Time to Buy or Sell?

All companies with financial year ended 31 December have reported FY17 results by now, from a quick glance, I noted most companies were not doing that well compared to FY16, in terms of financial performance and of course, share price movement too.

 

Though KLCI is showing good uptrend, it is very much due to performance of big blue chips, especially consumer as well as banking counters. Many value and growth stocks have been hammered when the growth momentum expected were not shown or quarterly profits were badly affected by foreign currency fluctuation, higher input cost, labour shortage (the most common reasons or excuses provided in performance review).

 

As a result, many stocks fell to multi years low and historical PE now looks very attractive, but most would think that there could be a major correction this year (based on 10 year cycle prediction?) or the current market is on down trend, it is time to sell those stocks that are not showing good performance in the latest quarterly results. They are either sitting on huge cash reserve or switch to stocks that are turning around or showing strong growth YOY/QOQ.

 

This is the time that really test our investing process and thought - what have we been practising? Many questions came into mind and of course, there is no definite answer to them but this is the time to show what we understood about long term stock investment.

 

To me, one important belief remain unchanged, only buy companies or businesses you understood and are financially sound as we don't know when the next financial crisis will come to hit us. Financially sound companies tend to stand the test of crisis better. There are many articles on net cash company, high asset backing companies, strong cash flow etc, I always believe we need to carry out our own verification before jumping on board. Hopefully we can all earn a decent return in the volatile market too. All we need to do is .....take action at some point in time!!