Koon Yew Yin's Blog
Why should investors get out of the stock market? Koon Yew Yin
Koon Yew Yin
Publish date: Sun, 11 Jul 2021, 11:21 AM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
My sole intention for writing this piece is to prevent investors from losing more money in the stock market.
Allow me to tell you briefly my back ground so that you can accept my advice to ask you to cash out from the stock market.
Dato Yap Lim Sen, my collegemate and I were the original founders of Mudajaya, Gamuda, IJM, IGB, Rubberex, MBM Resources, major controlling shareholder of Perodua Cars.
I have been investing in the stock market for more than 50 years. This is the first time I have practically sold all my stocks holdings and cashed out.
When you buy a stock, you hope to gain from share price increase and also dividend yield. In Malaysia all listed companies give out very small dividend. On record, Public Bank gives out the best dividend yield of about 5% per year. So, unless the stock price goes up, investors cannot make money.
What pushes the share up?
Among all the stock selection criteria such as account balance sheet, cash flow, NTA, no debt or cash rich etc, profit growth prospect is the most powerful catalyst to push up share price. Never buy any stock that has no profit growth prospect.
Why investors must believe in price chart?
Price chart cannot lie because it is a record of the daily trading. Down trend means there are more sellers than buyers in most days. Never buy a down trending stock.
A stock price can only go up if the company has reported increased profit. But if it reports reduced profit, its share price would drop because there would be more smart sellers than stupid buyers.
In the last 6 months, almost all the listed share prices have been dropping as shown on the KLCI Chart below. Why?
There are 2 main reasons for the listed companies’ share prices to drop.
1 Covid 19 pandemic
Covid 19 pandemic frequent lockdown restricts people’s movement and all listed companies’ business operation. Workers cannot go to work and business activities are reduced. As a result, almost all listed companies cannot report increased profit in the next few quarters until Covid 19 pandemic is fully under control. Many medical experts predicted that the pandemic will not be under control for at least 1 or more years. That simply means our stock market will be depressed for at least 1 or more years. The above KLCI chart shows that it has been dropping for the last 6 months and it will continue to drop for another 1 or more years.
2 Political Uncertainty
Investors do not like political uncertainty. In the last general election about 2 years ago, Pakatan Harapan won the right to form the Government and Dr Mahathir became the Prime Minister. Within a couple of months, he resigned suddenly and Muhyiddin became the PM by the back door. Currently he is seriously terminally ill with cancer in KL Hospital. Apparently, he has pancreatic cancer.
Who will be the next PM?
As you know, Politicians make rules and regulations which often affect business operation and their balance sheets which is creating more difficulties in making investment decisions.
That is why many investors especially foreign institutional investors are constant net sellers and some of them have already left the stock market.
Yesterday I posted my article namely “A safe strategy during the pandemic” in which I said the Covid 19 pandemic lockdown is affecting everybody’s movement. Workers cannot to go to work and all business operation will naturally slow down. Almost all the listed companies will not be able to report increased profit in the next few quarters until the Covid 19 pandemic is fully under control which will take at least 1 or more years.
For example:
All the steel products manufacturers have reported increased profit in their latest quarter due to the steel price increase. Currently, due to Covid 19 pandemic lockdown, workers cannot go to work to make steel products and construction workers also cannot go to work. Contractors will not require to buy steel products. As a result, all the steel products makers will report reduced profit in the next few quarters. Many smart investors already could foresee this situation. That is why Leon Fuat, the most profitable steel company price chart is showing down trend as you can see below.
Leon Fuat’s last traded price is 99 sen and its latest EPS for quarter ending March 2021 was 11.65 sen. Even if I assume its EPS for the next 3 quarters is the same as 11.65 sen, its annual EPS will be 46.6 sen. Leon Fuat is selling at PE 2.
Other Industries also suffer the same fate
In fact, almost all other industries also suffer the same fate as steel companies. For example, Supermax and Top Glove have to close down a few times because the government authorities found Covid 19 cases in their factories.
Supermax price chart below:
Investors must always remember price chart is the more important investment consideration than financial analysis. Down trend price chart means there are more smart sellers than stupid buyers.
Statistics shows that in the stock market, there are about 70 % of investors lose money, 10% of investors break even and only 20% of investors are real winners. But under the current condition all investors including myself are losing money.
All investors must examine their track record to their performance. Even if they have been winners, they should sell all their holdings as soon as possible before they lose more money and get out of the stock market completely.
My mistake
I must admit my mistake in recommending Leon Fuat recently because I did not foresee earlier how Covid 19 lockdown and our political uncertainty can cause serious damage to the stock prices. That is why I sold practically all my stock holdings and cashed out of the stock market.
A best strategy during the pandemic for all investors is to cash out because all listed companies will not be able to report increased profit in the next quarters.
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Discussions
3 people like this. Showing 50 of 98 comments
Ignore, few days later another article out ask you buy, the fees also can kill you
2021-07-12 07:57
With 'sifu' bang Koon advise, contrarian strategy works best: when he says sell, wait for opportunity to buy.
With share prices so low these days good if can buy and hold, wait for rebound.
2021-07-12 09:04
Keep telling ppl you are founders of this and that Co, just wana tell ppl you are very rich but act like conman here keep promote this and that shit.
2021-07-12 09:22
What is the use being founders but u never make use of your knowledge reinvesting in those companies leh ??
Also when u invested in mudajaya, it was a disaster loh!
U r not good businessman & stock picker loh!
2021-07-12 09:25
treat KYY as indicator .. he call buy then sell.. he call sell then buy ...
2021-07-12 10:25
kyy is not wrong this time, can tell from news of foreign funds exiting drastically of late.
2021-07-12 12:34
Just few weeks ago, KYY was asking investors to buy this share, that share. He even dared us to call his remisier. All of a sudden, he writes that he has cashed out. Pandemic didn't start yesterday and neither did the instability of the political situation.
2021-07-12 12:40
Years of experience doesn't actually matters because my parents have been investing for around 50 years as well. They still hit the wall in investing stock market now. They learn the hard way during the global recessions times for losing all the money and force to borrow money from their parents. Now they still hitting the wall again.
Investing in stock market is not a sure win method or able to get easy money. Why Kyy need to cash out everything? He can at least reserve some for the stocks that he think good and is in KLCI index one. Kyy cash out then what can he do to follow the money depreciation in following years? Got better place to invest? Property?
For me I just leave part of my money in stocks. Whether it will down all the way or not I not sure. One thing for sure I know how to allocate the money well. I still have cash reserves in case.
Just remember everything has a limit.
2021-07-12 14:05
Is it true that KYY said our PM as:
"Within a couple of months, he resigned suddenly and Muhyiddin became the PM by the back door. Currently he is seriously terminally ill with cancer in KL Hospital. Apparently, he has pancreatic cancer"
2021-07-12 16:03
U must remember that KYY is an old man. I think its a strategic decision for a person that age. I too would have done that if I were his age.
2021-07-12 18:06
very very ignorant/arrogant to say that all listed companies will not be able to report increased profit in the next quarters. Some more in bold and red.
2021-07-12 18:13
Posted by eddthh > Jul 12, 2021 6:13 PM | Report Abuse
very very ignorant/arrogant to say that all listed companies will not be able to report increased profit in the next quarters. Some more in bold and red.
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yes very arrogant old man. Duopharma(7148)(DUOP.KL) will prove him wrong.
2021-07-12 18:21
A uncle who flopped many times trading in a lot of counters still have the audacity to give advice to Bilis. What a big joke this uncle can make to himself?
2021-07-12 19:34
Maybe uncle wants you to donate to his social project but he choose to let you transfer your money politely by following his advice in stock market.
2021-07-12 19:40
Accordingly, the last Prophet is Malachi...read the book of Malachi. What did he said? Just at the final chapter..Chapter 4 - Malachi 4
New International Version
Judgment and Covenant Renewal.
4 [a]“Surely the day is coming; it will burn like a furnace. All the arrogant and every evildoer will be stubble, and the day that is coming will set them on fire,” says the Lord Almighty. “Not a root or a branch will be left to them. 2 But for you who revere my name, the sun of righteousness will rise with healing in its rays. And you will go out and frolic like well-fed calves. 3 Then you will trample on the wicked; they will be ashes under the soles of your feet on the day when I act,” says the Lord Almighty.
4 “Remember the law of my servant Moses, the decrees and laws I gave him at Horeb for all Israel.
5 “See, I will send the prophet Elijah to you before that great and dreadful day of the Lord comes. 6 He will turn the hearts of the parents to their children, and the hearts of the children to their parents; or else I will come and strike the land with total destruction.” Note : JUST BEFORE THE END OF THE WORLD, GOD will send Prophet Elijah...until we see Elijah.
2021-07-12 22:25
If you ask the Chinese in China how they interpret news from the communist, you need to think of the opposite on what they said
2021-07-12 23:03
KYY is to be respected. He is an accomplished investor with a flawless track record, good analysis skillsets and a young and sound business mind
2021-07-13 09:17
[re-posting] my opinion: https://miloshtrading.blogspot.com/2021/07/time-to-sell-all.html
2021-07-13 10:02
Just my personal opinion, when uncle asks you to sell, you should buy ! When he asks you to buy, you should sell. Seriously, when he promoted how good the companies are, he already accumulated tickets much earlier & get readied to sell the tickets, on the other hand, when he wrote this article, he already sold all beforehand & he get readied to collect the tickets at lower point (if the company's fundamental still intact !) We dont know what is his main intention is ? don't trust other views too much but rather do more homework would help.
2021-07-13 11:04
I am not a fan of this uncle.
Somehow agreed with the points that he has articulated.
Something is going on in Malaysia market if you comparing the YTD performance against all the major / ASEAN market.
2021-07-13 12:58
Chill guys! Close eyes and buy now! The worst is not over but based on vaccination projection, we should be okay by August! And should be very okay if government makes vaccination mandatory!
2021-07-13 13:07
covid can tembus loorr..not even 21 day for 2nd dose,...covid19 already take over your body, in the end...vaccine also failed due to those 1st dose citizen need to go n back from work as MITI not closing their factory, just buy BIG for more oxygen ,expected 10k mark daily will break...
2021-07-13 14:16
This uncle so thick skinned... after losing in Jaks ... still want to teach Bilis how to trade BursaStocks?
2021-07-13 15:46
He made his fortune in business. The stock market is just a casino for him. Look at the way he thinks. Very unlike warren buffet.
2021-07-13 21:03
He is the Dr Adham 'Spanish Fly' Baba/Tajuddin of the Malaysian stock market.
2021-07-13 21:08
Don't look at old school industries like manufacturing. Look at technology industry.
Frontken is a good example. Despite Covid-19, the share price still on the rise and steady growth in quarterly profits.
2021-07-15 10:16
Malaysia listed company pay low dividend? I think is already among the best. U expecting how much dividend LOL.. Please do research before posting....
2021-08-22 12:34
When u say Public bank give out the "best" dividend over year I already know how much research u have done in Malaysia stocks...
2021-08-22 12:36
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When you all sell low, KYY will buy cheap cheap..
2021-07-12 07:00