Actually, my impression is that the "big boys" represent the "smart money" in the system, which means they were already in during the early stages of the bull market/late stage of the bear market and are now sitting on comfortable profits and with a significant margin of safety.
Of course, there will be people who punt and expect to make large oversized gains in a short period of time; but the question to ask is whether this is sustainable in the long-run, and whether they may get badly burnt with the risks they are taking on.
As to the question of over-valuation, it is subjective as it depends on your assessment of the fundamentals of the business versus its market price; and whether the business will ever be able to reach that kind of lofty valuation. An example from my own personal investing experience was Swiber being priced at $3.00 - overly-optimistic at the time on the O&G sector and without regard to the realities of the business, but I was blind to that at the time.
Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
those are the biggest boys, actually they also speculate when there's money to be made
actually in a correcting market you can find a lot of 'mispriced' stocks. Means example a stock 'net-net' value is 20cts but open market trading maybe misprice it at 12cts
a steal right?
yah but in that depressed environment it will unlikely rise to 20cts anytime soon that's why I say is slim pickings because everybody looking for the best deal in the market is probably a value investor not many novices around, however in a speculative environment like now when market is hot maybe that same stock the punters could whack it up to 60cts, it's probably way overvalued from any value investor point of view but would you consider that a bad thing?
(06-02-2013, 10:40 AM)camelking Wrote: [ -> ]Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
That my strategies too, but an element of luck play a part. I value a company at 72 cents, set take profits target if it falls back to 70 cents, which it did. I sell, then it cheong now to 80 over cents. That counter is CES, but at least i made some decent profits
As for sighs for irrational exburance, I use a rather "strange" guage, when the forummers of a particular investment site suddenly have a influx of new members and all are screaming counters off the posts without proper anayalysis, I turned catious, and stop buying. hehe =)
(06-02-2013, 11:46 AM)Greenrookie Wrote: [ -> ] (06-02-2013, 10:40 AM)camelking Wrote: [ -> ]Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
That my strategies too, but an element of luck play a part. I value a company at 72 cents, set take profits target if it falls back to 70 cents, which it did. I sell, then it cheong now to 80 over cents. That counter is CES, but at least i made some decent profits
For aspial, i valued it at 15cents (can't remember the workings) but then it keeps going up.... and i keep shifting my cut profit targets
I will be cursing myself if i had sold it at say, 18 cents......
I called it a mix of value and trading approach.
Hi Musicwhiz,
I have been through several bulls and bears, I can share with you my experience on past events. The essense of the Beginning Bull market happens when the broad market rallied and most investors, day traders and speculators made $$$. When corrections happen, as usual, investors would attempt to buy on dips, speculators and day traders will just cut losses and move on. The Seed of GREED has started to sow in market, pennies stocks giving multi-baggers give market participants more HOPE and looking for the next DARLINGS.
On the question regarding substainability of these activities, as long as the music dont stop, everyone will continue to dance. Once the music stop, everyone incur losses. If the losses is not painful, the GREED factor will continue.
Bull market move in different stages -
1. Acceptance of BULL RUN,
2. Optimism of future earnings,
3. Excitement of rally,
4. Thrill of volatility,
and finally the ULTIMATE EUPHORIA.
Thus, Valuation matrix do not work effectively during tail-end of bull market. Value investors have the tendancy to sell earlier because of over-valuation pricing. I sold Cosco at PE35X, it went up to PE50X! Euphoria has taken control of market...
Knowing the cycle of market - How do we make $$$ from this? There was another questions posted on Diversifed or Focus approach to investing. I have tried both methods, Focus methods tends to be more rewarding in Bull run. During market correction, you have the faith to buy while others are selling. Your in-depth research tells you that its an attractive value, if price go lower due to margin calls/ cut losses, you are buying even more attractive valuation. On diversified approach, once you sell your stocks, it will take longer time to build up positions again, you may also endup buying higher prices once correction is over.
(06-02-2013, 10:17 AM)Musicwhiz Wrote: [ -> ]Actually, my impression is that the "big boys" represent the "smart money" in the system, which means they were already in during the early stages of the bull market/late stage of the bear market and are now sitting on comfortable profits and with a significant margin of safety.
Of course, there will be people who punt and expect to make large oversized gains in a short period of time; but the question to ask is whether this is sustainable in the long-run, and whether they may get badly burnt with the risks they are taking on.
As to the question of over-valuation, it is subjective as it depends on your assessment of the fundamentals of the business versus its market price; and whether the business will ever be able to reach that kind of lofty valuation. An example from my own personal investing experience was Swiber being priced at $3.00 - overly-optimistic at the time on the O&G sector and without regard to the realities of the business, but I was blind to that at the time.
(06-02-2013, 02:32 PM)2V. Wrote: [ -> ]Thus, Valuation matrix do not work effectively during tail-end of bull market. Value investors have the tendancy to sell earlier because of over-valuation pricing. I sold Cosco at PE35X, it went up to PE50X! Euphoria has taken control of market...
Knowing the cycle of market - How do we make $$$ from this? There was another questions posted on Diversifed or Focus approach to investing. I have tried both methods, Focus methods tends to be more rewarding in Bull run. During market correction, you have the faith to buy while others are selling. Your in-depth research tells you that its an attractive value, if price go lower due to margin calls/ cut losses, you are buying even more attractive valuation. On diversified approach, once you sell your stocks, it will take longer time to build up positions again, you may also endup buying higher prices once correction is over.
Hi 2V,
Thanks for the explanation. My favourite quote is still this one from Sir John Templeton which summarizes a bull market: "Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria".
I'd like to think we are in the "mature on optimism" phase now, as the skepticism has lasted the better part of the last 3-4 years. Valuations are indeed rising and some companies are trading higher than their long-term mean.
The issue of over-valuation arises more as a function of the business model/prospects of a Company versus its valuation. For instance, can one justify a commodity player trading at say 30x if there is keen competition and very low ROE and NPM? Your example of Cosco - it exists in a cyclical shipping industry so it is possible for PERs to gyrate quite violently depending on which stage of the cycle we are in. We all know the bust which followed the boom, after the fact. But for a normal company e.g. doing consumer goods, one should ask if valuations may be excessive compared to its prospects. Not an easy answer, admittedly, but we should still ask the question and try our best to answer it.
If we focus on value, I doubt your would ever buy too expensively. Many investors make a mistake of omission rather than commission, and lose out more on opportunity cost rather than real money. This is fine by me.
(06-02-2013, 11:53 AM)camelking Wrote: [ -> ] (06-02-2013, 11:46 AM)Greenrookie Wrote: [ -> ] (06-02-2013, 10:40 AM)camelking Wrote: [ -> ]Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
That my strategies too, but an element of luck play a part. I value a company at 72 cents, set take profits target if it falls back to 70 cents, which it did. I sell, then it cheong now to 80 over cents. That counter is CES, but at least i made some decent profits
For aspial, i valued it at 15cents (can't remember the workings) but then it keeps going up.... and i keep shifting my cut profit targets
I will be cursing myself if i had sold it at say, 18 cents......
I called it a mix of value and trading approach.
"At every interval, set a cut profit limit eg $1.10, $1.20 and etc."
Unqoute:_
Hi guys, which SG's INT BROKERAGE allow you to do the above? Do you mean "STOP LOSS LIMIT"?
I have to do it "manually" very difficult leh?
i am trying to join CITI BANK INT BROKERAGE but CITI still processing my application after 2 weeks. i only got a notice from CDP informing my account is linked but nothing from CITI yet? DAMN TA PAI!
(06-02-2013, 05:09 PM)Temperament Wrote: [ -> ] (06-02-2013, 11:53 AM)camelking Wrote: [ -> ] (06-02-2013, 11:46 AM)Greenrookie Wrote: [ -> ] (06-02-2013, 10:40 AM)camelking Wrote: [ -> ]Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
That my strategies too, but an element of luck play a part. I value a company at 72 cents, set take profits target if it falls back to 70 cents, which it did. I sell, then it cheong now to 80 over cents. That counter is CES, but at least i made some decent profits
For aspial, i valued it at 15cents (can't remember the workings) but then it keeps going up.... and i keep shifting my cut profit targets
I will be cursing myself if i had sold it at say, 18 cents......
I called it a mix of value and trading approach.
"At every interval, set a cut profit limit eg $1.10, $1.20 and etc."
Unqoute:_
Hi guys, which SG's INT BROKERAGE allow you to do the above? Do you mean "STOP LOSS LIMIT"?
I have to do it "manually" very difficult leh?
i am trying to join CITI BANK INT BROKERAGE but CITI still processing my application after 2 weeks. i only got a notice from CDP informing my account is linked but nothing from CITI yet? DAMN TA PAI!
Temperament, i did it manually
(06-02-2013, 10:01 PM)Greenrookie Wrote: [ -> ] (06-02-2013, 05:09 PM)Temperament Wrote: [ -> ] (06-02-2013, 11:53 AM)camelking Wrote: [ -> ] (06-02-2013, 11:46 AM)Greenrookie Wrote: [ -> ] (06-02-2013, 10:40 AM)camelking Wrote: [ -> ]Let's say in your view, the value of stock A is $1.00
You got it at 60cents some time back.
Now, the market price is $1.03.
Do you sell?
It is over-valued as per your analysis.
My view is no, you shouldn't sell.
Set a cut profit limit at $1.00 if you like
and let the punters move the price up for you.
You don't get bullish market every few months, remember?
At every interval, set a cut profit limit eg $1.10, $1.20 and etc.
That my strategies too, but an element of luck play a part. I value a company at 72 cents, set take profits target if it falls back to 70 cents, which it did. I sell, then it cheong now to 80 over cents. That counter is CES, but at least i made some decent profits
For aspial, i valued it at 15cents (can't remember the workings) but then it keeps going up.... and i keep shifting my cut profit targets
I will be cursing myself if i had sold it at say, 18 cents......
I called it a mix of value and trading approach.
"At every interval, set a cut profit limit eg $1.10, $1.20 and etc."
Unqoute:_
Hi guys, which SG's INT BROKERAGE allow you to do the above? Do you mean "STOP LOSS LIMIT"?
I have to do it "manually" very difficult leh?
i am trying to join CITI BANK INT BROKERAGE but CITI still processing my application after 2 weeks. i only got a notice from CDP informing my account is linked but nothing from CITI yet? DAMN TA PAI!
Temperament, i did it manually
Hi camelking & Greenrookie,
Citi Bank INT Trading Brokerage has this "Special Stop Loss" and "Limit Stop Loss". But Citi doesn't seems to welcome me ikan billis investor. More than 14 days already, still "NO GO YOU CAN START TRADING." i wonder once approve, whether CITI will give me more "delay tatics" problems?