Wednesday, July 10, 2019
Alcom : Buy to hold crashed stocks?
DOW flattish as all awaiting the FED news on the rates cut ... while BNM maintaining the OPR.
There are many stocks already crashed some 50-80% ... from their peaks. Is it time to INVEST in those crashed stocks, since many stuck up there, might beh-tahan and sold off their stakes for huge losses?
I m taking a random chart here ... say, Alcom.
Say we just queue to buy 50cents till done. We dont have to buy hugely, say put RM5k for her (and few more other crashed stocks ... each in different sectors ... to diversify). Put few conditions for buying, if you want.
Say : stocks must have retraced 70% from the peak.
Say : PER must be positive and NTA > the stock price
Alcom satisfied those conditions : at 50cents level, the stock dropped 70% from the peak with PER at 34 (not cheap) and NTA 90cents > 50cents.
As buy-hold investors, we are going to hold till stocks up to x2 ... in this case, Alcom trading at RM1 ... we sell her off. What if it goes LOWER ... say to 30cents? Buy-hold?? Hmm ... investors wont buy-hold in 2019 or buying into Alcom (aluminium sector) with such high valuations (I have not check other ratios ... so, do our homework).
This is just an example of putting some of our money in stocks. If I m to buy-hold stocks ... I will only do that with some conditions ... but the issue of MISSING out those uptrending stocks which is more of a concern. WHY stuck inside downtrending? I wonder ...
There are many stocks which are down 50% from their peaks ... or even 70% ... is it a BUY?