How Long Should
One Keeps Stocks?
One of the most interesting questions is how long should one keeps
stocks? I think most of us must have come across many articles about good
quality stocks that one must be kept on for long as possible.
I believe there is no straight answer for this. In today's fast pace of
business change, a good company doing so well consistently for years could be
brought down to its knee in a matter of short times when their business started
to face stiff competition and eventually suffer losses as well.
Seasoned investors would surely experienced this. Many years back, New Straits Times newspaper was the King
of English newspaper. There were hardly any challengers then. It share price
was constantly traded above RM10 for many, many years.
But when competition came from The Star Media Group (previously The Star), Straits Times saw its
business being eaten up quick and fast and profit fell from worse to worse. Its
share price even declined all the way to below RM2 at one stage.
Eventually Straits Times was privatised at below RM3 (I think I am very
sure about it). I had a friend whose close family member was working at the
Straits Times then and holding on to Straits Times shares then.
I recalled he was sharing with us about the importance of keeping shares
like Straits Times for as long as possible. True to his words, he kept on
holding on to its shares regardless about its share price performance
until the privatisation exercise
finally.
It is not easy to find a share that one can keeps holding on for
decades, yet was rewarded for its yearly dividends and enjoy capital
appreciation as well. A few stocks come in mind easily and they are Nestles (M) Berhad, Dutch Lady Milk
Industries Berhad and Public Bank Berhad.
In theory, it is easy to say I will keep this good stock for as long as
I can or even "pass" it to my next generation. In practical, it is
extremely hard to practise because the world today is so much from the world of yesteryears. Changes occurred so
fast and so furious that one is easily affected that will have a impact on
decision whether it is better to sell to keep cash and buy back later or ride
through the storm.
I can say this genuinely because despite my years of experience, when
there is big crisis happening that
affect share price movement, especially those I have larger holdings, I will
still feel some effect too. Of course perhaps in my case, I will not let it
affect my daily lifestyle. But I can't say for others. It is different to
everyone of us.
So far I have been able to keep a few counters for more than 10 years
and based on my records, a very high percentage has turned out to be big
winners much to my surprise. I think when one invests long term in fundamental
companies and willing to ride through the storms now and then, the chances of
making good returns is there.
Of course the sweetest bonus is the good regular dividends received over
the years. A few of my long term counters are actually FREE because the total
dividends received has exceeded my original purchase price and at the same
time, the original share price has appreciated to over 100% or several times.
Notably are Harrisons Holdings (M) Berhad, Fima Corporation Berhad, Apollo Food Holdings
Berhad.
The dividends received since day one invested are fabulous yet their businesses are the boring
types which would not appeal to many.
No doubt some might argue that their current prices are still below
their peak, but then again how many of us have managed to sell their shares at
the peak or near its peak? Even their current prices are still up several
ringgits over my original prices which means I should actually be grateful and
glad rather than complaining or berating why I did not manage to sell when its share prices were at its peak.
Thong Guan playing catch up with its bigger brother Scientex and smaller
sister BP Plastics
The new current darling poster boy of Bursa Malaysia, Thong Guan Industries
Berhad (Tguan) is trending to new
52-week high by the weeks. It rising share price has been expected all these
while because so many good reports about TGuan has been shared/reported by
several prominent bloggers and write up in The Edge recently. Supported by its
impressive and improving quarter to quarter results, investors begun chasing
TGuan shares since the last quarterly results announced in May 2016.
When one compares its price earnings ration (PER) to its bigger brother Scientex Berhad and its smaller sister BP Plastics Berhad, one would know that it
is the cheapest plastics company amongst the trio.
Not surprisingly, the current interest in Tguan shares has gained
momentum although it still remains to be seen if Tguan can improve again this
April to June quarter results expected to be released in August.
If it does improve, there would be more catch up again in its share
price to be nearer its bigger brother for its PER to be comparable.
I was lucky enough to pick up 4,000 Tguan shares at RM1.86 on Dec 12,
2014 (when oil prices was plunging to new lows and also Tguan shares prices was
crashing down to new 52-week low), I intend to hold on although I would have
reasonable big profits to take now.
I believed holding on to good companies for long period (as long as
their business fundamental is intact) would be a better choice rather than the
hit and run style.
It is my personal opinion that one should be brave enough to hold on to
good companies with simple good business that pays regular good dividends.
To achieve this, one must be able to ignore the short term wild
swings that affect stock market now and
then.
I hope this article would help to explain to
alwayswin111 in his email on June 9,
2016 at 7:39 AM which he posted this question :
KASSIM, do you still plan to keep Kseng, Apollo, LPI, TGUAN, FLBHD, KAF,
TEKSENG for the long term?
The answer is YES!
LATEST: Buying 3,000 shares
of Berjaya Sports Toto Berhad
at RM2.93 on June 24, 2016.
Will
elaborate more on this purchase during my next blog.
