My sole purpose for writing this piece is to prevent my readers from losing their hard earned money or life time savings. Currently there are a few irresponsible promoters to encourage readers to buy Hengyuan.
A few days ago, I posted my article namely “Investors ignored Hengyuan’s fantastic profit” which you can read on the Hengyuan’s forum.
The blue line is the 50 day moving average price and the red line is the 20 day moving average price. When the red line crosses over the blue line and the share price is below the 2 lines, it is a strong signal of down trend as shown on the chart below.
Hengyuan Refinery buys crude oil to refine to various kind of products for sale. An oil refinery or petroleum refinery is an industrial process plant where petroleum (crude oil) is transformed and refined into useful products such as gasoline (petrol), diesel fuel, asphalt base, fuel oils, heating oil, kerosene, liquefied petroleum gas and petroleum naphtha.
Hengyuan’s profit or loss solely depends on the buying price of crude oil and the selling prices of the refined products which is shown by the Brent Crack Spread margin is chart below:
Due to the high crude oil price and the low Brent Crack Spread margin as shown on the 2 charts above, Hengyuan will report a reduced profit or a loss in the next quarter ending September.
Price chart cannot lie. It is a record of the daily closing price. Currently there are more sellers than buyers every day. As a result, it is dropping continuously. Even financial institutions and syndicates cannot stop it from dropping because the daily volume traded is several million shares.
Price chart takes preference over financial analysis. Price chart is more important than its profit growth prospect which is wishful thinking.
Hope is only a wishful thinking. It is only a dream. Despite the chart showing down trend, many investors refused to sell to cut loss because they still hope for Hengyuan to report better profit in the next quarter ending June which will be announced before the end of August. At the meantime, it continues to drop. Hope is not a strategy because your hope might not materialise.
Investors hate to lose and hate to admit they are wrong.
But in life, losing is inevitable. Warren Buffet is wealthy not because he never loses money, it’s because he’s better at minimizing his losses and capitalizing on his wins.
Most investors refuse to sell a losing stock because of loss aversion, a term used very often in behavioral finance and economics. When we sell a losing stock, we not only lose money we also lose our pride and ego.
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