It is very easy to get inundated, mesmerized and hypotized by all the media news, analysts' reports, promoters' buy calls and FOMO effects.
This note is my personal thought on Rubber Gloves sector and not a post to enlicit any buy or sell recommendations. I hope investors and traders benefit from this note.
Note 1: I must always remember that Stock Market is a Zero Sum game. This means:
* My profit comes from someone else buying my shares at the profited price
* My loss means someone willing to buy my share at that price.
* That someone may profit or loss in the future depends on the price action next.
* There is always people trying to sell at higher price and they have to find ways to make people buy at that price.
* There is always people trying to buy at lower price and they have to find ways to make people sell at that price.
* Theoretically, this cycle can go forever. PE 100, PE 1000 and so on.
* Practically, all profit takers will exit eventually and left with buy-and-hold people willing to take the long term risks.
* Moving forward from that point, capital appreciation (meaning someone willing to buy your share at higher price) will be slower and smaller. Only main source of income will be Dividend from growing business.
Note 2: I must always remember why Rubber Gloves sector appreciated so fast in so short time frame. This means:
* Previous oversupply situation became undersupply.
* Supernormal demand is triggered by a global scale coronavirus crisis.
* Panic buying or ordering of Rubber Gloves.
* Willingness to pay more to buy/order Rubber Gloves.
* A possible structural change in the demand market post coronavirus.
* Supply scalability is slower than demand increase.
Note 3: I must keep in mind that for all the points in Note 2, there maybe future risks counteracting. This means:
* Undersupply situation may become oversupply situation worst than pre-crisis level. Look at the number of newcomers in Malaysia , let alone global supply development.
* A possible structural change in the demand market post coronavirus does not materialize. Human is forgetful and may not keen to adapt to new long term norm.
* Panic buying or ordering Rubber Gloves subsided. Less likely clients are willing to wait too long the lead time.
* Unwillingness to pay more. Save the budget for vaccines and other essentials. Implement measures to reduce glove usage.
Note 4: I should know that for all the points in Note 1, 2 and 3 combined:
* There will be market dynamics interacting and moving the price up and down, thus short term trading opportunity to make profit.
* I may lose money in long run investment if my entry price is not supported by sustainable actual future fundamental.
* For long term investment, It maybe wise to take profit if the price hits the long term target in short term.