Pic from The Star
Dear all, due
to last Friday surged in buying volume and share price ascend of glove
makers across the board, the KLCI index turned positive by 1.9% to close
at 1630. What is impressive is not only the magnitude of purchase but
the rally upwards. Over the weekend, I received many calls, emails,
messages asking me whether is this the start of the glove mania again. Should investors consider taking a position in Gloves?
I
am sure most readers have noticed by now that I am not a short term
thematic investor. I do not look to invest in stocks week by week or
month by month. The past 2 months, the sell down of gloves have been
very frightening even for the most seasoned investors. I have friends
around me who actually cut loss last week, throwing in the towel despite
my repeated advice to them to hang in there. These are not new
investors with minimal investment experience. They are investors who
have the market knowledge and view but could not withstand the
frightening selloff for the past 2 months which worsened when short
sellers came in last week.
It
caught many by surprise considering early in the week, the massive
short selling flooded glove sector to start the year. When they saw what
happen on Friday, they called me. They couldn't believe what happened.
They felt cheated. But I did not rub it in. I simply told them, believe
in fundamentals, believe in the logic and believe in the rationale of
investing. Do not be swayed by market sentiment and noises. Otherwise,
there is no point investing, just put the money in FD and lock it away.
We
have seen many rejoicing, gloating and showing off with the glove
superb rebound last Friday. However, I did not write any articles over
the weekend. There are 2 reasons :
1.
I do not think this overnight rebound should be misconstrued that
"Gloves are back". I believe it will be a very tough fight between the
bear and the bull upwards. This is especially so when the short sellers
have plenty of ammunition. Definitely, the stock market do not move in a
straight line so there will be gyrations on the way up just as there is
the gyrations downwards. To be fair, gloves should never have been dead
in the first place. There were too many non-rational investors and
commentators in the stock market providing input on this subject.
Everyone is like an expert. Who do you trust?
2.
I do not believe in "Gloating" or "I told you so" mentality which is
unhealthy for the investment community. In fact, we should all work
together and study why and how the experience of glove selloff in the
past 2 months should become a guide towards the future.
As per my title, all things being equal, are gloves back? My
humble view - investors should consider whether do you have the
stomach to continue holding on and soldiering on believing the
fundamental quality of glove stocks. If the answer is yes, then you
can still ride glove stocks no matter what happen next week (MCO /
Politics / Vaccine etc). If the answer is no, then investors should sell
on strength because we know short sellers are back in droves, this
round it is unlike 2020. So it all comes down to your investment
horizon, risk tolerance and mindset of investing which will determine if
you should continue holding or otherwise. As for me, my favourite glove stocks especially for long term investment remain to be Riverstone and Hartalega. This shall be a topic for another day.
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Food for thought:
https://www.tradeview.my/2021/01/tradeview-commentaries-11th-january.html
