It has been a few months since I had the chance to meet my uncle due to COVID-19, movement restriction. Finally, today I manage to meet up with him for a yumcha session and of course for me to learn more from him as he is a retired fund manager.
As a newbie that just opened an account in March, I need to learn more about investing as I believe the stock market may provide me financial freedom if I gain the right knowledge & correct tactics. My retired uncle, who previously served as a senior fund manager in one of the top performing unit trust funds in Malaysia will the right person to guide me.
So finally I managed to meet him after 3 month since opening my stock account as he was the one who encouraged me to start and buy some stocks listed in Bursa. (Of course I just followed and didn’t really ask much because my dad also told me to follow him).
During the yumcha session, I asked him some newbie questions, and whether I can share it with everyone (as my friends also followed what I have bought and eagerly want to know what they should do now). So yes, he allowed me to share it so that it may also benefit to everyone.
So below are some of the questions I asked him during our yumcha session:
ME : Can we still hold the glove stock you recommended us to buy during March ?
HIM : He smiled, and ask me what is the reason I bought?
ME : (Feeling shy as I have no idea why I bought at that point of time, as I was still new in the stock market. It was during May suddenly prices shoot up and news started to spread that Glove demand exceeds supply and it will last for the next one year at least. So my answer pretty simple) "Because of covid!!!".
HIM : Do you think this covid pandemic will end soon?
ME : (I did do some homework) I answer confidently by telling him at least next year or until vaccine is ready !
HIM : (he started to get serious) Look, if vaccine is ready, how many people in this world will go get themselves vaccine?
ME : Definitely everyone! Everyone also scare die!
HIM : Do you know how many people are there living on earth?
ME : I google immediately and it show 7.8 billion people as of March 2020.
HIM : (He smile again) Told me its going to take years for everyone to get vaccine! The Covid pandemic doesn’t magically go away because vaccine has been produced.
ME : (I agreed with what he said but I just kept quiet because I didn’t really know what he was implying) I just quietly nod my head.
HIM : So he continued explaining, gloves will be needed even more when vaccine is ready as doctors or nurses must wear gloves for administering vaccine.
ME : (I quickly moved on to the next question) So we can still hold lah? But price drop more than 10-30% lately, if so good why did it drop? (I refer to SUPERMX and TOPGLOV).
HIM : This is a very good question, but first of all, you need to learn about fund movement which can be complicated.
ME : (i just keep quiet and wait him to further explain from here)
HIM : If you noticed, beginning of March, prices were not moving as much, during which Covid have already spread seriously in CHINA and EUROPE also USA but glove stocks did not rally until MAY. It started to move right after a well know investor in Malaysia name "K" share an article about gloves and thereafter his followers and other smart insiders started to buy in heavily in May causing price to shoot up.
ME : So they left already ?
HIM : Looking back at the recent movement, definitely some left during the peak but he told me not to worry, as he can see that they are starting to buy back again. When all glove company posting good result, price start to fall, and come with numerous bad news like margin capping cut, windfall tax, china glove expansion. He tell me this is all planned by big local fund to trick normal retailer into panic sell.
ME : Why would they want to do that? If prices keep going up isn't it even better?
HIM : Simply, many fund houses has yet to enter because they have to wait for result release for confirmation, they couldn’t just buy based on expectation. They require real facts & data to access risk and reward for long term. He explained that most of the fund will not enter just for a few days or weeks, some of the fund usually invest for at least half to one year or even longer but prices already shoot up by smart investor/insider and therefore they need to get their "people" to issue some bad news to reduce confident of investors. With bursa having to ban short selling, prices are even harder to go down without any bad news.
ME : (I start to get confused). So I just hold and wait for it to go higher or should I sell?
HIM : (He laughed and asked) "Have you earned enough" ?
ME : I honestly told him that I only managed to buy a little as my fund quite limited so surely it's not enough but now after few months of saving up from paying for bank loans, I have extra pocket money!!!
HIM : Then you should consider now as an opportunity to increase your position ! Every fund house is buying quietly now because next few quarter result already confirm to be better than the previous one. If you look at most of the bank research, you can see that especially SUPERMX and TOPGLOV have higher Price Target because Fund houses are actually buying this two compare to the others. He further explained, some fund are stuck with many stocks during March flash crash, they only just managed to exit some and start allocating to glove stock as gloves is the only shining business now.
ME : (actually I get the answer I want already) Just to learn more, I ask him another question "why smart retailer want to sell off some at peak when it possible to go higher up?
HIM : Well, if you look at the time they sell off, its actually due to margin capping reduction and they are well-known to use margin account aggressively. The due date to sell off was by JUNE which will be over soon, since then they are also worried if short selling is not extended further, the price may further sell down by institute trader. (he taking a breathe) Luckily bursa has just extended the short sell until end of the year, which provides big opportunity for everyone that has yet to enter. I am pretty sure, "they" will be buying back in coming weeks as the prices already drop a lot from peak and the doubt of short sell extension have been clear.
ME : Is this short sell extension really that important that it could influence the market so seriously?
HIM : Yes, if you look at March, right after BURSA stopped short selling, every stock start to rally and rebound by the end of April when it was announced to further extend to June, again many stock rally up further. It's much easier for stocks to move with short sell still on suspension.
After long yumcha session with my uncle, my conclusion is that I still have a lot to learn from this market and from my uncle.
Hope for next yumcha session with him and to learn new insights to be shared with everyone.
During the time i share this yumcha session, I still holding SUPERMX. Hopefully it will double up from here.
Above sharing is not buy or sell call.