THE STRONG IS GETTING STRONGER, THE WEAK IS GETTING WEAKER. 强者越强，弱者越弱。

 

CASE STUDY –HENGYUAN VS PARKSON

 

 

HENGYUAN price rises from a low of 2.06 on 29/12/2016 to the high of 19.20 on 29/12/2017, which is an increase of 832% within one year time frame. It means if you invest RM100000 in the stock, it will grow to become RM932000 after one year. This is really amazing. But who can hold after seeing the syer price has rise for 50% or even 100%? I think most of the investors will sell off after seeing some gain. So, it is important to have target price in the mind by calculation and evaluate the company future growth prospect. If the company showing continuous improvement in profit, just hold and keep in your portfolio. Let’s profit run until target price is reach is important. HENGYUAN  share price keep rising because it’s profit jump significantly, the global oil price is increasing, and company is cheap (P/E is around 5).

 

LESSONS TO LEARN

 

1) IF YOU MANAGE TO BUY GOOD SHARE AT UNDERVALUE PRICE, KEEP HOLDING.(低价买好股，要长期收藏。）

 

2) Don’t sell for a small profit, must aim for BIG MONEY. 既然花了那么多时间和心血投资，一定要决心赚大钱。

 

3) Don’t over trade. 坚守好股 . KEEP FOR AT LEAST 6 MONTHS TO ONE YEAR, OR EVEN LONGER (3-5 years).

 

4) IF THE COMPANY PROFIT CONTINUE TO RISE, STOCK PRICE WILL FOLLOW CONTINUE TO RISE, HENCE MUST HOLD TIGHTLY TO LET PROFIT RUN.

 

Let’s look at PARKSON.

 

 

The price drops from a high of 7.44 on Jan 2008 to a low of 0.51 on Jan 2018. It drops for  93% for a period of 10 years. If you invest RM100000 in this stocks 10 years ago, it will left only RM6900 in the current value. You loss RM93100. 血本无归。You will even loss more, if you keep average down on this stock. This is a really sad story. The syer price keeps dropping because the profit keeps dropping.

 

LESSONS TO LEARN

 

1) Profit growth is very important for the syer price to keep rising. If the profit is reducing for continuous quarters, sell immediately. Cannot buy the stock which has deteriorating profit and EPS.

 

2) Don’t average down on the stock with deteriorating fundamental.

 

3) Must set cut loss price and swap to syer of a company with continuous improvement in profit  and good future prospect. 

 

4) Don’t always think about the past glory of the company. If the condition is not right, CUT LOSS to protect your capital. Parkson is once a very profitable company and darling of investment community (syer price more than RM10). But with E-commerce, its mall base retailing soon losing its market share and showing continuous dropping in net profit and even loss.

 

As you can see, your choice will make a huge different. Just a right or wrong pick will differentiate you between going to heaven or hell. Look at the cost of opportunity as well. The initial capital of RM100k will  grow to become RM932k or drop to RM6.9k (a difference of 135 times). It is a difference of good quality of life to you and your family or leading a miserable life. So, next time before you press the BUY button, please evaluate the company you want to buy thoroughly quantitively as well as qualitatively. You can make a difference if you treat your investment seriously.