94 - Buy low, sell high and hibernating

94 - Buy low,

sell high and

hibernating

Investors are constantly bombarded with so many good advices by many top stock masters or sifus these days.

The popular ones are buy low, sell high, when others are greedy, we should be fearful and sell vice versa. But there is one particular advice that is to try to buy near its low and sell near its high.

I think this buy near its low and sell near its high is more easier to follow if one really practise it although there is no guarantee it will always ends up profitably.

What is exactly buy near its low? To me, if a particular good fundamental stock has seen dramatic fall in its share price due to many reasons, especially if the share price keeps touching new 52-week low or several year low, then entering at this point can be construed as buying near its low because the risk has been hugely discounted off.

I like to share three stocks, Thong Guan Industries Bhd, Supermax Corporation Berhad and YSP Southeast Asia Holding (YSP Sah) which I had the privilege to experience buying near its lows and selling near its high.

After my purchase of Thong Guan at RM1.86 on Dec 12, 2014 (having fallen from as high as RM3 plus some six months earlier), Thong Guan even went down a bit more before stabilising around my purchase price for several months.

But once it resumed back its growing profitable quarters, its share price continued to ascend from time to time. Luckily Thong Guan is one share I have been holding on steadily and refusing to sell even when it went all the way to as high as RM4.87 recently.

Granted one is seldom able to sell at its highest peak or even near its high. In fact it is quiet for sure many who would have bought at below RM2 would have taken profit when it hits RM3 levels and there would even be more selling when it hits the RM4 levels.

I personally think Thong Guan is still a very attractive stock to keep for longer terms as it is continuously expanding its business in many areas. Its eps of 54 sen for Financial Year 2016 suggests its current price of RM4.50 + level is not expensive or over-valued in my very frank opinion.

Supermax on the other hand has just rebounded back the previous day from its 52-week low done which I entered at RM1.67 on Dec 16, 2014. It was trading slightly above RM3 in early January 2014.

I was actually lucky enough to sell off Supermax a year plus later in January 2016 at its almost 5 year high at RM3.50 +. (At that time of selling, I was just merely taking profit without regards to whether the fundamental is still going strong there or not).

Since then, Supermax share price has been trending all the way down since the last four quarterly results (its average eps of 2.5 sen for last four quarters can hardly been considered as good one, right?).

Its current share price of just merely at RM1.98 is at its 52-week low. So jestingly speaking, its it time to buy into Supermax at this point since it is at 52-week low and the risk can be considered as lower already?

You decide yourself.

 

The above two investments demonstrated it was genuinely cases of  buying near its low although it is different when coming to selling. As I said, my selling of Supermax at near its almost 5-year peak is merely luck or good timing and nothing to do with any skill.

What about selling near its high? Well, there is one stock YSP Southeast Asia Holding (YSP Sah) which I could claim as selling near its high.

YSP Sah was one stock I bought in June 2012 at RM1.05. YSP Sah was actually hibernating for several months at this tight range price of RM1 - RM1.10 levels.

When a stock has been hibernating for long months, is it safe to enter? I don't have a clear answer, it depends on individual's perception. For me, it means the short term or contra players have been weeded out hence the tight range price situation. Unless of course, a new development that will have an impact on its share price surfaces.

I sold off YPS Sah in July 2015 at RM2.95. Again there is no particular reason why I decided to sell other than just to enjoy some real cash profits.

After I sold off YSP Sah, it went up to touch a new high of RM3.49 within the same month before eventually profit taking and a string of rather disappointing quarterly results plunged its share down to below RM2. Currently YSP Sah is trading at RM2.20 + levels.