Ultimate Stock Tips
6 LESSONS from the Rise & Fall of GLOVE STOCKS 2020-2021
CynicalCyan
Publish date: Sat, 11 Sep 2021, 11:34 PM
CynicalCyan
0 69
Unique content created once in a blue moon to increase the quality of articles of klse.i3investor.com. (used to be weekly)
The PAINFUL Lessons of Glove Stocks 2020-2021:
1. Mr. Market is brutal.
The ruthless Mr. Market showed no mercy to its victims. The beaten down glove stocks were battered down even further. Retailers who were badly bruised, pleaded for Mr. Market to stop. Ignoring their pleas, the manic-depressive Mr. Market continued the bloodbath...
Glove companies showed higher & higher profits, yet share prices plunged lower & lower. The majority of investors who bought glove stocks in 2021 would have lost money, judging by the strong downtrend. Early 2021 purchasers suffered even more.
Be mentally prepared that the stockmarket can be volatile. It doesn't care how much you lost.
2. Be fearful when others are greedy over-optimistic.
ASPs increased at an unprecedented fast pace due to severe shortage last year. Mr. Market became exceptionally optimistic on glove companies' future prospects. Glove stock prices quickly shot through the roof.
Fearing of missing out, investors bought glove stocks following each jump in share price or upon receiving bullish news about gloves.
Even some glove companies were no different from the euphoric crowd, spending substantial amounts of cash for share buybacks but did not achieve the desired effect of stabilising the share price.
Although less speculative than the infamous Tulip Mania, the gloves incident 2020-2021 shares similarities. When almost the entire market is optimistic & already holding glove stocks, who will be the new buyers to continue the musical chairs?
When the market is all but optimistic, the run-up in share price would have reflected all future potential, leaving little room for further upside.
3. The stockmarket is forward-looking & efficient.
If glove stocks could command a trailing PE of >50 and even >100 at some point last year, what's surprising when they have a PE of <10 this year?
How could AIRASIA & GENM's share price move up while they remain loss-making?
The stockmarket looks at companies' future performance, placing less emphasis on its past.
4. The luck factor.
Scenario 1: Buying glove stocks in May 2020 and selling in Aug 2020. Esp. those who got lucky with SUPERMAX. Feels like winning the lottery for them.
Scenario 2: Buying glove stocks in May 2021 and selling in Aug 2021. Utter misery.
Buying and selling at the perfect timing is rare. Luck swings both ways. Don't invest with the hope that stocks will go your way.
5. Keep an open mind.
Last December, JP Morgan was the most hated fund analyst. Glove shareholders cursed them day & night, dismissing JP Morgan's report.
Fast forward to the present, JP Morgan's concerns actually came true.
Don't dismiss opinions that you dislike.
6. Don't trust stock forum writers too much.
One year ago, one of the most prominent figures of klse.i3investor.com who is super bullish on gloves was very critical against Macquarie Bank and Maybank IB while writing many supportive articles on gloves stocks.
Having indomitable views is commendable. But take pity on your followers.
Wholeheartedly trusting forum writers to know better, followers find themselves in devastating losses shortly after. Forum writers could be wrong.
Always do further research. Don't rely solely on forum writers before any investment decision. (even myself)
CONCLUSION:
"Sometimes you must hurt in order to know, fall in order to grow, lose in order to gain, because life's greatest lessons are learned through pain."
Disclaimer: This article is not tailored financial advice, but mere general stock sharing / observations. Please do further due diligence. The author disclaims all liabilities from readers. The author may have interest in some of the stocks listed above from time to time.
Always do further research. Don't rely solely on forum writers before any investment decision.
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Discussions
6 people like this. Showing 21 of 21 comments
In any business you just need to take care of two fundamental.
1. Demand any fundamental change in market demand?
2. Supply any fundamental change on new supplier coming into market and how you going to compete with these new supplier for the market share?
2021-09-13 13:53
U need to understand, that Airasia is owned & supported by the Greatest Poker player of the world mah!
Surely it is worth something to have the Greatest World Champion Poker Player support mah!
Posted by Sslee > Sep 13, 2021 12:54 PM | Report Abuse
Haha,
Those saying the stockmarket is forward-looking & efficient and telling you:
How could AIRASIA's share price move up while they remain loss-making is asking you to have hope and faith and ignore the fundamental
Market is very inefficient and irrational.
One of Warren Buffett’s favorite old admonitions 'Price Is What You Pay, Value Is What You Get’ Quote reveals that price and value are not always the same. While the intrinsic value of a business is admittedly a somewhat imprecise estimate that depends on assumptions, it nevertheless stays within a much narrower range than the common stock price investors are asked to pay on any given day. As we’ve all seen, price can vary wildly depending on the emotions of the crowd and have hope and faith with the sweet talking CEO.
So if market is efficient AA with negative equity (PN17) and going to loss many more billions in next few quarters will be priced as zero value.
Posted by Sslee > Sep 13, 2021 1:53 PM | Report Abuse
In any business you just need to take care of two fundamental.
1. Demand any fundamental change in market demand?
2. Supply any fundamental change on new supplier coming into market and how you going to compete with these new supplier for the market share?
2021-09-13 14:04
market is just irrational moreoever in bursa Malaysia they are very cash rich companies one of the most in the country,one of the most profitable
but somehow never stop bleeding evenn getting lower than pre pandemic level
oh well being manipulated and played by big funnds susah nobody dare to touch! this is bursa ! all about speculative and rumour......
2021-09-13 15:48
gloves like other healthcare products are forever needed and must Have standard SOP.
too bad its worst than the market rotten fruits and vegetables even sell cheap noobody wants.Lelong like priceless even u are #1 in the world at exporting glove.
This is one of the market outlook that puzzles me and beyond.
2021-09-13 15:53
AA anD GLOVE companies are in dfferent industries.
One was forced to halt operation while another struck jackpot due to pandemic demand. Jackpots, "easy come, easy go".
On the other hand, AA starved and managed to pull through and still hanging on.
This shows character which is lacking in most companies. Numbers are not the complete story.
2021-09-13 16:03
Only winner here is ceo of glove companies. Billions of cash at their hands now. Striked jackpot.
2021-09-13 16:52
How do you price in if AA raise enough cash and ready for turn around in future?
There is some value there. People are buying that opportunity. But assigning a price to such value is impossible.
----------------------------
SSlee,
So if market is efficient AA with negative equity (PN17) and going to loss many more billions in next few quarters will be priced as zero value.
2021-09-13 17:23
However, only SUPER-NOOB would say market is efficient.
Look at the bosses and C-suite. They get paid doing nothing while 75% work like horse and yet claim market is efficient. Hahahaha.
So, if market is efficient. What's the fair price market pay for the few calls, meetings and emails bosses and c-suite produce? Super inefficient I tell u.
2021-09-13 17:27
Market is both efficient and inefficient. If you're active investing i.e not buying index fund, you're making the assumption that the market is inefficient so you can buy things on the cheap and sell it at a fair price, which is when market become efficient.
Market is not always efficient but it is efficient most of the time. In the sense that most people don't make money from market timing.
2021-09-13 18:48
Quite a number of good points raised in the discussion above. Ricky Yeo's views resonate with mine the most.
2021-09-13 19:48
Glove shares dipped again today. However, they fell in tandem with the general stockmarket.
If you bought glove stocks in 2021 & holding at a loss now, these questions might be your answer to BUY, HOLD OR SELL?
1) Do you need the money for urgent use now? For food, children's fees, rental, bills, etc? You should never had invested in the first place if the money is for immediate use. Convert to cash for urgent use.
2) What are you cut-loss plans? Fix a percentage & cut when target is met.
3) Without stop loss, you must be 100% confident. Hold glove stocks. Stop staring at price charts. Leave klse.i3investor.com. Wait for 2 years to recover.
4) If you decide to ditch gloves, what alternatives offer higher returns?
2021-09-13 20:18
Let's observe if the stockmarket is efficient.
Use the upcoming TOPGLOV QR as example.
I believe the stockmarket is efficient. I'm guessing Top Glove's upcoming QR will not lead to a sharp decline of the glove stocks. Neither would it spark a bullish reversal. Sideways, at best.
2021-09-13 20:38
All stocks prices go through their highs and lows and not only glove counters. Haven't we heard of the dot.com bust? What about the subprime loans 2007 market crash?
2021-09-13 22:18
Are you sure Market is not always efficient but it is efficient most of the time?
The stock market can remain irrational longer than you can remain solvent.
And the stock market can remain inefficient longer than you can remain patient.
Tell me how market value INSAS?
Why INSAS value less than it cash and less than 1/3 of its holding in Inari?
INSAS Balance sheet financial end 30/06/2021;
Total non-current assets: RM 735,876,000
Total current assets: RM 1,747,587,000 of which
Trades receivables include loans given out by ICL: RM 443,417,000
Fair value assets: RM 220,198,000
Deposits with banks and financial institutions; RM 413,854,000
Cash and bank balances: RM 488,944,000
Total liabilities: RM 498,975,000
NTA: RM 2.99
EPS: 37.06 cents
NOSH: 663,021,000
INSAS RPS: 132,604.152
INSAS-WC: 331,510,380
Insas holds following listed company as associate company: Inari, Hohup and DGSB
Inari: 540,693,575 units (14.68%) the last disposed 2,500,000 units on 8 Sept 2021
Hohup: 72,705,250 units (14.69%)
DGSB: 190,000,000 (25.48%)
Dividend received from associate companies and fair value assets; RM 57,394,000
2021-09-13 23:00
Haha,
I thought someone say 'Cash is king'
Insas disposed 4.81 million inari shares in Q1 financial end 31/09/21. So can expect another good quarter for Q1.
2021-09-13 23:18
This is bcos investors do like insas governance loh!
Posted by Sslee > Sep 13, 2021 11:00 PM | Report Abuse
Are you sure Market is not always efficient but it is efficient most of the time?
The stock market can remain irrational longer than you can remain solvent.
And the stock market can remain inefficient longer than you can remain patient.
Tell me how market value INSAS?
Why INSAS value less than it cash and less than 1/3 of its holding in Inari?
INSAS Balance sheet financial end 30/06/2021;
Total non-current assets: RM 735,876,000
Total current assets: RM 1,747,587,000 of which
Trades receivables include loans given out by ICL: RM 443,417,000
Fair value assets: RM 220,198,000
Deposits with banks and financial institutions; RM 413,854,000
Cash and bank balances: RM 488,944,000
Total liabilities: RM 498,975,000
NTA: RM 2.99
EPS: 37.06 cents
NOSH: 663,021,000
INSAS RPS: 132,604.152
INSAS-WC: 331,510,380
Insas holds following listed company as associate company: Inari, Hohup and DGSB
Inari: 540,693,575 units (14.68%) the last disposed 2,500,000 units on 8 Sept 2021
Hohup: 72,705,250 units (14.69%)
DGSB: 190,000,000 (25.48%)
Dividend received from associate companies and fair value assets; RM 57,394,000
2021-09-14 07:52
Topglov's further share price plunge since the posting of this article, and not sideways movement like I expected, means the stockmarket did not take it kindly. I was wrong in my prediction.
2021-09-21 21:07
"The stockmarket looks at companies' future performance, placing less emphasis on its past."
==============================================
This is exactly why AA MAY reach RM 4.50.
Unfortunately, some mentals are fixated on FUND-A-MENTAL..
Wakakakakaka!
2021-09-21 21:13
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Sslee
Haha,
Those saying the stockmarket is forward-looking & efficient and telling you:
How could AIRASIA's share price move up while they remain loss-making is asking you to have hope and faith and ignore the fundamental
Market is very inefficient and irrational.
One of Warren Buffett’s favorite old admonitions 'Price Is What You Pay, Value Is What You Get’ Quote reveals that price and value are not always the same. While the intrinsic value of a business is admittedly a somewhat imprecise estimate that depends on assumptions, it nevertheless stays within a much narrower range than the common stock price investors are asked to pay on any given day. As we’ve all seen, price can vary wildly depending on the emotions of the crowd and have hope and faith with the sweet talking CEO.
So if market is efficient AA with negative equity (PN17) and going to loss many more billions in next few quarters will be priced as zero value.
2021-09-13 12:54