Merry Christmas everyone! I mentioned a few weeks ago, I like to screen for potential counters on a bad day and I added Daiboci during the turmoil when Trump said he will not be striking a deal with China that soon.

It was another red trading day on 24th Dec, how’s your portfolio performing? I’m glad that Daiboci, again, stood pretty strong on a bad day.

I believe those who have been investing for many years may notice that there is always exceptions in the stock exchange. Say, counters that shot up on a crash, or a counter in the bull sector that doesn’t perform on par with its peers. So why does such scenario happen?

The share market is an enormous pool of transactions made by the investors from all walks of life. They can be institutional investor or fund managers, or a lay person who just want to make some passive income to provide a better life to his family, or a punter who wants to try his luck in KLSE instead of driving in the jam all the way up to Genting Highlands. Each investors have different MINDSET and of course, different amount of CAPITAL. This will lead to different RISK APPETITE.

The share price is a manifestation of the collective decisions from each investor in a particular X company. In each successful transaction, there will be a seller and a buyer, with an AGREED PRICE. So one may think that RM47.20 for 1000 units of Dutch Lady is expensive, but the other might think this is a bargain. Only when both parties agreed with a price, the transaction can happen. Whether the share price moves up or down is actually a collective CONFIDENCE of investors towards company X and how willing are they to pay in order to OWN a fraction of the company via its share.

However, as mentioned above, because each investors have different MINDSET and different amount of CAPITAL, they behave differently according to their RISK APPETITE. Retail investors may think that 10,000 units is a lot; institutional investors may have millions of units in in their portfolio but still think they are not collecting enough. Same goes, when a RM1.00 counter being sold down to 70 cents, a retail investor may think it’s time to buy, but a fund manger might decide to sell off the remaining 15 million shares in the fund portfolio.

So, in simple words, we can say that share price is moved by LARGE CAPITALS rather than retail investors.

For example, my purchase of Daiboci will not be able to push Daiboci up to RM3.00 tomorrow. But, if Uncle Kooon suddenly read some market information and the financial reports of Daiboci and thinks that it is worth RM5.00 and he buys aggressively, then it will happen.

So the reason why I write such a long article on a holiday is to share that there is a reason behind why certain counters behave the other way round when the market is heading towards another direction. To me, investing in counters that gain support from large capital is the safe harbour in the rough sea, and have a better chance to sail far when the sea is calmer.

Happy holiday!
Written by
Rich Son Poor Son
25/12/2019

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