoping during the forthcoming period I will more than make up for the lost ground. ( ie: as explained earlier in bear market , prices fluctuated greatly due to panic and weak mentalities but in bull run it will be different. )
I hope the Investors ( with patience) noted my posts on CDB at Rs 40s and TFIL at Rs 14-15 now have massive gains. Still these 2 shares I believe have some more to gain with time. If you go check my CDB thread in the other forum you will note I even said the initial price target is Rs 60 for CDB. It recently went from Rs 44 to Rs 60 and then retreated to Rs 56. Again now it is Rs 63. With a Rs 3 dividend . This should clarify what I said about the mental shift needed and difference between bull and bear..
I right now have some shares that have 60-80% gains but also a few which have 10- 20% losses ( bear attack killed the share . But these shares I have with unrealized losses are fundamentals and slow movers) One day I am very confident these negative shares will give me good profit.
Btw, please do not send me PMs asking what shares to buy. I want people to be self sufficient. I think it is more noble to not just give a fish when you are hungry ( one time) but to teach how to fish so you are set for life. That what I always tried to do with no real benefit to me except merit.
As this post got very long I will stop now. Looking at share that will beat the market is the next game.
Finally as always
"Learn the basics, Invest not gamble, know your investment period, have Patience , have lesser Greed , know your entry and exit points and you will be a victorious on the longer run at CSE"
All the best
Last edited by slstock on Mon Jun 16, 2014 10:26 am; edited 1 time in total