The patient investor

 

It came to my knowledge that some close friends that I know have been making good money lately by joining social media investing group, even my sister who does not know much about stock investment asked me if I can help in trading stocks.

It makes me ponder on my belief in value investing, buying good companies when it is undervalued or buying great companies at reasonable price. Yes, I know, investment is about the future and the objective is the same  - to make money from investment. But the key difference is the risk involved when comparing investing (rather speculating)  based on pure speculation or hope and investing based on facts, figures and more reasonable forecast about future.

For instance, Bursa currently present some of these choices:-

1. Tech stocks with current valuation sky high, but with reasonably fair expectation of strong growth ahead. Now it is entering correction phase

2. Glove stocks with current valuation appears low, but with expectation super profit will revert to normal level soon

3. Hot penny stocks with lots of stories and many have made good money and continue to attract more people into it  

4. Plantation stocks with CPO keep climbing but not the stock price, on concern of ESG issue

5. Traditional stocks with reasonable valuation but not much growth expected, is getting attention lately

6. Stocks badly affected by pandemic and expected to recover soon as vaccination already started

7. Oil prices recovered strongly to near US$70 a barrel, market focus shift to Oil & Gas stocks  

There are always opportunities in the market, rotational play will set in when one sector seems overvalued and others undervalued. I am not sure if chasing momentum stocks is a better strategy in such market, I have to admit I am not good at it. I tend to believe what a very patient guru once said:" stock market is an exceptionally efficient mechanism for the transfer of wealth from the impatient to the patient". 

Well, his company Berkshire Hathaway uphold that belief now as the share price has been climbing lately. That shows an obvious shift of attention from growth to value stocks in the recent correction on high growth tech stocks. 

Price volatility is not risk, value destruction is.