Posted by oregami > 2015-01-15 10:58 | Report Abuse

Insiders will have 1st hand news regarding to the deterioration of earning. Selldown will start before layman can even react!

Posted by calvintaneng > 2015-01-15 11:24 | Report Abuse

Exactly,

Growth Stocks Are Powerful In Momentum When Conditions are favourable.

There are 3 types of Stocks

1) Hot Air - Speculative

2) The Flying Kite - Growth Stock

3) The Light House - Dull Value Stock

Growth Stock is Just The Flying Kite.

With Favorable Wind Condition the Kite Will Fly High & Stay Firm in the Sky for as long as possible.

This Flying Higher & Higher is negated under these conditions

1) When the string is used up. The flying kite cannot go higher by limitation of the length of the string. Say, the string is 500 meter. So the kite can only fly as high as 500 meter. Double the string to 1,000 meter. Now the kite can reach 1,000 meter. The more string you add the higher the kite can fly.

So there is need for expansion for futher growth. Top Glove added more lines of production to capture market share.

Further stocks have run up by 20% to 30%. Will earnings match price rise? The manufacture of furniture is space & labour intensive. To rise higher all must build more factories and hire more workers. The takes time. So there is a constrain to growth.

2) The Kite can stall if the wind ceases.

Favourable circumstances can change suddenly like the wind. In Year 2003 One Very Fast Growth Company in Singapore called One 99 was hit by the SARS Epidemic.

This Unforeseen event caused people to avoid shopping malls. The Sales of this Super Growth Company Plummeted & then went bankrupt.

3) The Kite Cannot Fly If rain suddenly fall.

A Severe Economic Downturn will also cause high growth stock to stall. Sale of Hot properties, cars and everything will stall if times like 1985-87, 1997-98 & 2007/08
happen again.

Posted by calvintaneng > 2015-01-15 11:29 | Report Abuse

Correction

"Further stocks= Furniture Stocks"

Posted by willnck > 2015-01-15 12:20 | Report Abuse

calvin,great anology.