Is It Time To Invest In US Stock Market?

Is It Time To Invest In US Stock Market?

At the end of 2020, I was bullish on the stock market in 2021.

It should be a recovery year from the pandemic as Covid-19 vaccines were rolled out in stages.

Now we are approaching the end of year 2021, and it turns out to be a tough year for stock market in Malaysia.

Unless you packed your portfolio with quality tech stocks, it's very likely that you will close year 2021 with a loss.

If you have Genetec or Kobay in your portfolio early in 2021 and hold on to them until now, you will be big winner in 2021.

Genetec rode a rocket from RM1.80 to RM50 while Kobay jumped from RM2.40 to RM18 (adjusted to bonus issue).

I had Genetec in my portfolio at the start of 2021 at a cost of RM1.49, only to have sold them "happily" at RM4.20...

Apart from Malaysia and China, other regions' stock markets seem to perform well especially the US.

If you have a few US stocks mixed within your Malaysia stock portfolio in 2021, I believe that you will not do badly either.

Year-To-Date, Alphabet rose 67%, Apple rose 33%, Amazon rose 6%, Microsoft rose 50%, Nvidia rose 116%, FB rose 25%, Intel rose 2%, Netflix rose 13%, Tesla rose 27%, Oracle rose 62%, Ford rose 138%, Berkshire rose 32%, Adobe rose 17%, Dell rose 91%, Broadcom rose 46%, Qualcomm rose 20%, Airbnb rose 12%, Nike rose 16%, McDonald's rose 26%, Domino's Pizza rose 40%, Bank of America rose 50%, ExxonMobil rose 48%, Pfizer rose 66%, Moderna rose 152% etc.

Inevitably every investors who hasn't tried US stock market will have this in their mind: Is it time to invest in the US stock market?

Investing in US stocks is much easier and cheaper now compared to 10 years ago. Local investment banks and many international online brokerage firms offer this service.

Many years ago I did have interest to invest in some US stocks. I felt that Google was a great business with massive potential.

However, I found that investing in US market was troublesome and "expensive" at that time and I didn't really make a serious effort to buy US stocks.

Later I had interest in a few Singapore listed stocks but I still did not try hard to take my first step out of Malaysia market.

As I was doing quite OK in Malaysia stock market, I told myself to just concentrate on my own "strength" which is to invest locally.

Of course we can't compare US market with Malaysia market, they are just incomparable from any angle.

In the US, we have world leading giant companies with moat, as well as exciting up and coming companies with explosive growth potential.

In Malaysia, we have only over 900 listed companies in which more than half are "half-dead" or already dead. Others who are alive are struggling for growth.

There are some good companies but they are mostly cyclical in nature.

Sometimes I feel like there are no more stocks with good potential in Malaysia for me to choose anymore.

That means I have to look elsewhere.

Nevertheless, as long as there is up and down price movement in the stock market, there is an opportunity to make money from it.

If we miss out a super stock that has gone up multiple times, there is always another opportunity waiting at the corner.

If you missed out on Inari, you have Pentamaster.

If you missed out on Pentamaster, you have Frontken.

If you missed out on Frontken, you have Dufu, UWC & Greatech.

If you missed out on Dufu, UWC & Greatech, you have JFTech, Unisem & MPI.

If you missed out on JFTech, Unisem & MPI, you have Kobay, Sam & Genetec.

If you missed out on Kobay, Sam & Genetec, you have ??? What's Next?

Yes, it won't stop here and surely there will be certain stocks that fulfill the potential to fly at any time.

Thus, I think there are still opportunity in Malaysia stock market, even though the KLCI is pathetic and overall sentiment is not good at the moment.

That's the main reason I still stick entirely to Malaysia stock market.

Some people might say that investing in oversea stock markets is a good diversification. I totally agree with that.

In Malaysia market alone, we can have all sorts of diversification for our investment.

Invest in 7-8 stocks at a time rather than 1-2 stocks is a diversification.

Invest across a few sectors rather than one sector is a diversification.

Invest some in short term and some in long term is a diversification.

Spreading your investment in blue chips, small caps, dividend and growth stocks is a diversification.

Place your money in FD, unit trust, ETF and property other than stock market alone is a diversification.

Nevertheless, over-diversification might do more harm than good.

What is over-diversification? I don't think there is a definition for it. Everyone will have different opinion about it.

In general, if you are good at one thing, it's better to spend more time and effort on it rather than diversify just for the sake of diversification.

A very successful stock market investor might suddenly want to diversify into property market after seeing people earning big money during a property boom.

So he shifts half of his time and energy to study the property market while spending less time on stock market which he is good at.

In the end, he may end up not doing well in property investment and missing good opportunities in the stock market.

If I were to diversify my portfolio into US market at this stage, most probably I will only invest in those powerful companies like Microsoft, Apple, Alphabet, Meta, Visa etc.

This is very different from my strategy in local stock market in which I rarely invest in very big companies.

I don't think I have the enthusiasm to study the relatively unknown small or mid cap stocks, and read news from the US. I don't even read half of local business news...

As investing in US stock market is made easy nowadays, there are more and more investors sharing US stocks on their blogs, YouTube Channels and Facebook.

Sometimes I do read and listen to their US stock recommendations. Some stocks are really interesting and I'd have already bought them if they are in Malaysia market.

However, I still find it hard to buy my first US stock.

Another reason why I'm still yet to invest in oversea markets is the lack of resources. I don't know how and where to find a growth company.

When I looked at the financial report of a US company in its investor relation website, I was immediately destroyed by too much information there.

Definitely it's good to have those detailed financial information and better corporate governance but I was just too lazy to go through them since I'm already accustomed to Malaysia style simple financial reports.

If I can go through more financial reports and presentations by US companies, I'm sure that I'll gain more knowledge in accounting and business world.

Since there are so many benefits investing in US markets, why I still haven't make my move?

I'd say it's because of the comfort zone and laziness.

I'm comfortable and familiar with the "pattern" of Malaysia stock market. I stay in this country and know first-hand what's going on with the politics, economy and the people here.

Besides, I'm also quite lazy to read news, quarter reports and annual reports. I only choose certain parts to read.

Anyway, not all well-known US stocks do well in the past one year.

Year-To-Date, Zoom lost 50%, Twitter lost 21%, Uber lost 26%, Paypal lost 19%, Visa lost 2%, Pinterest lost 49%, Disney lost 16%, Delta Airlines lost 8%, Boeing lost 6%, Verizon lost 10%, AT&T lost 20%, Walmart lost 2%, Merck lost 2%, Fedex lost 6%, First Solar lost 10% etc.

All those US stocks mentioned here are the big and famous one which I know. There are many other smaller companies which I'm not sure about their share price movement.

I believe that winning stocks in the US market are much much more than losing stocks in 2021.

Dow Jones, Nasdaq and S&P 500 indices continue to break new high during the pandemic. How long will this trend continue?

It seems like year 2022 will be another good year when US raises its interest rate.

On the other hand, KLCI has been trending down for 7 years since its peak in mid 2014. How long will this trend continue?

Is a trend reversal around the corner?

I won't rule out investing in US stock market in the future and I'd better prepare myself well for it.

When I can't "cari makan" in Malaysia stock market anymore, then it's time to switch.

http://bursadummy.blogspot.com/2021/12/is-it-time-to-invest-in-us-stock-market.html