When sanity returns

When sanity

returns

According to a Goggle search, the meaning of SANITY is explained as the  the ability to think and behave in a normal and rational manner. What it means is that for one to do something or to make a decision for something,  one must be in a state of sanity so that a better decision is derived.

But during the times of chaos or crisis happenings, many people actually act in the opposite of sanity. They panic, act irrationally and become insanity with their actions and decisions.

One of the most common places to find insanity is actually in Bursa Malaysia. And these insanity situation happens from time to time each time a major crisis develops.

It is during these time of panic caused by those insanity people that those with sanity state of mind are likely to make a better and wiser decision that will ultimately tilt in their favours over a period of times when finally ... sanity returns.

Just a few months back at the height of world market crash where even at one time the Dow Jones dropped over one thousands points on the opening bell before  crawling back for some recovery. Even our Composite Index dropped by some forty points on certain days.

It was during those panic-stricken times that many investors lost their nerve and dump their shares in massive drove and sellers simply overwhelmed buyers all days through, even though it is common knowledge amongst investors that investing is all about the strong fundamental of a company that will dictate the share price.

But when the majority of sellers become insane on that day, and genuine sanity buyers are few, prices can be swiftly pressed down to unimaginable levels. It is during those moments of madness that the real long term investors will dare to pick up some shares at heavily discounted price.

One of those incident was when the bad news hit Supermax Corporation Berhad about the insider trading issue related to APL Industries Berhad (APLI). The share felled to unbelievable price under such great ferocity selling and I was those lucky brave ones to pick up at RM1.67 the very next day (on Dec 16, 2014). It hit a 52-week low of RM1.58 on Dec 15, 2014. Since then, the current share price has recovered  superbly to close at  RM2.96 on Dec 17 following bouts of rallies accompanied by some encouraging corporate news.

Another of my 2015 favourites, Focus Lumber Berhad reported an excellent 2nd Qtr results of 7.8 sen compared to its 1st Qtr of 3.22 sen. But due to such extreme weak market sentiment on that day where the Composite Index dropped over 40 points, "insane" sellers ditched such a good cash rich company for a cheap price. Despite having 31,000 shares before this, I still could not resist such a fire bargaining sale and picked up 5,000 shares at RM1.46 plus.

As a matter of fact, on that day and some other days, market behaved in a very irrational way for many companies. I have to believed Focus Lumber shares must be one unjustifiably sold at a song on that day.

All because many strong hearted investors lost their sanity and courage  on that day .....

But as time is always a healer and a good judge, another few months down  the road, when companies started to announce results again and market sentiment has returned to sanity level, the share prices of good fundamental companies also begin to find its justified levels.

When Focus Lumber announced its 3rd Qtr results on Nov 17 with an even better sequential results of 9.35 sen and an almost 100% increase dividend payout (10 sen dividend followed by an earlier interim dividend of 5 sen), "sane" investors chased after the shares from the next day onwards resulting in a gain of 23 sen to RM2.68.

Since then, Focus Lumber has constantly traded at the RM2.70 - RM2.80 range although it touched a high of RM3.00 on Nov 24, 2015.

The share price of Focus Lumber has even surpassed YSP Sah and Signature International Berhad right now. Refer to my previous blog on Sep 13, 2015 titled : The Power of Market Sentiment.

At that time, on YSP Sah was traded at RM2.53 on Aug 19, Signature was traded at RM2.36 on Ag 24 and Focus Lumber was just traded at RM1.51 on Aug 21, 2015.

Fast forward to another three months and another set of quarterly results and the share price of these three mentioned companies are as followed  on Dec 17.

Focus Lumber is at RM2.77 on Dec 17, 2015.

(Up by a whopping RM1.31)

YSP Sah is at RM RM2.47 on Dec 17, 2015.

(Down by 5 sen)

Signature is at RM RM1.88 on Dec 17, 2015.

(Down by 13 sen)

What does this tell you?

From my point of view, it says that when the market sentiment has returned and most investors has recovered from insanity, a better decision to base a fairer value of a particular company based on its fundamental points from a vastly majority of investors will surely accord a fairer value share price.

Buying 10,000 shares

of NTPM Holdings Bhd

on Dec 17, 2015

It has been a long time since I bough a new stock. Many times I have been frequently asked if there is any good stock to buy. Well, here it is this "premier tissue and toilet paper' company called NTPM Holdings Bhd. Perhaps I shall share some of my reasons why I am buying some shares of this company in my future blogs, most probably in 2016.

As this probably is my last blog for 2015, I like to thank all those readers/followers/email fans/supporters who have been with me throughout the year and since this blog's inception.

I like to wish you a very Merry Christmas and a very wonderful 2016!