What a difficult year 2016

What a difficult

year 2016

By the time you are reading this, the year 2016 would have just passed by more than two weeks although memories are still very fresh of what a difficult year it was for most rakyats and of course investors of Bursa Malaysia.

For one, the majority of most stocks closed near its 52-week low or new 52-week low in 2016. Only a marginally small group managed to closed near its 52-week high. For long term investors, the declining stocks prices could only mean a major erosion of paper wealth in their profit and loss account.

It would be even more bitter to swallow especially for those who invested most or major portion of their cash savings in stocks rather than putting in fixed deposit. For those who practised proper asset allocation in investing, the loss is not that much. As Warren Buffet advised : Never put all your eggs in one basket. In fact I like to add in that it is advisable NOT to put the major portion of your eggs in one basket too!

Why did the majority of stocks prices declined to such new 52-week low or near its 52-week low? One must understand that it is always the profits earned that determines the direction of share price. This is the prime mover in my opinion.

Most companies reported lower profits or even loss as at the third quarter of 2016. It was no surprise to me because the economy as a whole was not going well in many quarters.

So when most companies and businesses are not doing well in this subdued economy time, less profits set out chain of an unfortunate dominoes effect of getting less take home pay and thus spending less to cope with rising cost of goods and services.

It is really a double edge sword for almost the whole segment of business and the rakyats. To illustrate how bad businesses are, here are some real life situations I personally experienced or shared by my closed friends.

Cosmetics counters are almost eerily deserted most of the times. The next time you go to the mall, try to observe the dire quiet situations of the cosmetics counters. These counters are normally located together in a big space. But it has been many months since customers started to disappear. 

Even the cosmetics sales consultants started to call or Whatsapp their regular disappearing customers to inform about any promotions or sales going on. During the good days, you won't hear from them at all. Why? They were busy entertaining hoards of customers. Even regular customers must wait for their turns to be served.

A leading supermarket in Penang has seen its cosmetics counters section becoming smaller due to less counters still operating as some have closed down.

At supermarkets, I have noticed that there are now more cases of fruits/essentials placed back after being chosen, packed, weighed and gummed with a price sticker. Obviously the customers must have thought the price was within his/her comfortable range. Only after knowing the price and feeling expensive, decided not to buy and put it back.

This cases are confirmed as I personally spoke to one official of a leading supermarkets who said they are also fed up with this situations happening commonly in a daily basis. It is giving them extra work, and using up more plastics.

Several leading malls in Penang has seen more empty shop lots these days than years back. And some have been empty since last year. 

A good indication of how companies have cut down on expenses is the current Chinese New Year red packets given out. During the good times, red packets packed in 10 were freely given out. But this year, it is not easy to ask for free red packets as most companies have ordered less and hence only given out to those who make some purchases or their regular customers. Even then, the red packets come in 5 or 6 only.

Another clear sign of the slowing economy is the drought of advertisements in The Star. The Star is getting thinner by each days. There are instances where on certain days, there was only one colour advertisement in the first half of the paper. Unlike those days The Star was brimmed with so many colour advertisements fighting for prominent pages even though those who wanted their advertisements on preferred pages must pay extra loading for it.

Admist all these subdued spending, the rakyats are faced with another  in the form of inflations. Prices of may essentials have risen since the late last year.

Many people are lamenting about the expensive prices of so many things.  And there are not much most of us can do other than to spend less and get less or spend more to get the same.

Life indeed will even be tougher in 2017.